<SUBMISSION>
<ACCESSION-NUMBER>0000950103-06-002654
<TYPE>FWP
<PUBLIC-DOCUMENT-COUNT>3
<FILING-DATE>20061122
<DATE-OF-FILING-DATE-CHANGE>20061122
<SUBJECT-COMPANY>
<COMPANY-DATA>
<CONFORMED-NAME>MORGAN STANLEY
<CIK>0000895421
<ASSIGNED-SIC>6211
<IRS-NUMBER>363145972
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1130
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>FWP
<ACT>34
<FILE-NUMBER>333-131266
<FILM-NUMBER>061236710
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1585 BROADWAY
<CITY>NEW YORK
<STATE>NY
<ZIP>10036
<PHONE>212-761-4000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1585 BROADWAY
<CITY>NEW YORK
<STATE>NY
<ZIP>10036
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MORGAN STANLEY DEAN WITTER & CO
<DATE-CHANGED>19980326
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>DEAN WITTER DISCOVER & CO
<DATE-CHANGED>19960315
</FORMER-COMPANY>
</SUBJECT-COMPANY>
<FILED-BY>
<COMPANY-DATA>
<CONFORMED-NAME>MORGAN STANLEY
<CIK>0000895421
<ASSIGNED-SIC>6211
<IRS-NUMBER>363145972
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1130
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>FWP
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1585 BROADWAY
<CITY>NEW YORK
<STATE>NY
<ZIP>10036
<PHONE>212-761-4000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1585 BROADWAY
<CITY>NEW YORK
<STATE>NY
<ZIP>10036
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MORGAN STANLEY DEAN WITTER & CO
<DATE-CHANGED>19980326
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>DEAN WITTER DISCOVER & CO
<DATE-CHANGED>19960315
</FORMER-COMPANY>
</FILED-BY>
<DOCUMENT>
<TYPE>FWP
<SEQUENCE>1
<FILENAME>dp04068_fwp-ps147.htm
<TEXT>

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<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
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	<TD align=right width=100%>
<B><I><FONT size=2 face="sans-serif">Preliminary Terms No. 147</FONT></I></B>
	</TD>
</TR>
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	<TD align=right width=100%>
<B><I><FONT size=2 face="sans-serif">Registration Statement No. 333-131266</FONT></I></B>
	</TD>
</TR>
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	<TD align=right width=100%>
<B><I><FONT size=2 face="sans-serif">Dated November 22,
2006</FONT></I></B>
	</TD>
</TR>
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	<TD align=right width=100%>
<B><I><FONT size=2 face="sans-serif">Rule 433</FONT></I></B>
	</TD>
</TR>
</TABLE>
<BR>
<P align="center">
<B><FONT size=5 face="sans-serif">7.5% SPARQS<SUP>&#174;</SUP></FONT> <FONT size=2 face="sans-serif"> </FONT><FONT size=4 face="sans-serif">DUE </FONT><FONT size=5 face="sans-serif">J</FONT><FONT size=4 face="sans-serif">ANUARY </FONT><FONT size=5 face="sans-serif">20, 2008<br>
</FONT></B><B><I><FONT size=2 face="sans-serif">(Stock Participation Accreting Redemption Quarterly-pay Securities </FONT></I></B><B><SUP><FONT size=2 face="sans-serif">SM</FONT></SUP></B><B><I><FONT size=2 face="sans-serif">)<br>
</FONT></I></B><B><FONT size=2 face="sans-serif">ISSUED BY </FONT></B><B><FONT size=5 face="sans-serif">M</FONT></B><B><FONT size=2 face="sans-serif">ORGAN </FONT></B><B><FONT size=5 face="sans-serif">S</FONT></B><B><FONT size=2 face="sans-serif">TANLEY</FONT></B><BR>
</P>
<P align="center"><BR>
  <B><FONT size=5 face="sans-serif">M</FONT></B><B><FONT size=2 face="sans-serif">ANDATORILY </FONT></B><B><FONT size=5 face="sans-serif">E</FONT></B><B><FONT size=2 face="sans-serif">XCHANGEABLE</FONT></B><BR>
  <B><FONT size=2 face="sans-serif">FOR THE </FONT></B><B><FONT size=5 face="sans-serif">C</FONT></B><B><FONT size=2 face="sans-serif">OMMON </FONT></B><B><FONT size=5 face="sans-serif">S</FONT></B><B><FONT size=2 face="sans-serif">TOCK OF</FONT></B></P>
<P align="center">&nbsp;</P>
<P align="center">
<B><FONT size=5 face="sans-serif">COACH, INC.</FONT></B></P>
<P align="center">&nbsp;</P>
<P align="left">
<B><I><FONT size=2 face="sans-serif">The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration
statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering.  You may get these documents for free by visiting EDGAR on the SEC Web site at </FONT></I></B><B><I><U><FONT size=2 face="sans-serif">www.sec.gov</FONT></U></I></B><B><I><FONT size=2 face="sans-serif">. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling
toll-free 1-800-584-6837.</FONT></I></B></P>
<P align="left">
  <font face="Arial, Helvetica, sans-serif"><U> <a href="http://www.sec.gov/Archives/edgar/data/895421/000095010306000149/sparqsproductsupp.txt"><font size="2">Prospectus
Supplement for SPARQS dated January 25, 2006 </font></a> </U><font size="2"><BR>
<U> <a href="http://www.sec.gov/Archives/edgar/data/895421/000095010306000145/jan2506_424b2.txt">Prospectus
dated January 25, 2006</a></U></font><U> <br>
</U></font></P>
<table border=0 cellspacing=0 cellpadding=0 width=100%>
  <tr valign="bottom">
    <td colspan="2" align=left><hr width=100% size=2 noshade color="#000066">
    </td>
  </tr>
  <tr valign="bottom">
    <td align=left width=50%>&nbsp;</td>
    <td align=right width=50%><b><font color="#000066" size=3 face="serif">MORGAN
          STANLEY</font></b> </td>
  </tr>
</table>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
  <TD align=right><img src="logo-s.jpg"></TD>
</TR>
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	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">7.5% SPARQS due January 20, 2008</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Mandatorily Exchangeable for the Common Stock of</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Coach, Inc.</FONT></B>
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT color="#000066" size=4 face="sans-serif">Overview</FONT></B>
	</TD>
</TR>
</TABLE>
<BR>
<P align="left">
<B><FONT size=2 face="sans-serif">Stock Participation Accreting Redemption Quarterly-pay Securities</FONT></B><B><SUP><FONT size=2 face="sans-serif">SM</FONT></SUP></B></P>
<P align="left">
<FONT size=2 face="sans-serif">SPARQS are short-term yield-enhancement securities that provide enhanced current income with exposure to an underlying security. In exchange for current income, investors forgo upside potential above the yield to
call.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">How SPARQS Work</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">SPARQS pay a relatively high fixed quarterly coupon compared to the dividend yield of the underlying stock in exchange for a limit on the opportunity for appreciation. Regardless of the stated maturity, SPARQS are callable by
the issuer at any time after the call date, typically 6 months from the issue date. If called, the SPARQS will return a stated annualized return, inclusive of any coupons previously paid and accrued to the Call Date. If not called, SPARQS will
return a fixed number of shares of the underlying stock per SPARQS. </FONT><B><FONT size=2 face="sans-serif">SPARQS are not principal protected.</FONT></B></P>
<P align="left">&nbsp;</P>
<TABLE border=0 cellspacing=0 cellpadding=0 width=100%>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#000066"></TD>
  </TR>
  <TR valign="bottom">
    <TD width=50% align=left valign="top"><B><FONT color="#000066" size=1>page
          2 of 10 </FONT></B></TD>
    <TD align=right width=50%><B><FONT color="#000066" size=2 face="serif">MORGAN
          STANLEY</FONT></B> </TD>
  </TR>
</TABLE>
<br>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br><TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD align=right><img src="logo-s.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <B><FONT size=2 face="sans-serif">7.5% SPARQS
          due January 20, 2008</FONT></B> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <B><FONT size=2 face="sans-serif">Mandatorily
          Exchangeable for the Common Stock of</FONT></B> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <B><FONT size=2 face="sans-serif">Coach, Inc.</FONT></B> </TD>
  </TR>
  <TR>
    <TD>
      <HR noshade size=1>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <B><FONT color="#000066" size=4 face="sans-serif">Fact Sheet</FONT></B> </TD>
  </TR>
</TABLE>
<P align="left"><I><FONT size=2 face="sans-serif">The SPARQS offered are senior unsecured obligations of Morgan Stanley, will pay 7.5% interest per year and will have the terms described in the prospectus supplement for SPARQS and the prospectus, as supplemented or
  modified by these preliminary terms. At maturity the SPARQS will pay a number of shares of Coach, Inc. common stock, subject to the Issuer&#146;s right to call the SPARQS for cash at any time beginning July 20, 2007. The SPARQS do not guarantee any
  return of principal at maturity.</FONT></I></P>
<P align="left">
<B><FONT color="#000066" size=2 face="sans-serif">Expected Key Dates</FONT></B></P>
<table width="100%"  border="1" cellpadding="2" cellspacing="0">
  <tr valign="top">
    <td width="34%"><b><font size=2 face="sans-serif">Expected Pricing Date: </font></b><font size=2 face="sans-serif">December &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
        2006</font></td>
    <td width="33%"><p align="left"> <b><font size=2 face="sans-serif">Expected
            Issue Date (Settlement Date): </font></b><font size=2 face="sans-serif">December &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
            2006 (5 trading days after the Pricing Date)</font></p></td>
    <td width="33%"><p align="left"> <b><font size=2 face="sans-serif">Maturity
            Date: </font></b><font size=2 face="sans-serif">January 20, 2008</font><b><font size=2 face="sans-serif">, </font></b><font size=2 face="sans-serif">subject
            to postponement due to a market disruption event</font></p></td>
  </tr>
</table>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD align=left width=100%> <B><FONT color="#000066" size=2 face="sans-serif">Key Terms</FONT></B> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#000066">     </TD>
  </TR>
</TABLE>
<br>
<table width="100%"  border="1" cellpadding="2" cellspacing="0">
  <tr valign="top">
    <td width="34%"><B><FONT size=2 face="sans-serif">Issuer: </FONT></B><FONT size=2 face="sans-serif">Morgan
    Stanley</FONT></td>
    <td width="33%"><p align="left"> <B><FONT size=2 face="sans-serif">Underlying
            Equity: </FONT></B><FONT size=2 face="sans-serif">Coach, Inc. common
            stock (the &#147;COH Stock&#148;)</FONT></p></td>
    <td width="33%"><p align="left">      <B><FONT size=2 face="sans-serif">Interest: </FONT></B><FONT size=2 face="sans-serif">7.5%
      per annum, payable quarterly beginning April 20, 2007</FONT></p></td>
  </tr>
</table>
<TABLE border=1 width=100% cellspacing=0 cellpadding=2>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Issue Price:</FONT></B></P>

