Morgan Stanley 8K Reports Third Quarter Results | MS 16 Sep 08

MORGAN STANLEY

Financial Supplement - 3Q 2008

Table of Contents

MORGAN STANLEY

Quarterly Financial Summary

(unaudited, dollars in millions)

Quarter Ended

Percentage Change From:

Nine Months Ended

Feb 28,
2007

May 31,
2007

Aug 31,
2007

Nov 30,
2007

Feb 29,
2008

May 31,
2008

Aug 31,
2008

3Q08 vs
3Q07

3Q08 vs.
2Q08

Aug 31,
2007

Aug 31,
2008

Percentage
Change

Net revenues
Institutional Securities (1)	$	7,162		$	7,429		$	4,983		$	(3,425	)	$	6,213		$	3,625		$	5,911		19	%	63	%	$	19,574		$	15,749		(20	%)
Global Wealth Management Group (2)		1,511			1,642			1,683			1,789			1,606			2,436			1,555		(8	%)	(36	%)		4,836			5,597		16	%
Asset Management		1,368			1,509			1,364			1,252			543			488			647		(53	%)	33	%		4,241			1,678		(60	%)
Intersegment Eliminations		(47	)		(56	)		(72	)		(66	)		(40	)		(39	)		(64	)	11	%	(64	%)		(175	)		(143	)	18	%
Consolidated net revenues	$	9,994		$	10,524		$	7,958		$	(450	)	$	8,322		$	6,510		$	8,049		1	%	24	%	$	28,476		$	22,881		(20	%)

Income / (loss) before taxes (3)
Institutional Securities	$	2,845		$	2,950		$	1,501		$	(6,479	)	$	2,117		$	679		$	2,183		45	%	*		$	7,296		$	4,979		(32	%)
Global Wealth Management Group		226			264			287			378			254			989			(34	)	(112	%)	(103	%)		777			1,209		56	%
Asset Management		379			303			491			294			(161	)		(227	)		(204	)	(142	%)	10	%		1,173			(592	)	(150	%)
Intersegment Eliminations		6			7			(14	)		3			4			5			3		121	%	(40	%)		(1	)		12		*
Consolidated income / (loss) before taxes	$	3,456		$	3,524		$	2,265		$	(5,804	)	$	2,214		$	1,446		$	1,948		(14	%)	35	%	$	9,245		$	5,608		(39	%)
Earnings / (loss) applicable to common shareholders	$	2,655		$	2,565		$	1,526		$	(3,605	)	$	1,534		$	1,012		$	1,414		(7	%)	40	%	$	6,747		$	3,960		(41	%)

Earnings per basic share: (4)
Income from continuing operations	$	2.28		$	2.35		$	1.45		$	(3.61	)	$	1.50		$	0.97		$	1.36		(6	%)	40	%	$	6.08		$	3.83		(37	%)
Discontinued operations (5)	$	0.35		$	0.22		$	0.07		$	-		$	-		$	-		$	-		*		--		$	0.65		$	-		*
Earnings per basic share	$	2.63		$	2.57		$	1.52		$	(3.61	)	$	1.50		$	0.97		$	1.36		(11	%)	40	%	$	6.73		$	3.83		(43	%)

Earnings per diluted share: (4)
Income from continuing operations	$	2.17		$	2.24		$	1.38		$	(3.61	)	$	1.45		$	0.95		$	1.32		(4	%)	39	%	$	5.79		$	3.72		(36	%)
Discontinued operations (5)	$	0.34		$	0.21		$	0.06		$	-		$	-		$	-		$	-		*		--		$	0.61		$	-		*
Earnings per diluted share	$	2.51		$	2.45		$	1.44		$	(3.61	)	$	1.45		$	0.95		$	1.32		(8	%)	39	%	$	6.40		$	3.72		(42	%)

Average common shares outstanding
Basic		1,009,186,993			996,544,761			1,002,330,181			999,553,568			1,020,802,234			1,038,145,038			1,042,541,501							1,002,687,312			1,033,829,591
Diluted		1,057,912,545			1,045,643,087			1,057,495,875			999,553,568			1,057,867,487			1,067,184,178			1,072,015,729							1,053,683,836			1,065,689,131
Period end common shares outstanding		1,061,644,077			1,051,690,047			1,062,450,986			1,056,289,659			1,105,301,550			1,108,865,416			1,109,155,431							1,062,450,986			1,109,155,431

Return on average common equity from continuing operations		30.9	%		29.4	%		17.2	%		*			19.7	%		12.3	%		16.5	%						25.5	%		16.1	%
Return on average common equity		29.9	%		27.4	%		17.1	%		*			19.7	%		12.3	%		16.5	%						24.9	%		16.1	%

(1)	The quarters ended May 31, 2008 and August 31, 2008 include pre-tax gains of $744 million and $745 million, respectively, related to the follow-on offerings of MSCI Inc.
(2)	The quarter ended May 31, 2008 includes a pre-tax gain of $748 million on the sale of the Spanish wealth management business, Morgan Stanley Wealth Management S.V., S.A.U. The quarter ended August 31, 2008 includes a charge of $277 million related to the auction rate securities settlement.
(3)	Represents consolidated income / (loss) from continuing operations before gain / (loss) from unconsolidated investees, taxes and gain / (loss) from discontinued operations.
(4)	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. 2007 is also affected by the loss reported for the quarter ended November 30, 2007. As a result of this loss, basic and diluted shares outstanding are equal for this period.
(5)	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 19.

MORGAN STANLEY

Quarterly Consolidated Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08			Aug 31, 2007			Aug 31, 2008			Percentge Change

Investment banking	$	1,227		$	1,913		$	1,659		$	1,569		$	1,109		$	1,049		$	1,146			(31	%)		9	%	$	4,799		$	3,304			(31	%)
Principal transactions:
Trading		4,158			4,838			1,381			(7,171	)		3,390			1,403			2,604			89	%		86	%		10,377			7,397			(29	%)
Investments		880			1,004			558			820			(346	)		(464	)		(453	)		(181	%)		2	%		2,442			(1,263	)		(152	%)
Commissions		1,005			1,123			1,264			1,290			1,199			1,155			1,070			(15	%)		(7	%)		3,392			3,424			1	%
Asset management, distribution and admin. fees		1,479			1,596			1,701			1,743			1,550			1,464			1,423			(16	%)		(3	%)		4,776			4,437			(7	%)
Interest and dividends		14,171			15,400			14,405			16,107			13,965			10,117			9,792			(32	%)		(3	%)		43,976			33,874			(23	%)
Other (1)		272			321			262			353			317			1,799			1,117			*			(38	%)		855			3,233			*
Total revenues		23,192			26,195			21,230			14,711			21,184			16,523			16,699			(21	%)		1	%		70,617			54,406			(23	%)
Interest expense		13,198			15,671			13,272			15,161			12,862			10,013			8,650			(35	%)		(14	%)		42,141			31,525			(25	%)
Net revenues		9,994			10,524			7,958			(450	)		8,322			6,510			8,049			1	%		24	%		28,476			22,881			(20	%)

Compensation and benefits		4,775			4,994			3,596			3,187			4,071			2,960			3,695			3	%		25	%		13,365			10,726			(20	%)

