Morgan Stanley 8K Reports $928 Million in Second Quarter Earnings | MS 22 Jun 05

MORGAN STANLEY
Financial Supplement - 2Q2005
Table of Contents
Page #

1		Quarterly Financial Summary
2		Quarterly Consolidated Income Statement
3		Quarterly Consolidated Financial Information and Statistical Data
4		Quarterly Institutional Securities Income Statement
5-6		Quarterly Institutional Securities Financial Information and Statistical Data
7		Quarterly Individual Investor Group Income Statement
8		Quarterly Individual Investor Group Financial Information and Statistical Data
9		Quarterly Investment Management Income Statement
10		Quarterly Investment Management Financial Information
11		Quarterly Consolidated Assets Under Management or Supervision
12		Quarterly Credit Services Income Statement
13		Quarterly Credit Services Income Statement (Managed Loan Basis)
14		Quarterly Credit Services Financial Information and Statistical Data
15		Quarterly Intersegment Eliminations Income Statement
16		Quarterly Inst'l. Securities, Individual Investor Group and Investment Mgmt. Combined Income Statement
17		Quarterly Credit Services Financial Information (Managed Loan Basis)
18		Quarterly Reconciliation of General Purpose Credit Card Loan Data (Current Year)
19		Quarterly Reconciliation of General Purpose Credit Card Loan Data (Prior Year)
20		YTD Reconciliation of General Purpose Credit Card Loan Data
21		Quarterly Reconciliation of Managed Income Statement Data
22		Quarterly Reconciliation of Adjusted Assets
23		Legal Notice

MORGAN STANLEY

Quarterly Financial Summary

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change
Net revenues
Institutional Securities	$	3,504		$	3,947		$	2,776		$	2,836		$	3,985		$	3,357			(15	%)		(16	%)	$	7,451		$	7,342			(1	%)
Individual Investor Group		1,211			1,209			1,124			1,071			1,238			1,228			2	%		(1	%)		2,420			2,466			2	%
Investment Management		642			690			692			714			696			642			(7	%)		(8	%)		1,332			1,338			--
Credit Services		958			879			897			900			996			878			--			(12	%)		1,837			1,874			2	%
Intersegment Eliminations		(74	)		(75	)		(64	)		(72	)		(69	)		(66	)		12	%		4	%		(149	)		(135	)		9	%
Consolidated net revenues	$	6,241		$	6,650		$	5,425		$	5,449		$	6,846		$	6,039			(9	%)		(12	%)	$	12,891		$	12,885			--

Income before taxes ⁽¹⁾
Institutional Securities	$	1,183		$	1,135		$	682		$	1,097		$	1,045		$	830			(27	%)		(21	%)	$	2,318		$	1,875			(19	%)
Individual Investor Group		166			132			22			51			353			118			(11	%)		(67	%)		298			471			58	%
Investment Management		170			209			217			231			287			175			(16	%)		(39	%)		379			462			22	%
Credit Services		365			298			330			279			380			242			(19	%)		(36	%)		663			622			(6	%)
Intersegment Eliminations		29			29			31			29			24			25			(14	%)		4	%		58			49			(16	%)
Consolidated income before taxes	$	1,913		$	1,803		$	1,282		$	1,687		$	2,089		$	1,390			(23	%)		(33	%)	$	3,716		$	3,479			(6	%)


Earnings per basic share:⁽²⁾
Income from continuing operations	$	1.14		$	1.13		$	0.80		$	1.11		$	1.25		$	0.88			(22	%)		(30	%)	$	2.27		$	2.14			(6	%)
Discontinued operations	$	-		$	-		$	(0.02	)	$	-		$	0.01		$	-			--			*		$	-		$	0.01			*
Cumulative effect of accounting change⁽³⁾	$	-		$	-		$	-		$	-		$	0.05		$	-			--			*		$	-		$	0.05			*
Earnings per basic share	$	1.14		$	1.13		$	0.78		$	1.11		$	1.31		$	0.88			(22	%)		(33	%)	$	2.27		$	2.20			(3	%)

Earnings per diluted share: ⁽²⁾
Income from continuing operations	$	1.11		$	1.10		$	0.78		$	1.09		$	1.23		$	0.86			(22	%)		(30	%)	$	2.21		$	2.09			(5	%)
Discontinued operations	$	-		$	-		$	(0.02	)	$	-		$	0.01		$	-			--			*		$	-		$	0.01			*
Cumulative effect of accounting change⁽³⁾	$	-		$	-		$	-		$	-		$	0.05		$	-			--			*		$	-		$	0.05			*
Earnings per diluted share	$	1.11		$	1.10		$	0.76		$	1.09		$	1.29		$	0.86			(22	%)		(33	%)	$	2.21		$	2.15			(3	%)

Average common shares outstanding
Basic		1,078,718,046			1,082,211,511			1,081,448,663			1,076,221,276			1,069,097,162			1,053,812,487									1,080,776,922			1,061,632,036
Diluted		1,106,000,596			1,110,357,415			1,105,546,130			1,098,282,118			1,090,166,326			1,079,811,172									1,108,270,257			1,084,988,764
Period end common shares outstanding		1,097,652,112			1,098,127,106			1,096,707,183			1,087,087,116			1,103,263,369			1,086,652,691									1,098,127,106			1,086,652,691

Return on common equity		19.2	%		18.4	%		12.3	%		17.4	%		19.7	%		13.1	%								18.8	%		16.4	%

(1) Represents consolidated income from continuing operations before losses from unconsolidated investees, taxes, dividends on preferred securities subject to mandatory redemption and

cumulative effect of accounting change.

(2) Summation of the quarters' earnings per common share may not equal the annual amounts due to the averaging effect of the number of shares and share equivalents throughout the year.

(3) Represents the effects of the adoption of SFAS 123(R) in the first quarter of fiscal 2005.

Note: Certain reclassifications have been made to prior period amounts to conform to the current presentation.

Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Consolidated Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change

Investment banking	$	829		$	983		$	783		$	746		$	821		$	814			(17	%)		(1	%)	$	1,812		$	1,635			(10	%)
Principal transactions:
Trading		1,832			2,064			695			934			1,850			1,911			(7	%)		3	%		3,896			3,761			(3	%)
Investments		29			191			125			167			117			123			(36	%)		5	%		220			240			9	%
Commissions		868			846			733			817			824			824			(3	%)		--			1,714			1,648			(4	%)
Fees:
Asset management, distribution and admin.		1,093			1,132			1,111			1,076			1,178			1,217			8	%		3	%		2,225			2,395			8	%
Merchant, cardmember and other		337			306			349			326			308			318			4	%		3	%		643			626			(3	%)
Servicing		572			485			459			477			526			413			(15	%)		(21	%)		1,057			939			(11	%)
Interest and dividends		3,782			3,663			5,410			5,735			5,843			6,035			65	%		3	%		7,445			11,878			60	%
Other		133			130			189			142			174			190			46	%		9	%		263			364			38	%
Total revenues		9,475			9,800			9,854			10,420			11,641			11,845			21	%		2	%		19,275			23,486			22	%
Interest expense		2,972			2,950			4,189			4,748			4,660			5,597			90	%		20	%		5,922			10,257			73	%
Provision for consumer loan losses		262			200			240			223			135			209			5	%		55	%		462			344			(26	%)
Net revenues		6,241			6,650			5,425			5,449			6,846			6,039			(9	%)		(12	%)		12,891			12,885			--