	</TD>
	<TD width=70% colspan=1><P><FONT size=2 face="sans-serif">COH Stock closing
	      price on the Pricing Date, provided that the SPARQS will be issued
	      at 100% of the Stated Principal Amount per SPARQS and the agent&#146;s
	      commissions will be 1.625% of the Stated Principal Amount per SPARQS;
	      provided that the price to public and the agent's commissions for any
	      single transaction to purchase between &#36;1,000,000 to &#36;2,999,999
	      principal  amount of SPARQS will be 99.75% of the Stated Principal Amount
	      per SPARQS and 1.375% of the Stated Principal Amount per SPARQS, respectively,
	      for any single transaction to purchase between &#36;3,000,000 to &#36;4,999,999
	      principal amount of SPARQS  will be 99.625% of the Stated Principal Amount
	      per SPARQS and 1.25% of the Stated Principal Amount per SPARQS, respectively,
	      and for any single transaction to purchase &#36;5,000,000 or more principal
	      amount of SPARQS will be 99.50% of the Stated  Principal Amount per SPARQS
	      and 1.125% of the Stated Principal Amount per SPARQS, respectively. Selling
	      concessions allowed to dealers in connection with the offering may be
	      reclaimed by the agent, if, within 30 days of the offering, the agent
	       repurchases the SPARQS distributed by such dealers.</FONT></P>

	</TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Stated Principal Amount (Par):</font></b></TD>
  <TD colspan=1><font size=2 face="sans-serif">COH Stock closing price on the
    Pricing Date</font></TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Interest Payment Dates:</font></b></TD>
  <TD colspan=1><font size=2 face="sans-serif">April 20, 2007, July 20, 2007,
    October 20, 2007 and the Maturity Date</font></TD>
</TR>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Exchange at Maturity:</FONT></B></P>
</TD>
	<TD width=70% colspan=1><P><FONT size=2 face="sans-serif">At maturity, unless previously called by the Issuer, each SPARQS will be exchanged into COH Stock at the Exchange Ratio</FONT></P>
</TD>
</TR>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Exchange Ratio:</FONT></B></P>

	</TD>
	<TD width=70% colspan=1><P><FONT size=2 face="sans-serif">The initial exchange ratio will be 1.0, subject to adjustment for corporate events; however, if the Issuer determines to price the SPARQS at a fraction of the closing price of COH Stock, the
initial exchange ratio will be adjusted so that it represents that fraction.</FONT></P>

	</TD>
</TR>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Issuer Call Right:</FONT></B></P>

	</TD>
	<TD width=70% colspan=1><P><FONT size=2 face="sans-serif">Beginning on July 20, 2007, the Issuer may call the SPARQS for a cash Call Price that, together with coupons paid from the Issue Date through the Call Date, implies an annualized rate of
return on the Stated Principal Amount equal to the Yield to Call</FONT></P>

	</TD>
</TR>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Expected Yield to Call:</FONT></B></P>

	</TD>
	<TD width=70% colspan=1><P><FONT size=2 face="sans-serif">16-20% per annum on
	      the Stated Principal Amount (actual yield to call to be determined
	      on the Pricing Date). See &#147;Hypothetical Call Price Calculations&#148; beginning
	      on page  6.</FONT></P>

	</TD>
</TR>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Call Notice Date:</FONT></B></P>

	</TD>
	<TD width=70% colspan=1><P><FONT size=2 face="sans-serif">If the Issuer calls the SPARQS, at least 10 but not more than 30 calendar days notice will be given before the Call Date specified in the notice</FONT></P>

	</TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">First Call Date:</font></b></TD>
  <TD colspan=1><font size=2 face="sans-serif">July 20, 2007</font></TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Final Call Date:</font></b></TD>
  <TD colspan=1><font size=2 face="sans-serif">January 10, 2008</font></TD>
</TR>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Risk Factors:</FONT></B></P>
</TD>
	<TD width=70% colspan=1><P><B><FONT size=2 face="sans-serif">Please see &#147;Risk Factors&#148; on
	        page 9.</FONT></B></P>
</TD>
</TR>
</TABLE>
<BR>
<P align="left">&nbsp;</P>
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  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#000066"></TD>
  </TR>
  <TR valign="bottom">
    <TD width=50% align=left valign="top"><B><FONT color="#000066" size=1>page
          3 of 10 </FONT></B></TD>
    <TD align=right width=50%><B><FONT color="#000066" size=2 face="serif">MORGAN
          STANLEY</FONT></B> </TD>
  </TR>
</TABLE>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
  <TD align=right><img src="logo-s.jpg"></TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">7.5% SPARQS due January 20, 2008</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Mandatorily Exchangeable for the Common Stock of</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Coach, Inc.</FONT></B>
	</TD>
</TR>
</TABLE>
<BR>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD align=left width=100%>
<B><FONT color="#000066" size=2 face="sans-serif">General Information</FONT></B>
	</TD>
</TR>
<TR>
	<TD>
      <hr width=100% size=2 noshade color="#000066">  	</TD>
</TR>
</TABLE><BR>
<TABLE border=1 width=100% cellspacing=0 cellpadding=2>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Listing:</FONT></B></P>

	</TD>
	<TD width=70% colspan=1><P><FONT size=2 face="sans-serif">Application will be
	      made to list the SPARQS on the American Stock Exchange (&#147;AMEX&#148;)
	      under the ticker symbol &#147;CFM&#148;, subject to meeting the listing
	      requirements. If accepted for listing, the SPARQS will begin trading
	      the day after the Pricing Date.</FONT></P>

