<SUBMISSION>
<ACCESSION-NUMBER>0000950103-06-002842
<TYPE>424B2
<PUBLIC-DOCUMENT-COUNT>2
<FILING-DATE>20061221
<DATE-OF-FILING-DATE-CHANGE>20061221
<FILER>
<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>424B2
<ACT>33
<FILE-NUMBER>333-131266
<FILM-NUMBER>061292944
</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>
</FILER>
<DOCUMENT>
<TYPE>424B2
<SEQUENCE>1
<FILENAME>dp04046_424b2.htm
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY bgcolor="#ffffff">
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" nowrap><i><font size="2" face="serif">Amendment No. 1 dated
          December 21, 2006 to </font></i></td>
    <td align="right"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="50%" align="left"><i><font size="2" face="serif">PROSPECTUS SUPPLEMENT</font></i></td>
    <td width="50%" align="right"><I><FONT size=2 face="serif">Filed Pursuant
          to Rule 424(b)(2)</FONT></I></td>
  </tr>
  <tr>
    <td width="50%" align="left"><i><font size="2" face="serif">(To Prospectus dated January
    25, 2006)</font></i></td>
    <td width="50%" align="right"><I><FONT size=2 face="serif">Registration Statement
          No. 333-131266</FONT></I></td>
  </tr>
</table>
<P align="center">&nbsp;</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="center"><img src="logo.jpg"></td>
  </tr>
  <tr>
    <td align="center"><B><I><FONT size=2 face="serif">GLOBAL MEDIUM-TERM NOTES,
            SERIES F</FONT></I></B><BR>
      <I><FONT size=2 face="serif">Senior Fixed Rate Notes</FONT></I></td>
  </tr>
  <tr>
    <td><hr width="15%" size="1" noshade></td>
  </tr>
  <tr>
    <td><P align="center"> <B><I><FONT size=5 face="serif">High Income Trigger
              Securities<br>
        </FONT></I></B><B><I><FONT face="serif">(&#147;HITS</FONT></I></B><B><I><SUP><FONT face="serif">SM</FONT></SUP></I></B><B><I><FONT face="serif">&#148;)</FONT></I></B></P></td>
  </tr>
  <tr>
    <td><hr width="15%" size="1" noshade></td>
  </tr>
</table>
<P align="left"> <I><FONT size=2 face="serif">We, Morgan Stanley, may offer from
      time to time High Income Trigger Securities</FONT></I><B><I><SUP><FONT size=2 face="serif">SM</FONT></SUP></I></B><I><FONT size=2 face="serif">,
      which we refer to as HITS</FONT></I><B><I><SUP><FONT size=2 face="serif">SM</FONT></SUP></I></B><I><FONT size=2 face="serif">,
      that pay at maturity either an amount in U.S. Dollars or shares of common
      stock of an underlying company not affiliated with us. The specific terms
      of any such HITS that we offer, including the name of the underlying company,
      will be included in a pricing supplement. If the terms described in the
      applicable pricing supplement are inconsistent with those described herein
      or in the accompanying prospectus, the terms described in the applicable
      pricing supplement will prevail. The HITS will have the following general
      terms:</FONT></I></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width=3% align=left valign="top">&#8226;</TD>
    <TD width=42% align=left valign="top" nowrap><I><FONT size=2 face="serif">The HITS
          do not guarantee any return of principal at</FONT></I> <I><FONT size=2 face="serif">maturity.</FONT></I></TD>
    <TD  width=10% align="left" valign="top">&nbsp;</TD>
    <TD  width=3% align="left" valign="top">&#8226; </TD>
    <TD width=42% align=left valign="top" nowrap><I><FONT size=2 face="serif">The HITS
          will pay a coupon at a fixed rate per</FONT></I> <I><FONT size=2 face="serif">annum
          on the principal amount</FONT></I></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left valign="top">&nbsp;</TD>
    <TD align=left valign="top" nowrap>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align=left valign="top" nowrap><i><font size=2 face="serif"> of each HITS,</font></i> <i><font size=2 face="serif">specified
    in the applicable pricing supplement, on the interest </font></i></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left valign="top">&#8226;</TD>
    <TD align=left valign="top" nowrap><i><font size=2 face="serif">At maturity you
          will receive either an amount in cash</font></i> <i><font size=2 face="serif">equal
    to the principal </font></i></TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align=left valign="top" nowrap><i><font size=2 face="serif">payment dates specified
    in the applicable pricing supplement.</font></i></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left valign="top">&nbsp;</TD>
    <TD align=left valign="top" nowrap><i><font size=2 face="serif">amount of each HITS
          or, if the</font></i> <i><font size=2 face="serif">trading price of
    the underlying stock has </font></i></TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align=left valign="top" nowrap>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left valign="top">&nbsp;</TD>
    <TD width=42% align=left valign="top" nowrap><i><font size=2 face="serif">decreased
    to or below the trigger price specified in the applicable pricing </font></i></TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&#8226; </TD>
    <TD align=left valign="top" nowrap><I><FONT size=2 face="serif">The HITS will be
          senior unsecured obligations of</FONT></I> <I><FONT size=2 face="serif">ours.</FONT></I></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left valign="top">&nbsp;</TD>
    <TD width=42% align=left valign="top" nowrap><i><font size=2 face="serif">supplement,
    shares of common stock of the underlying company at the </font></i></TD>
    <TD  width=10% align="left" valign="top">&nbsp;</TD>
    <TD  width=3% align="left" valign="top">&nbsp;</TD>
    <TD width=42% align=left valign="top" nowrap>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left valign="top">&nbsp;</TD>
    <TD width=42% align=left valign="top" nowrap><i><font size=2 face="serif">applicable
    exchange ratio in exchange for each HITS.</font></i></TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&#8226; </TD>
    <TD align=left valign="top" nowrap><I><FONT size=2 face="serif">The HITS will be
          held in global form by The</FONT></I> <I><FONT size=2 face="serif">Depository
          Trust Company, </FONT></I></TD>
  </TR>
  <TR valign="bottom">
    <TD width=3% align=left valign="top">&nbsp;</TD>
    <TD width=42% align=left valign="top" nowrap><i></i></TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align=left valign="top" nowrap><i><font size=2 face="serif">unless the pricing
    supplement provides otherwise.</font></i></TD>
  </TR>
</TABLE>
<BR>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><P align="left"><I><FONT size=2 face="serif">The applicable pricing supplement
            will describe the specific terms of the HITS, including any changes
            to the terms specified in this prospectus supplement. See &#147;Description
            of HITS&#148; on S-11.</FONT></I></P></td>
  </tr>
  <tr>
    <td><hr width="15%" size="1" noshade></td>
  </tr>
  <tr>
    <td><P align="left"> <B><I><FONT face="serif">Investing in the HITS involves
              risks not associated with an investment in ordinary debt securities.
              See &#147;Risk Factors&#148; beginning on S-7.</FONT></I></B></P></td>
  </tr>
  <tr>
    <td><hr width="15%" size="1" noshade></td>
  </tr>
  <tr>
    <td><P align="left"><I><FONT size=2 face="serif">The Securities and Exchange
            Commission and state securities regulators have not approved or disapproved
            these securities, or determined if this prospectus supplement or
            the accompanying prospectus is truthful or complete. Any representation
            to the contrary is a criminal offense.</FONT></I></P>
      <P align="left"> <I><FONT size=2 face="serif">Morgan Stanley &amp; Co.
            Incorporated and Morgan Stanley DW Inc., our wholly owned subsidiaries,
            have agreed to use reasonable efforts to solicit offers to purchase
            these securities as our agents. The agents may also purchase these
            securities as principal at prices to be agreed upon at the time of
            sale. The agents may resell any securities they purchase as principal
            at prevailing market prices, or at other prices, as the agents determine.</FONT></I></P>
      <P align="left"> <I><FONT size=2 face="serif">Morgan Stanley &amp; Co.
            Incorporated and Morgan Stanley DW Inc. may use this prospectus supplement
            and the accompanying prospectus in connection with offers and sales
            of the securities in market-making transactions.</FONT></I></P></td>
  </tr>
  <tr>
    <td><hr width="15%" size="1" noshade></td>
  </tr>
</table>
<P align="center"> <B><I><FONT size=5 face="serif">MORGAN STANLEY</FONT></I></B></P>
<P align="left"> <I><FONT size=2 face="serif">March 30, 2006</FONT></I></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">TABLE OF CONTENTS</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><B><U><FONT size=2 face="serif">Page</FONT></U></B> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><B><U><FONT size=2 face="serif">Page</FONT></U></B> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><B><FONT size=2 face="serif">Prospectus Supplement</FONT></B> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><B><FONT size=2 face="serif">Prospectus</FONT></B> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=7%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">Summary</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-3</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Summary</FONT></TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">3</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">Hypothetical Payments
        on the HITS</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-6</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Foreign Currency Risks</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">7</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">Risk Factors</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-7</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Where You Can Find More
        Information</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">9</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">Description of HITS</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-11</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Consolidated Ratios of
        Earnings to Fixed</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=7%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">Underlying Company and
        Stock &#150; Public</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%>&nbsp; &nbsp;<FONT size=2 face="serif">Charges and
        Earnings to Fixed Charges</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=7%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp; &nbsp;<FONT size=2 face="serif">Information</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-21</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%>&nbsp; &nbsp;<FONT size=2 face="serif">and Preferred
        Stock Dividends</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">11</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">Use of Proceeds and Hedging</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-21</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Morgan Stanley</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">12</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">HITS Offered on A Global
        Basis</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-22</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Use of Proceeds</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">13</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">ERISA</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-22</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Description of Debt Securities</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">13</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">United States Federal
        Taxation</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-23</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Description of Units</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">39</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%><FONT size=2 face="serif">Plan of Distribution</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=10%><FONT size=2 face="serif">S-29</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Description of Warrants</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">44</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Description of Purchase
        Contracts</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">47</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Description of Capital
        Stock</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">48</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Forms of Securities</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">59</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Securities Offered on
        a Global Basis through</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=7%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%>&nbsp; &nbsp;<FONT size=2 face="serif">the Depositary</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">63</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">United States Federal
        Taxation</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">67</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Plan of Distribution</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">71</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Legal Matters</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">73</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">Experts</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">73</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%><FONT size=2 face="serif">ERISA Matters for Pension
        Plans and</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=7%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=36%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=41%>&nbsp; &nbsp;<FONT size=2 face="serif">Insurance
        Companies</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=7%><FONT size=2 face="serif">74</FONT> </TD>
  </TR>
</TABLE>
<BR>
<P align="left"> <B><FONT size=2 face="serif">You should rely only on the information
      contained or incorporated by reference in this prospectus supplement, the
      prospectus and the applicable pricing supplement. We have not authorized
      anyone else to provide you with different or additional information. We
      are offering to sell these securities and seeking offers to buy these securities
      only in jurisdictions where offers and sales are permitted. As used in
      this prospectus supplement, the &#147;Company,&#148;
  &#147;we,&#148; &#147;us,&#148; and &#147;our&#148; refer to Morgan Stanley.</FONT></B></P>
<P align="center"> <FONT size=2 face="serif">S-2</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">SUMMARY</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">The
      following summary describes the High Income Trigger Securities</FONT></I><SUP><FONT size=2 face="serif">SM</FONT></SUP><I><FONT size=2 face="serif">,
      which we refer to as HITS</FONT></I><SUP><FONT size=2 face="serif">SM</FONT></SUP><I><FONT size=2 face="serif">,
      offered under this program, in general terms only. You should read the
      summary together with the more detailed information contained in this prospectus
      supplement, in the accompanying prospectus and in the applicable pricing
      supplement. We may also prepare free writing prospectuses that describe
      particular issuances of HITS. Any free writing prospectus should also be
      read in connection with this prospectus supplement and the accompanying
      prospectus. For purposes of this prospectus supplement, any references
      to an applicable pricing supplement may also refer to a free writing prospectus,
      unless the context otherwise requires.</FONT></I></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">We
      will sell these HITS primarily in the United States, but may also sell
      them outside the United States or both in and outside of the United States
      simultaneously. The HITS we offer under this prospectus supplement are
      among the notes we refer to as our Series F medium-term notes. We refer
      to the offering of the Series F medium-term notes as our Series F program.