Compensation and benefits		2,712			2,923			2,347			1,898			2,861			2,630			(10	%)		(8	%)		5,635			5,491			(3	%)
Occupancy and equipment		200			206			228			215			333			233			13	%		(30	%)		406			566			39	%
Brokerage, clearing and exchange fees		224			237			231			240			260			276			16	%		6	%		461			536			16	%
Information processing and communications		320			318			326			346			342			349			10	%		2	%		638			691			8	%
Marketing and business development		254			263			279			333			259			299			14	%		15	%		517			558			8	%
Professional services		318			356			400			475			380			441			24	%		16	%		674			821			22	%
Other		300			544			332			255			573			421			(23	%)		(27	%)		844			994			18	%
September 11th related insurance recoveries, net		0			0			0			0			(251	)		0			--			*			0			(251	)		*
Total non-interest expenses		4,328			4,847			4,143			3,762			4,757			4,649			(4	%)		(2	%)		9,175			9,406			3	%

Income from continuing operations before losses from unconsolidated investees, taxes, dividends on preferred securities subject to mandatory redemption and cumulative effect of accounting change		1,913			1,803			1,282			1,687			2,089			1,390			(23	%)		(33	%)		3,716			3,479			(6	%)
Losses from unconsolidated investees		93			81			77			77			73			67			(17	%)		(8	%)		174			140			(20	%)
Provision for income taxes		551			498			343			411			671			395			(21	%)		(41	%)		1,049			1,066			2	%
Div. on pref. sec. subject to mandatory redemption ⁽¹⁾		45			0			0			0			0			0			--			--			45			0			*
Income from continuing operations		1,224			1,224			862			1,199			1,345			928			(24	%)		(31	%)		2,448			2,273			(7	%)
Discontinued operations

Gain/(loss) from discontinued operations (including loss on disposal of $42 million in 2004)		3			(1	)		(42	)		2			13			0			*			*			2			13			*
Income tax benefit/(provision)		(1	)		0			17			(1	)		(5	)		0			--			*			(1	)		(5	)		*
Gain/(loss) from discontinued operations		2			(1	)		(25	)		1			8			0			*			*			1			8			*
Cumulative effect of accounting change⁽²⁾		0			0			0			0			49			0			--			*			0			49			*
Net income	$	1,226		$	1,223		$	837		$	1,200		$	1,402		$	928			(24	%)		(34	%)	$	2,449		$	2,330			(5	%)

Compensation and benefits as a % of net revenues		44	%		44	%		43	%		35	%		42	%		44	%								44	%		43	%

(1)

At February 29, 2004, preferred securities subject to mandatory redemption were reclassified to junior subordinated debt

issued to capital trusts (a component of long-term debt) pursuant to the adoption of FASB Interpretation No. 46,

"Consolidation of Variable Interest Entities". Dividends on junior subordinated debt issued to capital trusts are included

in interest expense from February 29, 2004 forward.

(2)

Represents the effects of the adoption of SFAS 123(R) in the first quarter of fiscal 2005.

Note:

Certain reclassifications have been made to prior period amounts to conform to the current presentation.

Refer to Legal Notice page 23.

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
(unaudited)

	Quarter Ended													Percentage Change From:
		Feb 29, 2004		May 31, 2004		Aug 31, 2004		Nov 30, 2004		Feb 28, 2005		May 31, 2005		2Q05 vs. 2Q04			2Q05 vs. 1Q05
Morgan Stanley
Total assets (millions) ⁽¹⁾		$	656,898	$	729,501	$	745,033	$	745,513	$	802,210	$	818,711		12	%		2	%
Adjusted assets (millions) ⁽²⁾		$	428,470	$	448,135	$	465,105	$	408,270	$	447,221	$	440,189		(2	%)		(2	%)
Period end common shares outstanding (millions)			1,097.7		1,098.1		1,096.7		1,087.1		1,103.3		1,086.7		(1	%)		(2	%)
Book value per common share		$	23.75	$	24.59	$	25.00	$	25.95	$	25.83	$	26.07		6	%		1	%
Shareholders' equity (millions)⁽³⁾		$	28,961	$	29,899	$	30,317	$	31,103	$	31,328	$	31,224		4	%		--
Total capital (millions) ⁽⁴⁾		$	96,359	$	100,127	$	101,237	$	110,793	$	122,230	$	113,867		14	%		(7	%)
Worldwide employees			50,979		51,580		52,812		53,284		53,718		54,142		5	%		1	%

Average Daily 99%/One-Day Value-at-Risk ("VaR")⁽⁵⁾
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread		$	42	$	50	$	52	$	51	$	66	$	62
Equity price			30		32		36		37		41		31
Foreign exchange rate			11		12		12		10		12		12
Commodity price			27		34		40		30		34		35
Trading VaR		$	62	$	72	$	79	$	80	$	96	$	87

(1)	Effective December 1, 2004, the Company offsets cash paid or received pursuant to credit support agreements ("cash collateral netting")
	against its OTC derivatives inventory. Total assets as of November 30, 2004 have been restated to reflect cash collateral netting.
	Prior periods presented do not reflect such cash collateral netting.
(2)	Adjusted assets exclude certain self-funded assets considered to have minimal market, credit and/or liquidity risk that are generally attributable to
	matched book and securities lending businesses as measured by aggregate resale agreements and securities borrowed less non-derivative short
	positions. See page 22 for further information.
(3)	Includes common equity and junior subordinated debt issued to capital trusts.
(4)	Includes common equity, junior subordinated debt issued to capital trusts, capital units and the non-current portion of long-term debt.
(5)	99%/One-Day VaR represents the loss amount that one would not expect to exceed, on average, more than one time every one hundred trading
	days in the Company's trading positions if the portfolio were held constant for a one day period. The Company's VaR incorporates substantially
	all financial instruments generating market risk that are managed by the Company's trading businesses. For a further discussion of the calculation
	of VaR and the limitations of the Company's VaR methodology, see Part II, Item 7A "Quantitative and Qualitative Disclosures about Market
	Risk" in the Company's Form 10-K for fiscal 2004.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Institutional Securities Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change

Investment banking	$	739		$	891		$	711		$	667		$	742		$	735			(18	%)		(1	%)	$	1,630		$	1,477			(9	%)
Principal transactions:
Trading		1,691			1,923			565			828			1,730			1,800			(6	%)		4	%		3,614			3,530			(2	%)
Investments		16			136			38			79			55			123			(10	%)		124	%		152			178			17	%
Commissions		505			527			462			504			503			538			2	%		7	%		1,032			1,041			1	%
Asset management, distribution and admin. fees		34			32			36			42			34			39			22	%		15	%		66			73			11	%
Interest and dividends		3,225			3,151			4,831			5,160			5,265			5,371			70	%		2	%		6,376			10,636			67	%
Other		75			57			137			123			109			122			114	%		12	%		132			231			75	%
Total revenues		6,285			6,717			6,780			7,403			8,438			8,728			30	%		3	%		13,002			17,166			32	%
Interest expense		2,781			2,770			4,004			4,567			4,453			5,371			94	%		21	%		5,551			9,824			77	%
Net revenues		3,504			3,947			2,776			2,836			3,985			3,357			(15	%)		(16	%)		7,451			7,342			(1	%)