	</TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">CUSIP:</font></b></TD>
  <TD colspan=1><font size=2 face="sans-serif">61750V303</font></TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Minimum Ticketing Size:</font></b></TD>
  <TD colspan=1><font size=2 face="sans-serif">100 SPARQS</font></TD>
</TR>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Tax Consideration:</FONT></B></P>
</TD>
	<TD width=70% colspan=1><P><FONT size=2 face="sans-serif">The
    U.S. federal income tax consequences of an investment in the SPARQS are uncertain.
    There is no direct legal authority as to the proper tax treatment of the
    SPARQS, and the Issuer&#146;s counsel has not rendered an opinion as to their proper characterization for U.S. federal income tax purposes. Pursuant to the terms of the SPARQS and subject to the discussion in the accompanying
prospectus supplement for SPARQS under &#147;United States Federal Taxation,&#148; you agree with the Issuer to treat a SPARQS as a unit consisting of (i) a terminable forward contract and (ii) a deposit with the Issuer of a fixed amount of cash to
secure your obligation under the terminable forward contract. Assuming the characterization of the SPARQS as set forth above is respected, a portion of the stated interest payments on the SPARQS will be treated as the Yield on the Deposit, and the
remainder will be attributable to the Contract Fees, as described in the section of the accompanying prospectus supplement for SPARQS called &#147;United States Federal Taxation &#151; Tax Treatment of the SPARQS.&#148; The
Yield on the Deposit will be determined as of the pricing date and set forth
in the applicable pricing supplement to the accompanying prospectus supplement
for SPARQS.</FONT></P>
<P><FONT size=2 face="sans-serif">Assuming the characterization of the SPARQS as set forth above is respected, the following U.S. federal income tax consequences would result. The portion of the stated interest payment on the SPARQS that is
attributable to the deposit will be taxable to a U.S. Holder as ordinary interest income. The Issuer will treat the portion of the stated interest payment that is attributable to the terminable forward contract as ordinary income. Based on the tax
treatment described above, upon sale, exchange or redemption of the SPARQS solely for cash, a U.S. Holder will generally recognize capital gain or loss equal to the difference between the amount realized and the issue price. Upon physical settlement
of the terminable forward contract at maturity, a U.S. Holder generally will not recognize any gain or loss with respect to the underlying equity received and will have a tax basis in the underlying equity received equal to the issue
price.</FONT></P>
<P><FONT size=2 face="sans-serif">Please read the discussion under &#147;Risk Factors </FONT><FONT size=2 face="sans-serif">--</FONT><FONT size=2 face="sans-serif">Structure Specific Risk Factors&#148; in these preliminary terms and the discussion
under &#147;United States Federal Taxation&#148; in the accompanying prospectus supplement for SPARQS concerning the U.S. federal income tax consequences of investing in the SPARQS.</FONT></P>
<P><FONT size=2 face="sans-serif">Notwithstanding the foregoing, any stated interest payments on the SPARQS made to non-U.S. holders (as defined in the accompanying prospectus supplement for SPARQS) will generally be withheld upon at a rate of 30%.
See the section called &#147;United States Federal Taxation &#151; Tax Consequences to Non- U.S. Holders&#148; in the accompanying prospectus supplement for SPARQS. Non-U.S. holders should also note that the discussion in the accompanying prospectus
supplement for SPARQS does not address the tax consequences to non-U.S. holders for whom income or gain in respect of the SPARQS is effectively connected with a trade or business in the United States.</FONT></P>
<P><B><FONT size=2 face="sans-serif">The Issuer does not render any advice on tax matters. This material is not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the
taxpayer under U.S. federal tax laws. You are urged to consult your own tax advisors regarding all aspects of the U.S. federal tax consequences of investing in the SPARQS, as well as any tax consequences arising under the laws of any state, local or
foreign taxing jurisdiction.</FONT></B></P>

