Morgan Stanley (MS) 8-K Morgan Stanley Reports Third Quarter Results

Exhibit 99.2

MORGAN STANLEY

Financial Supplement - 3Q 2007

Table of Contents

Page #
1	…………….	Quarterly Financial Summary
2	…………….	Quarterly Consolidated Income Statement Information
3-4	…………….	Quarterly Consolidated Financial Information and Statistical Data
5	…………….	Quarterly Institutional Securities Income Statement Information
6-7	…………….	Quarterly Institutional Securities Financial Information and Statistical Data
8	…………….	Quarterly Global Wealth Management Group Income Statement Information
9	…………….	Quarterly Global Wealth Management Group Financial Information and Statistical Data
10	…………….	Quarterly Asset Management Income Statement Information
11	…………….	Quarterly Asset Management Financial Information and Statistical Data
12	…………….	Quarterly Consolidated Assets Under Management or Supervision
13	…………….	Quarterly Intersegment Eliminations Income Statement Information
14	…………….	Quarterly Reconciliation of Adjusted Assets
15	…………….	Illustration of Standard Equity Award Amortization
16	…………….	Legal Notice

MORGAN STANLEY

Quarterly Financial Summary

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			Aug 31, 2007			3Q07 vs. 3Q06			3Q07 vs. 2Q07			Aug 31, 2006			Aug 31, 2007			Percentage Change
Net revenues
Institutional Securities	$	5,436		$	5,305		$	4,894		$	5,475		$	7,162		$	7,429		$	4,983			2	%		(33	%)	$	15,635		$	19,574			25	%
Global Wealth Management Group		1,289			1,400			1,371			1,452			1,511			1,642			1,683			23	%		2	%		4,060			4,836			19	%
Asset Management		737			898			845			973			1,368			1,509			1,364			61	%		(10	%)		2,480			4,241			71	%
Intersegment Eliminations		(49	)		(90	)		(46	)		(51	)		(47	)		(56	)		(72	)		(57	%)		(29	%)		(185	)		(175	)		5	%
Consolidated net revenues	$	7,413		$	7,513		$	7,064		$	7,849		$	9,994		$	10,524		$	7,958			13	%		(24	%)	$	21,990		$	28,476			29	%
Income before taxes (1)
Institutional Securities	$	1,707		$	1,899		$	1,915		$	2,200		$	2,845		$	2,950		$	1,501			(22	%)		(49	%)	$	5,521		$	7,296			32	%
Global Wealth Management Group		20			158			161			169			226			264			287			78	%		9	%		339			777			129	%
Asset Management		166			262			155			268			379			303			491			*			62	%		583			1,173			101	%
Intersegment Eliminations		17			(18	)		13			11			6			7			(14	)		*			*			12			(1	)		(108	%)
Consolidated income before taxes	$	1,910		$	2,301		$	2,244		$	2,648		$	3,456		$	3,524		$	2,265			1	%		(36	%)	$	6,455		$	9,245			43	%
Earnings per basic share: (2)
Income from continuing operations	$	1.26		$	1.46		$	1.57		$	1.97		$	2.28		$	2.35		$	1.45			(8	%)		(38	%)	$	4.29		$	6.08			42	%
Discontinued operations (3)	$	0.28		$	0.36		$	0.26		$	0.22		$	0.35		$	0.22		$	0.07			(73	%)		(68	%)	$	0.90		$	0.65			(28	%)
Earnings per basic share	$	1.54		$	1.82		$	1.83		$	2.19		$	2.63		$	2.57		$	1.52			(17	%)		(41	%)	$	5.19		$	6.73			30	%
Earnings per diluted share: (2)
Income from continuing operations	$	1.21		$	1.40		$	1.50		$	1.86		$	2.17		$	2.24		$	1.38			(8	%)		(38	%)	$	4.12		$	5.79			41	%
Discontinued operations (3)	$	0.27		$	0.35		$	0.25		$	0.22		$	0.34		$	0.21		$	0.06			(76	%)		(71	%)	$	0.87		$	0.61			(30	%)
Earnings per diluted share	$	1.48		$	1.75		$	1.75		$	2.08		$	2.51		$	2.45		$	1.44			(18	%)		(41	%)	$	4.99		$	6.40			28	%
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			1,002,330,181									1,014,846,804			1,002,687,312
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			1,057,495,875									1,055,811,711			1,053,683,836
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			1,062,450,986									1,058,664,567			1,062,450,986
Return on average common equity from continuing operations		20.9	%		22.8	%		23.3	%		27.8	%		30.9	%		29.4	%		17.2	%								22.4	%		25.5	%
Return on average common equity		21.3	%		23.7	%		22.7	%		26.0	%		29.9	%		27.4	%		17.1	%								22.6	%		24.9	%

(1)	Represents consolidated income from continuing operations before gain/(loss) from unconsolidated investees, taxes and gain/(loss) from discontinued operations.
(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)	All periods have been restated to include the results of Discover Financial Services in discontinued operations.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 16.