      See &#147;Plan of Distribution&#148; in this prospectus supplement.</FONT></I></P>
<P align="left"> <I><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#147;High
      Income Trigger Securities&#148; and &#147;HITS&#148; are service marks
      of Morgan Stanley.</FONT></I></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR align="center" valign="bottom">
    <TD colspan="3" valign="top"><P align="center"> <B><FONT size=2 face="serif">The HITS</FONT></B></P></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=30% align=left valign="top"><B><FONT size=2 face="serif">General
          terms of the HITS</FONT></B> </TD>
    <TD  width=5% valign="top">&nbsp;</TD>
    <TD  width=65% valign="top"><P align="left"> <FONT size=2 face="serif">Unlike
          ordinary debt securities, the HITS do not guarantee any return of principal
          at maturity. Instead, at the scheduled maturity date, the HITS will
          pay either:</FONT></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE width=100% border=0 cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD width=3% align=left valign="top"><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD width=62% align=left valign="top"><FONT size=2 face="serif">an amount
        in cash equal to the stated principal amount per HITS, or</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left valign="top">&nbsp;</TD>
    <TD align=left valign="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD width=3% align=left valign="top"><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD width=62% align=left valign="top"><FONT size=2 face="serif">if the trading
        price of the common stock of the underlying company specified in</FONT><FONT size=2 face="serif"> the
        applicable pricing supplement, which we refer to as underlying stock,</FONT><FONT size=2 face="serif"> decreases
        to or below the trigger price specified in the applicable pricing</FONT><FONT size=2 face="serif"> supplement,
        underlying stock at the exchange ratio.</FONT> </TD>
  </TR>
</TABLE>
<BR>
<TABLE border=0 cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">Coupon payments</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">The HITS will pay a
          coupon at a fixed rate per annum on the stated principal amount on
          the interest payment dates, in each case as specified in the applicable
          pricing supplement. For U.S. federal income tax purposes, we and you
          will agree to treat the total coupon as composed in part of interest
          and in part of option premium, in the proportion specified in the applicable
          pricing supplement. You will be entitled to receive all coupon payments
          on the principal amount of your HITS whether we deliver cash or shares
          of underlying stock at maturity.</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">Payment at maturity; no guaranteed
            return on</FONT></B> <B><FONT size=2 face="serif">principal</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P align="center"><B><FONT size=2 face="serif">Payment
            if the trading price </FONT></B><B><I><FONT size=2 face="serif">has
            not </FONT></I></B><B><FONT size=2 face="serif">decreased to or below
            the trigger price</FONT></B></P>
      <P><FONT size=2 face="serif">If the trading price of the underlying stock </FONT><B><FONT size=2 face="serif">has
            not </FONT></B><FONT size=2 face="serif">decreased to or below the
            trigger price </FONT><B><FONT size=2 face="serif">at any time on
            any trading day </FONT></B><FONT size=2 face="serif">from and including
            the pricing date to and including the determination date, you will
            receive an amount in cash per HITS equal to the stated principal
            amount.</FONT></P>
      <P align="center"><B><FONT size=2 face="serif">Payment if the trading price </FONT></B><B><I><FONT size=2 face="serif">has </FONT></I></B><B><FONT size=2 face="serif">decreased
            to or below the trigger price</FONT></B></P>
      <P><FONT size=2 face="serif">If the trading price of the underlying stock </FONT><B><FONT size=2 face="serif">has </FONT></B><FONT size=2 face="serif">decreased
          to or below the trigger price </FONT><B><FONT size=2 face="serif">at
          any time on any trading day </FONT></B><FONT size=2 face="serif">from
          and including the pricing date to and including the determination date,
          you will receive shares of underlying stock in exchange for each HITS
          at the applicable exchange ratio.</FONT></P>
      <P><FONT size=2 face="serif">The exchange ratio will be determined on the
          pricing date and will be equal to the stated principal amount of the
          HITS divided by the closing price of the underlying stock on the pricing
          date. The exchange ratio will be subject to adjustment for certain
          corporate events relating to the underlying company by means of an
          exchange factor, initially set at 1.0.</FONT></P></TD>
  </TR>
</TABLE>
<BR>
<P align="center"> <FONT size=2 face="serif">S-3</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">You should read about
          those adjustments in the sections of this prospectus supplement called &#147;Risk
          Factors&#151;The antidilution adjustments the Calculation Agent is
          required to make do not cover every corporate event that can affect
          the underlying stock&#148; and &#147;Description of HITS&#151;Payment
          at Maturity,&#148; &#147;&#151;General Terms of the HITS&#151;Some
          Definitions&#148; and &#147;&#151;Antidilution Adjustments.&#148;</FONT></P>
      <P><FONT size=2 face="serif">You will not have the right to exchange your
          HITS for cash or underlying stock prior to maturity.</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">Postponement of maturity date</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">If a market disruption
          event occurs on the scheduled maturity date, or that day is not a trading
          day, the maturity date of the HITS will be postponed. See the section
          of this prospectus supplement called &#147;Description of HITS&#151;General
          Terms of the HITS&#151; Some Definitions.&#148;</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">The maturity date of the HITS
            may be accelerated</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">The maturity date of
          the HITS will be accelerated upon the occurrence of either of the following
          events:</FONT></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE width=100% border=0 cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD width=3% align=left valign="top"><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD align=left width=62%><FONT size=2 face="serif">a price event acceleration,
        which will occur if the closing price of the underlying</FONT><FONT size=2 face="serif"> stock
        times the exchange factor on any two consecutive trading days is less
        than</FONT><FONT size=2 face="serif"> the acceleration trigger price,
        which will be equal to &#36;2.00, unless otherwise </FONT><FONT size=2 face="serif">specified
        in the applicable pricing supplement, and</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD align=left width=3%>&nbsp;</TD>
    <TD align=left width=62%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD width=3% align=left valign="top"><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD align=left width=62%><FONT size=2 face="serif">an event of default acceleration,
        which will occur if there is an event of default</FONT> <FONT size=2 face="serif">with
        respect to the HITS.</FONT></TD>
  </TR>
</TABLE>
<BR>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD align=left width=30%>&nbsp;</TD>
    <TD  width=5%>&nbsp;</TD>
    <TD align=left width=65%><FONT size=2 face="serif">The amount payable to
        you will differ depending on the reason for the acceleration.</FONT> </TD>
  </TR>
</TABLE>
<BR>
<TABLE width=100% border=0 cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD width=35% align=left valign="top">&nbsp;</TD>
    <TD width=3% align=left valign="top"><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD width=62% align=left valign="top"><FONT size=2 face="serif">If there
        is a price event acceleration, we will owe you (i) a number of shares
        of </FONT><FONT size=2 face="serif">underlying stock at the exchange
        ratio, multiplied by the exchange factor as of the </FONT><FONT size=2 face="serif">date
        of such acceleration and (ii) accrued but unpaid coupon to but excluding
        the</FONT> <FONT size=2 face="serif">date of acceleration plus an amount
        of cash determined by the Calculation Agent </FONT><FONT size=2 face="serif">equal
        to the sum of the present values of the remaining scheduled payments
        of</FONT><FONT size=2 face="serif"> interest on the HITS (excluding such
        accrued but unpaid coupon) discounted to </FONT><FONT size=2 face="serif">the
        date of acceleration, as described in the section of this prospectus
        supplement </FONT><FONT size=2 face="serif">called &#147;Description
        of HITS&#151;Price Event Acceleration.&#148;</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD width=35% align=left valign="top">&nbsp;</TD>
    <TD width=3% align=left valign="top">&nbsp;</TD>
    <TD width=62% align=left valign="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=35% align=left valign="top">&nbsp;</TD>
    <TD width=3% align=left valign="top"><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD width=62% align=left valign="top"><FONT size=2 face="serif">If there
        is an event of default acceleration, we will owe you either (i) the principal </FONT><FONT size=2 face="serif">amount
        of each HITS, plus accrued and unpaid coupon to but excluding the date</FONT><FONT size=2 face="serif"> of
        such acceleration, or (ii) if the trading price of the underlying stock
        has </FONT><FONT size=2 face="serif">decreased to or below the trigger
        price at any time on any trading day from and</FONT><FONT size=2 face="serif"> including
        the pricing date to and including the date of such acceleration, (x)
        a</FONT><FONT size=2 face="serif"> number of shares of underlying stock
        at the exchange ratio, multiplied by the </FONT><FONT size=2 face="serif">exchange
        factor as of the date of such acceleration and (y) accrued but unpaid </FONT><FONT size=2 face="serif">coupon
        to but excluding the date of acceleration.</FONT> </TD>
  </TR>
</TABLE>
<BR>
<TABLE border=0 cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%>&nbsp;</TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">The amount payable to
          you per HITS if the maturity of the HITS is accelerated may be substantially
          less than the stated principal amount.</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">The HITS may become exchangeable
            into the common stock of a company other than the underlying company</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">Following certain corporate
          events relating to underlying stock, such as a stock-for-stock merger
          where the underlying company is not the surviving entity, you will
          receive at maturity cash or a number of shares of the common stock
          of a successor corporation to the underlying company, based on the
          closing price of such successor&#146;s common stock. We describe the
          specific corporate events that can lead to these adjustments in the
          section of this product supplement called &#147;Description of HITS&#151;Antidilution
          Adjustments.&#148; You should read this section in order to understand
          these and other adjustments that may be made to your HITS.</FONT></P></TD>
  </TR>
</TABLE>
<BR>
<P align="center"> <FONT size=2 face="serif">S-4</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE width=100% border=0 cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=35% align=left><P align="left"> <B><FONT size=2 face="serif">Other
    terms of the HITS</FONT></B></P></TD>
    <TD width=3% align=left><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD width=62% align=left><FONT size=2 face="serif">The HITS
        will be denominated in U.S. dollars, unless we specify otherwise in the</FONT><FONT size=2 face="serif"> applicable
        pricing supplement.</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD width=35% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=62% align=left>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=35% align=left>&nbsp;</TD>
    <TD width=3% align=left><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD width=62% align=left><FONT size=2 face="serif">We may from
        time to time, without your consent, create and issue additional</FONT><FONT size=2 face="serif"> HITS
        with the same terms as the HITS previously issued so that they may be </FONT><FONT size=2 face="serif">combined
        with the earlier issuance.</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD width=35% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=62% align=left>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=35% align=left>&nbsp;</TD>
    <TD width=3% align=left><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD width=62% align=left><FONT size=2 face="serif">The HITS
        will be held in global form by The Depository Trust Company, unless </FONT><FONT size=2 face="serif">the
        pricing supplement provides otherwise.</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD width=35% align=left>&nbsp;</TD>
    <TD width=3% align=left>&nbsp;</TD>
    <TD width=62% align=left>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=35% align=left>&nbsp;</TD>
    <TD width=3% align=left><FONT size=2 face="serif">&#149;</FONT> </TD>
    <TD width=62% align=left><FONT size=2 face="serif">The HITS
        will not be listed on any securities exchange, unless we specify</FONT><FONT size=2 face="serif"> otherwise
        in the applicable pricing supplement.</FONT> </TD>
  </TR>
</TABLE>
<BR>
<TABLE width=100% border=0 cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD width=30% align=left valign="top"><B><FONT size=2 face="serif">MS &amp; Co.
          will be the Calculation Agent</FONT></B></TD>
    <TD  width=5% valign="top">&nbsp;</TD>
    <TD width=65% align=left valign="top"><FONT size=2 face="serif">We have appointed
        our affiliate, Morgan Stanley &amp; Co. Incorporated, which we refer
        to as MS &amp; Co., to act as Calculation Agent for us with respect to
        the HITS. As Calculation Agent, MS &amp; Co. will determine whether the
        trading price of the underlying stock has decreased to or below the trigger
        price, the appropriate payment at maturity, the amount payable per HITS
        in the event of a price event acceleration or an event of default acceleration,
        and any adjustment to the exchange factor for certain extraordinary dividends
        or other corporate events affecting underlying stock that we describe
        in the section of this prospectus supplement called &#147;Description
        of HITS&#151;Antidilution Adjustments.&#148;</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD width=30% align=left valign="top">&nbsp;</TD>
    <TD  width=5% valign="top">&nbsp;</TD>
    <TD width=65% align=left valign="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=30% align=left valign="top"><B><FONT size=2 face="serif">No affiliation
          with the underlying company</FONT></B></TD>
    <TD  width=5% valign="top">&nbsp;</TD>
    <TD width=65% align=left valign="top"><FONT size=2 face="serif">The underlying
        company is not an affiliate of ours and is not involved with any of the
        issuances of HITS in any way. The obligations represented by the HITS
        are obligations of Morgan Stanley and not of the underlying company.</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD width=30% align=left valign="top">&nbsp;</TD>
    <TD  width=5% valign="top">&nbsp;</TD>
    <TD width=65% align=left valign="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=30% align=left valign="top">&nbsp;</TD>
    <TD  width=5% valign="top">&nbsp;</TD>
    <TD width=65% align=left valign="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=30% align=left valign="top"><B><FONT size=2 face="serif">Forms
          of securities</FONT></B> </TD>
    <TD  width=5% valign="top">&nbsp;</TD>
    <TD width=65% align=left valign="top"><FONT size=2 face="serif">The HITS
        will be issued in fully registered form and will be represented by a
        global security registered in the name of a nominee of The Depository
        Trust Company, as depositary, unless we indicate that they will be represented
        by certificates issued in definitive form in the applicable pricing supplement.
        We will not issue book-entry securities as certificated securities except
        under the circumstances described in &#147;Forms of Securities &#151; The
        Depositary&#148; in the prospectus, under which heading you may also
        find information on The Depository Trust Company&#146;s book-entry system.</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD align=left valign="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=30% align=left valign="top"><B><FONT size=2 face="serif">Where
          you can find more</FONT></B> <B><FONT size=2 face="serif">information
          on the HITS</FONT></B> </TD>
    <TD  width=5% valign="top">&nbsp;</TD>
    <TD width=65% align=left valign="top"><B><FONT size=2 face="serif">Because
          this is a summary, it does not contain all of the information that
          may be important to you. You should read the &#147;Description of HITS&#148; section
          in this prospectus supplement and the &#147;Description of Debt Securities&#148; section
          in the prospectus for a detailed description of the terms of the HITS.
          You should also read about some of the risks involved in investing
          in HITS in the section called &#147;Risk Factors.&#148; The tax and
          accounting treatment of investments in equity-linked securities such
          as the HITS may differ from that of investments in ordinary debt securities
          or common stock. We urge you to consult with your investment, legal,
          tax, accounting and other advisors with regard to any proposed or actual
          investment in the HITS.</FONT></B> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD align=left valign="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD width=30% align=left valign="top"><B><FONT size=2 face="serif">How to
          reach us</FONT></B></TD>
    <TD  width=5% valign="top">&nbsp;</TD>
    <TD width=65% align=left valign="top"><FONT size=2 face="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 (212) 761-4000).</FONT> </TD>
  </TR>
</TABLE>
<BR>
<P align="center"> <FONT size=2 face="serif">S-5</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">HYPOTHETICAL PAYMENTS ON THE
      HITS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    following examples illustrate the payment at maturity on the HITS for a range
    of hypothetical closing prices for the underlying stock on a hypothetical
    determination date, which is approximately one year from the issue date of
    the HITS, depending on whether an intraday trading price during the term
    of the HITS has or has not decreased to or below the trigger price.</FONT></P>
<P align="left"> <FONT size=2 face="serif">The hypothetical examples are based
    on the following hypothetical values:</FONT></P>
<TABLE width=100% border=0 cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD align=left width=2%>&#8226;</TD>
    <TD align=left width=22%><FONT size=2 face="serif">Stated principal amount:</FONT> </TD>
    <TD align=left width=4%><FONT size=2 face="serif">&#36;10</FONT> </TD>
    <TD GUTTER align=left width=2%>&nbsp;</TD>
    <TD align=left width=70%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=2%>&#8226;</TD>
    <TD align=left width=22%><FONT size=2 face="serif"> Initial share price:</FONT> </TD>
    <TD colspan="3" align=left><font size=2 face="serif">&#36;100</font><font size=2 face="serif"> (the closing price of
    one share of underlying stock on the pricing date)</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=2%>&#8226;</TD>
    <TD align=left width=22%><FONT size=2 face="serif"> Exchange ratio:</FONT> </TD>
    <TD colspan="3" align=left><FONT size=2 face="serif">0.1</FONT> <FONT size=2 face="serif">(the &#36;10
       stated principal amount per HITS divided by the hypothetical initial share
    price)</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=2%>&#8226;</TD>
    <TD align=left width=22%><FONT size=2 face="serif"> Trigger price:</FONT> </TD>
    <TD colspan="3" align=left><FONT size=2 face="serif">&#36;75</FONT> <FONT size=2 face="serif">(75% of the initial
    share price)</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=2%>&#8226;</TD>
    <TD align=left width=22%><FONT size=2 face="serif"> Annual coupon:</FONT> </TD>
    <TD align=left width=4%><FONT size=2 face="serif">9%</FONT> </TD>
    <TD GUTTER align=left width=2%>&nbsp;</TD>
    <TD align=left width=70%>&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<P align="left"> <B><FONT size=2 face="serif">TABLE 1: This table represents
      the hypothetical payment at maturity and the total payment over the term
      of the HITS (assuming a one-year term) on a &#36;10 investment in the HITS
      if the trading price of the underlying stock </FONT></B><B><I><FONT size=2 face="serif">has
      not</FONT></I></B><B><FONT size=2 face="serif"> decreased to or below the
      hypothetical trigger price of &#36;75 </FONT></B><B><I><FONT size=2 face="serif">at
      any time on any trading day</FONT></I></B><B><FONT size=2 face="serif"> from
      and including the pricing date to and including the determination date.