Occupancy and equipment		260			279			279			312			286			329			309			11	%		(6	%)		818			924			13	%
Brokerage, clearing and exchange fees		361			366			459			470			444			448			378			(18	%)		(16	%)		1,186			1,270			7	%
Information processing and communications		277			286			302			328			305			312			302			--			(3	%)		865			919			6	%
Marketing and business development		153			199			190			271			183			207			168			(12	%)		(19	%)		542			558			3	%
Professional services		419			510			507			676			379			472			457			(10	%)		(3	%)		1,436			1,308			(9	%)
Other (2)		293			366			360			110			440			336			792			120	%		136	%		1,019			1,568			54	%
Total non-compensation expenses		1,763			2,006			2,097			2,167			2,037			2,104			2,406			15	%		14	%		5,866			6,547			12	%

Total non-interest expenses		6,538			7,000			5,693			5,354			6,108			5,064			6,101			7	%		20	%		19,231			17,273			(10	%)

Income / (loss) from continuing operations before gain / (loss) from unconsolidated investees and taxes		3,456			3,524			2,265			(5,804	)		2,214			1,446			1,948			(14	%)		35	%		9,245			5,608			(39	%)
Gain / (loss) from unconsolidated investees		(26	)		(20	)		(19	)		18			2			19			8			142	%		(58	%)		(65	)		29			145	%
Provision / (benefit) for income taxes		1,116			1,141			772			(2,198	)		665			439			531			(31	%)		21	%		3,029			1,635			(46	%)
Income / (loss) from continuing operations		2,314			2,363			1,474			(3,588	)		1,551			1,026			1,425			(3	%)		39	%		6,151			4,002			(35	%)
Discontinued operations (3)
Gain / (loss) from discontinued operations		564			349			111			0			0			0			0			*			--			1,024			0			*
Income tax provision / (benefit)		206			130			42			0			0			0			0			*			--			378			0			*
Gain / (loss) from discontinued operations		358			219			69			0			0			0			0			*			--			646			0			*
Net income / (loss)	$	2,672		$	2,582		$	1,543		$	(3,588	)	$	1,551		$	1,026		$	1,425			(8	%)		39	%	$	6,797		$	4,002			(41	%)
Preferred stock dividend requirements	$	17		$	17		$	17		$	17		$	17		$	14		$	11			(35	%)		(21	%)	$	50		$	42			(16	%)
Earnings / (loss) applicable to common shareholders	$	2,655		$	2,565		$	1,526		$	(3,605	)	$	1,534		$	1,012		$	1,414			(7	%)		40	%	$	6,747		$	3,960			(41	%)

Return on average common equity
from continuing operations		30.9	%		29.4	%		17.2	%		*			19.7	%		12.3	%		16.5	%								25.5	%		16.1	%
Return on average common equity		29.9	%		27.4	%		17.1	%		*			19.7	%		12.3	%		16.5	%								24.9	%		16.1	%
Pre-tax profit margin (4)		35	%		34	%		29	%		*			27	%		22	%		24	%								33	%		25	%
Compensation and benefits as a % of net revenues		48	%		48	%		45	%		*			49	%		46	%		46	%								47	%		47	%
Non-Compensation expenses as a % of net revenues		18	%		19	%		26	%		*			25	%		32	%		30	%								21	%		29	%

Effective tax rate		32.5	%		32.6	%		34.4	%		*			30.0	%		30.0	%		27.1	%								33.0	%		29.0	%

(1)	The quarter ended May 31, 2008 includes a pre-tax gain of $744 million related to the follow-on offering of MSCI Inc., (reported in Institutional Securities) and a pre-tax gain of $748 million on the sale of the Spanish wealth management business, Morgan Stanley Wealth Management S.V., S.A.U. (reported in Global Wealth Management Group). The quarter ended August 31, 2008 includes a pre-tax gain of $745 million related to the follow-on offering of MSCI, Inc. (reported in Institutional Securities).
(2)	The quarter ended August 31, 2008 includes a charge of $288 million related to the auction rate securities settlement.
(3)	All periods have been restated to include the results of Discover Financial Services in discontinued operations.
(4)	Income / (loss) from continuing operations before 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 19.

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08			Aug 31, 2007		Aug 31, 2008		Percentage Change
Morgan Stanley

Regional revenue (millions) (1) (2)
Americas (3)	$	6,072		$	6,049		$	4,121		$	(4,092	)	$	3,823		$	3,517		$	4,637			13	%		32	%	$	16,242	$	11,977		(26	%)
EMEA (Europe, Middle East, Africa) (4)		2,702			2,970			2,405			1,931			3,267			2,071			2,593			8	%		25	%		8,077		7,931		(2	%)
Asia		1,220			1,505			1,432			1,711			1,232			922			819			(43	%)		(11	%)		4,157		2,973		(28	%)
Consolidated net revenues	$	9,994		$	10,524		$	7,958		$	(450	)	$	8,322		$	6,510		$	8,049			1	%		24	%	$	28,476	$	22,881		(20	%)
Worldwide employees (1)		44,797			45,845			47,713			48,256			47,050			46,390			46,383			(3	%)		--
Total assets (millions)	$	1,182,061		$	1,199,993		$	1,185,131		$	1,045,409		$	1,090,896		$	1,031,228		$	988,821			(17	%)		(4	%)
Adjusted assets (millions) (5)	$	653,875		$	704,421		$	688,966		$	565,585		$	636,892		$	579,124		$	545,506			(21	%)		(6	%)
Tangible shareholders' equity (millions) (6)	$	38,577		$	40,253		$	36,674		$	32,074		$	39,840		$	41,070		$	42,133			15	%		3	%
Leverage Ratio (7)		30.6	x		29.8	x		32.3	x		32.6	x		27.4	x		25.1	x		23.5	x
Adjusted Leverage Ratio (8)		16.9	x		17.5	x		18.8	x		17.6	x		16.0	x		14.1	x		12.9	x
Shareholders' equity (millions)	$	37,954		$	39,511		$	35,250		$	31,269		$	33,280		$	34,493		$	35,765			1	%		4	%
Common equity (millions)	$	36,854		$	38,411		$	34,150		$	30,169		$	32,180		$	33,393		$	34,665			2	%		4	%
Period end common shares outstanding (millions)		1,061.6			1,051.7			1,062.5			1,056.3			1,105.3			1,108.9			1,109.2			4	%		--
Book value per common share (9)	$	34.71		$	36.52		$	32.14		$	28.56		$	29.11		$	30.11		$	31.25			(3	%)		4	%
Total capital (millions) (10)	$	177,270		$	187,250		$	187,480		$	191,085		$	198,210		$	210,131		$	202,588			8	%		(4	%)

Average liquidity
Parent company liquidity (billions)	$	46		$	38		$	49		$	64		$	71		$	74		$	81			65	%		9	%
Bank and other subsidiary liquidity (billions)		18			30			44			56			51			61			94			114	%		54	%
Total liquidity (billions)	$	64		$	68		$	93		$	120		$	122		$	135		$	175			88	%		30	%

Average Daily 95%/One-Day Value-at-Risk ("VaR") (11)
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread	$	39		$	40		$	52		$	53		$	59		$	66		$	68
Equity price	$	45		$	44		$	43		$	41		$	37		$	38		$	41
Foreign exchange rate	$	15		$	16		$	17		$	25		$	30		$	28		$	25
Commodity price	$	40		$	34		$	38		$	35		$	38		$	39		$	35

Trading VaR	$	90		$	81		$	87		$	89		$	97		$	99		$	99
Non - trading VaR	$	14		$	17		$	20		$	36		$	37		$	45		$	72
Aggregate trading and non - trading VaR	$	92		$	87		$	91		$	98		$	103		$	112		$	128

(1)	Restated to exclude Discover Financial Services.
(2)	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 merchant banking business which is based on asset location
(3)	The quarters ended May 31, 2008 and August 31, 2008 include pre-tax gains of $744 million and $745 million, respectively, related to the follow-on offerings of MSCI Inc.
(4)	The quarter ended May 31, 2008 includes a pre-tax gain of $748 million on the sale of the Spanish wealth management business, Morgan Stanley Wealth Management S.V., S.A.U.
(5)	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 15 for further information.
(6)	Tangible shareholders' equity equals shareholders' equity plus junior subordinated debt issued to capital trusts less goodwill and intangible assets.
(7)	Leverage ratio equals total assets divided by tangible shareholders' equity.
(8)	Adjusted leverage ratio equals adjusted assets divided by tangible shareholders' equity.
(9)	Book value per common share equals common equity divided by period end common shares outstanding. The Company's spin-off of Discover Financial Services on June 30, 2007 reduced book value per common share by approximately $5.79.
(10)	Includes common equity, preferred equity, junior subordinated debt issued to capital trusts, capital units and the non-current portion of long-term debt.
(11)	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 2007.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 19.

