Morgan Stanley 8K Reports Record Second Quarter Results | MS 20 Jun 07

MORGAN STANLEY
Financial Supplement - 2Q 2007
Table of Contents

MORGAN STANLEY

Quarterly Financial Summary ⁽¹⁾

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change
Net revenues
Institutional Securities	$	5,437		$	5,305		$	4,894		$	5,438		$	7,124		$	7,393			39	%		4	%	$	10,742		$	14,517			35	%
Global Wealth Management Group		1,289			1,400			1,371			1,452			1,511			1,642			17	%		9	%		2,689			3,153			17	%
Asset Management		737			898			845			973			1,368			1,509			68	%		10	%		1,635			2,877			76	%
Discover		1,089			1,191			1,047			963			1,025			1,035			(13	%)		1	%		2,280			2,060			(10	%)
Intersegment Eliminations		(49	)		(90	)		(46	)		(51	)		(47	)		(56	)		38	%		(19	%)		(139	)		(103	)		26	%
Consolidated net revenues	$	8,503		$	8,704		$	8,111		$	8,775		$	10,981		$	11,523			32	%		5	%	$	17,207		$	22,504			31	%

Income before taxes ⁽²⁾
Institutional Securities	$	1,721		$	1,910		$	1,932		$	2,218		$	2,860		$	2,965			55	%		4	%	$	3,631		$	5,825			60	%
Global Wealth Management Group		24			161			166			175			229			269			67	%		17	%		185			498			169	%
Asset Management		168			264			158			270			381			306			16	%		(20	%)		432			687			59	%
Discover		479			541			368			199			372			333			(38	%)		(10	%)		1,020			705			(31	%)
Intersegment Eliminations		19			(13	)		15			12			5			1			108	%		(80	%)		6			6			--
Consolidated income before taxes	$	2,411		$	2,863		$	2,639		$	2,874		$	3,847		$	3,874			35	%		1	%	$	5,274		$	7,721			46	%


Earnings per basic share: ⁽³⁾
Income from continuing operations	$	1.57		$	1.81		$	1.83		$	2.19		$	2.52		$	2.57			42	%		2	%	$	3.37		$	5.09			51	%
Discontinued operations	$	(0.03	)	$	0.01		$	-		$	-		$	0.11		$	-			*			*		$	(0.01	)	$	0.12			*
Earnings per basic share	$	1.54		$	1.82		$	1.83		$	2.19		$	2.63		$	2.57			41	%		(2	%)	$	3.36		$	5.21			55	%

Earnings per diluted share: ⁽³⁾
Income from continuing operations	$	1.51		$	1.74		$	1.75		$	2.08		$	2.40		$	2.45			41	%		2	%	$	3.25	��	$	4.86			50	%
Discontinued operations	$	(0.03	)	$	0.01		$	-		$	-		$	0.11		$	-			*			*		$	(0.02	)	$	0.10			*
Earnings per diluted share	$	1.48		$	1.75		$	1.75		$	2.08		$	2.51		$	2.45			40	%		(2	%)	$	3.23		$	4.96			54	%

Average common shares outstanding
Basic		1,020,041,181			1,013,241,715			1,010,468,365			997,892,310			1,009,186,993			996,544,761									1,016,756,096			1,002,894,369
Diluted		1,061,764,798			1,054,733,745			1,055,664,392			1,052,831,345			1,057,912,545			1,045,643,087									1,056,493,761			1,051,684,753
Period end common shares outstanding		1,070,407,513			1,071,786,172			1,058,664,567			1,048,877,006			1,061,644,077			1,051,690,047									1,071,786,172			1,051,690,047

Return on average common equity
from continuing operations		21.9	%		23.7	%		22.8	%		26.1	%		28.8	%		27.5	%								22.8	%		28.2	%
Return on average common equity		21.3	%		23.7	%		22.7	%		26.0	%		29.9	%		27.5	%								22.5	%		28.7	%

(1)	All periods have been restated to reflect the transfer of the real estate investing business from Institutional Securities to Asset Management. Real estate advisory and certain passive limited partnership interests remain in Institutional Securities.
(2)	Represents consolidated income from continuing operations before gain/(loss) from unconsolidated investees, taxes and gain/(loss) from discontinued operations.
(3)	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.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

Quarterly Consolidated Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change

Investment banking	$	982		$	1,132		$	1,138		$	1,503		$	1,227		$	1,913			69	%		56	%	$	2,114		$	3,140			49	%
Principal transactions:
Trading		3,086			3,559			2,843			2,317			4,158			4,838			36	%		16	%		6,645			8,996			35	%
Investments		300			629			300			578			880			1,004			60	%		14	%		929			1,884			103	%
Commissions		920			994			880			976			1,005			1,123			13	%		12	%		1,914			2,128			11	%
Fees:
Asset management, distribution and admin.		1,268			1,321			1,312			1,337			1,479			1,596			21	%		8	%		2,589			3,075			19	%
Merchant, cardmember and other		289			277			312			289			297			261			(6	%)		(12	%)		566			558			(1	%)
Servicing and securitization income		596			651			565			526			556			643			(1	%)		16	%		1,247			1,199			(4	%)
Interest and dividends		10,544			10,111			12,664			11,880			14,814			16,066			59	%		8	%		20,655			30,880			50	%
Other		134			125			132			228			245			290			132	%		18	%		259			535			107	%
Total revenues		18,119			18,799			20,146			19,634			24,661			27,734			48	%		12	%		36,918			52,395			42	%
Interest expense		9,461			9,965			11,803			10,620			13,485			16,007			61	%		19	%		19,426			29,492			52	%
Provision for consumer loan losses		155			130			232			239			195			204			57	%		5	%		285			399			40	%
Net revenues		8,503			8,704			8,111			8,775			10,981			11,523			32	%		5	%		17,207			22,504			31	%

Compensation and benefits		4,242			3,802			3,305			3,506			4,992			5,218			37	%		5	%		8,044			10,210			27	%
Occupancy and equipment		230			236			253			274			280			301			28	%		8	%		466			581			25	%
Brokerage, clearing and exchange fees		292			340			339			334			361			366			8	%		1	%		632			727			15	%
Information processing and communications		346			364			369			384			369			381			5	%		3	%		710			750			6	%
Marketing and business development		238			297			291			418			294			340			14	%		16	%		535			634			19	%
Professional services		433			537			548			724			499			626			17	%		25	%		970			1,125			16	%
Other		311			265			367			261			339			417			57	%		23	%		576			756			31	%
Total non-interest expenses		6,092			5,841			5,472			5,901			7,134			7,649			31	%		7	%		11,933			14,783			24	%

Income from continuing operations before gain/(loss)
from unconsolidated investees and taxes		2,411			2,863			2,639			2,874			3,847			3,874			35	%		1	%		5,274			7,721			46	%
Gain/(loss) from unconsolidated investees		(20	)		23			20			(65	)		(27	)		(21	)		(191	%)		22	%		3			(48	)		*
Provision for income taxes		789			1,058			811			607			1,261			1,271			20	%		1	%		1,847			2,532			37	%
Income from continuing operations		1,602			1,828			1,848			2,202			2,559			2,582			41	%		1	%		3,430			5,141			50	%
Discontinued operations ⁽¹⁾
Gain/(loss) from discontinued operations		(48	)		21			5			6			174			0			*			*			(26	)		174			*
Income tax benefit/(provision)		20			(8	)		(2	)		(2	)		(61	)		0			*			*			11			(61	)		*
Gain/(loss) from discontinued operations		(28	)		13			3			4			113			0			*			*			(15	)		113			*
Net income	$	1,574		$	1,841		$	1,851		$	2,206		$	2,672		$	2,582			40	%		(3	%)	$	3,415		$	5,254			54	%
Preferred stock dividend requirements	$	-		$	-		$	-		$	19		$	17		$	17			*			--		$	-		$	34			*
Earnings applicable to common shareholders	$	1,574		$	1,841		$	1,851		$	2,187		$	2,655		$	2,565			39	%		(3	%)	$	3,415		$	5,220			53	%

Return on average common equity
from continuing operations		21.9	%		23.7	%		22.8	%		26.1	%		28.8	%		27.5	%								22.8	%		28.2	%
Return on average common equity		21.3	%		23.7	%		22.7	%		26.0	%		29.9	%		27.5	%								22.5	%		28.7	%
Pre-tax profit margin⁽²⁾		28	%		33	%		33	%		33	%		35	%		34	%								31	%		34	%
Compensation and benefits as a % of net revenues		50	%		44	%		41	%		40	%		46	%		45	%								47	%		45	%

(1)	Gain/(loss) from discontinued operations for the quarter ended Feb 28, 2007 reflects the operating results for Quilter Holdings Limited and the gain related to the sale of this business.
(2)	Income before taxes, excluding gain/(loss) 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 25.