	</TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Trustee:</font></b></TD>
  <TD colspan=1><font size=2 face="sans-serif">The Bank of New York (as successor
    Trustee to JPMorgan Chase Bank, N.A.)</font></TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Calculation Agent:</font></b></TD>
  <TD colspan=1><font size=2 face="sans-serif">Morgan Stanley &amp; Co. Incorporated</font></TD>
</TR>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Contact:</FONT></B></P>
</TD>
	<TD width=70% colspan=1><P><FONT size=2 face="sans-serif">You may contact your local Morgan Stanley branch office or our principal executive offices at 1585 Broadway, New York, New York, 10036 (telephone number (866) 477-4776 / (914) 225-7000)</FONT></P>
</TD>
</TR>
</TABLE>
<BR>
<P align="left">
<I><FONT size=2 face="sans-serif">This offering summary represents a summary of the terms and conditions of the SPARQS. We encourage you to read the accompanying prospectus supplement for SPARQS and prospectus related to this offering.</FONT></I></P>
<TABLE border=0 cellspacing=0 cellpadding=0 width=100%>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#000066"></TD>
  </TR>
  <TR valign="bottom">
    <TD width=50% align=left valign="top"><B><FONT color="#000066" size=1>page
          4 of 10 </FONT></B></TD>
    <TD align=right width=50%><B><FONT color="#000066" size=2 face="serif">MORGAN
          STANLEY</FONT></B> </TD>
  </TR>
</TABLE>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
  <TD align=right><img src="logo-s.jpg"></TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">7.5% SPARQS due January 20, 2008</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Mandatorily Exchangeable for the Common Stock of</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Coach, Inc.</FONT></B>
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT color="#000066" size=4 face="sans-serif">Key Benefits / Key Risks /<br>
Key Investment Rationale</FONT></B>
	</TD>
</TR>
</TABLE>
<BR>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD colspan="2" align=left> <B><FONT color="#000066" size=2 face="sans-serif">Key </FONT></B><font color="#000066"><B><FONT size=2 face="sans-serif">Benefits</FONT></B></font> </TD>
    <TD  width=2%>&nbsp; </TD>
    <TD colspan="2" align=left> <B><FONT color="#000066" size=2 face="sans-serif">Key
          Investment Rationale</FONT></B> </TD>
  </TR>
  <TR valign="top">
    <TD width="5%"><HR noshade size=1></TD>
    <TD width="44%">
      <HR noshade size=1>
    </TD>
    <TD width="2%"> </TD>
    <TD width="5%"><HR noshade size=1></TD>
    <TD width="44%">
      <HR noshade size=1>
    </TD>
  </TR>
  <TR valign="top">
    <TD width="5%">&#149;</TD>
    <TD width="44%"><P align="left"><FONT size=2 face="sans-serif">7.5% yield,
          which is higher than the current</FONT> <FONT size=2 face="sans-serif">dividend
          yield of 0% on COH Stock.</FONT></P></TD>
    <TD width="2%"></TD>
    <TD colspan="2"><B><FONT size=2 face="sans-serif">You may be interested in
    the SPARQS if you are:</FONT></B></TD>
  </TR>
  <TR valign="top">
    <TD width="5%">&#149;</TD>
    <TD width="44%"><FONT size=2 face="sans-serif">A defensive, total return
    strategy linked to COH</FONT> <FONT size=2 face="sans-serif">Stock.</FONT></TD>
    <TD width="2%"></TD>
    <TD width="5%">&#149;</TD>
    <TD width="44%"><FONT size=2 face="sans-serif">Seeking exposure to COH Stock
        but are willing to limit your appreciation in exchange for a higher current
    yield.</FONT></TD>
  </TR>
  <TR valign="top">
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
    <TD width="2%"></TD>
    <TD width="5%">&#149;</TD>
    <TD width="44%"><FONT size=2 face="sans-serif">A holder of COH Stock and,
        if, consistent with your investment objectives, after taking into account
        the tax considerations, may consider switching into a security that provides
        an 7.5% yield while still retaining COH Stock exposure, which is limited
    by the Call Price.</FONT></TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD></TD>
    <TD>&#149;</TD>
    <TD><P align="left"><FONT size=2 face="sans-serif">Not concerned about principal
    risk.</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD colspan="2" align=left>&nbsp;</TD>
    <TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD colspan="2" align=left> <B><FONT color="#000066" size=2 face="sans-serif">Key
          Risks</FONT></B> </TD>
    <TD width="2%"></TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width="5%"><HR noshade size=1></TD>
    <TD width="44%">
      <HR noshade size=1>
    </TD>
    <TD width="2%"></TD>
    <TD colspan="2"><P align="left"> <B><I></I></B></P></TD>
  </TR>
  <TR valign="top">
    <TD>&#149;</TD>
    <TD><p><B><FONT size=2 face="sans-serif">No guaranteed return of principal.</FONT></B></p></TD>
    <TD></TD>
    <TD colspan="2"><b><i><font color="#000066" size=2 face="sans-serif">Please
            carefully review all the &#147;Risk Factors&#148; on page 9 </font></i></b></TD>
  </TR>
  <TR valign="top">
    <TD>&#149;</TD>
    <TD><p><FONT size=2 face="sans-serif">Your return on the SPARQS is limited
    by the</FONT> <FONT size=2 face="sans-serif">Issuer&#146;s call right.</FONT></p></TD>
    <TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width="5%">&#149;</TD>
    <TD width="44%"><p><FONT size=2 face="sans-serif">Secondary trading may be
          limited, and the</FONT> <FONT size=2 face="sans-serif">inclusion of
          commissions and projected profit from</FONT> <FONT size=2 face="sans-serif">hedging
          in the original issue price is likely to</FONT> <FONT size=2 face="sans-serif">adversely
          affect secondary market prices.</FONT></p></TD>
    <TD width="2%"></TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width="5%">&#149;</TD>
    <TD width="44%"><FONT size=2 face="sans-serif">If the SPARQS are accelerated,
        you may receive</FONT> <FONT size=2 face="sans-serif">an amount worth
        substantially less than the</FONT> <FONT size=2 face="sans-serif">principal
    amount of the SPARQS.</FONT></TD>
    <TD width="2%"></TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width="5%">&#149;</TD>
    <TD width="44%"><FONT size=2 face="sans-serif">Coach, Inc. is not involved
        with this offering in any</FONT> <FONT size=2 face="sans-serif">way.
        The Issuer has not made any due diligence</FONT> <FONT size=2 face="sans-serif">inquiry
    in connection with this offering.</FONT></TD>
    <TD width="2%"></TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width="5%">&#149;</TD>
    <TD width="44%"><p><FONT size=2 face="sans-serif">The antidilution adjustments
          the calculation agent</FONT> <FONT size=2 face="sans-serif">is required
          to make do not cover every corporate</FONT> <FONT size=2 face="sans-serif">event
          that could affect COH Stock.</FONT></p></TD>
    <TD width="2%"></TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&#149;</TD>
    <TD><FONT size=2 face="sans-serif">The U.S. federal income tax consequences
        of an</FONT> <FONT size=2 face="sans-serif">investment in the SPARQS
    are uncertain.</FONT></TD>
    <TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width="5%">&#149;</TD>
    <TD width="44%"><p><FONT size=2 face="sans-serif">Credit Risk to Morgan Stanley
          whose credit rating is</FONT> <FONT size=2 face="sans-serif">currently
          Aa3/A+.</FONT></p></TD>
    <TD width="2%"></TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
  </TR>
</TABLE>
<P align="left">&nbsp;</P>
<TABLE border=0 cellspacing=0 cellpadding=0 width=100%>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#000066"></TD>
  </TR>
  <TR valign="bottom">
    <TD width=50% align=left valign="top"><B><FONT color="#000066" size=1>page
          5 of 10 </FONT></B></TD>
    <TD align=right width=50%><B><FONT color="#000066" size=2 face="serif">MORGAN
          STANLEY</FONT></B> </TD>
  </TR>
</TABLE>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
  <TD align=right><img src="logo-s.jpg"></TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">7.5% SPARQS due January 20, 2008</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Mandatorily Exchangeable for the Common Stock of</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Coach, Inc.</FONT></B>
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT color="#000066" size=4 face="sans-serif">Hypothetical Call Price Calculations</FONT></B>
	</TD>
</TR>
</TABLE>
<BR>
<P align="left">
<FONT size=2 face="sans-serif">The following tables set forth sample values based on calculations of the Call Price for hypothetical Call Dates as indicated based on the following hypothetical terms:</FONT></P>
<table width="100%"  border="0" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td align="center">&#149;</td>
    <td width="20%"><FONT size=2 face="sans-serif">Original Issue Date:</FONT></td>
    <td>&nbsp;</td>
    <td width="70%"><FONT size=2 face="sans-serif">December 29, 2006</FONT></td>
  </tr>
  <tr valign="top">
    <td align="center">&nbsp;</td>
    <td width="20%">&nbsp;</td>
    <td>&nbsp;</td>
    <td width="70%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td align="center">&#149;</td>
    <td width="20%"><FONT size=2 face="sans-serif">Interest Payment Dates:</FONT></td>
    <td width="5%">&nbsp;</td>
    <td width="70%"><FONT size=2 face="sans-serif">April 20, 2007, July 20, 2007,
    October 20, 2007 and the Maturity Date</FONT></td>
  </tr>
  <tr valign="top">
    <td align="center">&nbsp;</td>
    <td width="20%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="70%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td align="center">&#149;</td>
    <td width="20%"><FONT size=2 face="sans-serif">Yield to Call:</FONT></td>
    <td width="5%">&nbsp;</td>
    <td width="70%"><FONT size=2 face="sans-serif">18% per annum (computed on
    the basis of a 360-day year of twelve 30-day months)</FONT></td>
  </tr>
  <tr valign="top">
    <td align="center">&nbsp;</td>
    <td width="20%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="70%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td align="center">&#149;</td>
    <td width="20%"><FONT size=2 face="sans-serif">Stated Principal Amount:</FONT></td>
    <td width="5%">&nbsp;</td>
    <td width="70%"><FONT size=2 face="sans-serif">&#36;42.00 per SPARQS</FONT></td>
  </tr>
  <tr valign="top">
    <td align="center">&nbsp;</td>
    <td width="20%">&nbsp;</td>
    <td>&nbsp;</td>
    <td width="70%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td align="center">&#149;</td>
    <td width="20%"><FONT size=2 face="sans-serif">Interest Rate:</FONT></td>
    <td>&nbsp;</td>
    <td width="70%"><FONT size=2 face="sans-serif">7.5% per annum</FONT></td>
  </tr>
  <tr valign="top">
    <td align="center">&nbsp;</td>
    <td width="20%">&nbsp;</td>
    <td>&nbsp;</td>
    <td width="70%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="5%" align="center">&#149;</td>
    <td width="20%"><font size=2 face="sans-serif">Discount Factor:</font></td>
    <td width="5%">&nbsp;</td>
    <td width="70%"><FONT size=2 face="sans-serif">1 / 1.18<SUP>x</SUP>,
        where x is the number of years from the Original Issue Date to and including
    the applicable payment date.</FONT></td>
  </tr>
</table>
<P align="left">
<FONT size=2 face="sans-serif">The Call Price with respect to any Call Date is
an amount of cash per SPARQS such that the sum of the present values of all cash
flows on each SPARQS to and including the Call Date (<I>i.e.</I>, the Call Price
and all of the interest payments and accrued interest on each SPARQS), discounted
to the Original Issue Date at the applicable Discount Factor, equals the Stated
 Principal Amount. The Discount Factor is based on the hypothetical Yield to
call rate of 18% per annum and the number of years (or fraction of a year) from
the Original Issue Date to and including the applicable payment date.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Each of the Call Price and total amount received calculations below are based upon the hypothetical terms set forth above and the sample Call Dates as indicated. The actual amount you will receive if the Issuer calls
the SPARQS will depend upon the actual terms of the SPARQS and the actual Call Date</FONT><I><FONT size=2 face="sans-serif">.</FONT></I></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD align=left width=40%>
<B><FONT size=2 face="sans-serif">Call on July 20, 2007 (First Call Date)</FONT></B>
	</TD>
	<TD  width=2%>&nbsp;
	</TD>
	<TD GUTTER align=left width=2%>&nbsp;

	</TD>
	<TD align=left width=56%>&nbsp;