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited)

	Quarter Ended																														Nine Months Ended
	Feb 29, 2008							May 31, 2008							Aug 31, 2008																Aug 31, 2008
	Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity			Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity			Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity												Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity
Institutional Securities	$	27.5	$	24.4		24	%	$	27.3	$	24.0		9	%	$	24.4	$	21.6		29	%										$	26.4	$	23.3		20	%

Global Wealth Management Group		1.6		1.5		42	%		1.7		1.5		172	%		1.7		1.4		*												1.7		1.5		70	%

Asset Management		3.2		3.8		*			3.1		3.4		*			4.3		4.2		*												3.5		3.8		*

Unallocated capital		1.5		1.5					3.9		3.9					7.1		7.1														4.2		4.2

Total - continuing operations		33.8		31.2		20	%		36.0		32.8		12	%		37.5		34.3		16	%											35.8		32.8		16	%

Discontinued operations		0.0		0.0					0.0		0.0					0.0		0.0														0.0		0.0

Firm	$	33.8	$	31.2		20	%	$	36.0	$	32.8		12	%	$	37.5	$	34.3		16	%										$	35.8	$	32.8		16	%


	Quarter Ended																														Nine Months Ended
	Feb 28, 2007							May 31, 2007							Aug 31, 2007							Nov 30, 2007									Aug 31, 2007
	Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity			Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity			Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity			Average tier 1 equity (billions) (1)			Average common equity (billions) (1)			Return on average common equity			Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity
Institutional Securities	$	21.0	$	20.0		38	%	$	23.7	$	22.8		35	%	$	25.7	$	25.1		16	%	$	28.0		$	27.7			*		$	23.5	$	22.6		29	%

Global Wealth Management Group		1.5		1.7		32	%		1.5		1.6		40	%		1.6		1.7		39	%		1.6			1.7			52	%		1.5		1.7		37	%

Asset Management		2.3		3.0		31	%		2.7		3.4		23	%		2.8		3.6		35	%		3.1			3.9			18	%		2.6		3.3		30	%

Unallocated capital		5.1		5.1					4.2		4.2					3.5		3.5					(0.4	)		(0.4	)					4.2		4.2

Total - continuing operations		29.9		29.8		31	%		32.1		32.0		29	%		33.6		33.9		17	%		32.3			32.9			*			31.8		31.8		26	%

Discontinued operations		4.6		5.7					4.5		5.4					1.6		1.9					0.0			0.0						3.6		4.4

Firm	$	34.5	$	35.5		30	%	$	36.6	$	37.4		27	%	$	35.2	$	35.8		17	%	$	32.3		$	32.9			*		$	35.4	$	36.2		25	%

(1)	The Company’s economic capital framework estimates the amount of equity capital required to support the businesses over a wide range of market environments while simultaneously satisfying regulatory, rating agency and investor requirements. Economic capital is assigned to each segment based on regulatory capital usage plus additional capital for stress losses. Economic capital requirements are met by regulatory Tier 1 equity (including common shareholders' equity, certain preferred stock, eligible hybrid capital instruments and deductions of certain goodwill, intangible assets and net deferred tax assets), subject to regulatory limits. The framework will evolve over time in response to changes in the business and regulatory environment and to incorporate improvements in modeling techniques.
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 19.

Morgan Stanley

Quarterly Institutional Securities Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended (1)																					Percentage Change From:						Nine Months Ended
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08			Aug 31, 2007			Aug 31, 2008			Percentage Change

Investment banking	$	1,032		$	1,704		$	1,439		$	1,363		$	980		$	875		$	1,032			(28	%)		18	%	$	4,175		$	2,887			(31	%)
Principal transactions:
Trading		4,029			4,705			1,236			(7,230	)		3,394			1,309			2,449			98	%		87	%		9,970			7,152			(28	%)
Investments		350			396			217			496			(141	)		(257	)		(245	)		*			5	%		963			(643	)		(167	%)
Commissions		691			766			911			894			840			813			759			(17	%)		(7	%)		2,368			2,412			2	%
Asset management, distribution and admin. fees		25			25			24			29			31			34			33			38	%		(3	%)		74			98			32	%
Interest and dividends		14,021			15,193			14,141			15,776			13,660			9,793			9,461			(33	%)		(3	%)		43,355			32,914			(24	%)
Other (2)		205			266			222			290			209			975			927			*			(5	%)		693			2,111			*
Total revenues		20,353			23,055			18,190			11,618			18,973			13,542			14,416			(21	%)		6	%		61,598			46,931			(24	%)
Interest expense		13,191			15,626			13,207			15,043			12,760			9,917			8,505			(36	%)		(14	%)		42,024			31,182			(26	%)
Net revenues		7,162			7,429			4,983			(3,425	)		6,213			3,625			5,911			19	%		63	%		19,574			15,749			(20	%)

Total non-interest expenses		4,317			4,479			3,482			3,054			4,096			2,946			3,728			7	%		27	%		12,278			10,770			(12	%)

Income / (loss) from continuing operations before gain / (loss) from unconsolidated investees and taxes		2,845			2,950			1,501			(6,479	)		2,117			679			2,183			45	%		*			7,296			4,979			(32	%)
Gain / (loss) from unconsolidated investees		(26	)		(20	)		(19	)		18			2			19			8			142	%		(58	%)		(65	)		29			145	%
Income / (loss) before taxes		2,819			2,930			1,482			(6,461	)		2,119			698			2,191			48	%		*			7,231			5,008			(31	%)
Provision / (benefit) for income taxes		878			932			483			(2,463	)		627			160			618			28	%		*			2,293			1,405			(39	%)
Income / (loss) from continuing operations (3)	$	1,941		$	1,998		$	999		$	(3,998	)	$	1,492		$	538		$	1,573			57	%		192	%	$	4,938		$	3,603			(27	%)

Return on average common equity (4)		38	%		35	%		16	%		*			24	%		9	%		29	%								29	%		20	%
Pre-tax profit margin (5)		40	%		40	%		30	%		*			34	%		19	%		37	%								37	%		32	%

(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, Aug 31, 2007, Nov 30, 2007, Feb 29, 2008, May 31, 2008 and Aug 31, 2008 are $4.4 billion, $5.9 billion, $8.2 billion, $9.7 billion, $10.3 billion, $10.1 billion and $12.6 billion, respectively.
(2)	The quarters ended May 31, 2008 and August 31, 2008 include pre-tax gains of $744 million and $745 million, respectively, related to the follow-on offerings of MSCI Inc.
(3)	Excludes gain / (loss) from discontinued operations.
(4)	Refer to page 4 for the allocation of average common equity.
(5)	Income / (loss) from continuing operations before gain / (loss) from unconsolidated investees and 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 19.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Institutional Securities