      Consequently, the payment at maturity in each of these examples would be
      made in cash.</FONT></B></P>
<TABLE width=100% border=0 cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD align=center width=13%>&nbsp;</TD>
    <TD  width=10% align="center">&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%>&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%>&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=25%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="2" align=center><B><FONT size=1 face="serif">Hypothetical underlying
          stock closing<br>
      </FONT></B><B><FONT size=1 face="serif">price at determination date</FONT></B> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><B><FONT size=1 face="serif">Value of cash delivery
          amount<br>
      </FONT></B><B><FONT size=1 face="serif">at maturity per HITS</FONT></B> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><B><FONT size=1 face="serif">Total quarterly coupon
          payments<br>
      </FONT></B><B><FONT size=1 face="serif">per HITS</FONT></B> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=25%><B><FONT size=1 face="serif">Value of total payment
          per HITS</FONT></B> </TD>
  </TR>
  <TR>
    <TD width="13%" align="center"><HR noshade size=1></TD>
    <TD width="10%" align="center"><HR noshade size=1></TD>
    <TD align="center"></TD>
    <TD width="23%" align="center"><HR noshade size=1>
    </TD>
    <TD align="center"></TD>
    <TD width="23%" align="center"><HR noshade size=1>
    </TD>
    <TD align="center"></TD>
    <TD width="25%" align="center"><HR noshade size=1>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;76.00</FONT> </TD>
    <TD  width=10% align="center">&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;10.00</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;0.90</FONT></TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;10.90</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;85.00</FONT> </TD>
    <TD  width=10% align="center">&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;10.00</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;10.90</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;95.00</FONT> </TD>
    <TD  width=10% align="center">&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;10.00</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;10.90</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;100.00</FONT> </TD>
    <TD  width=10% align="center">&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;10.00</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;10.90</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;105.00</FONT> </TD>
    <TD  width=10% align="center">&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;10.00</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;10.90</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;110.00</FONT> </TD>
    <TD  width=10% align="center">&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;10.00</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;10.90</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;115.00</FONT> </TD>
    <TD  width=10% align="center">&nbsp;</TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;10.00</FONT></TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=23%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2% align="center">&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;10.90</FONT> </TD>
  </TR>
</TABLE>
<BR>
<P align="left"> <B><FONT size=2 face="serif">TABLE 2: This table represents
      the hypothetical payment at maturity and the total payment over the term
      of the HITS (assuming a one-year term) on a &#36;10 investment in the HITS
      if the trading price of the underlying stock </FONT></B><B><I><FONT size=2 face="serif">has</FONT></I></B><B><FONT size=2 face="serif"> decreased
      to or below the trigger price of &#36;75 </FONT></B><B><I><FONT size=2 face="serif">at
      any time on any trading day</FONT></I></B><B><FONT
size=2 face="serif"> from and including the pricing date to and including the
      determination date. Consequently, the payment at maturity in each of these
      examples would be made by the delivery of shares of underlying stock.</FONT></B></P>
<TABLE width=100% border=0 cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=center><B><FONT size=1 face="serif">Hypothetical underlying
          stock closing<br>
      price at determination date</FONT></B> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD colspan="2" align=center><B><FONT size=1 face="serif">Value of shares
          of underlying stock<br>
      </FONT></B><B><FONT size=1 face="serif">delivered at maturity per HITS</FONT></B> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><B><FONT size=1 face="serif">Total quarterly coupon
          payments<br>
      </FONT></B><B><FONT size=1 face="serif">per HITS</FONT></B> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD colspan="2" align=center><B><FONT size=1 face="serif">Value of total
          payment per HITS</FONT></B> </TD>
  </TR>
  <TR>
    <TD colspan="2"><HR noshade size=1>
    </TD>
    <TD></TD>
    <TD colspan="2"><HR noshade size=1>
    </TD>
    <TD></TD>
    <TD width="25%"><HR noshade size=1>
    </TD>
    <TD></TD>
    <TD colspan="2"><HR noshade size=1>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;&nbsp;&nbsp;0.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;0.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;&nbsp;&nbsp;.90</FONT> </TD>
    <TD align=right width=10%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;50.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;5.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;5.90</FONT> </TD>
    <TD align=right width=10%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;65.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;6.50</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;7.40</FONT> </TD>
    <TD align=right width=10%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;70.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;7.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;7.90</FONT> </TD>
    <TD align=right width=10%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;75.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;7.50</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;&nbsp;&nbsp;8.40</FONT> </TD>
    <TD align=right width=10%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;100.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;10.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;10.90</FONT> </TD>
    <TD align=right width=10%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;105.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;10.50</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;11.40</FONT> </TD>
    <TD align=right width=10%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;110.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;11.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;11.90</FONT> </TD>
    <TD align=right width=10%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=13%><FONT size=1 face="serif">&#36;115.00</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;11.50</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><FONT size=1 face="serif">&#36;0.90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=13%><FONT size=1 face="serif">&#36;12.40</FONT> </TD>
    <TD align=right width=10%>&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Because
    the trading price of the underlying stock may be subject to significant fluctuation
    over the term of the HITS, it is not possible to present a chart or table
    illustrating the complete range of possible payouts at maturity. The examples
    of the hypothetical payout calculations above are intended to illustrate
    how the amount payable to you at maturity will depend both on (a) whether
    the price of the underlying stock falls to or below the trigger price from
    and including the pricing date to and including the determination date and
    (b) the closing price of the underlying stock on the determination date.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-6</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">RISK FACTORS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    HITS are not secured debt and are riskier than ordinary debt securities.
    Because the return to investors is linked to the performance of the common
    stock of the underlying company specified in the applicable pricing supplement,
    there is no guaranteed return of principal at maturity. This section describes
    the most significant risks relating to the HITS. You should carefully consider
    whether the HITS are suited to your particular circumstances before you decide
    to purchase them.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">HITS are not ordinary senior notes &#151; no
      guaranteed return of principal</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    HITS combine features of equity and debt. The terms of the HITS differ from
    those of ordinary debt securities in that we will not pay you a fixed amount
    at maturity. Our payout to you at maturity per HITS will either be (i) cash
    equal to the stated principal amount or (ii) if the trading price of the
    underlying stock decreases to or below the trigger price over the term of
    the HITS, shares of the underlying stock equal to the exchange ratio. If
    we deliver shares of underlying stock at maturity in exchange for each HITS,
    the value of those shares may be less than the stated principal amount and
    could be zero.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Except in certain circumstances,
      you will not participate in any appreciation in the value of underlying
      stock</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Generally,
    you will not participate in any appreciation in the price of the underlying
    stock. Your return on the HITS will be limited to the coupon payable on the
    HITS, unless: (i) the trading price of the underlying stock declines to or
    below the trigger price at any time in any trading day from and including
    the pricing date to and including the applicable determination date, </FONT><B><FONT size=2 face="serif">and</FONT></B><FONT
size=2 face="serif"> (ii) the price of the underlying stock at maturity has recovered
    and is greater than the initial share price of the underlying stock.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Secondary trading may be limited</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">There
    may be little or no secondary market for the HITS. Although we may apply
    to list certain issuances of HITS, we may not meet the requirements for listing
    and do not expect to announce whether or not we will meet such requirements
    prior to the pricing of the HITS. Even if there is a secondary market, it
    may not provide significant liquidity. MS &amp; Co. currently intends to
    act as a market maker for the HITS but is not required to do so. If at any
    time MS &amp; Co. were to cease acting as a market maker, it is likely that
    there would be significantly less liquidity in the secondary market, in which
    case the price at which you would be able to sell your HITS would likely
    be lower than if an active market existed. If the HITS are not listed on
    any securities exchange and MS &amp; Co. were to cease acting as a market
    maker, it is likely that there would be no secondary market for the HITS.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Market price of the HITS will be
      influenced by many unpredictable factors</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Several
    factors, many of which are beyond our control, will influence the value of
    the HITS in the secondary market and the price at which MS &amp; Co. may
    be willing to purchase or sell the HITS in the secondary market. We expect
    that generally the trading price of the underlying stock on any day will
    affect the value of the HITS more than any other single factor. Other factors
    that may influence the value of the HITS include:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">whether the trading price of the underlying
      stock has decreased to or below the trigger price at any time on</FONT> <FONT size=2 face="serif">any
      trading day;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the volatility (frequency and magnitude of changes
      in price) of the underlying stock;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the dividend rate on the underlying stock;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">geopolitical conditions and economic, financial,
      political, regulatory or judicial events that affect stock</FONT> <FONT size=2 face="serif">markets
      generally and that may affect the underlying company and the trading price
      of the underlying</FONT> <FONT size=2 face="serif">stock;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">interest and yield rates in the market;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the time remaining to the maturity of the HITS;</FONT></LI>
</UL>
<P align="center"> <FONT size=2 face="serif">S-7</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<UL>
  <LI> <FONT size=2 face="serif">our creditworthiness; and</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the occurrence of certain events affecting the
      underlying company that may or may not require an</FONT> <FONT size=2 face="serif">adjustment
      to the exchange factor.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Some
    or all of these factors will influence the price you will receive if you
    sell your HITS prior to maturity. For example, you may have to sell your
    HITS at a substantial discount from the stated principal amount if the price
    of the underlying stock has declined below the initial share price, especially
    if it has decreased to or below the trigger price at any time after the pricing
    date of the HITS.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">You
    cannot predict the future performance of underlying stock based on its historical
    performance. The price of the underlying stock may decrease to or below the
    trigger price and remain below the initial share price to maturity so that
    you will receive at maturity shares of underlying stock worth less than the
    principal amount of the HITS. We cannot guarantee that the price of the underlying
    stock will stay above the trigger price over the life of the HITS or that,
    if the price of the underlying stock has decreased to or below the trigger
    price, the price of the underlying stock will recover and be at or above
    the initial share price on the determination date so that you will receive
    at maturity an amount at least equal to the principal amount of the HITS.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">The inclusion of commissions and
      projected profit from hedging in the original issue price is likely to
      adversely affect secondary market prices</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Assuming
    no change in market conditions or any other relevant factors, the price,
    if any, at which MS &amp; Co. is willing to purchase HITS in secondary market
    transactions will likely be lower than the original issue price, since the
    original issue price included, and secondary market prices are likely to
    exclude, commissions paid with respect to the HITS, as well as the projected
    profit included in the cost of hedging our obligations under the HITS (even
    if the trading price of the underlying stock declines). In addition, any
    such prices may differ from values determined by pricing models used by MS &amp; Co.,
    as a result of dealer discounts, mark-ups or other transaction costs.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">If the HITS are accelerated, you
      may receive an amount worth substantially less than the principal amount
      of the HITS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    maturity of the HITS will be accelerated if there is a price event acceleration
    or an event of default acceleration. The amount payable to you if the maturity
    of the HITS is accelerated will differ depending on the reason for the acceleration
    and may be substantially less than the principal amount of the HITS. See &#147;Description
    of HITS&#151;Price Event Acceleration&#148; and &#147;Description of HITS&#151;Alternate
    Exchange Calculation in Case of an Event of Default.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Morgan Stanley is not affiliated
      with the underlying company</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    underlying company is not an affiliate of ours and is not involved with this
    offering in any way. Consequently, we have no ability to control the actions
    of the underlying company, including any corporate actions of the type that
    would require the Calculation Agent to adjust the payout to you at maturity.
    The underlying company has no obligation to consider your interest as an
    investor in the HITS in taking any corporate actions that might affect the
    value of your HITS. None of the money you pay for the HITS will go to the
    underlying company.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Morgan Stanley may engage in business
      with or involving the underlying company without regard to your interests</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We or
    our affiliates may presently or from time to time engage in business with
    the underlying company without regard to your interests, including extending
    loans to, or making equity investments in, the underlying company or providing
    advisory services to the underlying company, such as merger and acquisition
    advisory services. In the course of our business, we or our affiliates may
    acquire non-public information about the underlying company. Neither we nor
    any of our affiliates undertakes to disclose any such information to you.
    In addition, we or our affiliates from time to time have published and in
    the future may publish research reports with respect to the underlying company.
    These research reports may or may not recommend that investors buy or hold
    the underlying stock.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-8</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <B><FONT size=2 face="serif">You have no shareholder rights</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Investing
    in the HITS is not equivalent to investing in the common stock of the underlying
    company. As an investor in the HITS, you will not have voting rights or rights
    to receive dividends or other distributions or any other rights with respect
    to such common stock. In addition, you do not have the right to exchange
    your HITS for common stock of the underlying company except at maturity,
    if the trading price has decreased below the trigger price.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">The HITS may become exchangeable
      into the common stock of a company other than the underlying company</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Following
    certain corporate events relating to the underlying stock, such as a stock-for-stock
    merger where the underlying company is not the surviving entity, you will
    receive at maturity cash or a number of shares of the common stock of a successor
    corporation to the underlying company based on the closing price of such
    successor&#146;s common stock. We describe the specific corporate events
    that can lead to these adjustments in the section of this prospectus supplement
    called &#147;Description of HITS&#151;Antidilution Adjustments.&#148; The
    occurrence of such corporate events and the consequent adjustments may materially
    and adversely affect the market price of the HITS.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">The antidilution adjustments the
      Calculation Agent is required to make do not cover every corporate event
      that could affect the underlying stock</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">MS &amp; Co.,
    as Calculation Agent, will adjust the exchange factor and, thus, the trading
    price used to determine whether or not the trigger price has been reached
    and, if applicable, the number of shares of underlying stock deliverable
    at maturity for certain events affecting the underlying stock, such as stock
    splits and stock dividends, and certain other corporate actions involving
    underlying company, such as mergers. However, the Calculation Agent will
    not make an adjustment for every corporate event that could affect the underlying
    stock. For example, the Calculation Agent is not required to make any adjustments
    if the underlying company or anyone else makes a partial tender or partial
    exchange offer for the underlying stock. If an event occurs that does not
    require the Calculation Agent to adjust the amount of underlying stock payable
    at maturity, the market price of the HITS may be materially and adversely
    affected.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">The economic interests of the Calculation
      Agent and other of our affiliates are potentially adverse to your interests</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    economic interests of the Calculation Agent and other of our affiliates are
    potentially adverse to your interests as an investor in the HITS.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As Calculation
    Agent, MS &amp; Co. will determine whether the trading price of the underlying
    stock has decreased to or below the trigger level during the term of the
    HITS, the appropriate payout at maturity, the amount payable to you in the
    event of a price acceleration, any adjustment to the exchange factor to reflect
    certain corporate and other events and the appropriate underlying security
    or securities to be delivered at maturity following certain reorganization
    events, if the price of the underlying stock (or other exchange property)
    decreases to or below the trigger price at any time on any trading day from
    and including the pricing date to and including the determination date. Determinations
    made by MS &amp; Co, in its capacity as Calculation Agent, including adjustments
    to the exchange factor or the calculation of the amount payable to you in
    the event of a price event acceleration, may affect the amount payable to
    you at maturity or upon a price event acceleration of the HITS. See the sections
    of this prospectus supplement called &#147;Description of HITS&#151;Antidilution
    Adjustments&#148; and &#147;&#151;Price Event Acceleration.&#148;</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    original issue price of the HITS includes the agent&#146;s commissions and
    certain costs of hedging our obligations under the HITS. The subsidiaries
    through which we hedge our obligations under the HITS expect to make a profit.