	</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD GUTTER align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=40%>
<FONT size=2 face="sans-serif">Call Price received</FONT>
	</TD>
	<TD  width=2%>&nbsp;
	</TD>
	<TD GUTTER align=right width=2%>&nbsp;</TD>
	<TD align=left width=56%><FONT size=2 face="sans-serif">&#36;</FONT><FONT size=2 face="sans-serif">44.2664</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD GUTTER align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=40%>
<FONT size=2 face="sans-serif">Total amount received over the term of the SPARQS</FONT>
	</TD>
	<TD  width=2%>&nbsp;
	</TD>
	<TD GUTTER align=right width=2%>&nbsp;</TD>
	<TD align=left width=56%> <FONT size=2 face="sans-serif">&#36;46.0252</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD GUTTER align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=40%>
<B><FONT size=2 face="sans-serif">Call on August 29, 2007 (random interim Call date)</FONT></B>
	</TD>
	<TD  width=2%>&nbsp;
	</TD>
	<TD GUTTER align=left width=2%>&nbsp;

	</TD>
	<TD align=left width=56%>&nbsp;

	</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD GUTTER align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=40%>
<FONT size=2 face="sans-serif">Call Price received</FONT>
	</TD>
	<TD  width=2%>&nbsp;
	</TD>
	<TD GUTTER align=right width=2%>&nbsp;</TD>
	<TD align=left width=56%> <FONT size=2 face="sans-serif">&#36;44.7259</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD GUTTER align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=40%>
<FONT size=2 face="sans-serif">Total amount received over the term of the SPARQS</FONT>
	</TD>
	<TD  width=2%>&nbsp;
	</TD>
	<TD GUTTER align=right width=2%>&nbsp;</TD>
	<TD align=left width=56%> <FONT size=2 face="sans-serif">&#36;46.8260</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD GUTTER align=left>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=40%>
<B><FONT size=2 face="sans-serif">Call on January 20, 2008 (Maturity Date)</FONT></B>
	</TD>
	<TD  width=2%>&nbsp;
	</TD>
	<TD GUTTER align=left width=2%>&nbsp;

	</TD>
	<TD align=left width=56%>&nbsp;

	</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD GUTTER align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=40%>
<FONT size=2 face="sans-serif">Call Price received</FONT>
	</TD>
	<TD  width=2%>&nbsp;
	</TD>
	<TD GUTTER align=right width=2%>&nbsp;</TD>
	<TD align=left width=56%> <FONT size=2 face="sans-serif">&#36;46.4776</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD GUTTER align=right>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=40%>
<FONT size=2 face="sans-serif">Total amount received over the term of the SPARQS</FONT>
	</TD>
	<TD  width=2%>&nbsp;
	</TD>
	<TD GUTTER align=right width=2%>&nbsp;</TD>
	<TD align=left width=56%><FONT size=2 face="sans-serif">&#36;49.8114</FONT></TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="sans-serif">The table on the following page sets forth a more detailed sample calculation of the Call Price for a hypothetical Call Date of July 20, 2007 based upon the hypothetical terms set forth above.</FONT></P>
<P align="left">&nbsp;</P>
<TABLE border=0 cellspacing=0 cellpadding=0 width=100%>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#000066"></TD>
  </TR>
  <TR valign="bottom">
    <TD width=50% align=left valign="top"><B><FONT color="#000066" size=1>page
          6 of 10 </FONT></B></TD>
    <TD align=right width=50%><B><FONT color="#000066" size=2 face="serif">MORGAN
          STANLEY</FONT></B> </TD>
  </TR>
</TABLE>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
  <TD align=right><img src="logo-s.jpg"></TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">7.5% SPARQS due January 20, 2008</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Mandatorily Exchangeable for the Common Stock of</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Coach, Inc.</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr width=100% size=1 noshade>    </TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><b><font color="#000066" size=4 face="sans-serif">Hypothetical Call Price Calculation
    on the First Call Date (continued)</font></b></TD>
</TR>
</TABLE>
<P align="center">
<B></B></P>
<P align="left">
<FONT size=2 face="sans-serif">The Call Price in the hypothetical example shown below is determined as follows:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD width="5%" valign=top nowrap>&nbsp;</TD>
	<TD width="5%" valign=top nowrap>&#149;
 	</TD>
	<TD colspan=2>
<FONT size=2 face="sans-serif">The known cash flows on the SPARQS (</FONT><I><FONT size=2 face="sans-serif">i.e.</FONT></I><FONT size=2 face="sans-serif">, the interest payments) are discounted to their present value on the Original Issue Date at
the applicable Discount Factor. The sum of these present values equals the present value on the Original Issue Date of all of the interest payments payable on the SPARQS to and including the applicable Call Date.</FONT>	</TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="5%">&nbsp;</TD>
<TD width="5%">&nbsp;</TD>	<TD width="5%" valign=top nowrap>&#150;
 	</TD>
	<TD width=85%>
<FONT size=2 face="sans-serif">For example, the present value of all of the interest
payments for the hypothetical Call Date of July 20, 2007 is &#36;1.6410 (&#36;0.9230
+ &#36;0.7180).</FONT>	</TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="5%" valign=top nowrap>&nbsp;</TD>
	<TD width="5%" valign=top nowrap>&#149;
 	</TD>
	<TD colspan=2>
<FONT size=2 face="sans-serif">Since the present value of all payments on the SPARQS to and including the Call Date (</FONT><I><FONT size=2 face="sans-serif">i.e.</FONT></I><FONT size=2 face="sans-serif">, the Call Price and all of the interest
payment on each SPARQS) must equal the Stated Principal Amount, the Issuer can determine the present value of the applicable Call Price by subtracting the sum of the present values of the interest payments from the Stated Principal
Amount.</FONT>	</TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="5%">&nbsp;</TD>
<TD width="5%">&nbsp;</TD>	<TD width="5%" valign=top nowrap>&#150;
 	</TD>
	<TD width=85%>
<FONT size=2 face="sans-serif">For example, for the hypothetical Call Date of
July 20, 2007, the present value of the Call Price is &#36;40.3590 (&#36;42.0000
- &#36;1.6410).</FONT>	</TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="5%" valign=top nowrap>&nbsp;</TD>
	<TD width="5%" valign=top nowrap>&#149;
 	</TD>
	<TD colspan=2>
<FONT size=2 face="sans-serif">The Call Price is then derived by determining the amount that, when discounted to the Original Issue Date from the applicable Call Date at the applicable Discount Factor, equals the present value of the Call
Price.</FONT>	</TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD width="5%">&nbsp;</TD>
<TD width="5%">&nbsp;</TD>	<TD width="5%" valign=top nowrap>&#150;
 	</TD>
	<TD width=85%>
<FONT size=2 face="sans-serif">For the hypothetical Call Date of July 20, 2007,
the Call Price is therefore &#36;44.2664, which is the amount that if paid on
July 20, 2007 has a present value on the Original Issue Date of &#36;40.3590,
based on the  applicable Discount Factor.</FONT>	</TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR></TABLE>
<P align="left">
<I><FONT size=2 face="sans-serif">The Call Price calculated in the following table is based upon the hypothetical terms set forth above and the sample Call Date of July 20, 2007. The actual amount you will receive if the Issuer calls the SPARQS will
depend upon the actual terms of the SPARQS and the actual Call Date.</FONT></I></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR align="center" valign="bottom">
    <TD><font size="1">&nbsp;<B><FONT face="sans-serif">Payment Date</FONT></B> </font></TD>
    <TD><font size="1">&nbsp;</font> </TD>
    <TD> <font size="1"><B><FONT face="sans-serif">Stated<br>
    Principal<br>
    Amount</FONT></B> </font></TD>
    <TD GUTTER><font size="1">&nbsp;</font> </TD>
    <TD> <font size="1"><B><FONT face="sans-serif">Interest<br>
    Payments<br>
    Received</FONT></B> </font></TD>
    <TD><font size="1">&nbsp;</font> </TD>
    <TD> <font size="1"><B><FONT face="sans-serif">Accrued but<br>
    Unpaid<br>
    Interest<br>
    Received on<br>
    Call Date</FONT></B> </font></TD>
    <TD><font size="1">&nbsp;</font> </TD>
    <TD> <font size="1"><B><FONT face="sans-serif">Call Price<br>
    Received</FONT></B><SUP><FONT face="sans-serif">1</FONT></SUP> </font></TD>
    <TD><font size="1">&nbsp;</font> </TD>
    <TD> <font size="1"><B><FONT face="sans-serif">Total Cash<br>
    Received<br>
    on<br>
    Payment<br>
    Date</FONT></B> </font></TD>
    <TD><font size="1">&nbsp;</font> </TD>
    <TD> <font size="1"><B><FONT face="sans-serif">Days from<br>
    Original<br>
    Issue Date</FONT></B><SUP><FONT face="sans-serif">2</FONT></SUP> </font></TD>
    <TD><font size="1">&nbsp;</font> </TD>
    <TD> <font size="1"><B><FONT face="sans-serif">Years from<br>
    Original<br>
    Issue Date<br>
    (Days</FONT></B><SUP><FONT face="sans-serif">2 </FONT></SUP><B><FONT face="sans-serif">/360)</FONT></B> </font></TD>
    <TD><font size="1">&nbsp;</font> </TD>
    <TD> <font size="1"><B><FONT face="sans-serif">Discount<br>
    Factor at<br>
    Yield to<br>
    Call</FONT></B><SUP><FONT face="sans-serif">3</FONT></SUP> </font></TD>
    <TD><font size="1">&nbsp;</font> </TD>
    <TD nowrap> <font size="1"><B><FONT face="sans-serif">Present Value at<br>
    Original Issue<br>
    Date of Call<br>
    Received on<br>
    Payment Date at<br>
    Yield to Call</FONT></B> </font></TD>
  </TR>
  <TR>
    <TD>
      <HR noshade size=1>
    </TD>
    <TD> </TD>
    <TD>
      <HR noshade size=1>
    </TD>
    <TD GUTTER>
      <HR noshade size=1>
    </TD>
    <TD>
      <HR noshade size=1>
    </TD>
    <TD> </TD>
    <TD>
      <HR noshade size=1>
    </TD>
    <TD> </TD>
    <TD>
      <HR noshade size=1>
    </TD>
    <TD> </TD>
    <TD>
      <HR noshade size=1>
    </TD>
    <TD> </TD>
    <TD>
      <HR noshade size=1>
    </TD>
    <TD> </TD>
    <TD>
      <HR noshade size=1>
    </TD>
    <TD> </TD>
    <TD>
      <HR noshade size=1>
    </TD>
    <TD> </TD>
    <TD>
      <HR noshade size=1>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=19%> <FONT size=2 face="sans-serif">December 29, 2006</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">(&#36;42.00)</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">0</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">.00000</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">100.000%</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=19%> <FONT size=2 face="sans-serif">April 20, 2007</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%> <FONT size=2 face="sans-serif">&#36;0.9713</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%> <FONT size=2 face="sans-serif">&#36;0.9713</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">111</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">.30833</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">95.025%</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%> &nbsp; &nbsp; &nbsp;<FONT size=2 face="sans-serif">&#36;0.9230</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=19%> <FONT size=2 face="sans-serif">Call Date (July
        20, 2007)</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%> <FONT size=2 face="sans-serif">&#36;0.7875</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%> <FONT size=2 face="sans-serif">&#36;0.7875</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">201</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">.55833</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">91.173%</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%> &nbsp; &nbsp; &nbsp;<FONT size=2 face="sans-serif">&#36;0.7180</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=19%> <FONT size=2 face="sans-serif">Call Date (July
        20, 2007)</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%> <FONT size=2 face="sans-serif">&#36;44.2664</FONT></TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%> <FONT size=2 face="sans-serif">&#36;44.2664</FONT></TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">201</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">.55833</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">91.173%</FONT> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <FONT size=2 face="sans-serif">&#36;40.3590</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan=10 align=left> <B><FONT size=2 face="sans-serif">Total
          amount received on the Call Date: &#36;45.0539</FONT></B></TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=right width=8%> <B><FONT size=2 face="sans-serif">Total:</FONT></B> </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=center width=8%> <B><FONT size=2 face="sans-serif">&#36;42.0000</FONT></B> </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan=11 align=left> <B><FONT size=2 face="sans-serif">Total
          amount received over the term of the SPARQS: &#36;46.0252</FONT></B>     </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
    <TD  width=1%>&nbsp; </TD>
    <TD align=left width=8%>&nbsp; </TD>
  </TR>
</TABLE>
<BR>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD width="5%" valign=top nowrap>
<SUP><FONT size=2 face="sans-serif">1</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">The Call Price of &#36;44.2664 is the dollar amount
that has a present value of &#36;40.3590, which has been discounted to the Original
Issue Date from the Call Date at the Yield to Call rate of 18% so that the sum
of  the present values of all of the interest payments on the SPARQS and the
present value of the Call Price is equal to the Stated Principal Amount of &#36;42.0000.</FONT>	</TD>
</TR><TR>
	<TD width="5%" valign=top nowrap>
<SUP><FONT size=2 face="sans-serif">2</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">Based upon a 360-day year of twelve 30-day months.</FONT>	</TD>
</TR><TR>
	<TD width="5%" valign=top nowrap>
<SUP><FONT size=2 face="sans-serif">3</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">Discount Factor = 1 / 1.18<SUP>x </SUP>,
where <I>x </I>is
years  from Original Issue Date to and including the applicable payment date</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>