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited)

	Quarter Ended												Percentage Change From:
	Feb 28, 2006		May 31, 2006		Aug 31, 2006		Nov 30, 2006		Feb 28, 2007(1)		May 31, 2007		2Q07 vs. 2Q06			2Q07 vs. 1Q07
Morgan Stanley
Total assets (millions)	$	959,950	$	1,027,419	$	1,029,354	$	1,121,192	$	1,182,061	$	1,200,609		17	%		2	%
Adjusted assets (millions) ⁽²⁾	$	517,329	$	534,034	$	544,167	$	639,079	$	654,999	$	706,304		32	%		8	%
Period end common shares outstanding (millions)		1,070.4		1,071.8		1,058.7		1,048.9		1,061.6		1,051.7		(2	%)		(1	%)
Book value per common share	$	28.12	$	29.97	$	31.24	$	32.67	$	34.71	$	36.52		22	%		5	%
Shareholders' equity (millions)⁽³⁾	$	33,886	$	35,902	$	37,956	$	40,248	$	42,839	$	44,385		24	%		4	%
Total capital (millions) ⁽⁴⁾	$	134,366	$	145,849	$	149,956	$	162,134	$	177,270	$	187,250		28	%		6	%
Worldwide employees		53,870		53,163		54,349		56,310		57,845		58,333		10	%		1	%


Average Daily 95%/One-Day Value-at-Risk ("VaR") ⁽⁵⁾
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread	$	35	$	39	$	33	$	34	$	39	$	40
Equity price	$	25	$	29	$	26	$	32	$	45	$	44
Foreign exchange rate	$	9	$	9	$	7	$	12	$	15	$	16
Commodity price	$	31	$	28	$	33	$	30	$	40	$	34

Trading VaR	$	58	$	63	$	56	$	61	$	90	$	81
Non - trading VaR	$	20	$	26	$	24	$	18	$	14	$	17
Aggregate trading and non - trading VaR	$	65	$	70	$	66	$	67	$	92	$	87

(1)	Effective December 1, 2006, the Company elected early adoption of SFAS No. 157, "Fair Value Measurements", and SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115." As a result of the adoption of SFAS No. 157 and SFAS No. 159, the Company recorded an after-tax cumulative effect adjustment of $186 million as an increase to the opening balance of retained earnings as of December 1, 2006.
(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 23 for further information.
(3)	Includes common equity, preferred equity and junior subordinated debt issued to capital trusts.
(4)	Includes common equity, preferred equity, junior subordinated debt issued to capital trusts, capital units and the non-current portion of long-term debt.
(5)	95%/One-Day VaR represents the loss amount that one would not expect to exceed, on average, more than five times every one hundred trading days in the Company's trading positions if the portfolio were held constant for a one day period. 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 2006.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited)

	Quarter Ended														Six Months Ended
	Feb 28, 2007 (1)							May 31, 2007							May 31, 2007 (1)
	Average tier 1 equity (billions) (2)		Average common equity (billions) (2)		Return on average common equity			Average tier 1 equity (billions) (2)		Average common equity (billions) (2)		Return on average common equity			Average tier 1 equity (billions) (2)		Average common equity (billions) (2)		Return on average common equity
Institutional Securities	$	21.0	$	20.0		39	%	$	23.7	$	22.8		35	%	$	22.4	$	21.4		37	%

Global Wealth Management Group		1.5		1.7		33	%		1.5		1.6		41	%		1.5		1.7		37	%

Asset Management		2.3		3.0		31	%		2.7		3.4		23	%		2.5		3.2		27	%

Securities Business		24.8		24.7		37	%		27.9		27.8		34	%		26.4		26.3		36	%

Discover		4.6		5.5		17	%		4.5		5.3		16	%		4.6		5.4		16	%

Capital surplus (unallocated)		5.1		5.1					4.2		4.2					4.6		4.6

Total - continuing operations		34.5		35.3		29	%		36.6		37.3		27	%		35.6		36.3		28	%

Discontinued operations		0.0		0.2					0.0		0.1					0.0		0.1

Firm	$	34.5	$	35.5		30	%	$	36.6	$	37.4		27	%	$	35.6	$	36.4		29	%

	Quarter Ended																				Six Months Ended
	Feb 28, 2006					May 31, 2006					Aug 31, 2006					Nov 30, 2006					May 31, 2006
	Average common equity (billions)		Return on average common equity			Average common equity (billions)		Return on average common equity			Average common equity (billions)		Return on average common equity			Average common equity (billions)		Return on average common equity			Average common equity (billions)(2)		Return on average common equity
Institutional Securities	$	16.0		29	%	$	17.9		28	%	$	18.6		30	%	$	19.4		35	%	$	16.9		28	%

Global Wealth Management Group		3.3		2	%		3.1		14	%		2.8		16	%		2.8		18	%		3.2		8	%

Asset Management		2.2		18	%		2.3		28	%		2.5		15	%		2.7		23	%		2.2		23	%

Securities Business		21.5		24	%		23.3		26	%		23.9		27	%		24.9		32	%		22.3		25	%

Discover		4.6		26	%		5.0		27	%		5.1		19	%		5.1		15	%		4.8		27	%

Capital surplus (unallocated)		3.2					2.6					3.4					3.5					3.0

Total - continuing operations		29.3		22	%		30.9		24	%		32.4		23	%		33.5		26	%		30.1		23	%

Discontinued operations		0.2					0.2					0.2					0.2					0.2

Firm	$	29.5		21	%	$	31.1		24	%	$	32.6		23	%	$	33.7		26	%	$	30.3		23	%

(1)	For the quarter ended Feb 28, 2007, the Company had reassessed the amount of capital required to support the market risks and credit risks in its Global Wealth Management business.
(2)	The Company uses an economic capital model to determine the amount of equity capital needed to support the risk of its business activities and to ensure that the Company remains adequately capitalized. Economic capital is defined as the amount of capital needed to run the business through the business cycle and satisfy the requirements of regulators, rating agencies and the market. The Company's methodology is based on a going concern approach that assigns economic capital to each segment based on regulatory capital usage plus additional capital for stress losses, goodwill and principal investment risk. The economic capital model and allocation methodology may be enhanced over time in response to changes in the business and regulatory environment. Beginning in 1Q07, economic capital is met by regulatory Tier 1 equity (including common shareholders' equity, certain preferred stock, eligible hybrid capital instruments and deductions of goodwill and certain intangibles and deferred tax assets), subject to regulatory limits. This enhancement to the Company's equity capital model and related disclosures has been made on a prospective basis.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation. Additionally, the average common equity related to Quilter Holdings Limited has been reclassed to discontinued operations in all periods.
	Refer to Legal Notice page 25.

MORGAN STANLEY

Quarterly Institutional Securities Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended⁽¹⁾																		Percentage Change From:						Six Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007 (2)			May 31, 2007 (2)			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007 (2)			Percentage Change
Investment banking	$	892		$	1,035		$	992		$	1,309		$	1,032		$	1,704			65	%		65	%	$	1,927		$	2,736			42	%
Principal transactions:
Tading		2,963			3,442			2,728			2,193			4,029			4,705			37	%		17	%		6,405			8,734			36	%
Investments		243			389			114			335			350			396			2	%		13	%		632			746			18	%
Commissions		610			693			630			673			691			766			11	%		11	%		1,303			1,457			12	%
Asset management, distribution and admin. fees		8			29			19			17			25			25			(14	%)		--			37			50			35	%
Servicing income		0			0			0			0			35			42			*			20	%		0			77			*
Interest and dividends		9,788			9,318			11,823			11,044			13,960			15,132			62	%		8	%		19,106			29,092			52	%
Other		95			86			91			172			168			227			164	%		35	%		181			395			118	%
Total revenues		14,599			14,992			16,397			15,743			20,290			22,997			53	%		13	%		29,591			43,287			46	%
Interest expense		9,162			9,687			11,503			10,305			13,166			15,604			61	%		19	%		18,849			28,770			53	%
Net revenues		5,437			5,305			4,894			5,438			7,124			7,393			39	%		4	%		10,742			14,517			35	%

Total non-interest expenses		3,716			3,395			2,962			3,220			4,264			4,428			30	%		4	%		7,111			8,692			22	%