    Since hedging our obligations entails risk and may be influenced by market
    forces beyond our or our subsidiaries&#146; control, such hedging may result
    in a profit that is more or less than initially projected.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-9</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <B><FONT size=2 face="serif">Hedging and trading activity by
      the Calculation Agent and its affiliates could potentially affect the value
      of the HITS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">MS &amp; Co.
    and other affiliates of ours will carry out hedging activities related to
    the HITS, including trading in the underlying stock as well as in other instruments
    related to the underlying stock. MS &amp; Co. and some of our other subsidiaries
    also trade the underlying stock and other financial instruments related to
    the underlying stock on a regular basis as part of their general broker-dealer
    and other businesses. Any of these hedging or trading activities on or prior
    to the pricing date could potentially affect the price of the underlying
    stock and, accordingly, potentially increase the initial share price used
    to calculate the trigger price and, therefore, potentially have raised the
    trigger price relative to the price of the underlying stock absent such hedging
    or trading activity. Additionally, such hedging or trading activities during
    the term of the HITS could adversely affect whether the price of the underlying
    stock decreases to or below the trigger price and, therefore, whether or
    not you will receive the principal amount of the HITS or shares of the underlying
    stock at maturity.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">Because
      the characterization of the HITS for U.S. federal income tax purposes is
      uncertain, the material U.S. federal income tax consequences of an investment
      in the HITS are uncertain.</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">There
    is no direct legal authority as to the proper tax treatment of the HITS,
    and our counsel has not rendered an opinion as to their proper characterization
    for U.S. federal income tax purposes. Significant aspects of the tax treatment
    of the HITS are uncertain. Pursuant to the terms of the HITS and subject
    to the discussion in this prospectus supplement under &#147;United States
    Federal Taxation&#151;General,&#148; you have agreed with us to treat a HITS
    as a unit consisting of (i) an option on a forward contract pursuant to which
    you, upon the occurrence of certain events, agree to purchase underlying
    stock at the exchange ratio from us at maturity and (ii) a deposit with us
    of a fixed amount of cash to secure your obligation under the forward contract.
    Please read the discussion under &#147;United States Federal Taxation&#148; in
    this prospectus supplement concerning the U.S. federal income tax consequences
    of investing in the HITS. </FONT><B><FONT size=2 face="serif">Please read
    carefully the section of this prospectus supplement called &#147;United States
    Federal Taxation.&#148;</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">If
      you are a non-U.S. investor, please also read the section of this prospectus
      supplement called &#147;United States Federal Taxation&#151;Tax Consequences
      to Non-U.S. Holders.&#148;</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">You
      are urged to consult your own tax advisors regarding all aspects of the
      U.S. federal income tax consequences of investing in the HITS, as well
      as any tax consequences arising under the laws of any state, local or foreign
      taxing jurisdiction.</FONT></B></P>
<P align="center"> <FONT size=2 face="serif">S-10</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">DESCRIPTION OF HITS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Investors
    should carefully read the general terms and provisions of our debt securities
    in &#147;Description of Debt Securities&#148; in the prospectus. This section
    supplements that description. </FONT><B><FONT size=2 face="serif">The pricing
    supplement will specify the particular terms for each issuance of HITS, and
    may supplement, modify or replace any of the information in this section
    and in &#147;Description of Debt Securities&#148; in the prospectus. </FONT></B><FONT size=2 face="serif">References
    in this prospectus supplement to a HITS shall refer to the stated principal
    amount specified as the denomination for that issuance of HITS in the applicable
    pricing supplement.</FONT></P>
<P align="left"> <FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
    following terms used in this section are defined in the indicated sections
    of the accompanying prospectus:</FONT></P>
<ul>
  <li><FONT size=2 face="serif" align="left">Senior Debt Indenture (&#147;Description
      of Debt Securities &#151; Indentures&#148;)</FONT></li>
</ul>
<P align="left"> <B><FONT size=2 face="serif">General Terms of the HITS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We will
    issue the HITS as part of our Series F medium-term notes under the Senior
    Debt Indenture. Our senior Series F global medium-term notes, together with
    our senior Series G and Series H global medium-term notes, referred to below
    under &#147;Plan of Distribution,&#148; will constitute a single series under
    the Senior Debt Indenture, together with any other obligations we issue in
    the future under that indenture that we designate as being part of that series.
    The Senior Debt Indenture does not limit the amount of additional indebtedness
    that we may incur. We may create and issue additional HITS with the same
    terms as previous issuances of HITS, so that the additional HITS will be
    considered as part of the same issuance as the earlier HITS.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Ranking</FONT></I><FONT size=2 face="serif">.
    HITS issued under the Senior Debt Indenture will rank on a parity with all
    of our other senior indebtedness and with all of our other unsecured and
    unsubordinated indebtedness, subject to statutory exceptions in the event
    of liquidation upon insolvency.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Terms
      Specified in Pricing Supplement. </FONT></I><FONT size=2 face="serif">A
      pricing supplement will specify the following terms of any issuance of
      our HITS to the extent applicable:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">the issue price (price to public);</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the stated principal amount per HITS;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the aggregate principal amount;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the denominations or minimum denominations;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the original issue date;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the stated maturity date and any terms related
      to any extension of the maturity date not otherwise set forth</FONT> <FONT size=2 face="serif">in
      this prospectus supplement;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the rate per year at which the HITS will pay
      a coupon, if any, or the method of calculating that rate and the</FONT> <FONT size=2 face="serif">dates
      on which the coupon will be payable;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the underlying stock;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the underlying company, whose stock investors
      will receive at maturity if the trading price of the</FONT> <FONT size=2 face="serif">underlying
      stock has decreased to or below the trigger price during the relevant period;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the initial share price;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the trigger level;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the trigger price;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the determination date;</FONT></LI>
</UL>
<P align="center"> <FONT size=2 face="serif">S-11</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<UL>
  <LI> <FONT size=2 face="serif">the stock exchange, if any, on which the HITS
      may be listed;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">if any HITS is not denominated and payable in
      U.S. dollars, the currency or currencies in which the</FONT> <FONT size=2 face="serif">principal
      and coupon, if any, will be paid, which we refer to as the &#147;specified
      currency,&#148; along with any</FONT> <FONT size=2 face="serif">other terms
      relating to the non-U.S. dollar denomination, including historical exchange
      rates as against the</FONT> <FONT size=2 face="serif">U.S. dollar;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">if the HITS are in book-entry form, whether
      the HITS will be offered on a global basis to investors through</FONT> <FONT size=2 face="serif">Euroclear
      and Clearstream, Luxembourg as well as through the Depositary (each as
      defined below); and</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">any other terms on which we will issue the HITS.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Some
      Definitions. </FONT></I><FONT size=2 face="serif">We have defined some
      of the terms that we use frequently in this prospectus supplement below:</FONT></P>
<P align="left"> <FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#147;</FONT><B><FONT size=2 face="serif">acceleration
      trigger price</FONT></B><FONT size=2 face="serif">&#148; means &#36;2.00,
      unless otherwise specified in the applicable pricing supplement.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">business
      day</FONT></B><FONT size=2 face="serif">&#148; means any day, other than
      a Saturday or Sunday, (i) that is neither a legal holiday nor a day on
      which banking institutions are authorized or required by law or regulation
      to close (a) in The City of New York or (b) for HITS denominated in a specified
      currency other than U.S. dollars, euro or Australian dollars, in the principal
      financial center of the country of the specified currency or (c) for HITS
      denominated in Australian dollars, in Sydney, and (ii) for HITS denominated
      in euro, a day that is also a TARGET Settlement Day.</FONT></P>
<P align="left"> <FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#147;</FONT><B><FONT size=2 face="serif">Clearstream,
      Luxembourg</FONT></B><FONT size=2 face="serif">&#148; means Clearstream
      Banking, </FONT><I><FONT size=2 face="serif">soci&eacute;t&eacute; anonyme</FONT></I><FONT
size=2 face="serif">.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">closing
      price</FONT></B><FONT size=2 face="serif">&#148; for one share of underlying
      stock (or one unit of any other security for which a closing price must
      be determined) on any trading day  means:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">if such underlying stock (or any such other
      security) is listed or admitted to trading on a national securities</FONT> <FONT size=2 face="serif">exchange
      (other than The NASDAQ Stock Market LLC (the &#147;NASDAQ&#148;)), the
      last reported sale price,</FONT> <FONT size=2 face="serif">regular way,
      of the principal trading session on such day on the principal national
      securities exchange</FONT> <FONT size=2 face="serif">registered under the
      Securities Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;),
      on which such</FONT> <FONT size=2 face="serif">underlying stock (or any
      such other security) is listed or admitted to trading,</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">if such underlying stock (or any such other
      security) is a security of the NASDAQ, the official closing price</FONT> <FONT size=2 face="serif">published
      by the NASDAQ on such day, or</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">if such underlying stock (or any such other
      security) is not listed or admitted to trading on any national</FONT> <FONT size=2 face="serif">securities
      exchange but is included in the OTC Bulletin Board Service (the
    &#147;OTC Bulletin Board&#148;)</FONT> <FONT size=2 face="serif">operated
    by the National Association of Securities Dealers, Inc. (the &#147;NASD&#148;),
    the last reported sale price</FONT> <FONT size=2 face="serif">of the principal
    trading session on the OTC Bulletin Board on such day.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If such
    underlying stock (or any such other security) is listed or admitted to trading
    on any national securities exchange but the last reported sale price or the
    official closing price published by the NASDAQ, as applicable, is not available
    pursuant to the preceding sentence, then the closing price for one share
    of such underlying stock (or one unit of any such other security) on any
    trading day will mean the last reported sale price of the principal trading
    session on the over-the-counter market as reported on the NASDAQ or the OTC
    Bulletin Board on such day. If a market disruption event (as defined below)
    occurs with respect to such underlying stock (or any such other security)
    or the last reported sale price or the official closing price published by
    the NASDAQ, as applicable, for such underlying stock (or any such other security)
    is not available pursuant to either of the two preceding sentences, then
    the closing price for any trading day will be the mean, as determined by
    the Calculation Agent, of the bid prices for such underlying stock (or any
    such other security) for such trading day obtained from as many recognized
    dealers in such security, but not exceeding three, as will make such bid
    prices available to the Calculation Agent. Bids of MS &amp; Co. or any of
    its affiliates may be included in the calculation of such mean, but only
    to the extent that any such bid is the highest of the bids obtained. The
    term &#147;OTC Bulletin Board Service&#148; will include any successor service
    thereto.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Depositary</FONT></B><FONT size=2 face="serif">&#148; or &#147;</FONT><B><FONT size=2 face="serif">DTC</FONT></B><FONT size=2 face="serif">&#148; means
    The Depository Trust Company, New York, New York.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-12</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">determination
      date</FONT></B><FONT size=2 face="serif">&#148; will be the date specified
      as such in the applicable pricing supplement, </FONT><I><FONT
size=2 face="serif">provided </FONT></I><FONT size=2 face="serif">that if such
      date is not a trading day or if a market disruption event occurs on such
      date, the determination date will be the immediately succeeding trading
      day on which no market disruption event occurs.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">exchange
      factor</FONT></B><FONT size=2 face="serif">&#148; will be set initially
      at 1.0, but will be subject to adjustment upon the occurrence of certain
      extraordinary dividends and corporate events affecting the underlying stock
      through and including the determination date. See &#147;Antidilution Adjustments&#148; below.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">exchange
      ratio</FONT></B><FONT size=2 face="serif">&#148; will be equal to the stated
      principal amount divided by the initial share price and will be determined
      on the pricing date.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Euroclear
      operator</FONT></B><FONT size=2 face="serif">&#148; means Euroclear Bank
      S.A./N.V., as operator of the Euroclear System.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">initial
      share price</FONT></B><FONT size=2 face="serif">&#148; means the closing
      price of the underlying stock on the pricing date.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">interest
      payment date</FONT></B><FONT size=2 face="serif">&#148; for any HITS means
      any date specified in the applicable pricing supplement for the regularly
      scheduled payment of the coupon. If the scheduled maturity date is postponed
      due to a market disruption event or otherwise, we will pay the coupon on
      the maturity date as postponed rather than on the scheduled maturity date,
      but no coupon will accrue on the HITS or on such payment during the period
      from or after the scheduled maturity date.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">intraday
      price</FONT></B><FONT size=2 face="serif">&#148; for one share of the underlying
      stock (or one unit of any other security for which an intraday price must
      be determined) at any time during any trading day (including at the close)
      means:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">if the underlying stock (or any such other security)
      is listed or admitted to trading on a national securities</FONT> <FONT size=2 face="serif">exchange
      (other than the NASDAQ), the most recently reported sale price, regular
      way, at such time during</FONT> <FONT size=2 face="serif">the principal
      trading session on such day on the principal national securities exchange
      registered under the</FONT> <FONT size=2 face="serif">Exchange Act on which
      the underlying stock (or any such other security) is listed or admitted
      to trading,</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">if the underlying stock (or any such other security)
      is a security of the NASDAQ, the most recently</FONT> <FONT size=2 face="serif">reported
      sale price, regular way, at such time during the principal trading session
      on such day quoted by the</FONT> <FONT size=2 face="serif">NASDAQ, or</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">if the underlying stock (or any such other security)
      is not listed or admitted to trading on any national</FONT> <FONT size=2 face="serif">securities
      exchange but is included in the OTC Bulletin Board, the most recently reported
      sale price at such</FONT> <FONT size=2 face="serif">time during the principal
      trading session on the OTC Bulletin Board on such day.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">issue
      price</FONT></B><FONT size=2 face="serif">&#148; means the amount per HITS
      specified as such in the applicable pricing supplement and will equal the
      stated principal amount, unless otherwise specified.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">&#147;market
      disruption event</FONT></B><FONT size=2 face="serif">&#148; means, with
      respect to the underlying stock:</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(i)
    a suspension, absence or material limitation of trading of the underlying
    stock on the primary market for such common stock for more than two hours
    of trading or during the one-half hour period preceding the close of the
    principal trading session in such market; or a breakdown or failure in the
    price and trade reporting systems of the primary market for the underlying
    stock as a result of which the reported trading prices for the underlying
    stock during the last one-half hour preceding the close of the principal
    trading session in such market are materially inaccurate; or the suspension,
    absence or material limitation of trading on the primary market for trading
    in options contracts related to the underlying stock, if available, during
    the one-half hour period preceding the close of the principal trading session
    in the applicable market, in each case as determined by the Calculation Agent
    in its sole discretion; and</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii)
    a determination by the Calculation Agent in its sole discretion that any
    event described in clause (i) above materially interfered with our ability
    or the ability of any of our affiliates to unwind or adjust all or a material
    portion of the hedge with respect to the HITS.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-13</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">For
    purposes of determining whether a market disruption event has occurred: (1)
    a limitation on the hours or number of days of trading will not constitute
    a market disruption event if it results from an announced change in the regular
    business hours of the primary market, (2) a decision to permanently discontinue
    trading in the relevant options contract will not constitute a market disruption
    event, (3) limitations pursuant to New York Stock Exchange LLC (&#147;NYSE&#148;)
    Rule 80A (or any applicable rule or regulation enacted or promulgated by
    the NYSE, any other self-regulatory organization or the Securities and Exchange
    Commission (the &#147;Commission&#148;) of scope similar to NYSE Rule 80A
    as determined by the Calculation Agent) on trading during significant market
    fluctuations shall constitute a suspension, absence or material limitation
    of trading, (4) a suspension of trading in options contracts on the underlying
    stock by the primary securities market trading in such options, if available,
    by reason of (x) a price change exceeding limits set by such securities exchange
    or market, (y) an imbalance of orders relating to such contracts or (z) a
    disparity in bid and ask quotes relating to such contracts will constitute
    a suspension, absence or material limitation of trading in options contracts
    related to the underlying stock and (5) a suspension, absence or material
    limitation of trading on the primary securities market on which options contracts
    related to the underlying stock are traded will not include any time when
    such securities market is itself closed for trading under ordinary circumstances.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The &#147;</FONT><B><FONT size=2 face="serif">maturity
      date</FONT></B><FONT size=2 face="serif">&#148; is specified in the applicable
      pricing supplement and is subject to acceleration as described below in &#147;&#151;Price
      Event Acceleration&#148; and &#147;&#151;Alternate Exchange Calculation
      in Case of an Event of Default&#148; and subject to extension if the determination
      date is postponed in accordance with the following paragraph.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    determination date is postponed due to a market disruption event or otherwise,
    the maturity date will be postponed so that the maturity date will be the
    second trading day following the determination date. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">original
      issue date</FONT></B><FONT size=2 face="serif">&#148; means the date specified
      in the applicable pricing supplement on which a particular issuance of
      HITS will be issued.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">pricing
      date</FONT></B> <FONT size=2 face="serif">&#148; means the day when we
      price an issuance of the HITS for initial sale to the public.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">record
      date</FONT></B><FONT size=2 face="serif">&#148; for each interest payment
      date, including the interest payment date scheduled to occur on the maturity
      date, means the date 5 calendar days prior to such scheduled interest payment
      date, whether or not that date is a business day.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">stated
      principal amount</FONT></B><FONT size=2 face="serif">&#148; means the principal
      amount of each HITS specified in the applicable pricing supplement.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">TARGET
      Settlement Day</FONT></B><FONT size=2 face="serif">&#148; means any day
      on which the Trans-European Automated Real-time Gross Settlement Express
      Transfer System is open.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">trading
      day</FONT></B><FONT size=2 face="serif">&#148; means a day, as determined
      by the Calculation Agent, on which trading is generally conducted on the
      NYSE, the American Stock Exchange LLC, the NASDAQ, the Chicago Mercantile
      Exchange and the Chicago Board of Options Exchange, in the over-the-counter
      market for equity securities in the United States and, if the principal
      trading market for the common stock or ordinary shares of the underlying
      company is outside the United States, in such principal trading market.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">trading
      price</FONT></B><FONT size=2 face="serif">&#148; means the product of (i)
      the intraday price of one share of the underlying stock and (ii) the exchange
      factor, each as determined by the Calculation Agent at any time on any
      trading day.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">trigger
      level</FONT></B> <FONT size=2 face="serif">&#148; means the percentage
      specified in the applicable pricing supplement.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">trigger
      price</FONT></B><FONT size=2 face="serif">&#148; means the product of the
      trigger level and the initial share price, and will be determined by the
      Calculation Agent on the pricing date.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">underlying
      company</FONT></B><FONT size=2 face="serif">&#148; means the company that
      is specified in the applicable pricing supplement, whose shares underlie
      that issuance of HITS.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">underlying
      stock</FONT></B><FONT size=2 face="serif">&#148; means the common stock
      of the underlying company that is specified in the applicable pricing supplement.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-14</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">References
    in this prospectus supplement to &#147;</FONT><B><FONT size=2 face="serif">U.S.