1

MORGAN STANLEY

Quarterly Consolidated Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			Aug 31, 2007			3Q07 vs. 3Q06			3Q07 vs. 2Q07			Aug 31, 2006			Aug 31, 2007		��	Percentage Change
Investment banking	$	982		$	1,132		$	1,138		$	1,503		$	1,227		$	1,913		$	1,659			46	%		(13	%)	$	3,252		$	4,799			48	%
Principal transactions:
Trading		3,086			3,559			2,843			2,317			4,158			4,838			1,381			(51	%)		(71	%)		9,488			10,377			9	%
Investments		300			629			300			578			880			1,004			558			86	%		(44	%)		1,229			2,442			99	%
Commissions		920			994			880			976			1,005			1,123			1,264			44	%		13	%		2,794			3,392			21	%
Asset management, distribution and admin. fees		1,268			1,321			1,312			1,337			1,479			1,596			1,701			30	%		7	%		3,901			4,776			22	%
Servicing income		0			0			0			0			35			42			32			*			(24	%)		0			109			*
Interest and dividends		9,958			9,504			12,021			11,293			14,171			15,400			14,405			20	%		(6	%)		31,483			43,976			40	%
Available for sale securities		0			0			0			0			0			0			(18	)		*			*			0			(18	)		*
Other		130			118			119			218			237			279			248			108	%		(11	%)		367			764			108	%
Total revenues		16,644			17,257			18,613			18,222			23,192			26,195			21,230			14	%		(19	%)		52,514			70,617			34	%
Interest expense		9,231			9,744			11,549			10,373			13,198			15,671			13,272			15	%		(15	%)		30,524			42,141			38	%
Net revenues		7,413			7,513			7,064			7,849			9,994			10,524			7,958			13	%		(24	%)		21,990			28,476			29	%
Compensation and benefits		4,010			3,587			3,085			3,304			4,775			4,994			3,596			17	%		(28	%)		10,682			13,365			25	%
Occupancy and equipment		210			215			233			254			260			279			279			20	%		--			658			818			24	%
Brokerage, clearing and exchange fees		292			340			339			334			361			366			459			35	%		25	%		971			1,186			22	%
Information processing and communications		259			272			274			284			277			286			302			10	%		6	%		805			865			7	%
Marketing and business development		120			155			147			221			153			199			190			29	%		(5	%)		422			542			28	%
Professional services		372			450			459			608			419			510			507			10	%		(1	%)		1,281			1,436			12	%
Other		240			193			283			196			293			366			360			27	%		(2	%)		716			1,019			42	%
Total non-interest expenses		5,503			5,212			4,820			5,201			6,538			7,000			5,693			18	%		(19	%)		15,535			19,231			24	%
Income from continuing operations before gain/(loss)  from unconsolidated investees and taxes		1,910			2,301			2,244			2,648			3,456			3,524			2,265			1	%		(36	%)		6,455			9,245			43	%
Gain/(loss) from unconsolidated investees		(19	)		24			20			(65	)		(26	)		(20	)		(19	)		(195	%)		5	%		25			(65	)		*
Provision for income taxes		603			848			676			601			1,116			1,141			772			14	%		(32	%)		2,127			3,029			42	%
Income from continuing operations		1,288			1,477			1,588			1,982			2,314			2,363			1,474			(7	%)		(38	%)		4,353			6,151			41	%
Discontinued operations (1)
Gain/(loss) from discontinued operations		453			583			399			231			564			349			111			(72	%)		(68	%)		1,435			1,024			(29	%)
Income tax benefit/(provision)		(167	)		(219	)		(136	)		(7	)		(206	)		(130	)		(42	)		69	%		68	%		(522	)		(378	)		28	%
Gain/(loss) from discontinued operations		286			364			263			224			358			219			69			(74	%)		(68	%)		913			646			(29	%)
Net income	$	1,574		$	1,841		$	1,851		$	2,206		$	2,672		$	2,582		$	1,543			(17	%)		(40	%)	$	5,266		$	6,797			29	%
Preferred stock dividend requirements	$	-		$	-		$	-		$	19		$	17		$	17		$	17			*			--		$	-		$	50			*
Earnings applicable to common shareholders	$	1,574		$	1,841		$	1,851		$	2,187		$	2,655		$	2,565		$	1,526			(18	%)		(41	%)	$	5,266		$	6,747			28	%
Return on average common equity from continuing operations		20.9	%		22.8	%		23.3	%		27.8	%		30.9	%		29.4	%		17.2	%								22.4	%		25.5	%
Return on average common equity		21.3	%		23.7	%		22.7	%		26.0	%		29.9	%		27.4	%		17.1	%								22.6	%		24.9	%
Pre-tax profit margin (2)		26	%		31	%		32	%		34	%		35	%		34	%		29	%								29	%		33	%
Compensation and benefits as a % of net revenues		54	%		48	%		44	%		42	%		48	%		48	%		45	%								49	%		47	%

(1)	All periods have been restated to include the results of Discover Financial Services in discontinued operations.
(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 16.

2

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited)