Income from continuing operations before gain/(loss) from unconsolidated investees and taxes		1,721			1,910			1,932			2,218			2,860			2,965			55	%		4	%		3,631			5,825			60	%
Gain/(loss) from unconsolidated investees		(19	)		23			21			(64	)		(26	)		(20	)		(187	%)		23	%		4			(46	)		*
Income before taxes		1,702			1,933			1,953			2,154			2,834			2,945			52	%		4	%		3,635			5,779			59	%
Provision for income taxes		528			703			562			439			884			937			33	%		6	%		1,231			1,821			48	%
Income from continuing operations ⁽³⁾	$	1,174		$	1,230		$	1,391		$	1,715		$	1,950		$	2,008			63	%		3	%	$	2,404		$	3,958			65	%

Return on average common equity ⁽⁴⁾		29	%		28	%		30	%		35	%		39	%		35	%								28	%		37	%
Pre-tax profit margin ⁽⁵⁾		32	%		36	%		40	%		41	%		40	%		40	%								34	%		40	%

(1)	All periods have been restated to reflect the transfer of the real estate investing business from Institutional Securities to Asset Management. Real estate advisory and certain passive
	limited partnership interests remain in Institutional Securities.
(2)	Principal transactions investments revenue reflects net gain/(loss) on investments marked at fair value. The related investment asset balance for the quarters
	ended Feb 28, 2007 and May 31, 2007 are $4.4 billion and $5.9 billion, respectively.
(3)	Excludes gain/(loss) from discontinued operations.
(4)	Refer to page 4 for the allocation of average common equity.
(5)	Income before taxes, excluding gain/(loss) 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 25.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Institutional Securities

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change

Investment Banking
Advisory revenue	$	344		$	365		$	444		$	600		$	373		$	725			99	%		94	%	$	709		$	1,098			55	%
Underwriting revenue
Equity		197			371			237			254			300			493			33	%		64	%		568			793			40	%
Fixed income		351			299			311			455			359			486			63	%		35	%		650			845			30	%
Total underwriting revenue	$	548		$	670		$	548		$	709		$	659		$	979			46	%		49	%	$	1,218		$	1,638			34	%

Total investment banking revenue	$	892		$	1,035		$	992		$	1,309		$	1,032		$	1,704			65	%		65	%	$	1,927		$	2,736			42	%

Sales & Trading ⁽¹⁾
Equity	$	1,656		$	1,669		$	1,520		$	1,436		$	2,209		$	2,216			33	%		--		$	3,325		$	4,425			33	%
Fixed income		2,651			2,131			2,257			2,216			3,393			2,859			34	%		(16	%)		4,782			6,252			31	%
Other		(108	)		(34	)		(99	)		(47	)		(88	)		(76	)		(124	%)		14	%		(142	)		(164	)		(15	%)
Total sales & trading net revenue	$	4,199		$	3,766		$	3,678		$	3,605		$	5,514		$	4,999			33	%		(9	%)	$	7,965		$	10,513			32	%

	Fiscal View																		Calendar View
	Quarter Ended (2)																		Five Months Ended (2)
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			May 31, 2006			May 31, 2007

Mergers and acquisitions announced transactions
Morgan Stanley global market volume (billions)	$	301.2		$	178.8		$	167.4		$	373.9		$	316.8		$	484.7		$	314.5		$	698.1
Market share		42.1	%		20.6	%		23.1	%		36.9	%		33.5	%		31.3	%		25.0	%		32.7	%
Rank		2			3			4			1			2			4			3			2

Mergers and acquisitions completed transactions
Morgan Stanley global market volume (billions)	$	176.8		$	182.3		$	172.6		$	227.3		$	181.7		$	338.9		$	290.1		$	488.8
Market share		27.5	%		29.5	%		25.9	%		32.3	%		22.2	%		42.7	%		28.1	%		38.5	%
Rank		3			2			5			1			3			1			2			1

Global equity and related issues
Morgan Stanley global market volume (billions)	$	10.8		$	19.2		$	10.5		$	14.9		$	13.9		$	20.0		$	24.0		$	26.0
Market share		7.4	%		9.3	%		8.5	%		6.6	%		7.6	%		8.6	%		8.4	%		7.7	%
Rank		4			2			4			6			4			3			3			5

Global IPO's
Morgan Stanley global market volume (billions)	$	2.7		$	7.6		$	5.2		$	6.1		$	4.0		$	6.3		$	9.0		$	8.0
Market Share		6.8	%		11.0	%		11.1	%		6.3	%		7.6	%		8.0	%		9.8	%		7.7	%
Rank		5			3			1			6			3			4			2			3

Global debt
Morgan Stanley global market volume (billions)	$	96.1		$	102.3		$	89.2		$	111.5		$	100.5		$	133.4		$	178.3		$	203.1
Market share		5.9	%		5.9	%		5.6	%		5.3	%		5.6	%		6.6	%		6.2	%		6.2	%
Rank		5			5			7			7			5			3			5			5

(1)	Includes principal transactions trading, commissions and net interest revenue. Equity and Fixed income sales and trading net revenue have been restated to include certain
	funding costs not previously allocated to those businesses. Other sales and trading net revenue primarily includes results related to Investment Banking and other activities.
(2)	Source: Thomson Financial, data as of June 7, 2007.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Institutional Securities

(unaudited, dollars in billions)

	Quarter Ended																		Percentage Change From:
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07


Corporate funded loans
Investment grade	$	5.6		$	6.2		$	7.4		$	6.4		$	6.2		$	13.7			121	%		121	%
Non-investment grade		2.9			2.9			5.4			3.4			3.9			4.9			69	%		26	%
Total corporate funded loans	$	8.5		$	9.1		$	12.8		$	9.8		$	10.1		$	18.6			104	%		84	%

Corporate lending commitments
Investment grade	$	29.2		$	27.1		$	26.2		$	32.2		$	30.3		$	39.3			45	%		30	%
Non-investment grade		5.3			8.2			18.4			17.0			22.9			31.5			*			38	%
Total corporate lending commitments	$	34.5		$	35.3		$	44.6		$	49.2		$	53.2		$	70.8			101	%		33	%

Corporate funded loans plus lending commitments
Investment grade	$	34.8		$	33.3		$	33.6		$	38.6		$	36.5		$	53.0			59	%		45	%
Non-investment grade	$	8.2		$	11.1		$	23.8		$	20.4		$	26.8		$	36.4			*			36	%
% investment grade		81	%		75	%		59	%		65	%		58	%		59	%
% non-investment grade		19	%		25	%		42	%		35	%		42	%		41	%

Total corporate funded loans and lending commitments	$	43.0		$	44.4		$	57.4		$	59.0		$	63.3		$	89.4			101	%		41	%
Hedges ⁽¹⁾	$	17.7		$	23.8		$	24.3		$	26.5		$	29.9		$	34.4			45	%		15	%
Total corporate funded loans and lending commitments net of hedges	$	25.3		$	20.6		$	33.1		$	32.5		$	33.4		$	55.0			167	%		65	%

(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 25.

MORGAN STANLEY

Quarterly Global Wealth Management Group Income Statement Information

(unaudited, dollars in millions)

		Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
		Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change
Investment banking		$	67		$	95		$	120		$	146		$	166		$	164			73	%		(1	%)	$	162		$	330			104	%
Principal transactions:
	Trading		125			120			117			125			129			133			11	%		3	%		245			262			7	%
	Investments		1			27			16			13			(2	)		20			(26	%)		*			28			18			(36	%)
Commissions			310			302			252			304			315			357			18	%		13	%		612			672			10	%
Asset management, distribution and admin fees			667			691			704			695			729			769			11	%		5	%		1,358			1,498			10	%
Interest and dividends			203			243			265			293			274			298			23	%		9	%		446			572			28	%
Other			31			36			26			37			38			40			11	%		5	%		67			78			16	%
	Total revenues		1,404			1,514			1,500			1,613			1,649			1,781			18	%		8	%		2,918			3,430			18	%
Interest expense			115			114			129			161			138			139			22	%		1	%		229			277			21	%
	Net revenues		1,289			1,400			1,371			1,452			1,511			1,642			17	%		9	%		2,689			3,153			17	%

Total non-interest expenses			1,265			1,239			1,205			1,277			1,282			1,373			11	%		7	%		2,504			2,655			6	%
Income before taxes			24			161			166			175			229			269			67	%		17	%		185			498			169	%
Provision for income taxes			9			54			55			54			88			104			93	%		18	%		63			192			*
Income from continuing operations		$	15		$	107		$	111		$	121		$	141		$	165			54	%		17	%	$	122		$	306			151	%

Return on average common equity ⁽¹⁾			2	%		14	%		16	%		18	%		33	%		41	%								8	%		37	%
Pre-tax profit margin ⁽²⁾			2	%		12	%		12	%		12	%		15	%		16	%								7	%		16	%

(1)	Refer to page 4 for the allocation of average common equity.
(2)	Income before taxes 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 25.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Global Wealth Management Group

(unaudited)

	Quarter Ended																		Percentage Change From:
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07