    dollars</FONT></B><FONT size=2 face="serif">&#148; or &#147;</FONT><B><FONT size=2
face="serif">U.S.&#36;</FONT></B><FONT size=2 face="serif">&#148; or &#147;</FONT><B><FONT size=2 face="serif">&#36;</FONT></B><FONT size=2 face="serif">&#148; are
    to the currency of the United States of America.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Other
    features of the HITS are described in the following paragraphs. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Payment at Maturity</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    the maturity of the HITS has been accelerated, on the maturity date, upon
    delivery of the HITS to the Trustee, we will deliver to you for each stated
    principal amount of the HITS either:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">if the trading price of the underlying stock </FONT><B><FONT size=2 face="serif">has
        not </FONT></B><FONT size=2 face="serif">decreased to or below the trigger
        price </FONT><B><FONT size=2 face="serif">at any time on</FONT></B> <B><FONT size=2 face="serif">any
        trading day </FONT></B><FONT size=2 face="serif">from and including the
        pricing date to and including the determination date, an amount in</FONT> <FONT size=2 face="serif">cash
        equal to the stated principal amount per HITS, or</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">if the trading price of the underlying stock </FONT><B><FONT size=2 face="serif">has </FONT></B><FONT size=2 face="serif">decreased
      to or below the trigger price </FONT><B><FONT size=2 face="serif">at any
      time on any</FONT></B> <B><FONT size=2 face="serif">trading day </FONT></B><FONT size=2 face="serif">from
      and including the pricing date to and including the determination date,
      a number of</FONT> <FONT size=2 face="serif">shares of the underlying stock
      equal to the product of the exchange ratio and the exchange factor,</FONT> <FONT size=2 face="serif">determined
      as of the determination date. See &#147;exchange ratio&#148; above. The
      exchange factor is subject to</FONT> <FONT size=2
face="serif">adjustment upon the occurrence of certain extraordinary dividends
      and corporate events relating to the</FONT> <FONT size=2 face="serif">underlying
      stock. See &#147;exchange factor&#148; above and &#147;&#151;Antidilution
      Adjustments&#148; below.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We shall,
    or shall cause the Calculation Agent to, (i) provide written notice to the
    Trustee and to the Depositary, on or prior to 10:30 a.m. on the trading day
    immediately prior to the maturity date of the HITS (but if such trading day
    is not a business day, prior to the close of business on the business day
    preceding the maturity date), of the amount of cash or underlying stock,
    as applicable, to be delivered with respect to the stated principal amount
    of each HITS and (ii) deliver such cash or shares of the underlying stock
    (and cash in respect of coupon and any fractional shares of the underlying
    stock), if applicable, to the Trustee for delivery to the holders on the
    maturity date. The Calculation Agent shall determine the exchange factor
    applicable at the maturity of the HITS.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    maturity of the HITS is accelerated because of a price event acceleration
    (as described under &#147;&#151;Price Event Acceleration&#148; below) or
    because of an event of default acceleration (as defined under &#147;&#151;Alternate
    Exchange Calculation in Case of an Event of Default&#148; below), we shall
    provide such notice as promptly as possible and in no event later than (i)
    in the case of an event of default acceleration, two trading days after the
    date of acceleration (but if such trading day is not a business day, prior
    to the close of business on the business day preceding such trading day)
    and (ii) in the case of a price event acceleration, 10:30 a.m. on the trading
    day immediately prior to the date of acceleration (but if such trading day
    is not a business day, prior to the close of business on the business day
    preceding the date of acceleration).</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Price Event Acceleration</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If on
    any two consecutive trading days during the period prior to and ending on
    the third business day immediately preceding the maturity date, the product
    of the closing price of the common stock of the underlying company and the
    exchange factor is less than the acceleration trigger price, the maturity
    date of the HITS will be deemed to be accelerated to the third business day
    immediately following such second trading day (the
  &#147;date of acceleration&#148;). See the definition of &#147;exchange ratio&#148; above.
  Upon such acceleration, with respect to the stated principal amount of each
  HITS, we will deliver to DTC, as holder of the HITS, on the date of acceleration:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">a number of shares of underlying stock equal
      to the product of the exchange ratio and the exchange factor,</FONT> <FONT size=2 face="serif">as
      of such date of acceleration; and</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">accrued but unpaid coupon to but excluding the
      date of acceleration plus an amount of cash, as determined</FONT> <FONT size=2 face="serif">by
      the Calculation Agent, equal to the sum of the present values of the remaining
      scheduled payments of</FONT> <FONT size=2 face="serif">coupon on the HITS
      (excluding any portion of such payments of coupon accrued to the date of</FONT> <FONT size=2 face="serif">acceleration)
      discounted to the date of acceleration based on the comparable yield that
      we would pay on a</FONT> <FONT size=2 face="serif">non-interest bearing,
      senior unsecured debt obligation having a maturity equal to the term of
      each such</FONT> <FONT size=2 face="serif">remaining scheduled payment.</FONT></LI>
</UL>
<P align="center"> <FONT size=2 face="serif">S-15</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We expect
    such shares and cash will be distributed to investors on the date of acceleration
    in accordance with the standard rules and procedures of DTC and its direct
    and indirect participants.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Investors
    will not be entitled to receive the return of the stated principal amount
    of each HITS upon a price event acceleration.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">No Fractional Shares</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Following
    the delivery of the HITS to the Trustee at maturity, if our payment is to
    be made in shares of underlying stock, we will deliver the aggregate number
    of shares of underlying stock due with respect to all of such HITS, as described
    above, but we will pay cash in lieu of delivering any fractional share of
    underlying stock in an amount equal to the corresponding fractional closing
    price of such fraction of a share of underlying stock as determined by the
    Calculation Agent as of the second scheduled trading day prior to the maturity
    of the HITS.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Antidilution Adjustments</FONT></B></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The exchange factor will be adjusted
    as follows:</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">1. If
    the underlying stock is subject to a stock split or reverse stock split,
    then once such split has become effective, the exchange factor will be adjusted
    to equal the product of the prior exchange factor and the number of shares
    issued in such stock split or reverse stock split with respect to one share
    of the underlying stock.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">2. If
    the underlying stock is subject (i) to a stock dividend (issuance of additional
    shares of the underlying stock) that is given ratably to all holders of shares
    of the underlying stock or (ii) to a distribution of the underlying stock
    as a result of the triggering of any provision of the corporate charter of
    the underlying company, then once the dividend has become effective and the
    underlying stock is trading ex-dividend, the exchange factor will be adjusted
    so that the new exchange factor shall equal the prior exchange factor plus
    the product of (i) the number of shares issued with respect to one share
    of the underlying stock and (ii) the prior exchange factor. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">3. If
    the underlying company issues rights or warrants to all holders of the underlying
    stock to subscribe for or purchase the underlying stock at an exercise price
    per share less than the closing price of the underlying stock on both (i)
    the date the exercise price of such rights or warrants is determined and
    (ii) the expiration date of such rights or warrants, and if the expiration
    date of such rights or warrants precedes the maturity of the HITS, then the
    exchange factor will be adjusted to equal the product of the prior exchange
    factor and a fraction, the numerator of which shall be the number of shares
    of the underlying stock outstanding immediately prior to the issuance of
    such rights or warrants plus the number of additional shares of the underlying
    stock offered for subscription or purchase pursuant to such rights or warrants
    and the denominator of which shall be the number of shares of the underlying
    stock outstanding immediately prior to the issuance of such rights or warrants
    plus the number of additional shares of the underlying stock which the aggregate
    offering price of the total number of shares of the underlying stock so offered
    for subscription or purchase pursuant to such rights or warrants would purchase
    at the closing price on the expiration date of such rights or warrants, which
    shall be determined by multiplying such total number of shares offered by
    the exercise price of such rights or warrants and dividing the product so
    obtained by such closing price.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">4. There
    will be no adjustments to the exchange factor to reflect cash dividends or
    other distributions paid with respect to the underlying stock other than
    distributions described in paragraph 2, paragraph 3 and clauses (i), (iv)
    and (v) of paragraph 5 below and Extraordinary Dividends as described below.
    A cash dividend or other distribution with respect to the underlying stock
    will be deemed to be an &#147;</FONT><B><FONT size=2
face="serif">Extraordinary Dividend</FONT></B><FONT size=2 face="serif">&#148; if
    such cash dividend or distribution  exceeds the
    immediately preceding non-Extraordinary Dividend for the underlying stock
    by an amount equal to at least 10% of the closing price of the underlying
    stock (as adjusted for any subsequent corporate event requiring an adjustment
    hereunder, such as a stock split or reverse stock split) on the trading day
    preceding the ex-dividend date (that is, the day on and after which transactions
    in the underlying stock on the primary U.S. organized securities exchange
    or trading system on which the underlying stock is traded or trading system
    no longer carry the right to receive that cash dividend or that cash distribution)
    for the payment of such Extraordinary Dividend. If an Extraordinary Dividend
    occurs with respect to the underlying stock, the exchange factor with respect
    to the underlying stock will be adjusted on the ex-dividend date with respect
    to such Extraordinary Dividend </FONT><font size=2 face="serif">so that the new
    exchange factor will equal the product of (i) the then current exchange </font></P>
<P align="center"> <FONT size=2 face="serif">S-16</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">factor and (ii) a fraction,
    the numerator of which is the closing price on the trading day preceding
    the ex-dividend date, and the denominator of which is the amount by which
    the closing price on the trading day preceding the ex-dividend date exceeds
    the Extraordinary Dividend Amount. The &#147;</FONT><B><FONT size=2 face="serif">Extraordinary
    Dividend Amount</FONT></B><FONT
size=2 face="serif">&#148; with respect to an Extraordinary Dividend for the
    underlying stock will equal (i) in the case of cash dividends or other distributions
    that constitute regular dividends, the amount per share of such Extraordinary
    Dividend minus the amount per share of the immediately preceding non-Extraordinary
    Dividend for the underlying stock or (ii) in the case of cash dividends or
    other distributions that do not constitute regular dividends, the amount
    per share of such Extraordinary Dividend. To the extent an Extraordinary
    Dividend is not paid in cash, the value of the non-cash component will be
    determined by the Calculation Agent, whose determination shall be conclusive.