Total non-interest expenses		2,321			2,812			2,094			1,739			2,940			2,527			(10	%)		(14	%)		5,133			5,467			7	%

Income from continuing operations before
losses from unconsolidated investees,
taxes, dividends on preferred securities
subject to mandatory redemption and
cumulative effect of accounting change		1,183			1,135			682			1,097			1,045			830			(27	%)		(21	%)		2,318			1,875			(19	%)
Losses from unconsolidated investees		93			81			77			77			73			67			(17	%)		(8	%)		174			140			(20	%)
Div. on pref. sec. subject to mandatory redemption ⁽¹⁾		45			0			0			0			0			0			--			--			45			0			*
Income before taxes, discontinued operations and cumulative effect of accounting change	$	1,045		$	1,054		$	605		$	1,020		$	972		$	763			(28	%)		(22	%)	$	2,099		$	1,735			(17	%)

Pre-tax profit margin ⁽²⁾		33	%		29	%		25	%		39	%		26	%		25	%								31	%		26	%

(1)	At February 29, 2004, preferred securities subject to mandatory redemption were reclassified to junior subordinated debt issued to capital trusts
	(a component of long-term debt) pursuant to the adoption of FIN 46. Dividends on junior subordinated debt issued to capital trusts are included
	in interest expense from February 29, 2004 forward.
(2)	Income before taxes, discontinued operations and cumulative effect of accounting change, excluding losses from unconsolidated investees, as a % of net revenues.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

Quarterly Financial Information and Statistical Data

Institutional Securites

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change


Advisory revenue (millions)	$	232		$	324		$	310		$	290		$	254		$	357			10	%		41	%	$	556		$	611			10	%
Underwriting revenue (millions)
Equity		314			314			200			165			202			145			(54	%)		(28	%)		628			347			(45	%)
Fixed income		193			253			201			212			286			233			(8	%)		(19	%)		446			519			16	%
Total underwriting revenue	$	507		$	567		$	401		$	377		$	488		$	378			(33	%)		(23	%)	$	1,074		$	866			(19	%)

Sales and trading net revenue (millions)⁽¹⁾
Equity		1,105			1,113			883			966			1,214			1,119			1	%		(8	%)		2,218			2,333			5	%
Fixed income		1,651			1,828			1,186			890			1,996			1,323			(28	%)		(34	%)		3,479			3,319			(5	%)
Total sales and trading net revenue	$	2,756		$	2,941		$	2,069		$	1,856		$	3,210		$	2,442			(17	%)		(24	%)	$	5,697		$	5,652			(1	%)


	Fiscal View																								Calendar View
	Quarter Ended (2)																								Five Months Ended (2)
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005									May 31, 2004			May 31, 2005

Mergers and acquisitions announced transactions
Morgan Stanley global market volume (billions)	$	114.7		$	76.5		$	80.0		$	51.2		$	189.7		$	208.1								$	181.2		$	322.0
Market share		27.9	%		21.7	%		21.6	%		12.7	%		29.0	%		39.0	%								26.6	%		35.9	%
Rank		3			3			3			7			3			1									2			1

Mergers and acquisitions completed transactions
Morgan Stanley global market volume (billions)	$	58.6		$	132.6		$	139.2		$	53.7		$	42.7		$	92.2								$	148.2		$	122.3
Market share		22.2	%		35.7	%		29.8	%		14.5	%		13.8	%		30.1	%								30.0	%		24.3	%
Rank		4			2			3			7			7			1									2			3

Global equity and related issues
Morgan Stanley global market volume (billions)	$	16.2		$	16.4		$	9.3		$	11.4		$	13.8		$	5.7								$	28.6		$	14.6
Market share		11.5	%		12.7	%		8.9	%		8.1	%		11.5	%		6.4	%								13.3	%		9.2	%
Rank		1			2			2			3			2			6									1			4

Global initial public offerings
Morgan Stanley global market volume (billions)	$	3.7		$	3.1		$	5.3		$	0.9		$	2.7		$	2.1								$	6.8		$	4.0
Market share		13.5	%		10.2	%		13.7	%		2.3	%		9.0	%		8.8	%								15.3	%		9.8	%
Rank		1			2			1			13			3			2									1			2

Global debt
Morgan Stanley global market volume (billions)	$	90.4		$	104.0		$	90.7		$	92.0		$	82.5		$	81.1								$	166.5		$	150.8
Market share		7.1	%		7.6	%		7.6	%		6.5	%		6.1	%		5.9	%								7.1	%		6.2	%
Rank		5			2			2			3			3			5									3			4

(1)	Includes principal trading, commissions and net interest revenue.
(2)	Source: Thomson Financial, data as of June 9, 2005.
Notes:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

Quarterly Financial Information and Statistical Data

Institutional Securities

(unaudited, dollars in billions)

	Quarter Ended																		Percentage Change From:
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05


Loans
Investment grade	$	0.5		$	1.1		$	0.8		$	1.2		$	1.5		$	1.8			64	%		20%
Non-investment grade		1.1			1.8			1.0			0.5			1.0			1.9			6	%		90%
Total loans	$	1.6		$	2.9		$	1.8		$	1.7		$	2.5		$	3.7			28	%		48%

Commitments
Investment grade	$	13.7		$	16.5		$	18.3		$	19.0		$	18.7		$	21.1			28	%		13%
Non-investment grade		2.8			2.2			2.7			1.4			2.0			5.6			*			*
Total commitments	$	16.5		$	18.7		$	21.0		$	20.4		$	20.7		$	26.7			43	%		29%

Loans plus commitments
Investment grade	$	14.2		$	17.6		$	19.1		$	20.2		$	20.2		$	22.9			30	%		13%
Non-investment grade	$	3.9		$	4.0		$	3.7		$	1.9		$	3.0		$	7.5			88	%		150%
% investment grade		78	%		81	%		84	%		91	%		87	%		75	%
% non-investment grade		22	%		19	%		16	%		9	%		13	%		25	%

Total loans and commitments	$	18.1		$	21.6		$	22.8		$	22.1		$	23.2		$	30.4			41	%		31%
Hedges ⁽¹⁾	$	7.7		$	9.1		$	12.9		$	11.6		$	13.1		$	14.3			57	%		9%
Total loans and commitments net of hedges	$	10.4		$	12.5		$	9.9		$	10.5		$	10.1		$	16.1			29	%		59%