	Quarter Ended														Percentage Change From:						Nine Months Ended
	Feb 28, 2006		May 31, 2006		Aug 31, 2006		Nov 30, 2006		Feb 28, 2007 (2)		May 31, 2007		Aug 31, 2007		3Q07 vs. 3Q06			3Q07 vs. 2Q07			Aug 31, 2006		Aug 31, 2007		Percentage Change
Morgan Stanley
Regional revenue (millions) (1)(3)
Americas	$	4,689	$	4,692	$	4,528	$	4,902	$	6,109	$	6,093	$	4,172		(8	%)		(32	%)	$	13,909	$	16,374		18	%
EMEA (Europe, Middle East, Africa)		1,894		2,061		1,825		1,980		2,702		2,984		2,439		34	%		(18	%)		5,780		8,125		41	%
Asia		830		760		711		967		1,183		1,447		1,347		89	%		(7	%)		2,301		3,977		73	%
Consolidated net revenues	$	7,413	$	7,513	$	7,064	$	7,849	$	9,994	$	10,524	$	7,958		13	%		(24	%)	$	21,990	$	28,476		29	%
Total assets (millions)	$	959,950	$	1,027,419	$	1,029,354	$	1,121,192	$	1,182,061	$	1,199,993	$	1,185,131		15	%		(1	%)
Adjusted assets (millions) (4)	$	517,329	$	534,034	$	544,167	$	638,158	$	654,999	$	704,421	$	688,966		27	%		(2	%)
Period end common shares outstanding (millions)		1,070.4		1,071.8		1,058.7		1,048.9		1,061.6		1,051.7		1,062.5		--			1	%
Book value per common share(5)	$	28.12	$	29.97	$	31.24	$	32.67	$	34.71	$	36.52	$	32.14		3	%		(12	%)
Shareholders' equity (millions) (6)	$	33,886	$	35,902	$	37,956	$	40,248	$	42,839	$	44,385	$	40,125		6	%		(10	%)
Total capital (millions) (7)	$	134,366	$	145,849	$	149,956	$	162,134	$	177,270	$	187,250	$	187,480		25	%		--
Worldwide employees(1)		40,188		40,088		41,416		43,124		44,797		45,845		47,713		15	%		4	%
Average Daily 95%/One-Day Value-at-Risk ("VaR") (8)
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread	$	35	$	39	$	33	$	34	$	39	$	40	$	52
Equity price	$	25	$	29	$	26	$	32	$	45	$	44	$	43
Foreign exchange rate	$	9	$	9	$	7	$	12	$	15	$	16	$	17
Commodity price	$	31	$	28	$	33	$	30	$	40	$	34	$	38
Trading VaR	$	58	$	63	$	56	$	61	$	90	$	81	$	87
Non - trading VaR	$	20	$	26	$	24	$	18	$	14	$	17	$	20
Aggregate trading and non - trading VaR	$	65	$	70	$	66	$	67	$	92	$	87	$	91

(1)	Restated to exclude Discover Financial Services.
(2)	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.
(3)	Reflects the regional view of the Company's consolidated net revenues, on a managed basis, based on the following methodology:
	Institutional Securities: investment banking - client location, equity capital markets - client location, debt capital markets - revenue recording location, sales & trading - trading desk location
	Global Wealth Management: financial advisor location
	Asset Management: client location except for the real estate investing business which is based on asset location
(4)	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 14 for further information.
(5)	The Company's spin-off of Discover Financial Services on June 30, 2007 reduced book value per common share by approximately $5.79.
(6)	Includes common equity, preferred equity and junior subordinated debt issued to capital trusts.
(7)	Includes common equity, preferred equity, junior subordinated debt issued to capital trusts, capital units and the non-current portion of long-term debt.
(8)	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 16.

3

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited)

	Quarter Ended																											Nine Months Ended
	Feb 28, 2007 (1)							May 31, 2007							Aug 31, 2007													Aug 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									Average tier 1 equity (billions) (2)		Average common equity (billions) (2)		Return on average common equity
Institutional Securities	$	21.0	$	20.0		38	%	$	23.7	$	22.8		35	%	$	25.7	$	25.1		16	%							$	23.5	$	22.6		29	%
Global Wealth Management Group		1.5		1.7		32	%		1.5		1.6		40	%		1.6		1.7		39	%								1.5		1.7		37	%
Asset Management		2.3		3.0		31	%		2.7		3.4		23	%		2.8		3.6		35	%								2.6		3.3		30	%
Unallocated capital		5.1		5.1					4.2		4.2					3.5		3.5											4.2		4.2
Total - continuing operations		29.9		29.8		31	%		32.1		32.0		29	%		33.6		33.9		17	%								31.8		31.8		26	%
Discontinued operations		4.6		5.7					4.5		5.4					1.6		1.9											3.6		4.4
Firm	$	34.5	$	35.5		30	%	$	36.6	$	37.4		27	%	$	35.2	$	35.8		17	%							$	35.4	$	36.2		25	%
	Quarter Ended																											Nine Months Ended
	Feb 28, 2006							May 31, 2006							Aug 31, 2006							Nov 30, 2006						Aug 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		27	%			$	18.6		30	%		$	19.4		35	%			$	17.5		29	%
Global Wealth Management Group				3.3		1	%				3.1		14	%				2.8		15	%			2.8		17	%				3.1		10	%
Asset Management				2.2		18	%				2.3		28	%				2.5		15	%			2.7		23	%				2.3		20	%
Unallocated capital				3.1							2.6							3.4						3.4							3.1
Total - continuing operations				24.6		21	%				25.9		23	%				27.3		23	%			28.3		28	%				26.0		22	%
Discontinued operations				4.9							5.2							5.3						5.4							5.1
Firm			$	29.5		21	%			$	31.1		24	%			$	32.6		23	%		$	33.7		26	%			$	31.1		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 equity related to Discover Financial Services and Quilter Holdings Limited have been reclassed to discontinued operations in all periods.
	Refer to Legal Notice page 16.

