Business: Morgan Stanley, Global Medium-Term Notes, Series C, Senior Fixed Rate Notes, 8% Stock Participation Accreting Redemption Quarterly-pay Securities (SPARQS) due 6/15/2004, mandatorily exchangeable at maturity for common stock of Schering-Plough Corp. (NYSE: SGP) unless called prior to maturity, issued at $18.50 per SPARQS (the closing price of Schering-Plough on 5/14/2003). The SPARQS pay 8% ($1.48) per annum quarterly interest distributions on 9/15/03, 12/15/03, 3/15/04 and 6/15/04 to holders of record five calendar days prior to the payment date. The units are callable at Morgan Stanley’s option beginning 11/30/2003 for cash at a total maximum annual yield, including distributions, of 24.5% per annum. At maturity, if not previously called, the holder will receive one share of Schering-Plough common stock for each SPARQS. If on any date during the term of the SPARQS the price of Schering-Plough common stock is less than $2.00 the maturity date of the SPARQS will be accelerated and the shares of Schering-Plough common stock will be delivered to the holders. See the IPO prospectus for further information on the SPARQS by clicking on the ‘Link to IPO Prospectus’ provided below.