morgan stanley Q4 2007

Overall --NI -3.59 billion, or -$3.61 a share --revenue reflects $9.4 Billion of Mortgage Related Writedowns (3.7 in Oct, 5.7 in Nov, 7.8 related to subprime) --Firm Further Bolsters Its Strong Capital Position With a Long-Term Investment of Approximately $5 Billion from China Investment Corporation --Morgan Stanley valuation of subprime position as of November 30 takes into consideration a variety of inputs including observable trades, the continued deterioration in market conditions, the decline in the ABX Indices, other market developments, including mortgage remittances and updated cumulative loss data. --Of 9.4 writedown, $7.8 billion represents writedowns of the Firm’s U.S. subprime trading positions (including the $3.7 billion writedown of subprime assets announced on November 7, based on valuations as of October 31). --In addition, the Firm’s $9.4 billion in mortgage related writedowns also includes $1.2 billion of writedowns related to European Non-Conforming Loans, CMBS, ALT-A, and Non-Performing and Other Loans. --The Firm’s remaining direct net U.S. subprime exposure is $1.8 billion at November 30, down from $10.4 billion at August 31 (writien down 7.8 subprime). The value of these positions remains subject to mark-to-market volatility. An updated schedule defining and detailing the Firm’s direct U.S. subprime net exposure is included in the financial supplement. Breakdown FI and trading --Fixed income sales and trading recorded a net loss of $7.9 billion,