(1)	Includes both internal and external hedges utilized by the lending business.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Individual Investor Group Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change
Investment banking	$	77		$	82		$	64		$	67		$	71		$	68			(17	%)		(4	%)	$	159		$	139			(13	%)
Principal transactions:
Trading		141			141			130			106			120			111			(21	%)		(8	%)		282			231			(18	%)
Investments		4			(4	)		(3	)		(2	)		(2	)		(2	)		50	%		--			0			(4	)		*
Commissions		385			336			281			325			329			295			(12	%)		(10	%)		721			624			(13	%)
Asset management, distribution and admin fees		492			530			536			480			581			603			14	%		4	%		1,022			1,184			16	%
Interest and dividends		93			95			103			118			135			149			57	%		10	%		188			284			51	%
Other		52			64			57			21			64			74			16	%		16	%		116			138			19	%
Total revenues		1,244			1,244			1,168			1,115			1,298			1,298			4	%		--			2,488			2,596			4	%
Interest expense		33			35			44			44			60			70			100	%		17	%		68			130			91	%
Net revenues		1,211			1,209			1,124			1,071			1,238			1,228			2	%		(1	%)		2,420			2,466			2	%

Total non-interest expenses		1,045			1,077			1,102			1,020			885			1,110			3	%		25	%		2,122			1,995			(6	%)
Income before taxes and cumulative
effect of accounting change	$	166		$	132		$	22		$	51		$	353		$	118			(11	%)		(67	%)	$	298		$	471			58	%

Pre-tax profit margin ⁽¹⁾		14	%		11	%		2	%		5	%		29	%		10	%								12	%		19	%

(1)	Income before taxes and cumulative effect of accounting change as a % of net revenues.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

Quarterly Financial Information and Statistical Data

Individual Investor Group

(unaudited)

	Quarter Ended																		Percentage Change From:
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05


Global representatives		10,832			10,722			10,785			10,962			10,471			10,438			(3	%)		--

Annualized revenue per global
representative (thousands)⁽¹⁾	$	442		$	449		$	418		$	394		$	462		$	470			5	%		2	%

Total client assets (billions)	$	595		$	579		$	576		$	602		$	618		$	613			6	%		(1	%)
Fee-based client account assets (billions) ⁽²⁾	$	143		$	145		$	146		$	157		$	166		$	165			14	%		(1	%)
Fee-based assets as a % of client assets		24	%		25	%		25	%		26	%		27	%		27	%

Client assets per global
representative (millions)⁽³⁾	$	55		$	54		$	53		$	55		$	59		$	59			9	%		--
Domestic retail net new assets (billions) ⁽⁴⁾	$	2.8		$	2.8		$	3.7		$	2.3		$	3.7			3.8			36	%		3	%

Domestic retail locations		526			526			525			525			524			526			--			--

(1)	Annualized revenue divided by average global representative headcount.
(2)	Represents the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
(3)	Total IIG client assets divided by period end global representative headcount.
(4)	Represents net new assets in the U.S. broad-based branch system.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Investment Management Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change
Investment banking	$	13		$	10		$	8		$	12		$	11		$	11			10	%		--		$	23		$	22			(4	%)
Principal transactions:
Investments		9			59			90			90			64			2			(97	%)		(97	%)		68			66			(3	%)
Commissions		7			8			7			5			7			7			(13	%)		--			15			14			(7	%)
Asset management, distribution and admin fees		604			607			579			600			605			615			1	%		2	%		1,211			1,220			1	%
Interest and dividends		2			1			3			2			3			3			*			--			3			6			100	%
Other		9			6			7			6			8			6			--			(25	%)		15			14			(7	%)
Total revenues		644			691			694			715			698			644			(7	%)		(8	%)		1,335			1,342			1	%
Interest expense		2			1			2			1			2			2			100	%		--			3			4			33	%
Net revenues		642			690			692			714			696			642			(7	%)		(8	%)		1,332			1,338			--

Total non-interest expenses		472			481			475			483			409			467			(3	%)		14	%		953			876			(8	%)
Income before taxes and cumulative
effect of accounting change	$	170		$	209		$	217		$	231		$	287		$	175			(16	%)		(39	%)	$	379		$	462			22	%

Pre-tax profit margin ⁽¹⁾		27	%		30	%		31	%		32	%		41	%		27	%								29	%		35	%

(1)	Income before taxes and cumulative effect of accounting change as a % of net revenues.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Investment Management

(unaudited, dollars in billions)

	Quarter Ended																Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004		May 31, 2004			Aug 31, 2004			Nov 30, 2004		Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change

Assets under management or supervision

Net flows
Retail	$	0.5	$	(0.6	)	$	(0.3	)	$	0.4	$	(0.7	)	$	(0.9	)		(50	%)		(29	%)	$	(0.1	)	$	(1.6	)		*
Institutional		1.4		5.7			(0.2	)		1.2		(7.3	)		(3.0	)		*			59	%		7.1			(10.3	)		*
Net flows excluding money markets		1.9		5.1			(0.5	)		1.6		(8.0	)		(3.9	)		*			51	%		7.0			(11.9	)		*
Money markets		1.4		4.2			9.2			5.8		0.9			(3.2	)		*			*			5.6			(2.3	)		(141	%)

Assets under management or supervision by distribution channel
Retail	$	200	$	195		$	194		$	202	$	201		$	199			2	%		(1	%)
Institutional		180		189			200			222		226			217			15	%		(4	%)
Total	$	380	$	384		$	394		$	424	$	427		$	416			8	%		(3	%)

Assets under management or supervision by asset class
Equity	$	186	$	182		$	179		$	200	$	209		$	206			13	%		(1	%)
Fixed income		111		114			116			114		108			103			(10	%)		(5	%)
Money market		62		66			76			83		84			80			21	%		(5	%)
Other ⁽¹⁾		21		22			23			27		26			27			23	%		4	%
Total	$	380	$	384		$	394		$	424	$	427		$	416			8	%		(3	%)

(1)	Includes Alternative Investments.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Consolidated Assets Under Management or Supervision

(unaudited, dollars in billions)

	Quarter Ended												Percentage Change From:
	Feb 29, 2004		May 31, 2004		Aug 31, 2004		Nov 30, 2004		Feb 28, 2005		May 31, 2005		2Q05 vs. 2Q04			2Q05 vs. 1Q05


Consolidated assets under management or supervision by distribution channel
Retail	$	294	$	290	$	290	$	305	$	321	$	319		10	%		(1	%)
Institutional		211		220		229		251		255		246		12	%		(4	%)
Total⁽¹⁾	$	505	$	510	$	519	$	556	$	576	$	565		11	%		(2	%)

Consolidated assets under management or supervision by asset class
Equity	$	231	$	226	$	224	$	251	$	272	$	270		19	%		(1	%)
Fixed income		124		128		130		130		123		118		(8	%)		(4	%)
Money market		65		70		80		87		88		84		20	%		(5	%)
Other⁽²⁾		85		86		85		88		93		93		8	%		--
Total ⁽¹⁾	$	505	$	510	$	519	$	556	$	576	$	565		11	%		(2	%)

(1)	Revenues and expenses associated with customer assets of $126 billion, $103 billion and $127 billion
	for fiscal 2Q05, fiscal 2Q04 and fiscal 1Q05, respectively, are included in the Company's Individual
	Investor Group segment, and $23 billion, $23 billion and $22 billion for fiscal 2Q05, fiscal 2Q04
	and fiscal 1Q05, respectively, are included in the Company's Institutional Securities segment.
(2)	Includes Alternative Investments.
Notes:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Credit Services Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change