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08			Aug 31, 2007			Aug 31, 2008			Percentage Change

Investment Banking
Advisory revenue	$	373		$	725		$	664		$	779		$	444		$	367		$	401			(40	%)		9	%	$	1,762		$	1,212			(31	%)
Underwriting revenue
Equity		300			493			429			348			261			298			379			(12	%)		27	%		1,222			938			(23	%)
Fixed income		359			486			346			236			275			210			252			(27	%)		20	%		1,191			737			(38	%)
Total underwriting revenue	$	659		$	979		$	775		$	584		$	536		$	508		$	631			(19	%)		24	%	$	2,413		$	1,675			(31	%)

Total investment banking revenue	$	1,032		$	1,704		$	1,439		$	1,363		$	980		$	875		$	1,032			(28	%)		18	%	$	4,175		$	2,887			(31	%)

Sales & Trading (1)
Equity	$	2,318		$	2,374		$	1,880		$	2,468		$	3,467		$	2,103		$	2,671			42	%		27	%	$	6,572		$	8,241			25	%
Fixed income		3,321			2,738			2,078			(7,869	)		2,769			414			1,903			(8	%)		*			8,137			5,086			(37	%)
Other		(89	)		(74	)		(877	)		(202	)		(1,102	)		(519	)		(410	)		53	%		21	%		(1,040	)		(2,031	)		(95	%)
Total sales & trading net revenue	$	5,550		$	5,038		$	3,081		$	(5,603	)	$	5,134		$	1,998		$	4,164			35	%		108	%	$	13,669		$	11,296			(17	%)

	Fiscal View																					Calendar View
	Quarter Ended (2)																					Eight Months Ended (2)
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			Aug 31, 2007			Aug 31, 2008

Mergers and acquisitions announced transactions
Morgan Stanley global market volume (billions)	$	330.0		$	489.1		$	327.7		$	282.1		$	72.8		$	206.2		$	163.8		$	1,043.9		$	389.9
Market share		35.9	%		38.4	%		28.4	%		34.0	%		11.2	%		25.3	%		18.3	%		34.9	%		19.3	%
Rank		2			1			2			5			7			6			6			1			5

Mergers and acquisitions completed transactions
Morgan Stanley global market volume (billions)	$	209.2		$	365.3		$	249.7		$	503.4		$	177.0		$	104.7		$	201.7		$	768.6		$	424.5
Market share		22.6	%		39.1	%		25.8	%		44.9	%		25.0	%		16.8	%		30.4	%		31.6	%		24.4	%
Rank		4			1			2			2			4			9			3			1			5

Global equity and related issues
Morgan Stanley global market volume (billions)	$	13.9		$	20.2		$	19.5		$	14.9		$	7.8		$	20.6		$	16.7		$	44.6		$	40.5
Market share		7.5	%		8.7	%		8.1	%		6.3	%		6.1	%		9.3	%		10.5	%		7.8	%		9.7	%
Rank		4			3			3			6			5			3			2			4			3

Global IPO's
Morgan Stanley global market volume (billions)	$	4.1		$	6.4		$	6.5		$	6.9		$	3.0		$	3.8		$	0.7		$	14.5		$	4.9
Market Share		7.6	%		8.3	%		8.2	%		7.0	%		8.8	%		7.4	%		3.0	%		7.8	%		5.6	%
Rank		3			3			3			5			1			6			9			2			7

Global debt
Morgan Stanley global market volume (billions)	$	102.0		$	141.6		$	86.7		$	67.6		$	58.6		$	64.0		$	39.6		$	277.0		$	148.3
Market share		5.6	%		6.5	%		5.1	%		5.1	%		4.2	%		4.3	%		4.2	%		5.6	%		4.4	%
Rank		6			5			8			6			7			10			10			5			8

(1)	Includes principal transactions trading, commissions and net interest revenue. Other sales and trading net revenue primarily includes net losses from the mark-to-market of loans and closed and pipeline commitments and related hedges, and results related to Investment Banking and other activities.
(2)	Source: Thomson Reuters, data as of September 3, 2008.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 19.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Institutional Securities - Corporate Lending (1)

(unaudited, dollars in billions)

	Quarter Ended																					Percentage Change From:
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08


Corporate funded loans
Investment grade	$	6.2		$	13.7		$	11.1		$	13.0		$	15.6		$	14.6		$	9.3			(16	%)		(36	%)
Non-investment grade		3.9			4.9			7.5			10.9			10.7			10.3			10.4			39	%		1	%
Total corporate funded loans	$	10.1		$	18.6		$	18.6		$	23.9		$	26.3		$	24.9		$	19.7			6	%		(21	%)

Corporate lending commitments
Investment grade	$	31.5		$	42.1		$	50.4		$	50.2		$	44.2		$	39.9		$	39.5			(22	%)		(1	%)
Non-investment grade		25.5			32.4			35.7			20.0			15.3			12.0			10.9			(69	%)		(9	%)
Total corporate lending commitments	$	57.0		$	74.5		$	86.1		$	70.2		$	59.5		$	51.9		$	50.4			(41	%)		(3	%)

Corporate funded loans plus lending commitments
Investment grade	$	37.7		$	55.8		$	61.5		$	63.2		$	59.8		$	54.5		$	48.8			(21	%)		(10	%)
Non-investment grade (2)	$	29.4		$	37.3		$	43.2		$	30.9		$	26.0		$	22.3		$	21.3			(51	%)		(4	%)

% investment grade		56	%		60	%		59	%		67	%		70	%		71	%		70	%
% non-investment grade		44	%		40	%		41	%		33	%		30	%		29	%		30	%

Total corporate funded loans and lending commitments	$	67.1		$	93.1		$	104.7		$	94.1		$	85.8		$	76.8		$	70.1			(33	%)		(9	%)
Hedges (3)	$	29.9		$	34.2		$	37.5		$	37.6		$	40.6		$	36.7		$	34.1			(9	%)		(7	%)
Total corporate funded loans and lending commitments net of hedges	$	37.2		$	58.9		$	67.2		$	56.5		$	45.2		$	40.1		$	36.0			(46	%)		(10	%)

(1)	In connection with certain of its Institutional Securities business activities, the Company provides loans or lending commitments to select clients related to its leveraged acquisition finance or relationship lending activities. For a further discussion of this activity, see the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2007.
(2)	For the quarters ended Nov 30, 2007, Feb 29, 2008, May 31, 2008 and Aug 31, 2008, the leveraged acquisition finance portfolio of pipeline commitments and closed deals was $19.6 billion, $15.9 billion, $12.7 billion and $9.3 billion, respectively.
(3)	Includes 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 19.