    A distribution on the underlying stock described in clause (i), (iv) or (v)
    of paragraph 5 below that also constitutes an Extraordinary Dividend shall
    cause an adjustment to the exchange factor pursuant only to clause (i), (iv)
    or (v) of paragraph 5, as applicable.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">5. If
    (i) there occurs any reclassification or change of the underlying stock,
    including, without limitation, as a result of the issuance of any tracking
    stock by the underlying company, (ii) the underlying company or any surviving
    entity or subsequent surviving entity of the underlying company (an &#147;</FONT><B><FONT size=2 face="serif">underlying
    company Successor</FONT></B><FONT size=2 face="serif">&#148;) has been subject
    to a merger, combination or consolidation and is not the surviving entity,
    (iii) any statutory exchange of securities of the underlying company or any
    underlying company Successor with another corporation occurs (other than
    pursuant to clause (ii) above), (iv) the underlying company is liquidated,
    (v) the underlying company issues to all of its shareholders equity securities
    of an issuer other than the underlying company (other than in a transaction
    described in clause (ii), (iii) or (iv) above) (a &#147;</FONT><B><FONT size=2 face="serif">Spin-off
    Event</FONT></B><FONT size=2 face="serif">&#148;) or (vi) a tender or exchange
    offer or going-private transaction is consummated for all the outstanding
    shares of the underlying stock (any such event in clauses (i) through (vi),
    a &#147;</FONT><B><FONT size=2 face="serif">Reorganization Event</FONT></B><FONT size=2 face="serif">&#148;),
    the method of determining the amount payable upon exchange at maturity for
    each HITS will be adjusted to provide that investors will be entitled to
    receive at maturity, in respect of the stated principal amount of each HITS
    either:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">if (x) the trading price of the underlying stock
      at any time on any trading day from and including the</FONT> <FONT size=2 face="serif">pricing
      date to and including the effective date of the Reorganization Event, or
      (y) the Exchange Property</FONT> <FONT size=2 face="serif">Value (as defined
      below) at any time on any trading day from and including the effective
      date of the</FONT> <FONT size=2 face="serif">Reorganization Event to and
      including the determination date has not decreased to or below the Trigger</FONT> <FONT size=2 face="serif">Price,
      and amount of cash equal to the stated principal amount of each HITS, or</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">if (x) the trading price of the underlying stock
      at any time on any trading day from and including the</FONT> <FONT size=2 face="serif">pricing
      date to and including the effective date of the Reorganization Event, or
      (y) the Exchange Property</FONT> <FONT size=2 face="serif">Value (as defined
      below) at any time on any trading day from and including the effective
      date of the</FONT> <FONT size=2 face="serif">Reorganization Event to and
      including the determination date has decreased to or below the Trigger
      Price,</FONT> <FONT size=2 face="serif">securities, cash or any other assets
      distributed to holders of the underlying stock in or as a result of any
      such</FONT> <FONT size=2 face="serif">Reorganization Event, including (A)
      in the case of the issuance of tracking stock, the reclassified share of</FONT> <FONT size=2 face="serif">the
      underlying stock, (B) in the case of a Spin-off Event, the share of the
      underlying stock with respect to</FONT> <FONT size=2
face="serif">which the spun-off security was issued, and (C) in the case of any
      other Reorganization Event where the</FONT> <FONT size=2 face="serif">underlying
      stock continues to be held by the holders receiving such distribution,
      the underlying stock</FONT> <FONT size=2 face="serif">(collectively, the &#147;</FONT><B><FONT size=2 face="serif">Exchange
      Property</FONT></B><FONT size=2 face="serif">&#148;), in an amount equal
      to the amount of Exchange Property</FONT> <FONT size=2
face="serif">delivered with respect to a number of shares of the underlying stock
      equal to the Exchange Ratio times the</FONT> <FONT size=2 face="serif">exchange
      factor each determined at the time of the Reorganization Event.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If Exchange
    Property consists of more than one type of property, we will deliver to DTC,
    as holder of the HITS, at maturity a pro rata share of each such type of
    Exchange Property. We expect that such Exchange Property will be distributed
    to investors in accordance with the standard rules and procedures of DTC
    and its direct and indirect participants. If Exchange Property includes a
    cash component, investors will not receive any interest accrued on such cash
    component. In the event Exchange Property consists of securities, those securities
    will, in turn, be subject to the antidilution adjustments set forth in paragraphs
    1 through 5.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">For
    purposes of determining whether or not the Exchange Property Value has decreased
    to or below the Trigger Level at any time on any trading day from and including
    the time of the Reorganization Event to and including the determination date, &#147;</FONT><B><FONT size=2 face="serif">Exchange
    Property Value</FONT></B><FONT size=2 face="serif">&#148; means (i) for any
    cash received in any Reorganization Event, the value, as determined by the
    Calculation Agent, as of the date of receipt, of such cash received for one
    share of the </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-17</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">underlying stock, as adjusted by the
    exchange factor as the time of such Reorganization Event, (ii) for any property
    other than cash or securities received in any such Reorganization Event,
    the market value, as determined by the Calculation Agent in its sole discretion,
    as of the date of receipt, of such Exchange Property received for one share
    of the underlying stock, as adjusted by the exchange factor at the time of
    such Reorganization Event and (iii) for any security received in any such
    Reorganization Event, an amount equal to the Intraday Price, as of the time
    at which the Exchange Property Value is determined, per share of such security
    multiplied by the quantity of such security received for each share of the
    underlying stock, as adjusted by the exchange factor at the time of such
    Reorganization Event. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">For
    purposes of paragraph 5 above, in the case of a consummated tender or exchange
    offer or going-private transaction involving consideration of particular
    types, Exchange Property shall be deemed to include the amount of cash or
    other property delivered by the offeror in the tender or exchange offer (in
    an amount determined on the basis of the rate of exchange in such tender
    or exchange offer or going-private transaction). In the event of a tender
    or exchange offer or a going-private transaction with respect to Exchange
    Property in which an offeree may elect to receive cash or other property,
    Exchange Property shall be deemed to include the kind and amount of cash
    and other property received by offerees who elect to receive cash.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Following
    the occurrence of any Reorganization Event referred to in paragraph 5 above,
    (i) references to &#147;the underlying stock&#148; under &#147;&#151;No Fractional
    Shares,&#148;
  &#147;&#151;General Terms of the HITS&#151;Some Definitions,&#148; &#147;&#151;Price
  Event Acceleration&#148; and &#147;&#151;Alternate Exchange Calculation in
  Case of an Event of Default&#148; shall be deemed to also refer to any other
  security received by holders of the underlying stock in any such Reorganization
  Event, and (ii) all other references in this prospectus supplement to &#147;the
  underlying stock&#148; shall be deemed to refer to the Exchange Property into
  which the HITS are thereafter exchangeable and references to a &#147;share&#148; or &#147;shares&#148; of
  the underlying stock shall be deemed to refer to the applicable unit or units
  of such Exchange Property, unless the context otherwise requires.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">No adjustment
    to the exchange factor will be required unless such adjustment would require
    a change of at least 0.1% in the exchange factor then in effect. The exchange
    factor resulting from any of the adjustments specified above will be rounded
    to the nearest one hundred-thousandth, with five one-millionths rounded upward.
    Adjustments to the exchange factor will be made up to the close of business
    on the determination date.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">No adjustments
    to the exchange factor or method of calculating the exchange factor will
    be required other than those specified above. The adjustments specified above
    do not cover all events that could affect the trading price or closing price
    of the underlying stock, including, without limitation, a partial tender
    or exchange offer for the underlying stock.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    Calculation Agent shall be solely responsible for the determination and calculation
    of any adjustments to the exchange factor or method of calculating the exchange
    factor and of any related determinations and calculations with respect to
    any distributions of stock, other securities or other property or assets
    (including cash) in connection with any corporate event described in paragraphs
    1 through 5 above, and its determinations and calculations with respect thereto
    shall be conclusive in the absence of manifest error. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    Calculation Agent will provide information as to any adjustments to the exchange
    factor or to the method of calculating the amount payable at maturity of
    the HITS made pursuant to paragraph 5 above upon written request by any investor
    in the HITS.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Alternate Exchange Calculation
      in Case of an Event of Default</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In case
    an event of default with respect to the HITS shall have occurred and be continuing,
    the amount declared due and payable per HITS upon any acceleration of the
    HITS (an
  &#147;</FONT><B><FONT size=2 face="serif">Event of Default Acceleration</FONT></B><FONT size=2 face="serif">&#148;)
  shall be determined by the Calculation Agent and shall be an amount in cash
  equal to either (i) the stated principal amount of each HITS plus accrued but
  unpaid coupon to but excluding the date of acceleration or (ii) if the trading
  price of the underlying stock has decreased to or below the trigger price at
  any time on any trading day from and including the pricing date to and including
  the date of acceleration, (x) a number of shares of the underlying stock at
  the exchange ratio multiplied by the exchange factor as of the date of acceleration
  and (y) accrued but unpaid coupon to but excluding the date of acceleration.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-18</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <B><FONT size=2 face="serif">Trustee</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The &#147;</FONT><B><FONT size=2 face="serif">Trustee</FONT></B><FONT size=2 face="serif">&#148; for
    each offering of HITS issued under our Senior Debt Indenture will be The
    Bank of New York, a New York banking corporation (as successor to JPMorgan
    Chase Bank, N.A. (formerly known as JPMorgan Chase Bank)).</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Agent</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise specified in the applicable pricing supplement, the &#147;</FONT><B><FONT size=2 face="serif">Agent</FONT></B><FONT size=2 face="serif">&#148; for
    each underwritten offering of HITS will be MS &amp; Co.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Calculation Agent and Calculations</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The &#147;</FONT><B><FONT size=2 face="serif">Calculation
      Agent</FONT></B><FONT size=2 face="serif">&#148; for the HITS will be MS &amp; Co.
      As Calculation Agent, MS &amp; Co. will determine whether the trading price
      of the underlying stock has decreased to or below the trigger price, the
      appropriate payment at maturity, the amount payable per HITS in the event
      of a price event acceleration or an event of default acceleration, and
      any adjustment to the exchange factor for certain extraordinary dividends
      or corporate events affecting underlying stock that we describe in the
      section called &#147;&#151;Antidilution Adjustments&#148; above.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">All
    determinations made by the Calculation Agent will be at the sole discretion
    of the Calculation Agent and will, in the absence of manifest error, be conclusive
    for all purposes and binding on you, the Trustee and us.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">All
    calculations with respect to the exchange ratio and the exchange factor will
    be made by the Calculation Agent and will be rounded to the nearest one hundred-thousandth,
    with five one-millionths rounded upward (</FONT><I><FONT size=2 face="serif">e.g., </FONT></I><FONT size=2 face="serif">.876545
    would be rounded to .87655); all dollar amounts paid with respect to the
    aggregate number of HITS related to coupon payments or the payment at maturity
    will be rounded to the nearest cent, with one-half cent rounded upward.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Because
    the Calculation Agent is our affiliate, the economic interests of the Calculation
    Agent and its affiliates may be adverse to your interests, as an owner of
    the HITS, including with respect to certain determinations and judgments
    that the Calculation Agent must make in making adjustments to the exchange
    factor or determining any closing price or whether a market disruption event
    has occurred or calculating the amount due to you in the event of a price
    event acceleration. See &#147;Antidilution Adjustments&#148;, and the definition
    of &#147;market disruption event&#148; above. MS &amp; Co. is obligated to
    carry out its duties and functions as Calculation Agent in good faith and
    using its reasonable judgment.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Forms of Securities</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As noted
    above, HITS are issued as part or our Series F medium-term note program.
    We will issue HITS only in fully registered form either as book-entry securities
    or as certificated securities. References to &#147;holders&#148; mean those
    who own securities registered in their own names on the books that we or
    the Trustee maintain for this purpose, and not those who own beneficial interests
    in securities registered in street name or in securities issued in book-entry
    form through one or more depositaries.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Book-entry
      securities. </FONT></I><FONT size=2 face="serif">For securities in book-entry
      form, we will issue one or more global certificates representing the entire
      issue of securities. Except as set forth in the prospectus under &#147;Forms
      of Securities &#151; Global Securities,&#148; you may not exchange book-entry
      securities or interests in book-entry securities for certificated securities.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Each
    global security certificate representing book-entry securities will be deposited
    with, or on behalf of, the Depositary and registered in the name of the Depositary
    or a nominee of the Depositary. These certificates name the Depositary or
    its nominee as the owner of the securities. The Depositary maintains a computerized
    system that will reflect the interests held by its participants in the global
    securities. An investor&#146;s beneficial interest will be reflected in the
    records of the Depositary&#146;s direct or indirect participants through
    an account maintained by the investor with its broker/dealer, bank, trust
    company or other representative. A further description of the Depositary&#146;s
    procedures for global securities representing book-entry securities is set
    forth under &#147;Forms of Securities&#151;The Depositary&#148; in the prospectus.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-19</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Certificated
      securities. </FONT></I><FONT size=2 face="serif">If we issue securities
      in certificated form, the certificate will name the investor or the investor&#146;s
      nominee as the owner of the securities. The person named in the security
      register will be considered the owner of the security for all purposes
      under the Senior Debt Indenture. For example, if we need to ask the holders
      of any issuance of securities to vote on a proposed amendment to such securities,
      the person named in the security register will be asked to cast any vote
      regarding that issuance of securities. If you have chosen to have some
      other entity hold the certificates for you, that entity will be considered
      the owner of your security in our records and will be entitled to cast
      the vote regarding your security. You may not exchange certificated securities
      for book-entry securities or interests in book-entry securities.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">New
      York law to govern. </FONT></I><FONT size=2 face="serif">The HITS will
      be governed by, and construed in accordance with, the laws of the State
      of New York.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Interest and Principal Payments</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">You
    should read the section called &#147;Description of Debt Securities&#148; in
    the prospectus, where we describe generally how principal and coupon payments
    on the HITS are made, how exchanges and transfers of the HITS are effected
    and how fixed rate coupons on the HITS are calculated. For purposes of this
    prospectus supplement for HITS, the description of fixed rate interest payments
    in the section called &#147;Description of Debt Securities&#148; in the prospectus
    shall be deemed to apply to the payment of coupons with respect to the HITS.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-20</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">UNDERLYING COMPANY AND STOCK &#150; PUBLIC
      INFORMATION</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Companies
    with securities registered under the Exchange Act are required to file periodically
    certain financial and other information specified by the Commission. Information
    provided to or filed with the Commission can be inspected and copied at the
    public reference facilities maintained by the Commission at Room 1580, 100
    F Street, N.E., Washington, D.C. 20549, and copies of such material can be
    obtained from the Public Reference Section of the Commission, 100 F Street,
    N.E., Washington, D.C. 20549, at prescribed rates. In addition, information
    provided to or filed with the Commission electronically can be accessed through
    a website maintained by the Commission. The address of the Commission&#146;s
    website is http://www.sec.gov. Information provided to or filed with the
    Commission by the underlying company pursuant to the Exchange Act can be
    located by reference to the Commission file number provided in the applicable
    pricing supplement. In addition, information regarding the underlying company
    may be obtained from other sources including, but not limited to, press releases,
    newspaper articles and other publicly disseminated documents. We make no
    representation or warranty as to the accuracy or completeness of such information.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">This
      prospectus supplement relates only to the HITS offered hereby and does
      not relate to the common stock of the underlying company or other securities
      of such company. In connection with any issuance of HITS under this prospectus
      supplement, neither we nor the Agent has participated in the preparation
      of such documents or made any due diligence inquiry with respect to the
      underlying company. Neither we nor the Agent makes any representation that
      such publicly available documents or any other publicly available information
      regarding the underlying company is accurate or complete. Furthermore,
      we cannot give any assurance that all events occurring prior to the date
      hereof (including events that would affect the accuracy or completeness
      of the publicly available documents described in the preceding paragraph)
      that would affect the trading price of the underlying stock (and therefore
      the price of such common stock at the time we price the HITS) have been
      publicly disclosed. Subsequent disclosure of any such events or the disclosure
      of or failure to disclose material future events concerning the underlying
      company could affect the value received at maturity with respect to the
      HITS and therefore the trading prices of the HITS.</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">Neither
      we nor any of our affiliates makes any representation to you as to the
      performance of the common stock of the underlying company.</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We and/or
    our affiliates may presently or from time to time engage in business with
    the underlying company, including extending loans to, or making equity investments
    in the underlying company or providing advisory services to the underlying
    company, such as merger and acquisition advisory services. In the course
    of such business, we and/or our affiliates may acquire non-public information
    with respect to the underlying company, and neither we nor any of our affiliates
    undertakes to disclose any such information to you. In addition, one or more
    of our affiliates may publish research reports with respect to the underlying
    company, and the reports may or may not recommend that investors buy or hold
    common stock of the underlying company. The statements in the preceding two
    sentences are not intended to affect the rights of investors in the HITS
    under the securities laws. As a prospective purchaser of HITS, you should
    undertake an independent investigation of the underlying company as in your
    judgment is appropriate to make an informed decision with respect to an investment
    in its common stock.</FONT></P>
<P align="center"> <B><FONT size=2 face="serif">USE OF PROCEEDS AND HEDGING</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    net proceeds we receive from the sale of the HITS will be used for general
    corporate purposes and, in part, in connection with hedging our obligations
    under the HITS through one or more of our subsidiaries. The original issue
    price of the HITS includes the agent&#146;s commissions (as shown on the
    cover page of the applicable pricing supplement) paid with respect to the
    HITS and the cost of hedging our obligations thereunder. The cost of hedging
    includes the projected profit that our subsidiaries expect to realize in
    consideration for assuming the risks inherent in managing the hedging transactions.