4

MORGAN STANLEY

Quarterly Institutional Securities Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007 (1)			May 31, 2007 (1)			Aug 31, 2007 (1)			3Q07 vs. 3Q06			3Q07 vs. 2Q07			Aug 31, 2006			Aug 31, 2007 (1)			Percentage Change
Investment banking	$	892		$	1,035		$	992		$	1,309		$	1,032		$	1,704		$	1,439			45	%		(16	%)	$	2,919		$	4,175			43	%
Principal transactions:
Trading		2,963			3,442			2,728			2,193			4,029			4,705			1,236			(55	%)		(74	%)		9,133			9,970			9	%
Investments		243			389			114			335			350			396			217			90	%		(45	%)		746			963			29	%
Commissions		610			693			630			673			691			766			911			45	%		19	%		1,933			2,368			23	%
Asset management, distribution and admin. fees		8			29			19			17			25			25			24			26	%		(4	%)		56			74			32	%
Servicing income		0			0			0			0			35			42			32			*			(24	%)		0			109			*
Interest and dividends		9,822			9,338			11,852			11,094			14,021			15,193			14,141			19	%		(7	%)		31,012			43,355			40	%
Available for sale securities		0			0			0			0			0			0			(18	)		*			*			0			(18	)		*
Other		95			83			92			174			170			224			208			126	%		(7	%)		270			602			123	%
Total revenues		14,633			15,009			16,427			15,795			20,353			23,055			18,190			11	%		(21	%)		46,069			61,598			34	%
Interest expense		9,197			9,704			11,533			10,320			13,191			15,626			13,207			15	%		(15	%)		30,434			42,024			38	%
Net revenues		5,436			5,305			4,894			5,475			7,162			7,429			4,983			2	%		(33	%)		15,635			19,574			25	%
Total non-interest expenses		3,729			3,406			2,979			3,275			4,317			4,479			3,482			17	%		(22	%)		10,114			12,278			21	%
Income from continuing operations before gain/(loss) from unconsolidated investees and taxes		1,707			1,899			1,915			2,200			2,845			2,950			1,501			(22	%)		(49	%)		5,521			7,296			32	%
Gain/(loss) from unconsolidated investees		(19	)		24			20			(65	)		(26	)		(20	)		(19	)		(195	%)		5	%		25			(65	)		*
Income before taxes		1,688			1,923			1,935			2,135			2,819			2,930			1,482			(23	%)		(49	%)		5,546			7,231			30	%
Provision for income taxes		522			700			556			434			878			932			483			(13	%)		(48	%)		1,778			2,293			29	%
Income from continuing operations (2)	$	1,166		$	1,223		$	1,379		$	1,701		$	1,941		$	1,998		$	999			(28	%)		(50	%)	$	3,768		$	4,938			31	%
Return on average common equity (3)		29	%		27	%		30	%		35	%		38	%		35	%		16	%								29	%		29	%
Pre-tax profit margin (4)		31	%		36	%		39	%		40	%		40	%		40	%		30	%								35	%		37	%

(1)	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, May 31, 2007 and Aug 31, 2007 are $4.4 billion, $5.9 billion and $8.2 billion, respectively.
(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.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 16.

5

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Institutional Securities

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			Aug 31, 2007			3Q07 vs. 3Q06			3Q07 vs. 2Q07			Aug 31, 2006			Aug 31, 2007			Percentage Change
Investment Banking
Advisory revenue	$	344		$	365		$	444		$	600		$	373		$	725		$	664			50	%		(8	%)	$	1,153		$	1,762			53	%
Underwriting revenue
Equity		197			371			237			254			300			493			429			81	%		(13	%)		805			1,222			52	%
Fixed income		351			299			311			455			359			486			346			11	%		(29	%)		961			1,191			24	%
Total underwriting revenue	$	548		$	670		$	548		$	709		$	659		$	979		$	775			41	%		(21	%)	$	1,766		$	2,413			37	%
Total investment banking revenue	$	892		$	1,035		$	992		$	1,309		$	1,032		$	1,704		$	1,439			45	%		(16	%)	$	2,919		$	4,175			43	%
Sales & Trading (1)
Equity	$	1,656		$	1,669		$	1,520		$	1,436		$	2,209		$	2,216		$	1,761			16	%		(21	%)	$	4,845		$	6,186			28	%
Fixed income		2,651			2,131			2,257			2,252			3,430			2,896			2,197			(3	%)		(24	%)		7,039			8,523			21	%
Other		(109)			(31	)		(100	)		(48	)		(89	)		(74	)		(877	)		*			*			(240	)		(1,040	)		*
Total sales & trading net revenue	$	4,198		$	3,769		$	3,677		$	3,640		$	5,550		$	5,038		$	3,081			(16	%)		(39	%)	$	11,644		$	13,669			17	%
	Fiscal View																											Calendar View
	Quarter Ended (2)																											Eight Months Ended (2)
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			Aug 31, 2007									Aug 31, 2006			Aug 31, 2007
Mergers and acquisitions announced transactions
Morgan Stanley global market volume (billions)	$	335.4		$	180.3		$	167.4		$	371.6		$	328.6		$	455.8		$	286.2								$	517.7		$	967.6
Market share		44.8	%		20.9	%		23.3	%		36.8	%		35.1	%		30.4	%		24.0	%								25.8	%		29.6	%
Rank		2			3			4			1			2			4			2									4			2
Mergers and acquisitions completed transactions
Morgan Stanley global market volume (billions)	$	176.8		$	182.3		$	175.4		$	229.1		$	187.0		$	353.3		$	184.6								$	465.6		$	690.7
Market share		27.1	%		29.2	%		26.0	%		31.1	%		21.6	%		40.6	%		22.6	%								27.1	%		31.5	%
Rank		3			2			5			1			3			1			2									2			1
Global equity and related issues
Morgan Stanley global market volume (billions)	$	10.8		$	19.2		$	10.5		$	14.9		$	13.9		$	20.1		$	18.5								$	34.4		$	44.6
Market share		7.4	%		9.3	%		8.5	%		6.5	%		7.6	%		8.5	%		8.2	%								8.4	%		7.8	%
Rank		4			2			4			6			4			3			4									3			4
Global IPO's
Morgan Stanley global market volume (billions)	$	2.7		$	7.6		$	5.2		$	6.1		$	4.1		$	6.3		$	6.4								$	14.3		$	14.5
Market Share		6.8	%		11.0	%		11.1	%		6.2	%		7.6	%		7.9	%		8.0	%								10.3	%		7.8	%
Rank		5			3			1			6			3			4			3									1			2
Global debt
Morgan Stanley global market volume (billions)	$	96.1		$	102.3		$	89.4		$	111.6		$	99.8		$	131.4		$	76.6								$	267.7		$	277.0
Market share		5.9	%		5.9	%		5.6	%		5.3	%		5.6	%		6.1	%		4.9	%								6.0	%		5.6	%
Rank		5			5			7			7			5			5			7									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 net losses from marking to market loans and closed and pipeline commitments, results related to Investment Banking and other activities.
(2)	Source: Thomson Financial, data as of September 5, 2007.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 16.