MORGAN STANLEY

Quarterly Global Wealth Management Group Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08			Aug 31, 2007			Aug 31, 2008			Percentage Change
Investment banking	$	166		$	164		$	166		$	129		$	104		$	152		$	105			(37	%)		(31	%)	$	496		$	361			(27	%)
Principal transactions:
Trading		129			133			145			191			177			210			143			(1	%)		(32	%)		407			530			30	%
Investments		(2	)		20			3			8			(4	)		(3	)		(9	)		*			(200	%)		21			(16	)		(176	%)
Commissions		315			357			353			408			363			346			326			(8	%)		(6	%)		1,025			1,035			1	%
Asset management, distribution and admin. fees		729			769			788			781			716			694			693			(12	%)		--			2,286			2,103			(8	%)
Interest and dividends		274			298			321			328			302			319			327			2	%		3	%		893			948			6	%
Other (1)		38			40			33			52			39			801			35			6	%		(96	%)		111			875			*
Total revenues		1,649			1,781			1,809			1,897			1,697			2,519			1,620			(10	%)		(36	%)		5,239			5,836			11	%
Interest expense		138			139			126			108			91			83			65			(48	%)		(22	%)		403			239			(41	%)
Net revenues		1,511			1,642			1,683			1,789			1,606			2,436			1,555			(8	%)		(36	%)		4,836			5,597			16	%

Total non-interest expenses (2)		1,285			1,378			1,396			1,411			1,352			1,447			1,589			14	%		10	%		4,059			4,388			8	%
Income before taxes (1)		226			264			287			378			254			989			(34	)		(112	%)		(103	%)		777			1,209			56	%
Provision for income taxes		87			102			119			151			95			370			(25	)		(121	%)		(107	%)		308			440			43	%
Income from continuing operations	$	139		$	162		$	168		$	227		$	159		$	619		$	(9	)		(105	%)		(101	%)	$	469		$	769			64	%

Return on average common equity(3)		32	%		40	%		39	%		52	%		42	%		172	%		*									37	%		70	%
Pre-tax profit margin (4)		15	%		16	%		17	%		21	%		16	%		41	%		*									16	%		22	%

(1)	The quarter ended May 31, 2008 includes a pre-tax gain of $748 million and income before taxes of $698 million, on the sale of the Spanish wealth management business, Morgan Stanley Wealth Management S.V., S.A.U.
(2)	The quarter ended August 31, 2008 includes a charge of $277 million related to the auction rate securities settlement.
(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 19.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Global Wealth Management Group

(unaudited)

	Quarter Ended																					Percentage Change From:
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08


Global representatives(1)		7,993			8,137			8,341			8,429			8,456			8,350			8,500			2	%		2	%

Annualized revenue per global representative (thousands)(2)	$	758		$	814		$	817		$	853		$	761		$	810		$	741			(9	%)		(9	%)

Assets by client segment (billions)
$10m or more		210			223			228			247			229			235			223			(2	%)		(5	%)
$1m - $10m		248			268			265			275			262			276			261			(2	%)		(5	%)
Subtotal - > $1m		458			491			493			522			491			511			484			(2	%)		(5	%)
$100k - $1m		174			180			182			179			175			176			171			(6	%)		(3	%)
< $100k		26			24			24			23			23			22			22			(8	%)		--
Client assets excluding corporate / other		658			695			699			724			689			709			677			(3	%)		(5	%)
Corporate / other		32			33			35			34			33			30			30			(14	%)		--
Total client assets (billions)	$	690		$	728		$	734		$	758		$	722		$	739		$	707			(4	%)		(4	%)

% of assets by client segment > $1m(3)		70	%		71	%		71	%		72	%		71	%		72	%		71	%

Fee-based client account assets (billions)(4)	$	202		$	210		$	211		$	201		$	185		$	194		$	186			(12	%)		(4	%)
Fee-based assets as a % of client assets		29	%		29	%		29	%		27	%		26	%		26	%		26	%

Bank deposit program (millions)	$	16,364		$	18,226		$	19,409		$	26,160		$	33,365		$	34,334		$	36,036			86	%		5	%

Client assets per global representative (millions)(5)	$	86		$	89		$	88		$	90		$	85		$	89		$	83			(6	%)		(7	%)

Domestic retail net new assets (billions)(6)	$	6.7		$	8.7		$	14.6		$	10.0		$	11.4		$	13.3		$	13.7			(6	%)		3	%

Domestic retail locations		451			453			455			451			447			459			464			2	%		1	%

(1)	Global Representatives for the quarter ended May 31, 2008 includes a decline of 233 global representatives resulting from the sale of Morgan Stanley Wealth Management, S.V., S.A.U.
(2)	Annualized revenue divided by average global representative headcount. Computation for the quarter ended May 31, 2008 excludes revenues associated with the sale of the Spanish wealth management business, Morgan Stanley Wealth Management S.V., S.A.U.
(3)	Excludes corporate / other assets.
(4)	Represents the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
(5)	Total client assets divided by period end global representative headcount.
(6)	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 19.

MORGAN STANLEY

Quarterly Asset Management Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended (1)																					Percentage Change From:						Nine Months Ended
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008 (2)			3Q08 vs. 3Q07			3Q08 vs. 2Q08			Aug 31, 2007			Aug 31, 2008 (2)			Percentage Change
Investment banking	$	31		$	61		$	92		$	80		$	26		$	30		$	23			(75	%)		(23	%)	$	184		$	79			(57	%)
Principal transactions:
Trading (3)		0			0			0			(129	)		(179	)		(113	)		13			*			112	%		0			(279	)		*
Investments		532			588			338			316			(201	)		(204	)		(199	)		(159	%)		2	%		1,458			(604	)		(141	%)
Commissions		6			6			6			5			4			5			3			(50	%)		(40	%)		18			12			(33	%)
Asset management, distribution and admin. fees		768			844			926			986			845			779			742			(20	%)		(5	%)		2,538			2,366			(7	%)
Interest and dividends		14			29			14			17			15			16			16			14	%		--			57			47			(18	%)
Other		34			18			10			13			71			15			157			*			*			62			243			*
Total revenues		1,385			1,546			1,386			1,288			581			528			755			(46	%)		43	%		4,317			1,864			(57	%)
Interest expense		17			37			22			36			38			40			108			*			170	%		76			186			145	%
Net revenues		1,368			1,509			1,364			1,252			543			488			647			(53	%)		33	%		4,241			1,678			(60	%)

Total non-interest expenses		989			1,206			873			958			704			715			851			(3	%)		19	%		3,068			2,270			(26	%)
Income / (loss) before taxes		379			303			491			294			(161	)		(227	)		(204	)		(142	%)		10	%		1,173			(592	)		(150	%)
Provision / (benefit) for income taxes		149			105			174			113			(58	)		(94	)		(63	)		(136	%)		33	%		428			(215	)		(150	%)
Income / (loss) from continuing operations	$	230		$	198		$	317		$	181		$	(103	)	$	(133	)	$	(141	)		(144	%)		(6	%)	$	745		$	(377	)		(151	%)

Return on average common equity (4)		31	%		23	%		35	%		18	%		*			*			*									30	%		*
Pre-tax profit margin (5)		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, Aug 31, 2007, Nov 30, 2007, Feb 29, 2008, May 31, 2008 and Aug 31, 2008 are $2.9 billion, $3.9 billion, $4.6 billion, $4.5 billion, $4.4 billion, $5.1 billion and $5.1 billion, respectively.
(2)	The quarter ended August 31, 2008 includes the operating results of the Crescent Real Estate Limited Partnerships which was included in the Company's consolidated results begininning May 31, 2008.
(3)	Trading results for the quarters ended November 30, 2007, February 29, 2008, May 31, 2008 and August 31, 2008 include losses related to securities issued by structured investment vehicles.
(4)	Refer to page 4 for the allocation of average common equity.
(5)	Income / (loss) 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 19.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Asset Management

(unaudited, dollars in billions)

	Quarter Ended																				Percentage Change From:						Nine Months Ended
	Feb 28, 2007			May 31, 2007			Aug 31, 2007		Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08			Aug 31, 2007			Aug 31, 2008			Percentage Change