    Since hedging our obligations entails risk and may be influenced by market
    forces beyond our or our subsidiaries&#146; control, such hedging may result
    in a profit that is more or less than initially projected, or could result
    in a loss. See also &#147;Use of Proceeds&#148; in the accompanying prospectus.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-21</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">On or
    prior to the day we price the HITS for initial sale to the public, we, through
    our subsidiaries or others, expect to hedge our anticipated exposure in connection
    with the HITS by taking positions in the underlying stock, in options contracts
    on the underlying stock listed on major securities markets, or positions
    in any other available securities or instruments that we may wish to use
    in connection with such hedging. Such purchase activity could increase the
    price of the underlying stock, and, accordingly, potentially increase the
    issue price of the HITS, and therefore, the price at which the underlying
    stock must close before you would receive at maturity an amount of common
    stock worth as much as or more than the principal amount of the HITS. In
    addition, through our subsidiaries, we are likely to modify our hedge position
    throughout the life of the HITS, by purchasing and selling the underlying
    stock, options contracts on the underlying stock listed on major securities
    markets or positions in any other available securities or instruments that
    we may wish to use in connection with such hedging activities. We cannot
    give any assurance that our hedging activities will not affect the price
    of the underlying stock and, therefore, adversely affect the value of the
    HITS dates or the payment that you will receive at maturity or upon any acceleration
    of the HITS.</FONT></P>
<P align="center"> <B><FONT size=2 face="serif">HITS OFFERED ON A GLOBAL BASIS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If we
    offer the HITS on a global basis we will so specify in the applicable pricing
    supplement. The additional information contained in the prospectus under &#147;Securities
    Offered on a Global Basis Through the Depositary&#151;Book-Entry, Delivery
    and Form&#148; and &#147;&#151;Global Clearance and Settlement Procedures&#148; will
    apply to every offering on a global basis. The additional provisions described
    under &#147;&#151;Tax Redemption&#148; and &#147;&#151;Payment of Additional
    Amounts&#148; will apply to HITS offered on a global basis only if we so
    specify in the applicable pricing supplement.</FONT></P>
<P align="center"> <B><FONT size=2 face="serif">ERISA</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Each
    fiduciary of a pension, profit-sharing or other employee benefit plan subject
    to the Employee Retirement Income Security Act of 1974, as amended (&#147;</FONT><B><FONT size=2
face="serif">ERISA</FONT></B><FONT size=2 face="serif">&#148;) (a &#147;</FONT><B><FONT size=2 face="serif">Plan</FONT></B><FONT size=2 face="serif">&#148;),
    should consider the fiduciary standards of ERISA in the context of the Plan&#146;s
    particular circumstances before authorizing an investment in the HITS. Accordingly,
    among other factors, the fiduciary should consider whether the investment
    would satisfy the prudence and diversification requirements of ERISA and
    would be consistent with the documents and instruments governing the Plan.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In addition,
    we and certain of our subsidiaries and affiliates, including MS &amp; Co.
    and Morgan Stanley DW Inc. (formerly Dean Witter Reynolds Inc.) (&#147;</FONT><B><FONT size=2
face="serif">MSDWI</FONT></B><FONT size=2 face="serif">&#148;), may be each considered
    a &#147;party in interest&#148; within the meaning of ERISA, or a &#147;disqualified
    person&#148; within the meaning of the Internal Revenue Code of 1986, as
    amended (the &#147;</FONT><B><FONT size=2 face="serif">Code</FONT></B><FONT size=2 face="serif">&#148;),
    with respect to many Plans, as well as many individual retirement accounts
    and Keogh plans (also &#147;</FONT><B><FONT size=2
face="serif">Plans</FONT></B><FONT size=2 face="serif">&#148;). Prohibited transactions
    within the meaning of ERISA or the Code would likely arise, for example,
    if the HITS are acquired by or with the assets of a Plan with respect to
    which MS &amp;
  Co., MSDWI or any of their affiliates is a service provider or other party
  in interest, unless the HITS are acquired pursuant to an exemption from the &#147;prohibited
  transaction&#148; rules. A violation of these &#147;prohibited transaction&#148;
  rules could result in an excise tax or other liabilities under ERISA and/or
  Section 4975 of the Code for such persons, unless exemptive relief is available
  under an applicable statutory or administrative exemption.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    U.S. Department of Labor has issued five prohibited transaction class exemptions
    (&#147;</FONT><B><FONT size=2 face="serif">PTCEs</FONT></B><FONT size=2 face="serif">&#148;)
    that may provide exemptive relief for direct or indirect prohibited transactions
    resulting from the purchase or holding of the HITS. Those class exemptions
    are PTCE 96-23 (for certain transactions determined by in-house asset managers),
    PTCE 95-60 (for certain transactions involving insurance company general
    accounts), PTCE 91-38 (for certain transactions involving bank collective
    investment funds), PTCE 90-1 (for certain transactions involving insurance
    company separate accounts) and PTCE 84-14 (for certain transactions determined
    by independent qualified asset managers). In addition, ERISA Section 408(b)(17)
    provides an exemption for the purchase and sale of securities and related
    lending transactions, provided that neither the issuer of the securities
    nor any of its affiliates have or exercise any discretionary authority or
    control or render any investment advice with respect to the assets of any
    Plan involved in the transaction, and provided further that the Plan pays
    no more than
  &#147;adequate consideration&#148; (to be defined in regulations to be issued
  by the Secretary of the Department of Labor) in connection with the transaction
  (the so-called &#147;service provider&#148; exemption).</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-22</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Because
    we may be considered a party in interest with respect to many Plans, the
    HITS may not be purchased, held or disposed of by any Plan, any entity whose
    underlying assets include
  &#147;plan assets&#148; by reason of any Plan&#146;s investment in the entity
  (a &#147;</FONT><B><FONT size=2 face="serif">Plan Asset Entity</FONT></B><FONT size=2 face="serif">&#148;)
  or any person investing &#147;plan assets&#148; of any Plan, unless such purchase,
  holding or disposition is eligible for exemptive relief, including relief available
  under PTCEs 96-23, 95-60, 91-38, 90-1, 84-14 or the service provider exemption
  or such purchase, holding or disposition is otherwise not prohibited. Any purchaser,
  including any fiduciary purchasing on behalf of a Plan, transferee or holder
  of the HITS will be deemed to have represented, in its corporate and its fiduciary
  capacity, by its purchase and holding of the HITS that either (a) it is not
  a Plan or a Plan Asset Entity and is not purchasing such HITS on behalf of
  or with &#147;plan assets&#148; of any Plan, or with any assets of a governmental
  or church plan that is subject to any federal, state or local law that is substantially
  similar to the provisions of Section 406 of ERISA of Section 4975 of the Code
  or (b) its purchase, holding and disposition are eligible for exemptive relief
  or such purchase, holding and disposition are not prohibited by ERISA or Section
  4975 of the Code (or in the case of a governmental or church plan, any substantially
  similar federal, state or local law).</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Under
    ERISA, assets of a Plan may include assets of certain commingled vehicles
    and entities in which the Plan has invested (including, in certain cases,
    the general account of an insurance company). Accordingly, commingled vehicles
    and entities which include assets of a Plan must ensure that one of the foregoing
    exemptions is available. Due to the complexity of these rules and the penalties
    that may be imposed upon persons involved in non-exempt prohibited transactions,
    it is particularly important that fiduciaries or other persons considering
    purchasing the HITS on behalf of or with &#147;plan assets&#148; of any Plan
    consult with their counsel regarding the availability of exemptive relief
    under any available exemptions, such as PTCEs 96-23, 95-60, 91-38, 90-1 or
    84-14 or the service provider exemption.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In addition
    to considering the consequences of holding the HITS, employee benefit plans
    subject to ERISA or insurance companies deemed to be investing ERISA plan
    assets (or other governmental or church plans subject to similar regulations,
    as described above) purchasing the HITS should also consider the possible
    implications of owning the underlying stock upon exchange of the HITS at
    maturity. Purchasers of the HITS have exclusive responsibility for ensuring
    that their purchase, holding and disposition of the HITS do not violate the
    prohibited transaction rules of ERISA or the Code or similar regulations
    applicable to governmental or church plans, as described above. The sale
    of any HITS to any Plan investor is in no respect a representation by us
    or any of our affiliates or representatives that such an investment meets
    all relevant legal requirements with respect to investments by Plan investors
    generally or any particular Plan investor, or that such an investment is
    appropriate for Plan investors generally or any particular Plan investor.</FONT></P>
<P align="center"> <B><FONT size=2 face="serif">UNITED STATES FEDERAL TAXATION</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    following are the material U.S. federal tax consequences of ownership and
    disposition of the HITS. This discussion only applies to initial investors
    in the HITS who:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">purchase the HITS at their &#147;issue price,&#148; which
      will equal the first price to the public (not including bond</FONT> <FONT size=2 face="serif">houses,
      brokers or similar persons or organizations acting in the capacity of underwriters,
      placement agents</FONT> <FONT size=2 face="serif">or wholesalers) at which
      a substantial amount of the HITS is sold; and</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">will hold the HITS as capital assets within
      the meaning of Section 1221 of the Internal Revenue Code of</FONT> <FONT size=2 face="serif">1986,
      as amended (the &#147;Code&#148;).</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">This
    discussion does not describe all of the tax consequences that may be relevant
    to a particular holder in light of the holder&#146;s particular circumstances
    or to holders subject to special rules, such as:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">certain financial institutions;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">insurance companies;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">dealers in securities or foreign currencies;</FONT></LI>
</UL>
<P align="center"> <FONT size=2 face="serif">S-23</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<UL>
  <LI> <FONT size=2 face="serif">investors holding the HITS as part of a hedging
      transaction, &#147;straddle,&#148; conversion transaction, or other</FONT> <FONT size=2 face="serif">integrated
      transaction, or who holds the HITS as part of a constructive sale transaction
      or constructive</FONT> <FONT size=2 face="serif">ownership transaction;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">U.S. Holders (as defined below) whose functional
      currency is not the U.S. dollar;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">partnerships or other entities classified as
      partnerships for U.S. federal income tax purposes;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">regulated investment companies;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">real estate investment trusts;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">tax exempt entities, including an &#147;individual
      retirement account&#148; or &#147;Roth IRA&#148; as defined in Section
      408</FONT> <FONT size=2 face="serif">or 408A of the Code, respectively;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">persons subject to the alternative minimum tax;</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">nonresident alien individuals who have lost
      their U.S. citizenship or who have ceased to be taxed as U.S.</FONT> <FONT size=2 face="serif">resident
      aliens; or</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">Non-U.S. Holders (as defined below) for whom
      income or gain in respect of the HITS is effectively</FONT> <FONT size=2 face="serif">connected
      with a trade or business in the United States.</FONT></LI>
</UL>
<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In addition, neither we nor Davis Polk & Wardwell, our counsel, has determined whether the issuer of the underlying stock will be considered a &#147;United States real property holding corporation&#148; within the meaning of Section 897 of the Code and the effect of Section 897 of the Code on the tax consequences to a non-U.S. investor of an investment in and ownership of the HITS.  A non-U.S. investor should consult its own tax advisors regarding the U.S. federal tax consequences of an investment in and ownership of the HITS.</FONT></P>
<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Additionally,
    except as pertains to the withholding tax described below under &#147;&#151;Tax
    Consequences to Non-U.S. Holders,&#148; the effect of the U.S. federal tax
    laws, including the effect of the U.S. federal estate tax laws, on an investment
    in the HITS by non-U.S. investors is not discussed.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As the
    law applicable to the U.S. federal income taxation of instruments such as
    the HITS is technical and complex, the discussion below necessarily represents
    only a general summary. Moreover, the effect of any applicable state, local
    or foreign tax laws is not discussed.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">This
    discussion is based on the Code, administrative pronouncements, judicial
    decisions and final, temporary and proposed Treasury regulations, all as
    of the date hereof, changes to any of which subsequent to the date of this
    prospectus supplement may affect the tax consequences described herein. Persons
    considering the purchase of HITS are urged to consult their tax advisors
    with regard to the application of the U.S. federal income tax laws to their
    particular situations as well as any tax consequences arising under the laws
    of any state, local or foreign taxing jurisdiction.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">This
      discussion is subject to any additional discussion regarding U.S. federal
      income taxation contained in the applicable pricing supplement. Accordingly,
      you should also consult the applicable pricing supplement for any additional
      discussion of U.S. federal income taxation with respect to the specific
      HITS offered thereunder.</FONT></B></P>
<P align="left"> <B><FONT size=2 face="serif">Tax Consequences to U.S. Holders</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As used
    herein, the term &#147;U.S. Holder&#148; means a beneficial owner of a HITS
    that is, for U.S. federal income tax purposes:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">a citizen or resident of the United States;</FONT><br>
    <br>
  </LI>
</UL>
<P align="center"> <FONT size=2 face="serif">S-24</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<ul>
  <LI> <FONT size=2 face="serif">a corporation, or other entity taxable as a
      corporation for U.S. federal income tax purposes, created or</FONT> <FONT size=2 face="serif">organized
      in or under the laws of the United States or of any political subdivision
      thereof; or</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">an estate or trust the income of which is subject
      to U.S. federal income taxation regardless of its source.</FONT></LI>
</UL>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The term U.S. Holder also includes
    certain former citizens and residents of the United States.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">General</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise provided in the applicable pricing supplement, pursuant to the
    terms of the HITS and subject to the discussion below under &#147;&#151;Tax
    Consequences to Non-U.S. Holders,&#148; we and every investor in the HITS
    will agree (in the absence of an administrative determination or judicial
    ruling to the contrary) to characterize a HITS for all U.S. federal income
    tax purposes as a unit consisting of the following:</FONT></P>
<TABLE width=100% border=0 cellspacing=0 cellpadding=0>
  <TR>
    <TD width="5%" valign=top nowrap>&nbsp;</TD>
    <TD width="5%" valign=top nowrap><FONT size=2 face="serif">(i)</FONT></TD>
    <TD width=90%><FONT size=2 face="serif">an option (the &#147;Option&#148;)
        granted by the investor to enter into a forward contract (the &#147;Forward
        Contract&#148;), pursuant to which Forward Contract the investor in a
        HITS will be required to purchase from us shares of the underlying stock
        for an amount equal to the Deposit (as defined below); and</FONT> </TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" valign=top nowrap>&nbsp;</TD>
    <TD width="5%" valign=top nowrap><FONT size=2 face="serif">(ii)</FONT></TD>
    <TD width=90%><FONT size=2 face="serif">a deposit with us of a fixed amount
        of cash, equal to the issue price, to secure the investor&#146;s obligation
        under the Forward Contract (the &#147;Deposit&#148;), which Deposit pays
        interest in cash based on our cost of borrowing at the time of issuance
        (the &#147;Yield on the Deposit&#148;).</FONT> </TD>
  </TR>
</TABLE>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Please
    refer to the applicable pricing supplement for the Yield on the Deposit of
    the HITS offered thereunder. The Option will be deemed to have been exercised
    only if the trading price of the underlying stock has decreased to or below
    the trigger price at any time on any trading day from and including the pricing
    date to and including the determination date.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise indicated in the applicable pricing supplement,
    we will allocate 100% of the issue price of the HITS to the Deposit and none
    to the Option. Our allocation of the issue price between the Option and the
    Deposit will be binding on investors in the HITS, unless an investor timely
    and explicitly discloses to the Internal Revenue Service (&#147;IRS&#148;)
    that its allocation is different from ours. The treatment of the HITS described
    above and our allocation are not, however, binding on the IRS or the courts.