Fees:
Merchant, cardmember and other	$	337		$	306		$	349		$	326		$	308		$	318			4	%		3	%	$	643		$	626			(3	%)
Servicing		572			485			459			477			526			413			(15	%)		(21	%)		1,057			939			(11	%)
Other		5			16			(5	)		1			2			(2	)		(113	%)		*			21			0			*
Total non-interest revenues		914			807			803			804			836			729			(10	%)		(13	%)		1,721			1,565			(9	%)

Interest revenue		480			435			496			482			468			544			25	%		16	%		915			1,012			11	%
Interest expense		174			163			162			163			173			186			14	%		8	%		337			359			7	%
Net interest income		306			272			334			319			295			358			32	%		21	%		578			653			13	%

Provision for consumer loan losses		262			200			240			223			135			209			5	%		55	%		462			344			(26	%)
Net credit income		44			72			94			96			160			149			107	%		(7	%)		116			309			*

Net revenues		958			879			897			900			996			878			--			(12	%)		1,837			1,874			2	%

Total non-interest expenses		593			581			567			621			616			636			9	%		3	%		1,174			1,252			7	%
Income before taxes and cumulative
effect of accounting change	$	365		$	298		$	330		$	279		$	380		$	242			(19	%)		(36	%)	$	663		$	622			(6	%)

Pre-tax profit margin ⁽¹⁾		38	%		34	%		37	%		31	%		38	%		28	%								36	%		33	%

(1)	Income before taxes and cumulative effect of accounting change as a % of net revenues.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Credit Services Income Statement Information

(Managed loan basis)

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change

Fees:
Merchant, cardmember and other	$	519		$	467		$	499		$	485		$	479		$	486			4	%		1	%	$	986		$	965			(2	%)
Servicing		0			0			0			0			0			0			--			--			0			0			--
Other		35			16			(10	)		9			59			(38	)		*			*			51			21			(59	%)
Total non-interest revenues		554			483			489			494			538			448			(7	%)		(17	%)		1,037			986			(5	%)

Interest revenue		1,524			1,450			1,422			1,407			1,416			1,460			1	%		3	%		2,974			2,876			(3	%)
Interest expense		350			337			337			368			420			455			35	%		8	%		687			875			27	%
Net interest income		1,174			1,113			1,085			1,039			996			1,005			(10	%)		1	%		2,287			2,001			(13	%)

Provision for consumer loan losses		770			717			677			633			538			575			(20	%)		7	%		1,487			1,113			(25	%)
Net credit income		404			396			408			406			458			430			9	%		(6	%)		800			888			11	%

Net revenues		958			879			897			900			996			878			--			(12	%)		1,837			1,874			2	%

Total non-interest expenses		593			581			567			621			616			636			9	%		3	%		1,174			1,252			7	%
Income before taxes and cumulative
effect of accounting change	$	365		$	298		$	330		$	279		$	380		$	242			(19	%)		(36	%)	$	663		$	622			(6	%)

Pre-tax profit margin ⁽¹⁾		38	%		34	%		37	%		31	%		38	%		28	%								36	%		33	%

(1)	Income before taxes and cumulative effect of accounting change as a % of net revenues.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

Quarterly Financial Information and Statistical Data

Credit Services

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change


Total owned credit card loans
Period end	$	15,850		$	17,506		$	18,471		$	19,724		$	18,908		$	19,385			11	%		3	%	$	17,506		$	19.385			11	%
Average	$	17,880		$	16,202		$	17,787		$	18,579		$	19,210		$	18,753			16	%		(2	%)	$	17,036		$	18,979			11	%

Total managed credit card loans ⁽¹⁾⁽²⁾
Period end	$	47,336		$	46,828		$	47,126		$	48,261		$	47,770		$	46,845			--			(2	%)	$	46,828		$	46,845			--
Average	$	48,667		$	46,929		$	46,873		$	47,090		$	48,930		$	47,146			--			(4	%)	$	47,793		$	48,028			--
Interest yield		12.20	%		11.88	%		11.69	%		11.59	%		11.23	%		11.69	%		(19	bp)		46	bp		12.04	%		11.46	%		(58	bp)
Interest spread		9.35	%		9.06	%		8.83	%		8.43	%		7.79	%		7.96	%		(110	bp)		17	bp		9.21	%		7.88	%		(133	bp)
Transaction volume (billions)	$	24.2		$	24.4		$	25.4		$	25.7		$	25.9		$	25.4			4	%		(2	%)	$	48.5		$	51.3			6	%
Accounts (millions)		45.9			46.0			46.0			46.2			46.0			45.9			--			--			46.0			45.9			--
Active accounts (millions)		20.3			19.9			19.6			19.7			19.5			19.3			(3	%)		(1	%)		19.9			19.3			(3	%)
Average receivables per avg. active account (actual $)	$	2,360		$	2,330		$	2,381		$	2,407		$	2,476		$	2,426			4	%		(2	%)	$	2,345		$	2,451			5	%
Trans volume per avg. active account (actual $)	$	1,173		$	1,209		$	1,290		$	1,312		$	1,311		$	1,306			8	%		--		$	2,382		$	2,618			10	%
Net gain on securitization	$	19		$	(12	)	$	(14	)	$	(1	)	$	32		$	(16	)		(33	%)		(150	%)	$	7		$	16			129	%
Credit quality
Net charge-off rate		6.31	%		6.48	%		5.76	%		5.45	%		5.11	%		4.94	%		(154	bp)		(17	bp)		6.40	%		5.03	%		(137	bp)
Delinquency rate (over 30 days)		5.80	%		4.88	%		4.81	%		4.55	%		4.24	%		3.90	%		(98	bp)		(34	bp)		4.88	%		3.90	%		(98	bp)
Delinquency rate (over 90 days)		2.86	%		2.40	%		2.22	%		2.18	%		2.05	%		1.83	%		(57	bp)		(22	bp)		2.40	%		1.83	%		(57	bp)
Allowance for loan losses at period end	$	985		$	940		$	939		$	929		$	840		$	828			(12	%)		(1	%)	$	940		$	828			(12	%)

International managed credit card loans ⁽²⁾
Period end	$	2,463		$	2,409		$	2,337		$	2,571		$	2,648		$	2,479			3	%		(6	%)	$	2,409		$	2,479			3	%
Average	$	2,302		$	2,411		$	2,389		$	2,372		$	2,606		$	2,578			7	%		(1	%)	$	2,357		$	2,592			10	%
Accounts (millions)		1.2			1.2			1.2			1.3			1.4			1.4			17	%		--			1.2			1.4			17	%

Payment services (millions)
Discover network transaction volume		304			300			313			309			314			314			5	%		--			604			628			4
PULSE network transaction volume⁽³⁾		0			0			0			0			213			452			*			112	%		0			665			*
Total network transaction volume		304			300			313			309			527			766			*			45	%		604			1,293			114	%

Mortgages
Mortgage originations	$	959		$	1,380		$	1,231		$	1,046		$	760		$	921			(33	%)		21	%	$	2,339		$	1,681			(28	%)

(1)	Includes domestic and international credit card businesses.
(2)	Includes owned and securitized credit card loans.
(3)	Reflects volume subsequent to date of acquisition.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Intersegment Eliminations Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change