Assets under management or supervision

Net flows by distribution channel
Morgan Stanley Retail & Intermediary	$	(1.7	)	$	0.8		$	1.2	$	(1.6	)	$	(1.5	)	$	(0.6	)	$	(2.4	)		*			*		$	0.3		$	(4.5	)		*
Van Kampen Retail & Intermediary		0.7			1.1			0.6		(1.2	)		(2.3	)		(2.1	)		(4.0	)		*			(90	%)		2.4			(8.4	)		*
Retail money markets		(1.8	)		(1.5	)		0.5		(2.4	)		1.6			3.2			(1.4	)		*			(144	%)		(2.8	)		3.4			*
Total Americas Retail		(2.8	)		0.4			2.3		(5.2	)		(2.2	)		0.5			(7.8	)		*			*			(0.1	)		(9.5	)		*
U.S. Institutional		0.0			1.2			0.2		1.2			0.6			0.9			(1.1	)		*			*			1.4			0.4			(71	%)
Institutional money markets		2.5			3.5			12.3		(2.9	)		7.8			12.8			9.5			(23	%)		(26	%)		18.3			30.1			64	%
Non- U.S.		4.8			4.2			6.0		7.3			0.4			1.3			1.0			(83	%)		(23	%)		15.0			2.7			(82	%)
Total net flows	$	4.5		$	9.3		$	20.8	$	0.4		$	6.6		$	15.5		$	1.6			(92	%)		(90	%)	$	34.6		$	23.7			(32	%)

Assets under management or supervision by distribution channel
Morgan Stanley Retail & Intermediary	$	75		$	80		$	80	$	81		$	75		$	76		$	68			(15	%)		(11	%)
Van Kampen Retail & Intermediary		144			155			149		150			135			138			123			(17	%)		(11	%)
Retail money markets		34			32			33		31			33			37			36			9	%		(3	%)
Total Americas Retail		253			267			262		262			243			251			227			(13	%)		(10	%)
U.S. Institutional		109			119			121		128			123			127			117			(3	%)		(8	%)
Institutional money markets		52			57			70		68			76			89			98			40	%		10	%
Non- U.S.		102			112			118		132			128			131			121			3	%		(8	%)
Total assets under management or supervision	$	516		$	555		$	571	$	590		$	570		$	598		$	563			(1	%)		(6	%)
Share of minority interest assets (1)		5			5			6		7			7			7			7			17	%		--
Total	$	521		$	560		$	577	$	597		$	577		$	605		$	570			(1	%)		(6	%)

(1)	Amount represents Asset Management's proportional share of assets managed by entities in which it owns a minority interest.
Note:	Certain reclassifications have been made to prior period amounts to conform to the current presentation.
	Refer to Legal Notice page 19.

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Asset Management

(unaudited, dollars in billions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08			Aug 31, 2007			Aug 31, 2008			Percentage Change

Assets under management or supervision

Net flows by asset class
Core Asset Management
Equity	$	(1.8	)	$	(2.5	)	$	(6.4	)	$	(1.8	)	$	(6.8	)	$	(5.7	)	$	(5.1	)		20	%		11	%	$	(10.7	)	$	(17.6	)		(64	%)
Fixed income		1.4			5.2			13.4			(5.5	)		8.9			16.6			5.9			(56	%)		(64	%)		20.0			31.4			57	%
Alternatives (2)		4.6			2.3			6.2			4.7			4.3			3.0			0.9			(85	%)		(70	%)		13.1			8.2			(37	%)
Unit trusts		0.5			0.6			0.4			0.1			(0.3	)		(0.1	)		(0.5	)		*			*			1.5			(0.9	)		*
Total Core Asset Management		4.7			5.6			13.6			(2.5	)		6.1			13.8			1.2			(91	%)		(91	%)		23.9			21.1			(12	%)

Merchant Banking
Private Equity		(0.3	)		(0.1	)		0.9			0.0			(0.1	)		(0.1	)		(0.1	)		(111	%)		--			0.5			(0.3	)		*
Infrastructure		0.0			0.6			0.9			0.9			0.4			1.2			0.0			*			*			1.5			1.6			7	%
Real Estate		0.1			3.2			5.4			2.0			0.2			0.6			0.5			(91	%)		(17	%)		8.7			1.3			(85	%)
Total Merchant Banking		(0.2	)		3.7			7.2			2.9			0.5			1.7			0.4			(94	%)		(76	%)		10.7			2.6			(76	%)
Total net flows	$	4.5		$	9.3		$	20.8		$	0.4		$	6.6		$	15.5		$	1.6			(92	%)		(90	%)	$	34.6		$	23.7			(32	%)

Assets under management or supervision by asset class
Core Asset Management
Equity	$	245		$	265		$	254		$	265		$	234		$	239		$	206			(19	%)		(14	%)
Fixed income		179			187			201			201			210			227			231			15	%		2	%
Alternatives (2)		54			58			63			67			69			73			70			11	%		(4	%)
Unit trusts		15			16			15			15			14			14			12			(20	%)		(14	%)
Total Core Asset Management		493			526			533			548			527			553			519			(3	%)		(6	%)

Merchant Banking
Private Equity		2			2			3			4			3			3			3			--			--
Infrastructure		0			1			1			2			3			4			4			*			--
Real Estate		21			26			34			36			37			38			37			9	%		(3	%)
Total Merchant Banking		23			29			38			42			43			45			44			16	%		(2	%)
Total Assets Under anagement/Supervision	$	516		$	555		$	571		$	590		$	570		$	598		$	563			(1	%)		(6	%)
Share of minority interest assets (1)		5			5			6			7			7			7			7			17	%		--
Total	$	521		$	560		$	577		$	597		$	577		$	605		$	570			(1	%)		(6	%)

(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 hedge 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 19.

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, 2007		May 31, 2007		Aug 31, 2007		Nov 30, 2007		Feb 29, 2008		May 31, 2008		Aug 31, 2008		3Q08 vs. 3Q07			3Q08 vs. 2Q08

Assets under management or supervision by distribution channel
Morgan Stanley Retail & Intermediary	$	75	$	80	$	80	$	81	$	75	$	76	$	68		(15	%)		(11	%)
Van Kampen Retail & Intermediary		144		155		149		150		135		138		123		(17	%)		(11	%)
Retail money markets		34		32		33		31		33		37		36		9	%		(3	%)
Total Americas Retail	$	253	$	267	$	262	$	262	$	243	$	251	$	227		(13	%)		(10	%)
U.S. Institutional		109		119		121		128		123		127		117		(3	%)		(8	%)
Institutional money markets		52		57		70		68		76		89		98		40	%		10	%
Non- U.S.		102		112		118		132		128		131		121		3	%		(8	%)
Sub-total assets under management or supervision	$	516	$	555	$	571	$	590	$	570	$	598	$	563		(1	%)		(6	%)

Global Wealth Management Group		153		157		162		185		172		174		166		2	%		(5	%)
Total assets under management or supervision	$	669	$	712	$	733	$	775	$	742	$	772	$	729		(1	%)		(6	%)
Share of minority interest assets (1)		5		5		6		7		7		7		7		17	%		--
Total	$	674	$	717	$	739	$	782	$	749	$	779	$	736		--			(6	%)


Consolidated assets under management or supervision by asset class
Equity	$	317	$	344	$	333	$	355	$	316	$	327	$	288		(14	%)		(12	%)
Fixed income		201		210		227		235		241		261		265		17	%		2	%
Alternatives (2)		54		58		63		67		69		73		70		11	%		(4	%)
Private Equity		2		2		3		4		3		3		3		--			--
Infrastructure		0		1		1		2		3		4		4		*			--
Real Estate		21		26		34		36		37		38		37		9	%		(3	%)
Sub-total		595		641		661		699		669		706		667		1	%		(6	%)
Unit trusts		15		16		15		15		14		14		12		(20	%)		(14	%)
Other (3)		59		55		57		61		59		52		50		(12	%)		(4	%)
Total assets under management or supervision	$	669	$	712	$	733	$	775	$	742	$	772	$	729		(1	%)		(6	%)
Share of minority interest assets (1)		5		5		6		7		7		7		7		17	%		--
Total	$	674	$	717	$	739	$	782	$	749	$	779	$	736		--			(6	%)

(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 hedge 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 19.