<br>
<TABLE border=0 cellspacing=0 cellpadding=0 width=100%>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#000066"></TD>
  </TR>
  <TR valign="bottom">
    <TD width=50% align=left valign="top"><B><FONT color="#000066" size=1>page
          7 of 10 </FONT></B></TD>
    <TD align=right width=50%><B><FONT color="#000066" size=2 face="serif">MORGAN
          STANLEY</FONT></B> </TD>
  </TR>
</TABLE>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
  <TD align=right><img src="logo-s.jpg"></TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">7.5% SPARQS due January 20, 2008</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Mandatorily Exchangeable for the Common Stock of</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Coach, Inc.</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
  <TD align=right><hr width=100% size=1 noshade>    </TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right><b><font color="#000066" size=4 face="sans-serif">Information about Coach,
    Inc.</font></b></TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="sans-serif">Coach, Inc. is a designer and marketer of premium handbags and accessories. COH Stock is registered under the Exchange Act. Information provided to or filed with the Commission by Coach, Inc. pursuant to the Exchange
Act can be located by reference to Commission file number 001-16153 through the Commission&#146;s website at http://www.sec.gov. In addition, information regarding Coach, Inc. may be obtained from other sources including, but not limited to, press
releases, newspaper articles and other publicly disseminated documents. See the section called &#147;Underlying Company and Stock&#151;Public Information&#148; in the prospectus supplement for SPARQS.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">These preliminary terms relate only to the SPARQS offered hereby and do not relate to COH Stock or other securities of Coach, Inc. The Issuer has derived all disclosures contained in these preliminary terms
regarding Coach, Inc. from the publicly available documents described in the preceding paragraph. In connection with the offering of the SPARQS, neither the Issuer nor the Agent has participated in the preparation of such documents or made any due
diligence inquiry with respect to Coach, Inc. Neither the Issuer nor the Agent makes any representation that such publicly available documents or any other publicly available information regarding Coach, Inc. is accurate or complete.</FONT></B></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Neither the Issuer nor any of its affiliates makes any representation to you as to the performance of COH Stock.</FONT></B></P>
<P align="right">
<B><FONT color="#000066" size=4 face="sans-serif">Historical Information</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">The following graph presents the published high and low closing prices of COH Stock for 2003, 2004, 2005 and 2006 through November 20, 2006. The closing price of COH Stock on November 20, 2006 was &#36;41.80. The
Issuer obtained the closing prices and other information below from Bloomberg Financial Markets, without independent verification. You should not take the historical prices of COH Stock as an indication of future performance.</FONT></P>
<div align="center">
  <TABLE border=0 width=60% cellspacing=0 cellpadding=0>
    <TR valign="bottom">
      <TD align=left width=66%>&nbsp;