Investment banking	$	0		$	0		$	0		$	0		$	(3	)	$	0			--			*		$	0		$	(3	)		*
Principal transactions:
Trading		0			0			0			0			0			0			--			--			0			0			--
Investments		0			0			0			0			0			0			--			--			0			0			--
Commissions		(29	)		(25	)		(17	)		(17	)		(15	)		(16	)		36	%		(7	%)		(54	)		(31	)		43	%
Asset management, distribution and admin. fees		(37	)		(37	)		(40	)		(46	)		(42	)		(40	)		(8	%)		5	%		(74	)		(82	)		(11	%)
Interest and dividends		(18	)		(19	)		(23	)		(27	)		(28	)		(32	)		(68	%)		(14	%)		(37	)		(60	)		(62	%)
Other		(8	)		(13	)		(7	)		(9	)		(9	)		(10	)		23	%		(11	%)		(21	)		(19	)		10	%
Total revenues		(92	)		(94	)		(87	)		(99	)		(97	)		(98	)		(4	%)		(1	%)		(186	)		(195	)		(5	%)
Interest expense		(18	)		(19	)		(23	)		(27	)		(28	)		(32	)		(68	%)		(14	%)		(37	)		(60	)		(62	%)
Net revenues		(74	)		(75	)		(64	)		(72	)		(69	)		(66	)		12	%		4	%		(149	)		(135	)		9	%

Total non-interest expenses		(103	)		(104	)		(95	)		(101	)		(93	)		(91	)		13	%		2	%		(207	)		(184	)		11	%

Income before taxes	$	29		$	29		$	31		$	29		$	24		$	25			(14	%)		4	%	$	58		$	49			(16	%)

Notes:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

The following (page 16) presents more detailed financial information regarding the results of operations for the combined

institutional securities, individual investor group and investment management businesses. Morgan Stanley believes that a

combined presentation is informative due to certain synergies among these businesses, as well as to facilitate comparisons of

the Company’s results with those of other companies in the financial services industry that have securities and asset

management businesses. Morgan Stanley provides this type of presentation for its credit services activities (page 17) in order

to provide helpful comparison to other credit card issuers.

MORGAN STANLEY

Quarterly Institutional Securities, Individual Investor Group and Investment Management⁽¹⁾

Combined Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change

Investment banking	$	829		$	983		$	783		$	746		$	824		$	814			(17	%)		(1	%)	$	1,812		$	1,638			(10	%)
Principal transactions:
Trading		1,832			2,064			695			934			1,850			1,911			(7	%)		3	%		3,896			3,761			(3	%)
Investments		29			191			125			167			117			123			(36	%)		5	%		220			240			9	%
Commissions		868			846			733			817			824			824			(3	%)		--			1,714			1,648			(4	%)
Asset management, distribution and administration fees		1,093			1,132			1,111			1,076			1,178			1,217			8	%		3	%		2,225			2,395			8	%
Interest and dividends		3,314			3,241			4,929			5,270			5,395			5,513			70	%		2	%		6,555			10,908			66	%
Other		130			117			196			143			173			194			66	%		12	%		247			367			49	%
Total revenues		8,095			8,574			8,572			9,153			10,361			10,596			24	%		2	%		16,669			20,957			26	%
Interest expense		2,810			2,800			4,042			4,602			4,507			5,433			94	%		21	%		5,610			9,940			77	%
Net revenues		5,285			5,774			4,530			4,551			5,854			5,163			(11	%)		(12	%)		11,059			11,017			--

Compensation and benefits		2,514			2,725			2,155			1,711			2,641			2,415			(11	%)		(9	%)		5,239			5,056			(3	%)
Occupancy and equipment		179			185			205			193			308			210			14	%		(32	%)		364			518			42	%
Brokerage, clearing and exchange fees		224			237			231			240			260			276			16	%		6	%		461			536			16	%
Information processing and communications		234			232			242			258			258			265			14	%		3	%		466			523			12	%
Marketing and business development		111			137			143			161			113			144			5	%		27	%		248			257			4	%
Professional services		253			291			334			401			314			367			26	%		17	%		544			681			25	%
Other		222			462			268			179			502			338			(27	%)		(33	%)		684			840			23	%
September 11th related insurance recoveries, net		0			0			0			0			(251	)		0			--			*			0			(251	)		*
Total non-interest expenses		3,737			4,269			3,578			3,143			4,145			4,015			(6	%)		(3	%)		8,006			8,160			2	%

Income from continuing operations
before losses from unconsolidated
investees, taxes, dividends on preferred
securities subject to mandatory
redemption and cumulative
effect of accounting change		1,548			1,505			952			1,408			1,709			1,148			(24	%)		(33	%)		3,053			2,857			(6	%)
Losses from unconsolidated investees		93			81			77			77			73			67			(17	%)		(8	%)		174			140			(20	%)
Div. on pref. sec. subject to mandatory redemption ⁽²⁾		45			0			0			0			0			0			--			--			45			0			*
Income before taxes, discontinued
operations and cumulative
effect of accounting change	$	1,410		$	1,424		$	875		$	1,331		$	1,636		$	1,081			(24	%)		(34	%)	$	2,834		$	2,717			(4	%)

Compensation and benefits as a % of net revenues		48	%		47	%		48	%		38	%		45	%		47	%								47	%		46	%
Non-compensation expenses as a % of net revenues		23	%		27	%		31	%		32	%		26	%		31	%								25	%		28	%

Pre-tax profit margin ⁽³⁾		28	%		26	%		21	%		31	%		29	%		22	%								27	%		26	%


Number of employees ⁽⁴⁾		37,455			38,058			39,494			39,639			39,641			40,267			6	%		2	%

(1)	Includes the elimination of intersegment activity between Institutional Securities, Individual Investor Group and Investment Management.
(2)	At February 29, 2004, preferred securities subject to mandatory redemption were reclassified to junior subordinated debt issued to capital trusts
	(a component of long-term debt) pursuant to the adoption of FIN 46. Dividends on junior subordinated debt issued to capital trusts are included
	in interest expense from February 29, 2004 forward.
(3)	Income before taxes, discontinued operations and cumulative effect of accounting change, excluding losses from unconsolidated investees, as a % of net revenues.
(4)	Includes Institutional Securities, Individual Investor Group, Investment Management and Infrastructure / Company areas.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Credit Services Income Statement Information

(Managed loan basis)

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			2Q05 vs. 2Q04			2Q05 vs. 1Q05			May 31, 2004			May 31, 2005			Change

Fees:
Merchant, cardmember and other	$	519		$	467		$	499		$	485		$	479		$	486			4	%		1	%	$	986		$	965			(2	%)
Servicing		0			0			0			0			0			0			--			--			0			0			--
Other		35			16			(10	)		9			59			(38	)		*			*			51			21			(59	%)
Total non-interest revenues		554			483			489			494			538			448			(7	%)		(17	%)		1,037			986			(5	%)