MORGAN STANLEY

Quarterly Intersegment Eliminations Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended																					Percentage Change From:						Nine Months Ended
	Feb 28, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008			3Q08 vs. 3Q07			3Q08 vs. 2Q08			Aug 31, 2007			Aug 31, 2008			Percentage Change

Investment banking (1)	$	(2	)	$	(16	)	$	(38	)	$	(3	)	$	(1	)	$	(8	)	$	(14	)		63	%		(75	%)	$	(56	)	$	(23	)		59	%
Principal transactions:
Trading		0			0			0			(3	)		(2	)		(3	)		(1	)		*			67	%		0			(6	)		*
Investments		0			0			0			0			0			0			0			--			--			0			0			--
Commissions		(7	)		(6	)		(6	)		(17	)		(8	)		(9	)		(18	)		(200	%)		(100	%)		(19	)		(35	)		(84	%)
Asset management, distribution and admin. fees		(43	)		(42	)		(37	)		(53	)		(42	)		(43	)		(45	)		(22	%)		(5	%)		(122	)		(130	)		(7	%)
Interest and dividends		(138	)		(120	)		(71	)		(14	)		(12	)		(11	)		(12	)		83	%		(9	%)		(329	)		(35	)		89	%
Other		(5	)		(3	)		(3	)		(2	)		(2	)		8			(2	)		33	%		(125	%)		(11	)		4			136	%
Total revenues		(195	)		(187	)		(155	)		(92	)		(67	)		(66	)		(92	)		41	%		(39	%)		(537	)		(225	)		58	%
Interest expense		(148	)		(131	)		(83	)		(26	)		(27	)		(27	)		(28	)		66	%		(4	%)		(362	)		(82	)		77	%
Net revenues		(47	)		(56	)		(72	)		(66	)		(40	)		(39	)		(64	)		11	%		(64	%)		(175	)		(143	)		18	%

Total non-interest expenses		(53	)		(63	)		(58	)		(69	)		(44	)		(44	)		(67	)		(16	%)		(52	%)		(174	)		(155	)		11	%

Income before taxes		6			7			(14	)		3			4			5			3			121	%		(40	%)		(1	)		12			*
Provision for income taxes		2			2			(4	)		1			1			3			1			125	%		(67	%)		-			5			*
Income from continuing operations	$	4		$	5		$	(10	)	$	2		$	3		$	2		$	2			120	%		--		$	(1	)	$	7			*

(1)	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 19.

MORGAN STANLEY

The following (page 15) 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, 2007			May 31, 2007			Aug 31, 2007			Nov 30, 2007			Feb 29, 2008			May 31, 2008			Aug 31, 2008

Total assets		$	1,182,061		$	1,199,993		$	1,185,131		$	1,045,409		$	1,090,896		$	1,031,228		$	988,821

Less:	Securities purchased under agreements to resell		(193,162	)		(144,051	)		(176,910	)		(126,887	)		(143,097	)		(165,928	)		(179,540	)
	Securities borrowed		(277,093	)		(252,213	)		(257,032	)		(239,994	)		(243,695	)		(257,796	)		(241,051	)
Add:	Financial instruments sold, not yet purchased		157,807			166,549			176,097			134,341			171,111			161,748			150,426
Less:	Derivative contracts sold, not yet purchased		(51,574	)		(58,919	)		(62,088	)		(71,604	)		(89,392	)		(77,439	)		(68,401	)
	Subtotal		818,039			911,359			865,198			741,265			785,823			691,813			650,255
Less:	Cash and securities deposited with clearing
	organizations or segregated under federal and
	other regulations or requirements		(35,739	)		(47,114	)		(43,229	)		(61,608	)		(60,964	)		(53,393	)		(58,798	)
	Assets recorded under certain provisions of SFAS No.140 and FIN 46		(124,163	)		(155,692	)		(129,552	)		(110,001	)		(83,906	)		(55,406	)		(41,955	)
	Goodwill and intangible assets		(4,262	)		(4,132	)		(3,451	)		(4,071	)		(4,061	)		(3,890	)		(3,996	)

Adjusted assets		$	653,875		$	704,421		$	688,966		$	565,585		$	636,892		$	579,124		$	545,506

Common equity		$	36,854		$	38,411		$	34,150		$	30,169		$	32,180		$	33,393		$	34,665
Preferred equity			1,100			1,100			1,100			1,100			1,100			1,100			1,100
Shareholders' equity			37,954			39,511			35,250			31,269			33,280			34,493			35,765
Junior subordinated debt issued to capital trusts (1) (2)			4,885			4,874			4,875			4,876			10,621			10,467			10,364
	Subtotal		42,839			44,385			40,125			36,145			43,901			44,960			46,129
Less: Goodwill and intangible assets			(4,262	)		(4,132	)		(3,451	)		(4,071	)		(4,061	)		(3,890	)		(3,996	)
Tangible shareholders' equity		$	38,577		$	40,253		$	36,674		$	32,074		$	39,840		$	41,070		$	42,133

Leverage ratio (3)			30.6	x		29.8	x		32.3	x		32.6	x		27.4	x		25.1	x		23.5	x

Adjusted leverage ratio (4)			16.9	x		17.5	x		18.8	x		17.6	x		16.0	x		14.1	x		12.9	x

(1)	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.
(2)	During the quarter ended February 29, 2008, the Company issued $5,579 million of junior subordinated debt securities related to China Investment Corporation's investment in the Company in December 2007. For a further discussion of this investment, see the Company's Annual Report on Form 10-K for fiscal year ended November 30, 2007.
(3)	Leverage ratio equals total assets divided by tangible shareholders' equity.
(4)	Adjusted leverage ratio equals adjusted 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 19.

This page represents an addendum to the 3Q 2008 Financial Supplement.

MORGAN STANLEY

Institutional Securities - U.S. Subprime Analysis

(unaudited, dollars in billions)

							Profit / (Loss)
	Statement of Financial Condition						Three Months Ended			Nine Months Ended			Net Exposure (1)
	May 31, 2008			Aug 31, 2008			Aug 31, 2008			Aug 31, 2008			May 31, 2008			Aug 31, 2008

Super Senior Exposure
High- Grade	$	0.0		$	0.0		$	0.0		$	0.0		$	0.0		$	0.0
Mezzanine		(7.4	)		(7.2	)		(0.3	)		(1.2	)		1.6			1.1
CDO-Squared		0.0			0.0			0.0			0.0			0.0			0.0
Total ABS CDO Super Senior Exposure	$	(7.4	)	$	(7.2	)	$	(0.3	)	$	(1.2	)	$	1.6		$	1.1

Other Retained and Warehouse Exposure
ABS CDO CDS	$	2.1		$	2.0		$	0.1		$	0.7		$	(0.8	)	$	(0.5	)
ABS CDO Bonds		0.7			0.1			(0.1	)		(0.4	)		0.7			0.1
CDO Warehouse		0.0			0.0			0.0			0.0			0.0			0.0
Total Other Retained and Warehouse Exposure		2.8			2.1			0.0			0.3			(0.1	)		(0.4	)
Subtotal ABS CDO Related Exposure (2)	$	(4.6	)	$	(5.1	)	$	(0.3	)	$	(0.9	)	$	1.5		$	0.7