	</TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <B><FONT size=2 face="sans-serif">High</FONT></B>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <B><FONT size=2 face="sans-serif">Low</FONT></B>
      </TD>
    </TR>
    <TR>
      <TD width="66%">
      </TD>
      <TD width="2%">
      </TD>
      <TD width="15%">
    <HR noshade size=1>
      </TD>
      <TD width="2%">
      </TD>
      <TD width="15%">
    <HR noshade size=1>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <B><FONT size=2 face="sans-serif">(CUSIP 189754104)</FONT></B>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <B><FONT size=2 face="sans-serif">2003</FONT></B>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">First Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">9.98</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">7.29</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Second Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">13.22</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">9.27</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Third Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">14.82</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">12.72</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Fourth Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">19.96</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">14.21</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <B><FONT size=2 face="sans-serif">2004</FONT></B>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">First Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">21.84</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">17.08</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Second Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">22.85</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">19.75</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Third Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">23.10</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">18.06</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Fourth Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">28.53</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">19.84</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <B><FONT size=2 face="sans-serif">2005</FONT></B>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">First Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">29.75</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">26.41</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Second Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">33.92</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">25.22</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Third Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">36.22</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">30.25</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Fourth Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">36.64</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">28.94</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <B><FONT size=2 face="sans-serif">2006</FONT></B>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">First Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">36.97</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">31.75</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Second Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">35.35</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">27.75</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Third Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">34.65</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">25.58</FONT>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
    <FONT size=2 face="sans-serif">Fourth Quarter</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=left width=15%>&nbsp;