6

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			Aug 31, 2007			3Q07 vs. 3Q06			3Q07 vs. 2Q07
Corporate funded loans
Investment grade	$	5.6		$	6.2		$	7.4		$	6.4		$	6.2		$	13.7		$	11.1			50	%		(19	%)
Non-investment grade		2.9			2.9			5.4			3.4			3.9			4.9			7.5			39	%		53	%
Total corporate funded loans	$	8.5		$	9.1		$	12.8		$	9.8		$	10.1		$	18.6		$	18.6			45	%		-
Corporate lending commitments
Investment grade	$	30.2		$	28.2		$	30.4		$	35.0		$	31.5		$	42.1		$	50.4			66	%		20	%
Non-investment grade		6.3			9.0			19.1			18.5			25.5			32.4			35.7			87	%		10	%
Total corporate lending commitments	$	36.5		$	37.2		$	49.5		$	53.5		$	57.0		$	74.5		$	86.1			74	%		16	%
Corporate funded loans plus lending commitments
Investment grade	$	35.8		$	34.4		$	37.8		$	41.4		$	37.7		$	55.8		$	61.5			63	%		10	%
Non-investment grade	$	9.2		$	11.9		$	24.5		$	21.9		$	29.4		$	37.3		$	43.2			76	%		16	%
% investment grade		80	%		74	%		61	%		65	%		56	%		60	%		59	%
% non-investment grade		20	%		26	%		39	%		35	%		44	%		40	%		41	%
Total corporate funded loans and lending commitments	$	45.0		$	46.3		$	62.3		$	63.3		$	67.1		$	93.1		$	104.7			68	%		12	%
Hedges (1)	$	17.7		$	23.8		$	24.3		$	26.5		$	29.9		$	34.2		$	37.5			54	%		10	%
Total corporate funded loans and lending commitments net of hedges	$	27.3		$	22.5		$	38.0		$	36.8		$	37.2		$	58.9		$	67.2			77	%		14	%

(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 16.

7

MORGAN STANLEY

Quarterly Global Wealth Management Group Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			Aug 31, 2007			3Q07 vs. 3Q06			3Q07 vs. 2Q07			Aug 31, 2006			Aug 31, 2007			Percentage Change
Investment banking	$	67		$	95		$	120		$	146		$	166		$	164		$	166			38	%		1	%	$	282		$	496			76	%
Principal transactions:
Trading		125			120			117			125			129			133			145			24	%		9	%		362			407			12	%
Investments		1			27			16			13			(2	)		20			3			(81	%)		(85	%)		44			21			(52	%)
Commissions		310			302			252			304			315			357			353			40	%		(1	%)		864			1,025			19	%
Asset management, distribution and admin fees		667			691			704			695			729			769			788			12	%		2	%		2,062			2,286			11	%
Interest and dividends		203			243			265			293			274			298			321			21	%		8	%		711			893			26	%
Other		31			36			26			37			38			40			33			27	%		(18	%)		93			111			19	%
Total revenues		1,404			1,514			1,500			1,613			1,649			1,781			1,809			21	%		2	%		4,418			5,239			19	%
Interest expense		115			114			129			161			138			139			126			(2	%)		(9	%)		358			403			13	%
Net revenues		1,289			1,400			1,371			1,452			1,511			1,642			1,683			23	%		2	%		4,060			4,836			19	%
Total non-interest expenses		1,269			1,242			1,210			1,283			1,285			1,378			1,396			15	%		1	%		3,721			4,059			9	%
Income before taxes		20			158			161			169			226			264			287			78	%		9	%		339			777			129	%
Provision for income taxes		8			52			54			53			87			102			119			120	%		17	%		114			308			170	%
Income from continuing operations	$	12		$	106		$	107		$	116		$	139		$	162		$	168			57	%		4	%	$	225		$	469			108	%
Return on average common equity (1)		1	%		14	%		15	%		17	%		32	%		40	%		39	%								10	%		37	%
Pre-tax profit margin (2)		2	%		11	%		12	%		12	%		15	%		16	%		17	%								8	%		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 16.