Interest revenue		1,524			1,450			1,422			1,407			1,416			1,460			1	%		3	%		2,974			2,876			(3	%)
Interest expense		350			337			337			368			420			455			35	%		8	%		687			875			27	%
Net interest income		1,174			1,113			1,085			1,039			996			1,005			(10	%)		1	%		2,287			2,001			(13	%)

Provision for consumer loan losses		770			717			677			633			538			575			(20	%)		7	%		1,487			1,113			(25	%)
Net credit income		404			396			408			406			458			430			9	%		(6	%)		800			888			11	%

Net revenues		958			879			897			900			996			878			--			(12	%)		1,837			1,874			2	%

Compensation and benefits		198			198			192			187			220			215			9	%		(2	%)		396			435			10	%
Occupancy and equipment		21			21			23			22			25			23			10	%		(8	%)		42			48			14	%
Information processing and communications		86			86			84			88			84			84			(2	%)		--			172			168			(2	%)
Marketing and business development		143			126			136			172			146			155			23	%		6	%		269			301			12	%
Professional services		65			65			66			74			69			74			14	%		7	%		130			143			10	%
Other		80			85			66			78			72			85			--			18	%		165			157			(5	%)
Total non-interest expenses		593			581			567			621			616			636			9	%		3	%		1,174			1,252			7	%
Income before taxes and cumulative
effect of accounting change	$	365		$	298		$	330		$	279		$	380		$	242			(19	%)		(36	%)	$	663		$	622			(6	%)

Compensation and benefits as a % of net revenues		21	%		23	%		21	%		21	%		22	%		25	%								22	%		23	%
Non-compensation expenses as a % of net revenues		41	%		44	%		42	%		48	%		40	%		48	%								42	%		44	%
Pre-tax profit margin ⁽¹⁾		38	%		34	%		37	%		31	%		38	%		28	%								36	%		33	%

Number of employees		13,524			13,522			13,318			13,645			14,077			13,875			3	%		(1	%)

(1)	Income before taxes and cumulative effect of accounting change as a % of net revenues.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

The following (pages 18 - 21) present a reconciliation for certain information disclosed on pages 13, 14 and 17.

The data is presented on both a "managed" loan basis and as reported under generally accepted accounting principles ("owned" loan basis).

Managed loan data assume that the Company's securitized loan receivables have not been sold and presents the results of securitized loan

receivables in the same manner as the Company's owned loans. The Company operates its Credit Services business and analyzes its financial

performance on a managed basis. Accordingly, underwriting and servicing standards are comparable for both owned and securitized loans.

The Company believes that managed loan information is useful to investors because it provides information regarding the quality of loan

origination and credit performance of the entire managed portfolio and allows investors to understand the related credit risks inherent in owned

loans and retained interests in securitizations. In addition, investors often request information on a managed basis, which provides a more

meaningful comparison to industry competitors.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data⁽¹⁾

(unaudited, dollars in millions)

	Quarter Ended May 31, 2005
											Delinquency Rate
General Purpose Credit Card Loans:		Period End		Average	Interest Yield		Interest Spread		Net Charge-offs			30 Days		90 Days
Owned	$	19,385	$	18,753	10.56	%	6.50	%	4.62	%		3.48	%	1.64	%
Securitized		27,460		28,393	12.43	%	8.90	%	5.15	%		4.19	%	1.97	%
Managed	$	46,845	$	47,146	11.69	%	7.96	%	4.94	%		3.90	%	1.83	%

	Quarter Ended Feb 28, 2005
											Delinquency Rate
General Purpose Credit Card Loans:		Period End		Average	Interest Yield		Interest Spread		Net Charge-offs			30 Days		90 Days
Owned	$	18,908	$	19,210	9.07	%	5.21	%	4.62	%		3.75	%	1.81	%
Securitized		28,862		29,720	12.63	%	9.44	%	5.43	%		4.55	%	2.20	%
Managed	$	47,770	$	48,930	11.23	%	7.79	%	5.11	%		4.24	%	2.05	%

(1)	The tables provide a reconciliation of certain managed and owned basis statistical data (period-end and average loan balances,
	interest yield, interest spread, net charge-off rates, and 30- and 90-day delinquency rates) for the periods indicated.
Notes:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Credit Services Reconciliation of General Purpose Credit Card Loan Data ⁽¹⁾

(unaudited, dollars in millions)

	Quarter Ended Nov 30, 2004
											Delinquency Rate
General Purpose Credit Card Loans:		Period End		Average	Interest Yield		Interest Spread		Net Charge-offs			30 Days		90 Days
Owned	$	19,724	$	18,579	9.69	%	5.85	%	5.01	%		4.08	%	1.97	%
Securitized		28,537		28,511	12.82	%	10.06	%	5.74	%		4.87	%	2.34	%
Managed	$	48,261	$	47,090	11.59	%	8.43	%	5.45	%		4.55	%	2.18	%

	Quarter Ended Aug 31, 2004
											Delinquency Rate
General Purpose Credit Card Loans:		Period End		Average	Interest Yield		Interest Spread		Net Charge-offs			30 Days		90 Days
Owned	$	18,471	$	17,787	10.45	%	6.54	%	5.36	%		4.35	%	2.01	%
Securitized		28,655		29,086	12.44	%	10.15	%	6.01	%		5.10	%	2.35	%
Managed	$	47,126	$	46,873	11.69	%	8.83	%	5.76	%		4.81	%	2.22	%

	Quarter Ended May 31, 2004
											Delinquency Rate
General Purpose Credit Card Loans:		Period End		Average	Interest Yield		Interest Spread		Net Charge-offs			30 Days		90 Days
Owned	$	17,506	$	16,202	9.93	%	5.67	%	6.02	%		4.37	%	2.15	%
Securitized		29,322		30,727	12.91	%	10.77	%	6.73	%		5.18	%	2.55	%
Managed	$	46,828	$	46,929	11.88	%	9.06	%	6.48	%		4.88	%	2.40	%

	Quarter Ended Feb 29, 2004
											Delinquency Rate
General Purpose Credit Card Loans:		Period End		Average	Interest Yield		Interest Spread		Net Charge-offs			30 Days		90 Days
Owned	$	15,850	$	17,880	10.13	%	6.08	%	5.81	%		5.17	%	2.54	%
Securitized		31,486		30,787	13.40	%	11.20	%	6.60	%		6.11	%	3.01	%
Managed	$	47,336	$	48,667	12.20	%	9.35	%	6.31	%		5.80	%	2.86	%

(1)	The tables provide a reconciliation of certain managed and owned basis statistical data (period-end and average loan balances,
	interest yield, interest spread, net charge-off rates, and 30- and 90-day delinquency rates) for the periods indicated.
Notes:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Year to Date Credit Services Reconciliation of General Purpose Credit Card Loan Data⁽¹⁾

(unaudited, dollars in millions)

	Six Months Ended May 31, 2005
														Delinquency Rate
General Purpose Credit Card Loans:	Period End		Average		Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	19,385	$	18,979		9.81	%		5.85	%		4.62	%		3.48	%		1.64	%
Securitized		27,460		29,049		12.53	%		9.17	%		5.30	%		4.19	%		1.97	%
Managed	$	46,845	$	48,028		11.46	%		7.88	%		5.03	%		3.90	%		1.83	%