Global representatives		8,913			8,091			7,982			7,944			7,993			8,137			1	%		2	%

Annualized revenue per global
representative (thousands)⁽¹⁾	$	562		$	659		$	682		$	729		$	758		$	814			24	%		7	%

Assets by client segment (billions)
$10m or more		166			170			176			199			210			223			31	%		6	%
$1m - $10m		220			220			229			243			248			268			22	%		8	%
Subtotal -> $1m		386			390			405			442			458			491			26	%		7	%
$100k - $1m		177			180			180			177			174			180			--			3	%
< $100k		32			29			28			27			26			24			(17	%)		(8	%)
Client assets excluding corporate/other		595			599			613			646			658			695			16	%		6	%
Corporate / other		29			30			29			30			32			33			10	%		3	%
Total client assets (billions)	$	624		$	629		$	642		$	676		$	690		$	728			16	%		6	%

% of assets by client segment> $1m ⁽²⁾		65	%		65	%		66	%		68	%		70	%		71	%

Fee-based client account assets (billions) ⁽³⁾	$	173		$	180		$	183		$	195		$	202		$	210			17	%		4	%
Fee-based assets as a % of client assets		28	%		29	%		29	%		29	%		29	%		29	%


Bank deposit program (millions)	$	7,319		$	9,114		$	9,839		$	13,301		$	16,364		$	18,226			100	%		11	%

Client assets per global
representative (millions)⁽⁴⁾	$	70		$	78		$	80		$	85		$	86		$	89			14	%		3	%

Domestic retail net new assets (billions) ⁽⁵⁾	$	-		$	2.4		$	5.4		$	0.7		$	6.7		$	8.7			*			30	%

Domestic retail locations		484			473			460			453			451			453			(4	%)		--

(1)	Annualized revenue divided by average global representative headcount.
(2)	Excludes corporate/other assets.
(3)	Represents the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
(4)	Total client assets divided by period end global representative headcount.
(5)	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 25.

MORGAN STANLEY

Quarterly Asset Management Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended ⁽¹⁾																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007 (2)			May 31, 2007 (2)			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007 (2)			Change
Investment banking	$	23		$	35		$	26		$	54		$	31		$	61			74	%		97	%	$	58		$	92			59	%
Principal transactions:
Investments		56			213			170			230			532			588			176	%		11	%		269			1,120			*
Commissions		7			7			5			6			6			6			(14	%)		--			14			12			(14	%)
Asset management, distribution and admin fees		644			636			629			665			768			844			33	%		10	%		1,280			1,612			26	%
Interest and dividends		6			10			21			11			14			29			190	%		107	%		16			43			169	%
Other		6			5			5			10			34			18			*			(47	%)		11			52			*
Total revenues		742			906			856			976			1,385			1,546			71	%		12	%		1,648			2,931			78	%
Interest expense		5			8			11			3			17			37			*			118	%		13			54			*
Net revenues		737			898			845			973			1,368			1,509			68	%		10	%		1,635			2,877			76	%

Total non-interest expenses		569			634			687			703			987			1,203			90	%		22	%		1,203			2,190			82	%
Income before taxes		168			264			158			270			381			306			16	%		(20	%)		432			687			59	%
Provision for income taxes		67			103			63			110			149			107			4	%		(28	%)		170			256			51	%
Income from continuing operations	$	101		$	161		$	95		$	160		$	232		$	199			24	%		(14	%)	$	262		$	431			65	%

Return on average common equity ⁽³⁾		18	%		28	%		15	%		23	%		31	%		23	%								23	%		27	%
Pre-tax profit margin ⁽⁴⁾		23	%		29	%		19	%		28	%		28	%		20	%								26	%		24	%

(1)	All periods have been restated to reflect the transfer of the real estate investing business from Institutional Securities to Asset Management. Real estate advisory and certain passive
	limited partnership interests remain in Institutional Securities.
(2)	Principal transactions investments revenue reflects net gain/(loss) on investments marked at fair value including real estate funds,
	private equity funds and seed capital investments. The related investment asset balance for the quarters ended Feb 28, 2007
	and May 31, 2007 are $2.9 billion and $3.9 billion, respectively.
(3)	Refer to page 4 for the allocation of average common equity.
(4)	Income before taxes 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 25.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Asset Management

(unaudited, dollars in billions)

	Quarter Ended ⁽¹⁾																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change

Assets under management or supervision

Net flows by distribution channel
Americas Retail Morgan Stanley Brand	$	(3.1	)	$	(2.1	)	$	(2.2	)	$	(1.9	)	$	(2.0	)	$	0.1			105	%		105	%	$	(5.2	)	$	(1.9	)		63	%
Americas Retail Van Kampen Brand		(0.7	)		(0.4	)		(0.8	)		(0.1	)		0.0			0.0			*			--			(1.1	)		0.0			*
Americas Intermediary		1.7			4.0			1.5			1.0			1.0			1.8			(55	%)		80	%		5.7			2.8			(51	%)
U.S. Institutional		(4.7	)		(4.7	)		(2.7	)		(1.0	)		0.1			1.3			128	%		*			(9.4	)		1.4			115	%
Non- U.S.		1.2			2.5			0.3			2.5			4.7			4.1			64	%		(13	%)		3.7			8.8			138	%
Net flows excluding money markets	$	(5.6	)	$	(0.7	)	$	(3.9	)	$	0.5		$	3.8		$	7.3			*			92	%	$	(6.3	)	$	11.1			*
Money Market Net Flows
Institutional		4.0			(1.4	)		2.8			7.7			2.5			3.5			*			40	%		2.6			6.0			131	%
Retail		(5.7	)		(3.0	)		(0.7	)		(3.3	)		(1.8	)		(1.5	)		50	%		17	%		(8.7	)		(3.3	)		62	%
Total money market net flows	$	(1.7	)	$	(4.4	)	$	2.1		$	4.4		$	0.7		$	2.0			145	%		186	%	$	(6.1	)	$	2.7			144	%
Total net flows	$	(7.3	)	$	(5.1	)	$	(1.8	)	$	4.9		$	4.5		$	9.3			*			107	%	$	(12.4	)	$	13.8			*

Assets under management or supervision by distribution channel
Americas Retail Morgan Stanley Brand	$	65		$	63		$	61		$	63		$	62		$	67			6	%		8	%
Americas Retail Van Kampen Brand		90			89			90			94			96			102			15	%		6	%
Americas Intermediary		47			51			55			58			61			67			31	%		10	%
U.S. Institutional		98			96			95			100			110			119			24	%		8	%
Non- U.S.		77			80			84			93			102			111			39	%		9	%
Total long term assets under management or supervision		377			379			385			408			431			466			23	%		8	%
Institutional money markets/liquidity		37			37			40			49			52			57			54	%		10	%
Retail money markets		41			38			38			35			33			32			(16	%)		(3	%)
Total Money Markets		78			75			78			84			85			89			19	%		5	%
Total assets under management or supervision	$	455		$	454		$	463		$	492		$	516		$	555			22	%		8	%
Share of minority interest assets ⁽²⁾		0			0			0			4			5			5			*			--
Total	$	455		$	454		$	463		$	496		$	521		$	560			23	%		7	%

Assets under management or supervision by asset class
Equity	$	230		$	226		$	226		$	239		$	245		$	265			17	%		8	%
Fixed income		90			91			93			94			94			98			8	%		4	%
Money market		78			75			78			84			85			89			19	%		5	%
Alternatives ⁽³⁾		45			49			53			61			77			87			78	%		13	%
Subtotal		443			441			450			478			501			539			22	%		8	%
Unit trusts		12			13			13			14			15			16			23	%		7	%
Total assets under management or supervision	$	455		$	454		$	463		$	492		$	516		$	555			22	%		8	%
Share of minority interest assets ⁽²⁾		0			0			0			4			5			5			*			--
Total	$	455		$	454		$	463		$	496		$	521		$	560			23	%		7	%

(1)	Assets under managment or supervision and net flows by distribution channel for all periods have been restated to include amounts related to
	real estate funds previously managed within Institutional Securities. Additionally, the amounts reported for the real estate funds have been
	redefined to reflect invested equity in those funds. Previously, these amounts were disclosed on a gross real estate asset basis which included leverage.
(2)	Amount represents Asset Management's proportional share of assets managed by entities in which it owns a minority interest.
(3)	Includes a range of alternative investment products such as real estate funds, hedge funds, private equity funds, funds of hedge funds and funds
	of private equity funds.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Consolidated Assets Under Management or Supervision ⁽¹⁾

(unaudited, dollars in billions)