8

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			Aug 31, 2007			3Q07 vs. 3Q06			3Q07 vs. 2Q07
Global representatives		8,913			8,091			7,982			7,944			7,993			8,137			8,341			4	%		3	%
Annualized revenue per global representative (thousands) (1)	$	562		$	659		$	682		$	729		$	758		$	814		$	817			20	%		--
Assets by client segment (billions)
$10m or more		166			170			176			199			210			223			228			30	%		2	%
$1m - $10m		220			220			229			243			248			268			265			16	%		(1	%)
Subtotal -> $1m		386			390			405			442			458			491			493			22	%		--
$100k - $1m		177			180			180			177			174			180			182			1	%		1	%
< $100k		32			29			28			27			26			24			24			(14	%)		--
Client assets excluding corporate/other		595			599			613			646			658			695			699			14	%		1	%
Corporate / other		29			30			29			30			32			33			35			21	%		6	%
Total client assets (billions)	$	624		$	629		$	642		$	676		$	690		$	728		$	734			14	%		1	%
% of assets by client segment > $1m (2)		65	%		65	%		66	%		68	%		70	%		71	%		71	%
Fee-based client account assets (billions) (3)	$	173		$	180		$	183		$	195		$	202		$	210		$	211			15	%		--
Fee-based assets as a % of client assets		28	%		29	%		29	%		29	%		29	%		29	%		29	%
Bank deposit program (millions)	$	7,319		$	9,114		$	9,839		$	13,301		$	16,364		$	18,226		$	19,409			97	%		6	%
Client assets per global representative (millions) (4)	$	70		$	78		$	80		$	85		$	86		$	89		$	88			10	%		(1	%)
Domestic retail net new assets (billions) (5)	$	-		$	2.4		$	5.4		$	0.7		$	6.7		$	8.7		$	14.6			170	%		68	%
Domestic retail locations		484			473			460			453			451			453			455			(1	%)		--

(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 16.

9

MORGAN STANLEY

Quarterly Asset Management Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007 (1)			May 31, 2007 (1)			Aug 31, 2007 (1)			3Q07 vs. 3Q06			3Q07 vs. 2Q07			Aug 31, 2006			Aug 31, 2007 (1)			Pecentage Change
Investment banking	$	23		$	35		$	26		$	54		$	31		$	61		$	92			*			51	%	$	84		$	184			119	%
Principal transactions:
Investments		56			213			170			230			532			588			338			99	%		(43	%)		439			1,458			*
Commissions		7			7			5			6			6			6			6			20	%		--			19			18			(5	%)
Asset management, distribution and admin fees		644			636			629			665			768			844			926			47	%		10	%		1,909			2,538			33	%
Interest and dividends		6			10			21			11			14			29			14			(33	%)		(52	%)		37			57			54	%
Other		6			5			5			10			34			18			10			100	%		(44	%)		16			62			*
Total revenues		742			906			856			976			1,385			1,546			1,386			62	%		(10	%)		2,504			4,317			72	%
Interest expense		5			8			11			3			17			37			22			100	%		(41	%)		24			76			*
Net revenues		737			898			845			973			1,368			1,509			1,364			61	%		(10	%)		2,480			4,241			71	%
Total non-interest expenses		571			636			690			705			989			1,206			873			27	%		(28	%)		1,897			3,068			62	%
Income before taxes		166			262			155			268			379			303			491			*			62	%		583			1,173			101	%
Provision for income taxes		66			103			61			110			149			105			174			185	%		66	%		230			428			86	%
Income from continuing operations	$	100		$	159		$	94		$	158		$	230		$	198		$	317			*			60	%	$	353		$	745			111	%
Return on average common equity (2)		18	%		28	%		15	%		23	%		31	%		23	%		35	%								20	%		30	%
Pre-tax profit margin (3)		23	%		29	%		18	%		28	%		28	%		20	%		36	%								24	%		28	%

(1)	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, May 31, 2007 and Aug 31, 2007 are $2.9 billion, $3.9 billion and $4.6 billion, respectively.
(2)	Refer to page 4 for the allocation of average common equity.
(3)	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 16.