U.S. Subprime Mortgage Related Exposure
Loans	$	0.4		$	0.3		$	(0.1	)	$	(0.1	)	$	0.4		$	0.3
Total Rate of Return Swaps		0.0			0.0			0.0			0.0			0.1			0.0
ABS Bonds		1.3			1.2			(0.1	)		(0.9	)		1.3			1.2
ABS CDS		14.0			13.9			0.3			2.0			(3.0	)		(2.2	)
Subtotal U.S. Subprime Mortgage Related Exposure (3)	$	15.7		$	15.4		$	0.1		$	1.0		$	(1.2	)	$	(0.7	)
Total ABS CDO / Subprime Net Exposure (4)	$	11.1		$	10.3		$	(0.2	)	$	0.1		$	0.3		$	(0.0	)

(1)	Net Exposure is defined as potential loss to the Firm in an event of 100% default, assuming zero recovery, over a period of time. The value of these positions remains subject to mark-to-market volatility. Positive amounts indicate potential loss (long position) in a default scenario. Negative amounts indicate potential gain (short position) in a default scenario.
(2)	In determining the fair value of the Firm’s ABS CDO-related exposures – which represent the most senior tranches of the capital structure of subprime ABS CDOs – Morgan Stanley took into consideration observable transactions and data for relevant benchmark instruments in synthetic subprime markets. The deterioration of these inputs have led to significant declines in the estimates of fair value. These declines reflect increased implied losses across this portfolio. At August 31, 2008, these implied loss levels are consistent with losses in the range between 22% - 47% implied by the ABX indices. These cumulative loss levels, at a severity rate of 57%, imply defaults in the range of 84% - 95% for 2005 and 2006 outstanding mortgages.
(3)	In calculating the fair value of the Firm’s U.S. subprime mortgage related exposures – including loans, total rate-of-return swaps, ABS bonds (including subprime residuals) and ABS CDS – Morgan Stanley took into consideration observable transactions, the continued deterioration in market data, as reflected by the sharp decline in the ABX indices, and other market developments, including updated cumulative loss data.
(4)	Statement of financial condition total is presented on a net basis. These balances are presented on a gross basis in the Company's statement of financial condition.

At Aug 31, 2008, the investment portfolios of Morgan Stanley Bank (Utah) and Morgan Stanley Trust FSB (collectively, the "Subsidiary Banks") include certain subprime-related securities. The securities in the Subsidiary Banks' portfolios are part of the company's overall Treasury liquidity management portfolio. Such portfolios do not contain any subprime whole loans, subprime residuals or CDOs. The market value of the Subsidiary Banks' subprime-related securities, most of which are AAA-rated residential mortgage-backed securities, was $3.4 billion at Aug 31, 2008 and $4.0 billion at May 31,2008. For the three and nine months ended Aug 31, 2008, these portfolios incurred losses of $0.1 billion and $0.4 billion, respectively.

Note:

Refer to Legal Notice page 19.

This page represents an addendum to the 3Q 2008 Financial Supplement.

MORGAN STANLEY

Institutional Securities - Non-subprime Residential Mortgage Analysis

(unaudited, dollars in billions)

					Profit and (Loss)
	Statement of Financial Condition				Three Months Ended			Nine Months Ended			Net Exposure (1)
	May 31, 2008		Aug 31, 2008		Aug 31, 2008			Aug 31, 2008			May 31, 2008			Aug 31, 2008

Residential Loans (2)	$	4.8	$	4.3	$	(0.1	)	$	(0.2	)	$	4.8		$	4.3
RMBS Bonds (2)		4.0		3.2		(0.4	)		(1.4	)		4.0			3.2
RMBS Backed Warehouse Lines		0.2		0.2		0.0			0.0			0.2			0.2
RMBS Swaps(3)		0.2		0.4		(0.1	)		(0.1	)		(2.3	)		(1.2	)
Other secured financings (4)		3.2		2.8		0.0			0.0			0.0			0.0
Total residential non-subprime(5)(6)	$	12.4	$	10.9	$	(0.6	)	$	(1.7	)	$	6.7		$	6.5

(1)	Net Exposure is defined as potential loss to the Firm in an event of 100% default, assuming zero recovery, over a period of time. The value of these positions remains subject to mark-to-market volatility. Positive amounts indicate potential loss (long position) in a default scenario. Negative amounts indicate potential gain (short position) in a default scenario.
(2)	Gross and Net Exposure on Residential Loans and RMBS Bonds was split 53% Alt-A/Near prime and 47% prime underlying collateral at August 31, 2008. Gross and Net Exposure of U.S. Alt-A Resident Loans and Bonds was $2.2 billion at August 31, 2008.
(3)	Represents both hedges and directional positioning. At August 31, 2008, these positions include credit default and super senior CDO swaps.
(4)	Represents assets recorded under certain provisions of SFAS 140 and FASB Interpretation 46R that function as collateral for an offsetting amount of non-recourse debt to third parties. Any retained interests in these transactions are reflected in RMBS Bonds.
(5)	Statement of financial condition total is presented on a net basis. These balances are presented on a gross basis in the Company's statement of financial condition.
(6)	Regional distribution of Net Exposure was 57% U.S., 35% Europe and 8% Asia at August 31, 2008.

Note:

Refer to Legal Notice page 19.

This page represents an addendum to the 3Q 2008 Financial Supplement.

MORGAN STANLEY

Institutional Securities - CMBS and Commercial Whole Loan Analysis

(unaudited, dollars in billions)

					Profit / (Loss)
	Statement of Financial Condition				Three Months Ended			Nine Months Ended			Net Exposure (1)
	May 31, 2008		Aug 31, 2008		Aug 31, 2008			Aug 31, 2008			May 31, 2008			Aug 31, 2008

CMBS Bonds	$	5.8	$	5.8	$	(0.1	)	$	(0.6	)	$	5.8		$	5.8
CMBS Backed Warehouse Lines (2)		1.9		1.6		0.0			0.0			1.9			1.6
Commercial Loans (2)(3)		6.3		4.6		(0.2	)		(0.2	)		6.7			4.9
CMBS Swaps (4)		2.0		3.3		0.5			1.4			(8.0	)		(4.6	)
Other Secured Financing (5)		6.1		4.2		0.0			0.0			0.0			0.0
Total CMBS / Commercial Whole Loan Net Exposure(6)(7)	$	22.1	$	19.5	$	0.2		$	0.6		$	6.4		$	7.7

(1)	Net Exposure is defined as potential loss to the Firm in an event of 100% default, assuming zero recovery, over a period of time. The value of these positions remains subject to mark-to-market volatility. Positive amounts indicate potential loss (long position) in a default scenario. Negative amounts indicate potential gain (short position) in a default scenario.
(2)	Includes unfunded loan commitments.
(3)	Composition of Commercial Loans was 72% Senior and 28% Mezzanine at August 31, 2008.
(4)	Represents both hedges and directional positioning. At August 31, 2008, these positions include credit default, super senior CDO, index, and total rate-of-return swaps.
(5)	Represents assets recorded under certain provisions of SFAS 140 and FASB Interpretation 46R that function as collateral for an offsetting amount of non-recourse debt to third parties. Any retained interests in these transactions are reflected in CMBS Bonds.
(6)	Statement of financial condition total is presented on a net basis. These balances are presented on a gross basis in the Company's statement of financial condition.
(7)	Regional distribution of Net Exposure was 53% U.S., 26% Asia and 21% Europe at August 31, 2008.
Note:	Refer to Legal Notice page 19.

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 16, 2008.

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