	Quarter Ended												Percentage Change From:
	Feb 28, 2006		May 31, 2006		Aug 31, 2006		Nov 30, 2006		Feb 28, 2007		May 31, 2007		2Q07 vs. 2Q06			2Q07 vs. 1Q07
Assets under management or supervision by distribution channel
Americas Retail Morgan Stanley Brand	$	65	$	63	$	61	$	63	$	62	$	67		6	%		8	%
Americas Retail Van Kampen Brand		90		89		90		94		96		102		15	%		6	%
Americas Intermediary		47		51		55		58		61		67		31	%		10	%
U.S. Institutional		98		96		95		100		110		119		24	%		8	%
Non - U.S.		77		80		84		93		102		111		39	%		9	%
Total long term assets under management or supervision		377		379		385		408		431		466		23	%		8	%
Institutional money markets/liquidity		37		37		40		49		52		57		54	%		10	%
Retail money markets		41		38		38		35		33		32		(16	%)		(3	%)
Total Money Markets		78		75		78		84		85		89		19	%		5	%
Sub-total assets under management or supervision		455		454		463		492		516		555		22	%		8	%

Global Wealth Management Group		129		127		142		153		153		157		24	%		3	%
Total assets under management or supervision	$	584	$	581	$	605	$	645	$	669	$	712		23	%		6	%
Share of minority interest assets ⁽²⁾		0		0		0		4		5		5		*			--
Total	$	584	$	581	$	605	$	649	$	674	$	717		23	%		6	%


Consolidated assets under management or supervision by asset class
Equity	$	288	$	288	$	289	$	307	$	317	$	344		19	%		9	%
Fixed income		105		106		109		111		111		116		9	%		5	%
Money market		82		79		83		89		90		94		19	%		4	%
Alternatives ⁽³⁾		45		49		53		61		77		87		78	%		13	%
Subtotal		520		522		534		568		595		641		23	%		8	%
Unit trusts		12		13		13		14		15		16		23	%		7	%
Other ⁽⁴⁾		52		46		58		63		59		55		20	%		(7	%)
Total assets under management or supervision	$	584	$	581	$	605	$	645	$	669	$	712		23	%		6	%
Share of minority interest assets ⁽²⁾		0		0		0		4		5		5		*			--
Total	$	584	$	581	$	605	$	649	$	674	$	717		23	%		6	%

(1)	The amounts reported for the real estate funds have been redefined to reflect invested equity in those funds. Previously, these amounts were
	disclosed on a gross real estate asset basis which included leverage.
(2)	Amount represents Asset Management's proportional share of assets managed by entities in which it owns a minority interest.
(3)	Includes a range of alternative investment products such as real estate funds, hedge funds, private equity funds, funds of hedge funds and funds
	of private equity funds.
(4)	Includes assets under management or supervision associated with the Global Wealth Management Group.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

Quarterly Discover Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change


Merchant, cardmember and other fees	$	289		$	277		$	312		$	289		$	297		$	261			(6	%)		(12	%)	$	566		$	558			(1	%)
Servicing and securitization income		596			651			565			526			521			601			(8	%)		15	%		1,247			1,122			(10	%)
Other		4			5			13			13			9			9			80	%		--			9			18			100	%
Total non-interest revenues		889			933			890			828			827			871			(7	%)		5	%		1,822			1,698			(7	%)

Interest revenue		586			608			642			622			680			704			16	%		4	%		1,194			1,384			16	%
Interest expense		231			220			253			248			287			336			53	%		17	%		451			623			38	%
Net interest income		355			388			389			374			393			368			(5	%)		(6	%)		743			761			2	%

Provision for consumer loan losses		155			130			232			239			195			204			57	%		5	%		285			399			40	%
Net credit income		200			258			157			135			198			164			(36	%)		(17	%)		458			362			(21	%)

Net revenues		1,089			1,191			1,047			963			1,025			1,035			(13	%)		1	%		2,280			2,060			(10	%)

Total non-interest expenses		610			650			679			764			653			702			8	%		8	%		1,260			1,355			8	%

Income before gain/(loss) from
unconsolidated investees and taxes		479			541			368			199			372			333			(38	%)		(10	%)		1,020			705			(31	%)
Gain/(loss) from unconsolidated investees		(1	)		0			(1	)		(1	)		(1	)		(1	)		*			--			(1	)		(2	)		(100	%)
Income before taxes		478			541			367			198			371			332			(39	%)		(11	%)		1,019			703			(31	%)
Provision for income taxes		178			203			125			-			138			123			(39	%)		(11	%)		381			261			(31	%)
Income from continuing operations	$	300		$	338		$	242		$	198		$	233		$	209			(38	%)		(10	%)	$	638		$	442			(31	%)

Return on average common equity ⁽¹⁾		26	%		27	%		19	%		15	%		17	%		16	%								27	%		16	%
Pre-tax profit margin ⁽²⁾		44	%		45	%		35	%		21	%		36	%		32	%								45	%		34	%

(1)	Refer to page 4 for the allocation of average common equity.
(2)	Income before taxes, excluding gain/(loss) 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 25.

MORGAN STANLEY

Quarterly Discover Income Statement Information

(Managed loan basis)

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change


Merchant, cardmember and other fees	$	519		$	541		$	579		$	542		$	552		$	551			2	%		--		$	1,060		$	1,103			4	%
Servicing and securitization income		0			0			0			0			0			0			--			--			0			0			--
Other		143			22			11			18			5			45			105	%		*			165			50			(70	%)
Total non-interest revenues		662			563			590			560			557			596			6	%		7	%		1,225			1,153			(6	%)

Interest revenue		1,475			1,576			1,572			1,544			1,599			1,717			9	%		7	%		3,051			3,316			9	%
Interest expense		541			576			619			614			649			747			30	%		15	%		1,117			1,396			25	%
Net interest income		934			1,000			953			930			950			970			(3	%)		2	%		1,934			1,920			(1	%)

Provision for consumer loan losses		507			372			496			527			482			531			43	%		10	%		879			1,013			15	%
Net credit income		427			628			457			403			468			439			(30	%)		(6	%)		1,055			907			(14	%)

Net revenues		1,089			1,191			1,047			963			1,025			1,035			(13	%)		1	%		2,280			2,060			(10	%)

Total non-interest expenses		610			650			679			764			653			702			8	%		8	%		1,260			1,355			8	%

Income before gain/(loss) from
unconsolidated investees and taxes		479			541			368			199			372			333			(38	%)		(10	%)		1,020			705			(31	%)
Gain/(loss) from unconsolidated investees		(1	)		0			(1	)		(1	)		(1	)		(1	)		*			--			(1	)		(2	)		(100	%)
Income before taxes		478			541			367			198			371			332			(39	%)		(11	%)		1,019			703			(31	%)
Provision for income taxes		178			203			125			-			138			123			(39	%)		(11	%)		381			261			(31	%)
Income from continuing operations	$	300		$	338		$	242		$	198		$	233		$	209			(38	%)		(10	%)	$	638		$	442			(31	%)

Return on average common equity⁽¹⁾		26	%		27	%		19	%		15	%		17	%		16	%								27	%		16	%
Pre-tax profit margin ⁽²⁾		44	%		45	%		35	%		21	%		36	%		32	%								45	%		34	%

(1)	Refer to page 4 for the allocation of average common equity.
(2)	Income before taxes, excluding gain/(loss) 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 25.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Discover

(unaudited, dollars in millions)

	Quarter Ended																			Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006				May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change


Total owned credit card loans ⁽¹⁾
Period end	$	19,924			$	21,764		$	22,922		$	23,588		$	22,410		$	22,548			4	%		1	%	$	21,764		$	22,548			4	%
Average	$	21,976			$	19,664		$	22,424		$	22,539		$	24,672		$	21,286			8	%		(14	%)	$	20,808		$	22,960			10	%