10

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Asset Management

(unaudited, dollars in billions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			Aug 31, 2007			3Q07 vs. 3Q06			3Q07 vs. 2Q07			Aug 31, 2006			Aug 31, 2007			Percentage 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		$	(0.8	)		64	%		*		$	(7.4	)	$	(2.7	)		64	%
Americas Retail Van Kampen Brand		(0.7	)		(0.4	)		(0.8	)		(0.1	)		0.0			0.0			1.1			*			*			(1.9	)		1.1			158	%
Americas Intermediary		1.7			4.0			1.5			1.0			1.0			1.8			1.2			(20	%)		(33	%)		7.2			4.0			(44	%)
U.S. Institutional		(4.7	)		(4.7	)		(2.7	)		(1.0	)		0.1			1.3			0.3			111	%		(77	%)		(12.1	)		1.7			114	%
Non- U.S.		1.2			2.5			0.3			2.5			4.7			4.1			6.1			*			49	%		3.9			14.9			*
Net flows excluding money markets	$	(5.6	)	$	(0.7	)	$	(3.9	)	$	0.5		$	3.8		$	7.3		$	7.9			*			8	%	$	(10.3	)	$	19.0			*
Money Market Net Flows
Institutional		4.0			(1.4	)		2.8			7.7			2.5			3.5			12.4			*			*			5.4			18.4			*
Retail		(5.7	)		(3.0	)		(0.7	)		(3.3	)		(1.8	)		(1.5	)		0.5			171	%		133	%		(9.4	)		(2.8	)		70	%
Total money market net flows	$	(1.7	)	$	(4.4	)	$	2.1		$	4.4		$	0.7		$	2.0		$	12.9			*			*		$	(4.0	)	$	15.6			*
Total net flows	$	(7.3	)	$	(5.1	)	$	(1.8	)	$	4.9		$	4.5		$	9.3		$	20.8			*			124	%	$	(14.3	)	$	34.6			*
Assets under management or supervision by distribution channel
Americas Retail Morgan Stanley Brand	$	65		$	63		$	61		$	63		$	62		$	67		$	63			3	%		(6	%)
Americas Retail Van Kampen Brand		90			89			90			94			96			102			99			10	%		(3	%)
Americas Intermediary		47			51			55			58			61			67			66			20	%		(1	%)
U.S. Institutional		98			96			95			100			110			119			122			28	%		3	%
Non- U.S.		77			80			84			93			102			111			118			40	%		6	%
Total long term assets under management or supervision		377			379			385			408			431			466			468			22	%		--
Institutional money markets/liquidity		37			37			40			49			52			57			70			75	%		23	%
Retail money markets		41			38			38			35			33			32			33			(13	%)		3	%
Total Money Markets		78			75			78			84			85			89			103			32	%		16	%
Total assets under management or supervision	$	455		$	454		$	463		$	492		$	516		$	555		$	571			23	%		3	%
Share of minority interest assets (1)		0			0			0			4			5			5			6			*			20	%
Total	$	455		$	454		$	463		$	496		$	521		$	560		$	577			25	%		3	%
Assets under management or supervision by asset class
Equity	$	230		$	226		$	226		$	239		$	245		$	265		$	254			12	%		(4	%)
Fixed income		90			91			93			94			94			98			98			5	%		--
Money market		78			75			78			84			85			89			103			32	%		16	%
Alternatives (2)		45			49			53			61			77			87			101			91	%		16	%
Subtotal		443			441			450			478			501			539			556			24	%		3	%
Unit trusts		12			13			13			14			15			16			15			15	%		(6	%)
Total assets under management or supervision	$	455		$	454		$	463		$	492		$	516		$	555		$	571			23	%		3	%
Share of minority interest assets (1)		0			0			0			4			5			5			6			*			20	%
Total	$	455		$	454		$	463		$	496		$	521		$	560		$	577			25	%		3	%

(1)	Amount represents Asset Management's proportional share of assets managed by entities in which it owns a minority interest.
(2)	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 16.

11

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Consolidated Assets Under Management or Supervision

(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		Aug 31, 2007		3Q07 vs. 3Q06			3Q07 vs. 2Q07
Assets under management or supervision by distribution channel
Americas Retail Morgan Stanley Brand	$	65	$	63	$	61	$	63	$	62	$	67	$	63		3	%		(6	%)
Americas Retail Van Kampen Brand		90		89		90		94		96		102		99		10	%		(3	%)
Americas Intermediary		47		51		55		58		61		67		66		20	%		(1	%)
U.S. Institutional		98		96		95		100		110		119		122		28	%		3	%
Non - U.S.		77		80		84		93		102		111		118		40	%		6	%
Total long term assets under management or supervision		377		379		385		408		431		466		468		22	%		--
Institutional money markets/liquidity		37		37		40		49		52		57		70		75	%		23	%
Retail money markets		41		38		38		35		33		32		33		(13	%)		3	%
Total Money Markets		78		75		78		84		85		89		103		32	%		16	%
Sub-total assets under management or supervision		455		454		463		492		516		555		571		23	%		3	%
Global Wealth Management Group		129		127		142		153		153		157		162		14	%		3	%
Total assets under management or supervision	$	584	$	581	$	605	$	645	$	669	$	712	$	733		21	%		3	%
Share of minority interest assets (1)		0		0		0		4		5		5		6		*			20	%
Total	$	584	$	581	$	605	$	649	$	674	$	717	$	739		22	%		3	%
Consolidated assets under management or supervision by asset class
Equity	$	288	$	288	$	289	$	307	$	317	$	344	$	333		15	%		(3	%)
Fixed income		105		106		109		111		111		116		118		8	%		2	%
Money market		82		79		83		89		90		94		109		31	%		16	%
Alternatives (2)		45		49		53		61		77		87		101		91	%		16	%
Subtotal		520		522		534		568		595		641		661		24	%		3	%
Unit trusts		12		13		13		14		15		16		15		15	%		(6	%)
Other (3)		52		46		58		63		59		55		57		(2	%)		4	%
Total assets under management or supervision	$	584	$	581	$	605	$	645	$	669	$	712	$	733		21	%		3	%
Share of minority interest assets (1)		0		0		0		4		5		5		6		*			20	%
Total	$	584	$	581	$	605	$	649	$	674	$	717	$	739		22	%		3	%

(1)	Amount represents Asset Management's proportional share of assets managed by entities in which it owns a minority interest.
(2)	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.
(3)	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 16.