	Six Months Ended May 31, 2004
														Delinquency Rate
General Purpose Credit Card Loans:		Period End		Average		Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	17,506	$	17,036		10.03	%		5.88	%		5.91	%		4.37	%		2.15	%
Securitized		29,322		30,757		13.15	%		10.98	%		6.67	%		5.18	%		2.55	%
Managed	$	46,828	$	47,793		12.04	%		9.21	%		6.40	%		4.88	%		2.40	%

(1)	The tables provide a reconciliation of certain managed and owned basis statistical data (period-end and average loan balances, interest yield,
	interest spread, net charge-off rates, and 30- and 90-day delinquency rates) for the periods indicated.
Notes:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Quarterly Reconciliation of Managed Income Statement Data ⁽¹⁾

(unaudited, dollars in millions)

	Quarter Ended																		Six Months Ended
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005			May 31, 2004			May 31, 2005

Merchant and cardmember and other fees:
Owned	$	337		$	306		$	349		$	326		$	308		$	318		$	643		$	626
Securitization adjustment		182			161			150			159			171			168			343			339
Managed	$	519		$	467		$	499		$	485		$	479		$	486		$	986		$	965

Servicing fees:
Owned	$	572		$	485		$	459		$	477		$	526		$	413		$	1,057		$	939
Securitization adjustment		(572	)		(485	)		(459	)		(477	)		(526	)		(413	)		(1,057	)		(939	)
Managed	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

Other:
Owned	$	5		$	16		$	(5	)	$	1		$	2		$	(2	)	$	21		$	-
Securitization adjustment		30			0			(5	)		8			57			(36	)		30			21
Managed	$	35		$	16		$	(10	)	$	9		$	59		$	(38	)	$	51		$	21

Interest revenue:
Owned	$	480		$	435		$	496		$	482		$	468		$	544		$	915		$	1,012
Securitization adjustment		1,044			1,015			926			925			948			916			2,059			1,864
Managed	$	1,524		$	1,450		$	1,422		$	1,407		$	1,416		$	1,460		$	2,974		$	2,876

Interest expense:
Owned	$	174		$	163		$	162		$	163		$	173		$	186		$	337		$	359
Securitization adjustment		176			174			175			205			247			269			350			516
Managed	$	350		$	337		$	337		$	368		$	420		$	455		$	687		$	875

Provision for consumer loan losses:
Owned	$	262		$	200		$	240		$	223		$	135		$	209		$	462		$	344
Securitization adjustment		508			517			437			410			403			366			1,025			769
Managed	$	770		$	717		$	677		$	633		$	538		$	575		$	1,487		$	1,113

(1)	The tables provide a reconciliation of certain managed and owned basis income statement data
	(merchant and cardmember fees, servicing fees, other revenue, interest revenue, interest expense
	and provision for consumer loan losses) for the periods indicated.
Notes:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

The following (page 22) presents a reconciliation for adjusted assets.

Balance sheet leverage ratios are one indicator of capital adequacy when viewed in the context of a company's

overall liquidity and capital policies. The Company views the adjusted leverage ratio as a more relevant measure of

financial risk when comparing financial services firms and evaluating leverage trends. Adjusted assets exclude

certain self-funded assets considered to have minimal market, credit and/or liquidity risk that are generally

attributable to matched book and securities lending businesses as measured by aggregate resale agreements

and securities borrowed less non-derivative short positions. In addition, the adjusted leverage ratio reflects

the deduction from shareholders' equity of the amount of equity used to support goodwill and intangible assets,

as the Company does not view this amount of equity as available to support its risk capital needs.

MORGAN STANLEY

Quarterly Reconciliation of Adjusted Assets

(unaudited, dollars in millions, except ratios)

	Quarter Ended
	Feb 29, 2004			May 31, 2004			Aug 31, 2004			Nov 30, 2004			Feb 28, 2005			May 31, 2005

Total assets ⁽¹⁾	$	656,898		$	729,501		$	745,033		$	745,513		$	802,210		$	818,711

Less: Securities purchased under agreements to resell		(76,755	)		(96,042	)		(92,816	)		(123,041	)		(143,462	)		(145,579)
Securities borrowed		(179,288	)		(202,412	)		(202,863	)		(208,349	)		(207,985	)		(228,454)
Add: Financial instruments sold, not yet purchased ⁽¹⁾		129,711			130,440			132,618			111,315			119,913			131,901
Less: Derivative contracts sold, not yet purchased ⁽¹⁾		(43,857	)		(41,615	)		(39,425	)		(43,540	)		(37,389	)		(39,835)
Subtotal		486,709			519,872			542,547			481,898			533,287			536,744
Less: Segregated customer cash and securities balances		(16,935	)		(29,918	)		(35,194	)		(26,534	)		(26,461	)		(36,539)
Assets recorded under certain provisions of SFAS No.140 and FIN 46		(39,756	)		(40,279	)		(40,057	)		(44,895	)		(57,042	)		(57,488)
Goodwill and intangible assets		(1,548	)		(1,540	)		(2,191	)		(2,199	)		(2,563	)		(2,528)

Adjusted assets	$	428,470		$	448,135		$	465,105		$	408,270		$	447,221		$	440,189

Shareholders' equity	$	26,064		$	27,002		$	27,420		$	28,206		$	28,495		$	28,330
Junior subordinated debt issued to capital trusts ⁽²⁾		2,897			2,897			2,897			2,897			2,833			2,894
Subtotal		28,961			29,899			30,317			31,103			31,328			31,224
Less: Goodwill and intangible assets		(1,548	)		(1,540	)		(2,191	)		(2,199	)		(2,563	)		(2,528)
Tangible shareholders' equity	$	27,413		$	28,359		$	28,126		$	28,904		$	28,765		$	28,696

Leverage ratio⁽³⁾		24.0x			25.7x			26.5x			25.8x			27.9x			28.5x

Adjusted leverage ratio ⁽⁴⁾		15.6x			15.8x			16.5x			14.1x			15.5x			15.3x

(1)	Effective December 1, 2004, the Company offsets cash paid or received pursuant to credit support agreements ("cash collateral netting")
	against its OTC derivatives inventory. Total assets as of November 30, 2004 have been restated to reflect cash collateral netting.
	Prior periods presented do not reflect such cash collateral netting.
(2)	The Company views the junior subordinated debt issued to capital trusts as a component of its equity capital base
	given the inherent characteristics of the securities. These characteristics include the long dated nature (final maturity
	at issuance of thirty years extendable at the Company's option by a further nineteen years), the Company's ability to
	defer coupon interest for up to 20 consecutive quarters, and the subordinated nature of the obligations in the capital
	structure. The Company also receives rating agency equity credit for these securities.
(3)	Leverage ratio equals total assets divided by tangible shareholders' equity.
(4)	Adjusted leverage ratio equals adjusted total assets divided by tangible shareholders' equity.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 23.

MORGAN STANLEY

Legal Notice

This Financial Supplement contains financial, statistical and business-related information, as well as business and segment trends.

The information should be read in conjunction with the Company's second quarter earnings press release issued June 22, 2005.

Morgan Stanley (MS) 8-KMorgan Stanley Reports $928 Million in Second Quarter Earnings