Total managed credit card loans ⁽¹⁾⁽²⁾
Period end	$	47,825			$	48,539		$	49,585		$	50,291		$	50,730		$	51,265			6	%		1	%	$	48,539		$	51,265			6	%
Average	$	47,575			$	47,307		$	48,763		$	49,181		$	51,390		$	50,618			7	%		(2	%)	$	47,439		$	51,000			8	%
Interest yield		12.13	%	��		12.69	%		12.38	%		12.23	%		12.27	%		12.38	%	(31 bp)			11 bp				12.42	%		12.32	%	(10 bp)
Interest spread		7.44	%			7.78	%		7.07	%		6.86	%		6.85	%		6.96	%	(82 bp)			11 bp				7.61	%		6.91	%	(70 bp)
Transaction volume (billions)	$	26.8			$	28.5		$	30.2		$	29.1		$	30.3		$	29.9			5	%		(1	%)	$	55.4		$	60.2			9	%
Net Sales		22.5				24.0			25.7			24.5			25.1			25.2			5	%		--			46.5			50.3			8	%
Other transaction volume		4.3				4.5			4.5			4.6			5.2			4.7			4	%		(10	%)		8.9			9.9			12	%
Accounts (millions)		46.1				45.9			45.6			45.3			44.9			44.5			(3	%)		(1	%)		45.9			44.5			(3	%)
Active accounts (millions)		19.6				19.6			19.7			19.8			19.7			19.6			--			(1	%)		19.6			19.6			--
Average receivables per avg. active account (actual $)	$	2,457			$	2,415		$	2,484		$	2,500		$	2,590		$	2,576			7	%		(1	%)	$	2,436		$	2,582			6	%
Trans volume per avg. active account (actual $)	$	1,385			$	1,457		$	1,538		$	1,481		$	1,528		$	1,520			4	%		(1	%)	$	2,842		$	3,048			7	%
Net gain on securitization	$	139			$	18		$	(2	)	$	5		$	(4	)	$	36			100	%		*		$	157		$	32			(80	%)
Return on managed receivables ⁽³⁾		2.56	%			2.84	%		1.96	%		1.62	%		1.84	%		1.62	%	(122 bp)			(22 bp)				2.70	%		1.73	%	(97 bp)
Credit quality
Net charge-off rate		5.06	%			3.30	%		3.81	%		4.15	%		4.05	%		4.24	%	94 bp			19 bp				4.18	%		4.14	%	(4 bp)
Delinquency rate (over 30 days)		3.45	%			3.29	%		3.41	%		3.51	%		3.45	%		3.13	%	(16 bp)			(32 bp)				3.29	%		3.13	%	(16 bp)
Delinquency rate (over 90 days)		1.61	%			1.53	%		1.59	%		1.65	%		1.69	%		1.52	%	(1 bp)			(17 bp)				1.53	%		1.52	%	(1 bp)
Allowance for loan losses at period end	$	777			$	773		$	808		$	828		$	787		$	781			1	%		(1	%)	$	773		$	781			1	%

International managed credit card loans ⁽²⁾
Period end	$	4,183			$	4,406		$	4,522		$	4,644		$	4,575		$	4,551			3	%		(1	%)	$	4,406		$	4,551			3	%
Average	$	2,911			$	4,049		$	4,361		$	4,419		$	4,608		$	4,548			12	%		(1	%)	$	3,486		$	4,578			31	%
Accounts (millions)		2.6				2.9			2.9			3.0			3.0			3.0			3	%		--			2.9			3.0			3	%

Payment services (millions of transactions)
Discover network transaction volume		339				340			362			358			361			362			6	%		--			679			723			6	%
PULSE network transaction volume		425				471			473			488			521			559			19	%		7	%		896			1,080			21	%
Total network transaction volume		764				811			835			846			882			921			14	%		4	%		1,575			1,803			14	%

(1)	Includes the domestic and international consumer credit card businesses and excludes the commercial credit card business.
(2)	Includes owned and securitized credit card loans.
(3)	Annualized net income divided by average managed receivables.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

Quarterly Intersegment Eliminations Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change

Investment banking ⁽¹⁾	$	0		$	(33	)	$	0		$	(6	)	$	(2	)	$	(16	)		52	%		*		$	(33	)	$	(18	)		45	%
Principal transactions:
Trading		(2	)		(3	)		(2	)		(1	)		0			0			*			--			(5	)		0			*
Investments		0			0			0			0			0			0			--			--			0			0			--
Commissions		(7	)		(8	)		(7	)		(7	)		(7	)		(6	)		25	%		14	%		(15	)		(13	)		13	%
Asset management, distribution and admin. fees		(51	)		(35	)		(40	)		(40	)		(43	)		(42	)		(20	%)		2	%		(86	)		(85	)		1	%
Interest and dividends		(39	)		(68	)		(87	)		(90	)		(114	)		(97	)		(43	%)		15	%		(107	)		(211	)		(97	%)
Other		(2	)		(7	)		(3	)		(4	)		(4	)		(4	)		43	%		--			(9	)		(8	)		11	%
Total revenues		(101	)		(154	)		(139	)		(148	)		(170	)		(165	)		(7	%)		3	%		(255	)		(335	)		(31	%)
Interest expense		(52	)		(64	)		(93	)		(97	)		(123	)		(109	)		(70	%)		11	%		(116	)		(232	)		(100	%)
Net revenues		(49	)		(90	)		(46	)		(51	)		(47	)		(56	)		38	%		(19	%)		(139	)		(103	)		26	%

Total non-interest expenses		(68	)		(77	)		(61	)		(63	)		(52	)		(57	)		26	%		(10	%)		(145	)		(109	)		25	%

Income before taxes		19			(13	)		15			12			5			1			108	%		(80	%)		6			6			--
Provision for income taxes		7			(5	)		6			4			2			-			*			*			2			2			--
Income from continuing operations	$	12		$	(8	)	$	9		$	8		$	3		$	1			113	%		(67	%)	$	4		$	4			--

(1)	Included in the May 31, 2006 amount is $30m related to the sale of the Company's aircraft leasing business.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

The following (page 17) presents more detailed financial information regarding the results of operations for the combined

Institutional Securities, Global Wealth Management Group and Asset 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 also provides this type of presentation on a managed basis for its Discover business

(page 18) in order to provide helpful comparison to other credit card issuers.

MORGAN STANLEY

Quarterly Institutional Securities, Global Wealth Management Group and Asset Management⁽¹⁾

Combined Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change

Investment banking	$	982		$	1,165		$	1,138		$	1,503		$	1,227		$	1,913			64	%		56	%	$	2,147		$	3,140			46	%
Principal transactions:
Trading		3,088			3,562			2,845			2,318			4,158			4,838			36	%		16	%		6,650			8,996			35	%
Investments		300			629			300			578			880			1,004			60	%		14	%		929			1,884			103	%
Commissions		920			994			880			976			1,005			1,123			13	%		12	%		1,914			2,128			11	%
Asset management, distribution and administration fees		1,268			1,321			1,313			1,338			1,480			1,598			21	%		8	%		2,589			3,078			19	%
Servicing income		0			0			0			0			35			42			*			20	%		0			77			*
Interest and dividends		9,986			9,534			12,065			11,304			14,196			15,395			61	%		8	%		19,520			29,591			52	%
Other		130			120			119			215			236			281			134	%		19	%		250			517			107	%
Total revenues		16,674			17,325			18,659			18,232			23,217			26,194			51	%		13	%		33,999			49,411			45	%
Interest expense		9,258			9,776			11,593			10,419			13,261			15,706			61	%		18	%		19,034			28,967			52	%
Net revenues		7,416			7,549			7,066			7,813			9,956			10,488			39	%		5	%		14,965			20,444			37	%

Compensation and benefits		3,998			3,578			3,070			3,287			4,762			4,982			39	%		5	%		7,576			9,744			29	%
Occupancy and equipment		207			215			230			250			258			277			29	%		7	%		422			535			27	%
Brokerage, clearing and exchange fees		292			340			339			334			361			366			8	%		1	%		632			727			15	%
Information processing and communications		258			271			273			282			276			285			5	%		3	%		529			561			6	%
Marketing and business development		119			155			146			220			152			199			28	%		31	%		274			351			28	%
Professional services		369			448			455			605			416			508			13	%		22	%		817			924			13	%
Other		241			190			282			160			254			323			70	%		27	%		431			577			34	%
Total non-interest expenses		5,484			5,197			4,795			5,138			6,478			6,940			34	%		7	%		10,681			13,419			26	%



Income from continuing operations before gain/(loss) from unconsolidated
investees and taxes		1,932			2,352			2,271			2,675			3,478			3,548			51	%		2	%		4,284			7,025			64	%
Gain/(loss) from unconsolidated investees		(19	)		23			21			(64	)		(26	)		(20	)		(187	%)		23	%		4			(46	)		*
Income before taxes		1,913			2,375			2,292			2,611			3,452			3,528			49	%		2	%		4,288			6,979			63	%
Provision for income taxes		611			855			686			607			1,123			1,148			34	%		2	%		1,466			2,271			55	%
Income from continuing operations ⁽²⁾	$	1,302		$	1,520		$	1,606		$	2,004		$	2,329		$	2,380			57	%		2	%	$	2,822		$	4,708			67	%

Return on average common equity ⁽³⁾		24	%		26	%		27	%		32	%		37	%		34	%								25	%		36	%
Compensation and benefits as a % of net revenues		54	%		47	%		43	%		42	%		48	%		48	%								51	%		48	%
Non-compensation expenses as a % of net revenues		20	%		21	%		24	%		24	%		17	%		19	%								21	%		18	%

Pre-tax profit margin ⁽⁴⁾		26	%		31	%		32	%		34	%		35	%		34	%								29	%		34	%


Number of employees ⁽⁵⁾		40,188			40,088			41,416			43,124			44,797			45,845			14	%		2	%

(1)	Includes the elimination of intersegment activity between Institutional Securities, Global Wealth Management Group and Asset Management.
(2)	Excludes gain/(loss) from discontinued operations.
(3)	Refer to page 4 for the allocation of average common equity.
(4)	Income before taxes, excluding gain/(loss) from unconsolidated investees, as a % of net revenues.
(5)	Includes Institutional Securities, Global Wealth Management Group, Asset 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 25.