12

MORGAN STANLEY

Quarterly Intersegment Eliminations Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2006			May 31, 2006			Aug 31, 2006			Nov 30, 2006			Feb 28, 2007			May 31, 2007			Aug 31, 2007			3Q07 vs. 3Q06			3Q07 vs. 2Q07			Aug 31, 2006			Aug 31, 2007			Percentage Change
Investment banking (1)	$	0		$	(33	)	$	0		$	(6	)	$	(2	)	$	(16	)	$	(38	)		*			(138	%)	$	(33	)	$	(56	)		(70	%)
Principal transactions:
Trading		(2	)		(3	)		(2	)		(1	)		0			0			0			*			--			(7	)		0			*
Investments		0			0			0			0			0			0			0			--			--			0			0			--
Commissions		(7	)		(8	)		(7	)		(7	)		(7	)		(6	)		(6	)		14	%		--			(22	)		(19	)		14	%
Asset management, distribution and admin. fees		(51	)		(35	)		(40	)		(40	)		(43	)		(42	)		(37	)		8	%		12	%		(126	)		(122	)		3	%
Interest and dividends		(73	)		(87	)		(117	)		(105	)		(138	)		(120	)		(71	)		39	%		41	%		(277	)		(329	)		(19	%)
Other		(2	)		(6	)		(4	)		(3	)		(5	)		(3	)		(3	)		25	%		--			(12	)		(11	)		8	%
Total revenues		(135	)		(172	)		(170	)		(162	)		(195	)		(187	)		(155	)		9	%		17	%		(477	)		(537	)		(13	%)
Interest expense		(86	)		(82	)		(124	)		(111	)		(148	)		(131	)		(83	)		33	%		37	%		(292	)		(362	)		(24	%)
Net revenues		(49	)		(90	)		(46	)		(51	)		(47	)		(56	)		(72	)		(57	%)		(29	%)		(185	)		(175	)		5	%
Total non-interest expenses		(66	)		(72	)		(59	)		(62	)		(53	)		(63	)		(58	)		2	%		8	%		(197	)		(174	)		12	%
Income before taxes		17			(18	)		13			11			6			7			(14	)		*			*			12			(1	)		(108	%)
Provision for income taxes		7			(7	)		5			4			2			2			(4	)		(180	%)		*			5			-			*
Income from continuing operations	$	10		$	(11	)	$	8		$	7		$	4		$	5		$	(10	)		*			*		$	7		$	(1	)		(114	%)

(1)	Included in the May 31, 2006 amount is $30 million related to the sale of the Company's aircraft leasing business.
	Included in the August 31, 2007 amount is $25 million related to the spin-off of Discover Financial Services.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 16.

13

MORGAN STANLEY

The following (page 14) 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”). Gross assets are also reduced by the full amount of cash and securities deposited with clearing organizations or segregated under federal and other regulations or requirements. 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			Aug 31, 2007
Total assets		$	959,950		$	1,027,419		$	1,029,354		$	1,121,192		$	1,182,061		$	1,199,993		$	1,185,131
Less:	Securities purchased under agreements to resell		(176,260	)		(190,289	)		(171,547	)		(175,787	)		(192,038	)		(144,051	)		(176,910	)
	Securities borrowed		(252,896	)		(274,581	)		(283,024	)		(299,631	)		(277,093	)		(252,213	)		(257,032	)
Add:	Financial instruments sold, not yet purchased		149,561			159,822			152,979			183,119			157,807			166,549			176,097
Less:	Derivative contracts sold, not yet purchased		(42,928	)		(48,747	)		(47,017	)		(57,491	)		(51,574	)		(58,919	)		(62,088	)
	Subtotal		637,427			673,624			680,745			771,402			819,163			911,359			865,198
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	)		(43,229	)
	Assets recorded under certain provisions of SFAS No.140 and FIN 46		(78,925	)		(90,046	)		(89,649	)		(100,236	)		(124,163	)		(155,692	)		(129,552	)
	Goodwill and intangible assets		(2,873	)		(2,932	)		(2,943	)		(3,443	)		(4,262	)		(4,132	)		(3,451	)
Adjusted assets		$	517,329		$	534,034		$	544,167		$	638,158		$	654,999		$	704,421		$	688,966
Common equity		$	30,103		$	32,118		$	33,072		$	34,264		$	36,854		$	38,411		$	34,150
Preferred equity			0			0			1,100			1,100			1,100			1,100			1,100
Shareholders' equity			30,103			32,118			34,172			35,364			37,954			39,511			35,250
Junior subordinated debt issued to capital trusts (2)			3,783			3,784			3,784			4,884			4,885			4,874			4,875
	Subtotal		33,886			35,902			37,956			40,248			42,839			44,385			40,125
Less: Goodwill and intangible assets			(2,873	)		(2,932	)		(2,943	)		(3,443	)		(4,262	)		(4,132	)		(3,451	)
Tangible shareholders' equity		$	31,013		$	32,970		$	35,013		$	36,805		$	38,577		$	40,253		$	36,674
Leverage ratio (3)			31.0x			31.2x			29.4x			30.5x			30.6x			29.8x			32.3x
Adjusted leverage ratio (4)			16.7x			16.2x			15.5x			17.3x			17.0x			17.5x			18.8x

(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 16.

14

MORGAN STANLEY

This page represents an addendum to the 3Q 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																						Cumulative Amort.
Award	Nov 30, 2003			Nov 30, 2004			Nov 30, 2005			Nov 30, 2006			Nov 30, 2007			Nov 30, 2008			Nov 30, 2009			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																						Cumulative Amort.
Award	Nov 30, 2003			Nov 30, 2004			Nov 30, 2005			Nov 30, 2006			Nov 30, 2007			Nov 30, 2008			Nov 30, 2009			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:	Reflects current award terms. The actual fiscal impact depends on several factors including, but not limited to, forfeitures, award terms and modifications.
	Refer to Legal Notice page 16.

15

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 third quarter earnings press release issued September 19, 2007.

16