	</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left width=66%>
 &nbsp; &nbsp;<FONT size=2 face="sans-serif">(through November 20, 2006)</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">42.34</FONT>
      </TD>
      <TD  width=2%>&nbsp;
      </TD>
      <TD align=center width=15%>
    <FONT size=2 face="sans-serif">34.20</FONT>
      </TD>
    </TR>
  </TABLE>
</div>
<P align="left">
<FONT size=2 face="sans-serif">Historical prices with respect to COH Stock have been adjusted for two-for-one stock splits that were effected on April 4, 2005 and October 1, 2003. Coach, Inc. has never declared or paid any cash dividends on COH
Stock. The Issuer makes no representation as to the amount of dividends, if any, that Coach, Inc. will pay in the future. </FONT><B><FONT size=2 face="sans-serif">In any event, as an investor in the SPARQS, you will not be entitled to receive
dividends, if any, that may be payable on COH Stock.</FONT></B></P>
<TABLE border=0 cellspacing=0 cellpadding=0 width=100%>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#000066"></TD>
  </TR>
  <TR valign="bottom">
    <TD width=50% align=left valign="top"><B><FONT color="#000066" size=1>page
          8 of 10 </FONT></B></TD>
    <TD align=right width=50%><B><FONT color="#000066" size=2 face="serif">MORGAN
          STANLEY</FONT></B> </TD>
  </TR>
</TABLE>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
  <TD align=right><img src="logo-s.jpg"></TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">7.5% SPARQS due January 20, 2008</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Mandatorily Exchangeable for the Common Stock of</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Coach, Inc.</FONT></B>
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT color="#000066" size=4 face="sans-serif">Risk Factors</FONT></B>
	</TD>
</TR>
</TABLE>
<BR>
<P align="left">
<I><FONT size=2 face="sans-serif">The SPARQS are financial instruments that are suitable only for investors who are capable of understanding the complexities and risks specific to the SPARQS. Accordingly, investors should consult their own financial
and legal advisors as to the risks entailed by an investment in the SPARQS and the suitability of such SPARQS in light of an investor&#146;s particular circumstances.</FONT></I></P>
<P align="left">
<I><FONT size=2 face="sans-serif">The following is a non-exhaustive list of certain key considerations for investors in the SPARQS. For a complete list of considerations and risk factors, please see the accompanying prospectus supplement for SPARQS
and the accompanying prospectus.</FONT></I></P>
<P align="left">
<B><FONT color="#000066" size=2 face="sans-serif">Structure Specific Risk Factors</FONT></B></P>
<table width="100%"  border="0" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td width="5%">&#149;</td>
    <td width="95%"><B><FONT size=2 face="sans-serif">No guaranteed return of
          principal</FONT></B><FONT size=2 face="sans-serif">. If at maturity
          the closing price of COH Stock has declined from the closing price
          on the day</FONT> <FONT size=2 face="sans-serif">the SPARQS were priced
          for initial sale to the public, and the Issuer has not called the SPARQS,
          the payout at maturity will be</FONT> <FONT size=2 face="sans-serif">less
    than the principal amount of the SPARQS.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">The return on the SPARQS is limited
          by the Issuer&#146;s call right</FONT></B><FONT size=2 face="sans-serif">.
          The return you realize on the SPARQS is limited by the</FONT> <FONT size=2
face="sans-serif">Issuer&#146;s call right. The Issuer may call the SPARQS at
          any time beginning July 20, 2007, including at maturity, for the cash
          Call</FONT> <FONT size=2 face="sans-serif">Price, which will be calculated
          based on the Call Date. The Call Price will be an amount of cash per
          SPARQS that, together with</FONT> <FONT size=2 face="sans-serif">all
          of the interest paid on the SPARQS to and including the Call Date,
          gives you a yield to call of 16-20% per annum on the Stated</FONT> <FONT size=2 face="sans-serif">Principal
          Amount of each SPARQS from and including the date of issuance to but
          excluding the Call Date. </FONT><B><FONT size=2 face="sans-serif">You
          should not</FONT></B> <B><FONT size=2 face="sans-serif">expect to obtain
          a total yield (including interest payments) of more than 16-20% per
          annum on the Stated Principal</FONT></B> <B><FONT size=2 face="sans-serif">Amount
    of the SPARQS to the Call Date</FONT></B><FONT size=2 face="sans-serif">.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">Market price influenced by many unpredictable
          factors</FONT></B><FONT size=2 face="sans-serif">. Several factors
          will influence the value of the SPARQS in the</FONT> <FONT size=2 face="sans-serif">secondary
          market. It is expected that generally the trading price of COH Stock
          on any day will affect the value of the SPARQS</FONT> <FONT size=2 face="sans-serif">more
          than any other single factor. However, because of the Issuer&#146;s
          call right, the SPARQS may trade differently from COH</FONT> <FONT size=2 face="sans-serif">Stock.
          Other factors that may influence the value of the SPARQS include: the
          volatility of COH Stock, geopolitical conditions and</FONT><FONT size=2 face="sans-serif">economic,
          financial, political, regulatory or judicial events, interest and yield
          rates, time remaining until the Issuer can call the</FONT><FONT size=2 face="sans-serif">SPARQS
          and until the SPARQS mature, the dividend rate on COH Stock, the Issuer&#146;s
          creditworthiness and the occurrence of</FONT><FONT size=2 face="sans-serif">certain
          events affecting Coach, Inc. that may or may not require an adjustment
    to the exchange ratio.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">Maturity date of the SPARQS may be
          accelerated. </FONT></B><FONT size=2 face="sans-serif">The maturity
          of the SPARQS will be accelerated if (i) the closing price of</FONT> <FONT size=2 face="sans-serif">COH
          Stock on any two consecutive trading days is less than &#36;2.00 or
          (ii) there is an event of default with respect to the SPARQS.</FONT> <FONT size=2 face="sans-serif">The
          amount payable to you if the maturity of the SPARQS is accelerated
          will differ depending on the reason for the acceleration</FONT><FONT size=2 face="sans-serif">and
    may be substantially less than the principal amount of the SPARQS.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">No shareholder rights. </FONT></B><FONT size=2 face="sans-serif">Investing
        in SPARQS is not equivalent to investing in COH Stock. As an investor
        in the SPARQS, you</FONT> <FONT size=2 face="sans-serif">will not have
        voting rights or rights to receive dividends or other distributions or
    any other rights with respect to COH Stock.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">The SPARQS may become exchangeable
          into the common stock of companies other than Coach, Inc. </FONT></B><FONT size=2 face="sans-serif">Following
          certain</FONT> <FONT size=2 face="sans-serif">corporate events relating
          to COH Stock, you will receive at maturity either the common stock
          of three companies in the same</FONT> <FONT size=2 face="sans-serif">industry
          group as Coach, Inc. in lieu of, or in addition to, COH Stock or the
          common stock of a successor corporation to Coach,</FONT> <FONT size=2 face="sans-serif">Inc.
          The occurrence of such corporate events and the consequent adjustments
          may materially and adversely affect the market</FONT> <FONT size=2 face="sans-serif">price
    of the SPARQS.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">Antidilution adjustments. </FONT></B><FONT size=2 face="sans-serif">Although
        the calculation agent will adjust the amount payable at maturity for
        certain corporate events</FONT> <FONT size=2
face="sans-serif">affecting COH Stock, other corporate events may occur (such
        as partial tender or exchange offers) for which the calculation</FONT> <FONT size=2 face="sans-serif">agent
        is not required to make any adjustments. If an event occurs that does
        not require the calculation agent to adjust the</FONT> <FONT size=2 face="sans-serif">amount
        of COH Stock payable at maturity, the market price of the SPARQS may
    be materially and adversely affected.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">The inclusion of commissions and projected
          profit from hedging in the original issue price is likely to adversely
          affect</FONT></B> <B><FONT size=2 face="sans-serif">secondary market
          prices. </FONT></B><FONT size=2
face="sans-serif">Assuming no change in market conditions or any other relevant
          factors, the price, if any, at which</FONT> <FONT size=2 face="sans-serif">MS &amp; Co.
          is willing to purchase SPARQS in secondary market transactions will
          likely be lower than the original issue price, since</FONT> <FONT size=2 face="sans-serif">the
          original issue price included, and secondary market prices are likely
          to exclude, commissions paid with respect to the</FONT> <FONT size=2 face="sans-serif">SPARQS,
          as well as the projected profit included in the cost of hedging the
    Issuer&#146;s obligations under the SPARQS.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">The U.S. federal income tax consequences
          of an investment in the SPARQS are uncertain. </FONT></B><FONT size=2 face="sans-serif">There
          is no direct legal authority as to the proper tax treatment of the
          SPARQS, and the Issuer&#146;s counsel has not</FONT> <FONT size=2 face="sans-serif">rendered
          an opinion as to their proper characterization for U.S. federal income
    tax purposes.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><FONT size=2 face="sans-serif">Please read the
          discussion under &#147;Fact Shee</FONT><FONT size=2 face="sans-serif">t &#8212; General
          Information &#8212; Tax Consideration&#148; in these preliminary terms
          and the</FONT><FONT size=2
face="sans-serif">discussion under &#147;United States Federal Taxation&#148; in
          the accompanying prospectus supplement for SPARQS (together the &#147;Tax</FONT><FONT size=2 face="sans-serif">Disclosure
          Sections&#148;) concerning the U.S. federal income tax consequences
          of investing in the SPARQS. If the Internal Revenue</FONT><FONT size=2 face="sans-serif">Service
          (the &#147;IRS&#148;) were successful in asserting an alternative characterization
    for the SPARQS, the timing and character of</FONT></td>
  </tr>
</table>
<P align="left">&nbsp;</P>
<TABLE border=0 cellspacing=0 cellpadding=0 width=100%>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#000066"></TD>
  </TR>
  <TR valign="bottom">
    <TD width=50% align=left valign="top"><B><FONT color="#000066" size=1>page
          9 of 10 </FONT></B></TD>
    <TD align=right width=50%><B><FONT color="#000066" size=2 face="serif">MORGAN
          STANLEY</FONT></B> </TD>
  </TR>
</TABLE>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
  <TD align=right><img src="logo-s.jpg"></TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">7.5% SPARQS due January 20, 2008</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Mandatorily Exchangeable for the Common Stock of</FONT></B>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<B><FONT size=2 face="sans-serif">Coach, Inc.</FONT></B>
	</TD>
</TR>
</TABLE>
<BR>
<blockquote>
  <p align="left">
    <FONT size=2 face="sans-serif">income on the SPARQS might differ from the tax treatment described in the Tax Disclosure Sections. The Issuer does not plan to request a ruling from the IRS regarding the tax treatment of the SPARQS, and the IRS or a
    court may not agree with the tax treatment described in these preliminary terms and the prospectus supplement for SPARQS.</FONT></p>
</blockquote>
<P align="left">
<B><FONT color="#000066" size=2 face="sans-serif">Other Risk Factors</FONT></B></P>
<table width="100%"  border="0" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td width="5%">&#149;</td>
    <td width="95%"><B><FONT size=2 face="sans-serif">Secondary trading may be
          limited. </FONT></B><FONT size=2 face="sans-serif">There may be little
          or no secondary market for the SPARQS. The Issuer will apply to</FONT> <FONT size=2 face="sans-serif">list
          the SPARQS on the American Stock Exchange or AMEX under the symbol &#147;CFM.&#148; For
          a security to be listed on the AMEX,</FONT> <FONT size=2 face="sans-serif">the
          AMEX requires, among other things, that there be 1 million units and
          400 holders of such security. It is not possible to</FONT> <FONT size=2 face="sans-serif">predict
          whether the SPARQS will meet the requirements for listing or trade
          in the secondary market and we do not expect to</FONT> <FONT size=2 face="sans-serif">announce
          whether or not the SPARQS will meet those requirements prior to the
          pricing of the SPARQS. In addition, the</FONT> <FONT size=2 face="sans-serif">SPARQS
          could be delisted under certain circumstances, such as the delisting
          of the underlying stock. Because it is not</FONT> <FONT size=2 face="sans-serif">possible
          to predict whether the market for the SPARQS will be liquid or illiquid,
    you should be willing to hold your SPARQS to</FONT> <FONT size=2 face="sans-serif">maturity.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">No affiliation with Coach, Inc. </FONT></B><FONT size=2 face="sans-serif">Coach,
        Inc. is not an affiliate of ours, is not involved with this offering
        in any way, and has no</FONT> <FONT size=2
face="sans-serif">obligation to consider your interests in taking any corporate
        actions that might affect the value of the SPARQS. The Issuer has</FONT> <FONT size=2 face="sans-serif">not
        made any due diligence inquiry with respect to Coach, Inc. in connection
    with this offering.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">Potential adverse economic interest
          of the calculation agent. </FONT></B><FONT size=2 face="sans-serif">The
          economic interest of the calculation agent and other</FONT> <FONT size=2 face="sans-serif">affiliates
          of ours that will carry out hedging activities related to the SPARQS
          or that trade COH Stock on a regular basis are</FONT> <FONT size=2 face="sans-serif">potentially
          adverse to your interests as an investor in the SPARQS. The hedging
          or trading activities of the Issuer&#146;s affiliates</FONT> <FONT size=2 face="sans-serif">on
          or prior to the pricing date and on the valuation dates could adversely
          affect the price of COH Stock on the pricing date</FONT> <FONT size=2 face="sans-serif">and
          at maturity and, as a result, could decrease the value of the payment
          you receive on the SPARQS at maturity. Any of</FONT> <FONT size=2 face="sans-serif">these
          hedging or trading activities on or prior to the day the Issuer prices
          the SPARQS for initial sale to the public could</FONT> <FONT size=2 face="sans-serif">potentially
          affect the price of COH Stock and, accordingly, potentially increase
          the issue price of the SPARQS and, therefore,</FONT> <FONT size=2 face="sans-serif">the
          price at which COH Stock must close before you would receive at maturity
          an amount of COH Stock worth as much as or</FONT> <FONT size=2 face="sans-serif">more
          than the principal amount of the SPARQS. Additionally, such hedging
          or trading activities during the term of the</FONT> <FONT size=2 face="sans-serif">SPARQS
          could adversely affect the price of COH Stock at maturity and, accordingly,
          if the Issuer has not called the</FONT> <FONT size=2 face="sans-serif">SPARQS,
          the value of COH Stock or in certain circumstances cash, you will receive
          at maturity, including upon an</FONT> <FONT size=2 face="sans-serif">acceleration
    event.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&#149;</td>
    <td><B><FONT size=2 face="sans-serif">Morgan Stanley may engage in business
          with or involving Coach, Inc. without regard to your interests. </FONT></B><FONT size=2 face="sans-serif">The
          Issuer or</FONT> <FONT size=2 face="sans-serif">its affiliates may
          presently or from time to time engage in business with Coach, Inc.
          without regard to your interests, and thus</FONT> <FONT size=2 face="sans-serif">may
          acquire non-public information about Coach, Inc. Neither the Issuer
          nor any of its affiliates undertakes to disclose any</FONT> <FONT size=2 face="sans-serif">such
          information to you. In addition, the Issuer or its affiliates from
          time to time have published and in the future may publish</FONT> <FONT size=2 face="sans-serif">research
          reports with respect to Coach, Inc., which may or may not recommend
    that investors buy or hold COH Stock.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
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    <TD width=50% align=left valign="top"><B><FONT color="#000066" size=1>page
          10 of 10 </FONT></B></TD>
    <TD align=right width=50%><B><FONT color="#000066" size=2 face="serif">MORGAN
          STANLEY</FONT></B> </TD>
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