MORGAN STANLEY

Quarterly Discover Income Statement Information

(Managed loan basis)

(unaudited, dollars in millions)

	Quarter Ended																		Percentage Change From:						Six Months Ended						Percentage
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			2Q07 vs. 2Q06			2Q07 vs. 1Q07			May 31, 2006			May 31, 2007			Change


Merchant, cardmember and other fees	$	519		$	541		$	579		$	542		$	552		$	551			2	%		--		$	1,060		$	1,103			4	%
Servicing and securitization income		0			0			0			0			0			0			--			--			0			0			--
Other		143			22			11			18			5			45			105	%		*			165			50			(70	%)
Total non-interest revenues		662			563			590			560			557			596			6	%		7	%		1,225			1,153			(6	%)

Interest revenue		1,475			1,576			1,572			1,544			1,599			1,717			9	%		7	%		3,051			3,316			9	%
Interest expense		541			576			619			614			649			747			30	%		15	%		1,117			1,396			25	%
Net interest income		934			1,000			953			930			950			970			(3	%)		2	%		1,934			1,920			(1	%)

Provision for consumer loan losses		507			372			496			527			482			531			43	%		10	%		879			1,013			15	%
Net credit income		427			628			457			403			468			439			(30	%)		(6	%)		1,055			907			(14	%)

Net revenues		1,089			1,191			1,047			963			1,025			1,035			(13	%)		1	%		2,280			2,060			(10	%)

Compensation and benefits		244			224			235			219			230			236			5	%		3	%		468			466			--
Occupancy and equipment		23			21			23			24			22			24			14	%		9	%		44			46			5	%
Information processing and communications		90			96			98			103			94			97			1	%		3	%		186			191			3	%
Marketing and business development		119			142			145			198			142			141			(1	%)		(1	%)		261			283			8	%
Professional services		64			92			93			119			81			113			23	%		40	%		156			194			24	%
Other		70			75			85			101			84			91			21	%		8	%		145			175			21	%
Total non-interest expenses		610			650			679			764			653			702			8	%		8	%		1,260			1,355			8	%

Income before gain/(loss) from
unconsolidated investees and taxes		479			541			368			199			372			333			(38	%)		(10	%)		1,020			705			(31	%)
Gain/(loss) from unconsolidated investees		(1	)		0			(1	)		(1	)		(1	)		(1	)		*			--			(1	)		(2	)		(100	%)
Income before taxes		478			541			367			198			371			332			(39	%)		(11	%)		1,019			703			(31	%)
Provision for income taxes		178			203			125			0			138			123			(39	%)		(11	%)		381			261			(31	%)
Income from continuing operations	$	300		$	338		$	242		$	198		$	233		$	209			(38	%)		(10	%)	$	638		$	442			(31	%)

Return on average common equity ⁽¹⁾		26	%		27	%		19	%		15	%		17	%		16	%								27	%		16	%
Compensation and benefits as a % of net revenues		22	%		19	%		22	%		23	%		22	%		23	%								21	%		23	%
Non-compensation expenses as a % of net revenues		34	%		36	%		42	%		57	%		41	%		45	%								35	%		43	%
Pre-tax profit margin ⁽²⁾		44	%		45	%		35	%		21	%		36	%		32	%								45	%		34	%

Number of employees		13,683			13,075			12,933			13,186			13,048			12,488			(4	%)		(4	%)

(1)	Refer to page 4 for the allocation of average common equity.
(2)	Income before taxes, excluding gain/(loss) 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 25.

MORGAN STANLEY

The following (pages 19 - 22) present a reconciliation for certain information disclosed on pages 13, 14, 15 and 18.

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 Discover 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 Discover Reconciliation of General Purpose Credit Card Loan Data ⁽¹⁾

(unaudited, dollars in millions)

	Quarter Ended May 31, 2007
																	Delinquency Rate
General Purpose Credit Card Loans:	Period End		Average		Return on Receivables			Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	22,548	$	21,286		3.86	%		10.56	%		5.31	%		3.93	%		2.95	%		1.43	%
Securitized		28,717		29,332		2.80	%		13.69	%		8.14	%		4.46	%		3.26	%		1.58	%
Managed	$	51,265	$	50,618		1.62	%		12.38	%		6.96	%		4.24	%		3.13	%		1.52	%

	Quarter Ended Feb 28, 2007
																	Delinquency Rate
General Purpose Credit Card Loans:	Period End		Average		Return on Receivables			Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	22,410	$	24,672		3.84	%		10.44	%		5.20	%		3.78	%		3.16	%		1.56	%
Securitized		28,320		26,718		3.55	%		13.96	%		8.39	%		4.30	%		3.67	%		1.79	%
Managed	$	50,730	$	51,390		1.84	%		12.27	%		6.85	%		4.05	%		3.45	%		1.69	%

(1)	The table provides a reconciliation of certain managed and owned basis statistical data (period-end and average loan balances,
	return on receivables, interest yield, interest spread, net charge-off rates, and 30- and 90-day delinquency rates) for the periods indicated.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

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

(unaudited, dollars in millions)

	Quarter Ended Nov 30, 2006
																	Delinquency Rate
General Purpose Credit Card Loans:	Period End		Average		Return on Receivables			Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	23,588	$	22,539		3.53	%		10.28	%		5.18	%		3.95	%		3.22	%		1.53	%
Securitized		26,703		26,642		2.99	%		13.88	%		8.32	%		4.32	%		3.76	%		1.75	%
Managed	$	50,291	$	49,181		1.62	%		12.23	%		6.86	%		4.15	%		3.51	%		1.65	%

	Quarter Ended Aug 31, 2006
																	Delinquency Rate
General Purpose Credit Card Loans:	Period End		Average		Return on Receivables			Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	22,922	$	22,424		4.27	%		10.45	%		5.40	%		3.57	%		3.17	%		1.48	%
Securitized		26,663		26,339		3.64	%		14.02	%		8.52	%		4.01	%		3.62	%		1.68	%
Managed	$	49,585	$	48,763		1.96	%		12.38	%		7.07	%		3.81	%		3.41	%		1.59	%

	Quarter Ended May 31, 2006
																	Delinquency Rate
General Purpose Credit Card Loans:	Period End		Average		Return on Receivables			Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	21,764	$	19,664		6.83	%		11.01	%		6.41	%		3.02	%		2.97	%		1.38	%
Securitized		26,775		27,643		4.86	%		13.89	%		8.76	%		3.50	%		3.56	%		1.65	%
Managed	$	48,539	$	47,307		2.84	%		12.69	%		7.78	%		3.30	%		3.29	%		1.53	%

	Quarter Ended Feb 28, 2006
																	Delinquency Rate
General Purpose Credit Card Loans:	Period End		Average		Return on Receivables			Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	19,924	$	21,976		5.54	%		9.87	%		5.41	%		4.54	%		2.97	%		1.36	%
Securitized		27,901		25,599		4.75	%		14.08	%		9.20	%		5.51	%		3.79	%		1.79	%
Managed	$	47,825	$	47,575		2.56	%		12.13	%		7.44	%		5.06	%		3.45	%		1.61	%

(1)	The tables provide a reconciliation of certain managed and owned basis statistical data (period-end and average loan balances,
	return on receivables, interest yield, interest spread, net charge-off rates, and 30- and 90-day delinquency rates) for the periods indicated.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

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

(unaudited, dollars in millions)

	Six Months Ended May 31, 2007
																		Delinquency Rate
General Purpose Credit Card Loans:	Period End			Average		Return on Receivables			Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	22,548		$	22,960		3.85	%		10.50	%		5.25	%		3.85	%		2.95	%		1.43	%
Securitized		28,717	��		28,040		3.15	%		13.82	%		8.26	%		4.38	%		3.26	%		1.58	%
Managed	$	51,265		$	51,000		1.73	%		12.32	%		6.91	%		4.14	%		3.13	%		1.52	%

	Six Months Ended May 31, 2006
																	Delinquency Rate
General Purpose Credit Card Loans:	Period End		Average		Return on Receivables			Interest Yield			Interest Spread			Net Charge-offs			30 Days			90 Days
Owned	$	21,764	$	20,808		6.15	%		10.41	%		5.89	%		3.82	%		2.97	%		1.38	%
Securitized		26,775		26,631		4.80	%		13.98	%		8.97	%		4.46	%		3.56	%		1.65	%
Managed	$	48,539	$	47,439		2.70	%		12.42	%		7.61	%		4.18	%		3.29	%		1.53	%

(1)	The tables provide a reconciliation of certain managed and owned basis statistical data (period-end and average loan balances,
	return on receivables, 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 25.

MORGAN STANLEY

Quarterly Discover Reconciliation of Managed Income Statement Data ⁽¹⁾

(unaudited, dollars in millions)

	Quarter Ended																		Six Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			May 31, 2006			May 31, 2007

Merchant, cardmember and other fees:
Owned	$	289		$	277		$	312		$	289		$	297		$	261		$	566		$	558
Securitization adjustment		230			264			267			253			255			290			494			545
Managed	$	519		$	541		$	579		$	542		$	552		$	551		$	1,060		$	1,103

Servicing and securitizations income:
Owned	$	596		$	651		$	565		$	526		$	521		$	601		$	1,247		$	1,122
Securitization adjustment		(596	)		(651	)		(565	)		(526	)		(521	)		(601	)		(1,247	)		(1,122	)
Managed	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

Other:
Owned	$	4		$	5		$	13		$	13		$	9		$	9		$	9		$	18
Securitization adjustment		139			17			(2	)		5			(4	)		36			156			32
Managed	$	143		$	22		$	11		$	18		$	5		$	45		$	165		$	50

Interest revenue:
Owned	$	586		$	608		$	642		$	622		$	680		$	704		$	1,194		$	1,384
Securitization adjustment		889			968			930			922			919			1,013			1,857			1,932
Managed	$	1,475		$	1,576		$	1,572		$	1,544		$	1,599		$	1,717		$	3,051		$	3,316

Interest expense:
Owned	$	231		$	220		$	253		$	248		$	287		$	336		$	451		$	623
Securitization adjustment		310			356			366			366			362			411			666			773
Managed	$	541		$	576		$	619		$	614		$	649		$	747		$	1,117		$	1,396

Provision for consumer loan losses:
Owned	$	155		$	130		$	232		$	239		$	195		$	204		$	285		$	399
Securitization adjustment		352			242			264			288			287			327			594			614
Managed	$	507		$	372		$	496		$	527		$	482		$	531		$	879		$	1,013

(1)	The tables provide a reconciliation of certain managed and owned basis income statement data
	(merchant, cardmember and other fees, servicing fees, other revenue, interest revenue, interest expense
	and provision for consumer loan losses) for the periods indicated.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 25.

MORGAN STANLEY

The following (page 23) 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. The Company has adopted a definition

of adjusted assets that excludes certain self-funded assets considered to have minimal market, credit and/or liquidity risk.

These low-risk assets generally are attributable to the Company’s matched book and securities lending businesses.

Adjusted assets are calculated by reducing gross assets by aggregate resale agreements and securities borrowed

less non-derivative short positions and assets recorded under certain provisions of SFAS No. 140 and FASB

Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities” (“FIN 46R”). 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).

In addition, the Company views junior subordinated debt issued to capital trusts as a component of its capital base given

the inherent characteristics of the securities. These characteristics include the long-dated nature (e.g., some have final

maturity at issuance of 30 years extendible at the Company’s option by a further 19 years, others have a 60-year final maturity

at issuance), 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.

MORGAN STANLEY

Quarterly Reconciliation of Adjusted Assets

(unaudited, dollars in millions, except ratios)

		Quarter Ended
		Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007

Total assets		$	959,950		$	1,027,419		$	1,029,354		$	1,121,192		$	1,182,061		$	1,200,609

Less:	Securities purchased under agreements to resell		(176,260	)		(190,289	)		(171,547	)		(174,866	)		(192,038	)		(142,784	)
	Securities borrowed		(252,896	)		(274,581	)		(283,024	)		(299,631	)		(277,093	)		(252,213	)
Add:	Financial instruments sold, not yet purchased		149,561			159,822			152,979			183,119			157,807			166,549
Less:	Derivative contracts sold, not yet purchased		(42,928	)		(48,747	)		(47,017	)		(57,491	)		(51,574	)		(58,919	)
	Subtotal		637,427			673,624			680,745			772,323			819,163			913,242
Less:	Cash and securities deposited with clearing
	organizations or segregated under federal and
	other regulations or requirements ⁽¹⁾		(38,300	)		(46,612	)		(43,986	)		(29,565	)		(35,739	)		(47,114	)
	Assets recorded under certain provisions of SFAS No.140 and FIN 46		(78,925	)		(90,046	)		(89,649	)		(100,236	)		(124,163	)		(155,692	)
	Goodwill and intangible assets		(2,873	)		(2,932	)		(2,943	)		(3,443	)		(4,262	)		(4,132	)

Adjusted assets		$	517,329		$	534,034		$	544,167		$	639,079		$	654,999		$	706,304

Common equity		$	30,103		$	32,118		$	33,072		$	34,264		$	36,854		$	38,411
Preferred equity			0			0			1,100			1,100			1,100			1,100
Shareholders' equity			30,103			32,118			34,172			35,364			37,954			39,511
Junior subordinated debt issued to capital trusts ⁽²⁾			3,783			3,784			3,784			4,884			4,885			4,874
	Subtotal		33,886			35,902			37,956			40,248			42,839			44,385
Less: Goodwill and intangible assets			(2,873	)		(2,932	)		(2,943	)		(3,443	)		(4,262	)		(4,132	)
Tangible shareholders' equity		$	31,013		$	32,970		$	35,013		$	36,805		$	38,577		$	40,253

Leverage ratio⁽³⁾			31.0x			31.2x			29.4x			30.5x			30.6x			29.8x

Adjusted leverage ratio ⁽⁴⁾			16.7x			16.2x			15.5x			17.4x			17.0x			17.5x

(1)	In the second quarter of fiscal 2007, the adjusted assets calculation was revised in order to reduce gross assets by the full amount of cash and securities
	deposited with clearing organizations or segregated under federal and other regulations or requirements. All prior periods have been restated to conform
	to the current presentation.
(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 (some have final maturity
	at issuance of thirty years extendible at the Company's option by a further nineteen years, others have a sixty year final maturity at issuance),
	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 25.

MORGAN STANLEY

This page represents an addendum to the 2Q 2007 Financial Supplement.

Fiscal 2007 compensation expense primarily includes the amortization related to fiscal 2004 awards, as well as fiscal 2005 awards and fiscal 2006 awards granted to

non-retirement-eligible employees, and an accrual for the estimated full cost of fiscal 2007 year-end equity awards expected to be granted to retirement-eligible employees in December 2007.

Awards to non-retirement-eligible employees will be amortized over the period from the grant date to the earlier of the employee's retirement eligibility date or the vesting

date specified in the award terms.

For a further discussion of the Company's previous accounting for stock-based compensation, see the Company's Form 10-K for the fiscal year ended November 30, 2006.

Illustration of Standard Equity Award Amortization to Non-Retirement-Eligible and Retirement-Eligible Employees

	Non-Retirement-Eligible Employees - Fiscal Year Ended
Year of Award	Nov 30, 2003			Nov 30, 2004			Nov 30, 2005			Nov 30, 2006			Nov 30, 2007			Nov 30, 2008			Nov 30, 2009			Cumulative Amort. By Grant

2003		28	%		28	%		28	%		15	%		1	%		0	%		0	%		100	%

2004					28	%		28	%		28	%		15	%		1	%		0	%		100	%

2005											40	%		40	%		18	%		2	%		100	%

2006														40	%		40	%		18	%		98	%

2007																	40	%		40	%		80	%

2008																				40	%		40	%

	Retirement-Eligible Employees - Fiscal Year Ended
Year of Award	Nov 30, 2003			Nov 30, 2004			Nov 30, 2005			Nov 30, 2006			Nov 30, 2007			Nov 30, 2008			Nov 30, 2009			Cumulative Amort. By Grant

2003		28	%		28	%		28	%		15	%		1	%		0	%		0	%		100	%

2004					28	%		28	%		28	%		15	%		1	%		0	%		100	%

2005											100	%		0	%		0	%		0	%		100	%

2006											100	%		0	%		0	%		0	%		100	%

2007														100	%		0	%		0	%		100	%

2008																	100	%		0	%		100	%

2009																				100	%		100	%

Note:	The actual fiscal impact depends on several factors including, but not limited to, forfeitures, award terms and modifications.
	Refer to Legal Notice page 25.

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 20, 2007.

Morgan Stanley (MS) 8-KMorgan Stanley Reports Record Second Quarter Results