    No statutory, judicial or administrative authority directly addresses the
    characterization of the HITS or instruments similar to the HITS for U.S.
    federal income tax purposes, and no ruling is being requested from the IRS
    with respect to the HITS. <B>Our counsel  has not rendered
    an opinion as to the proper U.S. federal income tax characterization of the
    HITS. Significant aspects of the U.S. federal income tax consequences of
    an investment in the HITS are uncertain, and no assurance can be given that
    the IRS or the courts will agree with the characterization described herein.
    Accordingly, you are urged to consult your own tax advisors regarding the
    U.S. federal income tax consequences of an investment in the HITS (including
    alternative characterizations of the HITS) and with respect to any tax consequences
    arising under the laws of any state, local or foreign taxing jurisdiction.
    Unless otherwise stated, the following discussion is based on the treatment
    and the allocation described above.</B></FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Tax Treatment of the HITS</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise provided in the applicable pricing supplement and assuming the
    characterization of the HITS and the allocation of the issue price as set
    forth above, the following U.S. federal income
    tax consequences should result.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Coupon
      Payments on the HITS</FONT></I><FONT size=2 face="serif">. Under the characterization
      described above under &#147;&#151;General,&#148; only a portion of the
      coupon payments on the HITS will be attributable to the Yield on the Deposit.
      The remainder of the coupon payments will represent payments attributable
      to the granting by the investor of the Option (the &#147;Option Premium&#148;).
      To the extent attributable to the Yield on the Deposit, coupon payments
      on the HITS will generally be taxable to a U.S. Holder as ordinary income
      at the time accrued or received in accordance with the U.S. Holder&#146;s
      method of accounting for U.S. federal income tax purposes. The Option Premium
      will not be taxable to a U.S. Holder upon receipt.</FONT></P>

<P align="center"> <FONT size=2 face="serif">S-25</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>

<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><font size=2 face="serif">Tax Basis</font></i><font size=2 face="serif">.
    Based on our determination set forth above, the U.S. Holder&#146;s tax basis
    in the Option will be zero, and the U.S. Holder&#146;s tax basis in the Deposit
    will be 100% of the issue price.</font></P>
<p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><font size=2 face="serif">Receipt
      of Principal Amount in Cash upon Settlement of the HITS</font></i><font size=2 face="serif">.
      If a holder receives the principal amount of a HITS in cash at maturity, the
      amount attributable to the accrued but unpaid coupon on the HITS will be taxed
      as described under &#147;&#151;Coupon Payments on the HITS.&#148; In such a
      case, the Option will be deemed to have expired</font> <FONT size=2 face="serif">unexercised.
      A U.S. Holder will not recognize income upon return of the Deposit, but will
      recognize the total amount of Option Premium received by the holder over the
      term of the HITS as short-term capital gain or loss.</FONT></p>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Receipt
      of the Underlying Stock upon Settlement of the HITS</FONT></I><FONT size=2 face="serif">.
      If a U.S. Holder receives the underlying stock and accrued but unpaid coupons
      on the HITS in cash at maturity, the amount attributable to the accrued
      but unpaid coupon on the HITS will be taxed as described under &#147;&#151;Coupon
      Payments on the HITS.&#148; In such case, the Option will be deemed to
      have been exercised. The U.S. Holder will not recognize any income or gain
      in respect of the total Option Premium received and will not recognize
      any gain or loss with respect to any underlying stock received. Instead,
      the U.S. Holder will have an aggregate basis in the shares of the underlying
      stock received and the right to receive cash upon settlement of the HITS
      equal to the Deposit less the total Option Premium received (the &#147;Net
      Purchase Price&#148;). The allocation of the Net Purchase Price among the
      shares of underlying stock received and the right to receive cash should
      be based on the amount of cash received (excluding cash in respect of any
      accrued coupon payments on the HITS) and the relative fair market value
      of the underlying stock received, determined as of the date of the settlement
      of the HITS. A U.S. Holder&#146;s holding period for any such shares of
      underlying stock received will start on the day after receipt. With respect
      to any cash received upon settlement of the HITS, a U.S. Holder will recognize
      gain or loss. The amount of such gain or loss will be equal to the difference
      between the amount of such cash received and the tax basis allocable to
    the right to receive cash, as discussed above.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Sale,
      Exchange or Early Retirement of the HITS</FONT></I><FONT size=2 face="serif">.
      Upon a sale or exchange of a HITS prior to its maturity, or upon their
      retirement prior to maturity upon the occurrence of an Event of Default
      Acceleration, a U.S. Holder would recognize taxable gain or loss equal
      to the difference between the amount realized on such sale, exchange or
      retirement and the U.S. Holder&#146;s tax basis in the HITS so sold, exchanged
      or retired. For these purposes, the amount realized does not include any
      amount attributable to accrued but unpaid coupon payments on the HITS,
      which would be taxed as described under &#147;&#151;Coupon Payments on
      the HITS&#148; above. Such U.S. Holder&#146;s adjusted tax basis in the
      HITS would generally be equal to its adjusted tax basis in the Deposit
      less the total Option Premium received over the term of the HITS. Any such
      gain or loss upon a sale, exchange or retirement of the HITS prior to maturity
      would generally be capital gain or loss, as the case may be. To the extent
      such gain or loss is attributable to the Deposit, such gain or loss will
      be treated as long-term capital gain or loss if such U.S. Holder has held
    the HITS for more than one year.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    Trading Price of the underlying stock has not decreased to or below the Trigger
    Price prior to the sale, exchange or retirement of the HITS, any capital
    gain or loss, other than gain or loss attributable to the Deposit, will be
    treated as short-term capital gain or loss.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    Trading Price of the underlying stock has decreased to or below the Trigger
    Price prior to the sale, exchange or retirement of the HITS (and, therefore,
    the Option is deemed to have been exercised), any gain or loss, other than
    gain or loss attributable to the Deposit, will be treated as long-term capital
    gain or loss if such U.S. Holder has held the HITS for more than one year
    from the date the Option is deemed to have been exercised.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Price
      Event Acceleration</FONT></I><FONT size=2 face="serif">. Although the tax
      consequences of a Price Event Acceleration are uncertain, we intend to
      treat a Price Event Acceleration as (i) the repayment by us of the Deposit
      for a price equal to the Deposit plus the present value of the portion
      of the remaining scheduled payments on the HITS (from and including the
      date of acceleration) that is attributable to the Yield on the Deposit,
      and (ii) the exercise of the Option, immediately followed by settlement
      of the Forward Contract through the delivery by the U.S. Holder to us of
      the Deposit in exchange for (a) shares of underlying stock and (b) cash
      equal to the present value of the portion of the remaining scheduled payments
      on the HITS (from and including the date of acceleration) that is attributable
      to the Option Premium. We will also pay cash representing unpaid Yield
      on the Deposit and unpaid Option Premium that accrued up to but excluding
    the date of acceleration.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-26</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left">   &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Any cash
    received with respect to accrued coupon payments on the HITS will be taxed as
    described under &#147;&#151;Coupon Payments on the HITS&#148; above.</font></P>
<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Assuming
    the characterization of the Price Event Acceleration described above, any amount
    received attributable to the unaccrued Option Premium will be treated as Option
    Premium received under the Option. A U.S. Holder would, with respect to the price
    paid by us to repay the Deposit, generally recognize capital gain or loss equal
    to the difference between such amount and the U.S. Holder&#146;s basis in the
    Deposit. In the case of an initial </font><FONT size=2 face="serif">investor, such difference would be
    equal to the present value of the portion of the remaining scheduled payments
    on the HITS attributable to the unaccrued Yield on the Deposit. In general,
    the tax treatment of the settlement of the Forward Contract upon a Price
    Event Acceleration would be the same as described above under &#147;&#151;Receipt
    of the Underlying Stock upon Settlement of the HITS.&#148; U.S. Holders are
    urged to consult their own tax advisors regarding the U.S. federal income
    tax treatment of cash received with respect to the Forward Contract upon
    a Price Event Acceleration.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Possible Alternative Tax Treatments
    of an Investment in the HITS</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Due
    to the absence of authorities that directly address the proper characterization
    of the HITS, no assurance can be given that the IRS will accept, or that
    a court will uphold, the characterization and tax treatment described above.
    In particular, with respect to a HITS that matures (after taking into account
    the last possible date that the HITS could be outstanding under its terms)
    more than one year from its date of issuance, the IRS could seek to analyze
    the U.S. federal income tax consequences of owning a HITS under Treasury
    regulations governing contingent payment debt instruments (the &#147;Contingent
    Debt Regulations&#148;).</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    IRS were successful in asserting that the Contingent Debt Regulations applied
    to the HITS, the timing and character of income thereon would be significantly
    affected. Among other things, a U.S. Holder would be required to accrue interest
    income as original issue discount, subject to adjustments, at a &#147;comparable
    yield&#148; on the issue price. In addition, a U.S. Holder would recognize
    income upon maturity of the HITS to the extent that the value of the underlying
    stock and cash (if any) received exceeded the adjusted issue price. Furthermore,
    any gain realized with respect to the HITS would generally be treated as
    ordinary income.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Even
    if the Contingent Debt Regulations do not apply to the HITS, other alternative
    U.S. federal income tax characterizations or treatments of the HITS are possible,
    which, if applied, could significantly affect the timing and character of
    the income or loss with respect to the HITS. It is possible, for example,
    that a HITS could be treated as constituting an &#147;open transaction&#148; with
    the result that no portion of the coupon payments on the HITS might be accounted
    for separately as giving rise to income to U.S. Holders until the sale, exchange
    or retirement of the HITS. Other alternative characterizations are also possible.
    Accordingly, prospective purchasers are urged to consult their own tax advisors
    regarding the U.S. federal income tax consequences of an investment in the
    HITS.</FONT> </P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Backup Withholding and Information
    Reporting</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Backup
    withholding may apply in respect of the amounts paid to a U.S. Holder, unless
    such U.S. Holder provides proof of an applicable exemption or a correct taxpayer
    identification number, or otherwise complies with applicable requirements
    of the backup withholding rules. The amounts withheld under the backup withholding
    rules are not an additional tax and may be refunded, or credited against
    the U.S. Holder&#146;s U.S. federal income tax liability, provided that the
    required information is furnished to the IRS. In addition, information returns
    will be filed with the IRS in connection with payments on the HITS and the
    proceeds from a sale or other disposition of the HITS, unless the U.S. Holder
    provides proof of an applicable exemption from the information reporting
    rules.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Tax Consequence to Non-U.S. Holders</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">This
    section only applies to you if you are a Non-U.S. Holder. As used herein,
    the term &#147;Non-U.S. Holder&#148; means a beneficial owner of a HITS that
    is, for U.S. federal income tax purposes:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">an individual who is classified as a nonresident
      alien;</FONT><br>
    <br>
  <LI><FONT size=2 face="serif">a foreign corporation; or</FONT><br>
    <br>
  </LI>
</UL>
<P align="center"> <FONT size=2 face="serif">S-27</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>

<ul>
  <li><FONT size=2 face="serif">a foreign trust or estate.</FONT></li>
</ul>
<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">&#147;Non-U.S.
    Holder&#148; does not include a holder who is an individual present in the United
    States for 183 days or more in the taxable year of disposition and who is not
    otherwise a resident of the United States for U.S. federal income tax purposes.
    Such a holder is urged to consult his or her own tax advisors regarding the U.S.
    federal income tax consequences of the sale, exchange or other disposition of
the HITS.</font></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">General</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As described
    above, we and every holder of a HITS agree (in the absence of an administrative
    determination or judicial ruling to the contrary) to characterize a HITS
    for all U.S. federal income tax purposes as a unit consisting of the Option
    and the Deposit, and the discussion herein assumes such treatment.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Subject
    to the discussion below concerning backup withholding, payments with respect
    to a HITS by us or a paying agent to a Non-U.S. Holder, and gain realized
    on the sale, exchange or other disposition of such HITS, will not be subject
    to U.S. federal income or withholding tax, provided that: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">the Non-U.S. Holder does not own, directly or
      by attribution, ten percent or more of the total combined</FONT> <FONT size=2 face="serif">voting
      power of all classes of our stock entitled to vote;</FONT><br>
    <br>
  <LI><FONT size=2 face="serif">the Non-U.S. Holder is not a controlled foreign
      corporation related, directly or indirectly, to us through</FONT> <FONT size=2 face="serif">stock
      ownership;</FONT><br>
    <br>
  <LI><FONT size=2 face="serif">the Non-U.S. Holder is not a bank receiving
      interest under Section 881(c)(3)(A) of the Code; and</FONT><br>
    <br>
  </LI>
  <LI> <FONT size=2 face="serif">the certification requirement described below
      has been fulfilled with respect to the beneficial owner.</FONT><br>
    <br>
    <BR>
    <B><I><FONT size=2 face="serif">Certification Requirement</FONT></I></B>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    certification requirement referred to in the preceding paragraph will be
    fulfilled if the beneficial owner of a HITS (or a financial institution holding
    the HITS on behalf of the beneficial owner) furnishes to us an IRS Form W-8BEN,
    in which the beneficial owner certifies under penalties of perjury that it
    is not a U.S. person.</FONT> </P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Possible Alternative Tax Treatments
    of an Investment in the HITS</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As described
    above under &#147;&#151; Tax Consequences to U.S. Holders &#151; Possible
    Alternative Tax Treatments of an Investment in the HITS,&#148; the IRS may
    seek to apply a different characterization and tax treatment than those described
    herein. However, even if such a recharacterization were successful, the U.S.
    federal income and withholding tax consequences to a Non-U.S. Holder of ownership
    and disposition of a HITS should be the same as those described immediately
    above.</FONT> </P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Backup Withholding and Information
    Reporting</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Information
    returns may be filed with the IRS in connection with payments on the HITS
    as well as in connection with the proceeds from a sale, exchange or other
    disposition of the HITS. A Non-U.S. Holder may be subject to backup withholding
    in respect of amounts paid to the Non-U.S. Holder, unless such Non-U.S. Holder
    complies with certification procedures to establish that it is not a U.S.
    person for U.S. federal income tax purposes or otherwise establishes an exemption.
    The certification procedures described above will satisfy the certification
    requirements necessary to avoid the backup withholding as well. The amount
    of any backup withholding from a payment to a Non-U.S. Holder will be allowed
    as a credit against the Non-U.S. Holder&#146;s U.S. federal income tax liability
    and may entitle the Non-U.S. Holder to a refund, provided that the required
    information is furnished to the IRS.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-28</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">PLAN OF DISTRIBUTION</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We are
    offering the HITS as part of our Series F medium-term notes on a continuing
    basis exclusively through Morgan Stanley &amp; Co. Incorporated and Morgan
    Stanley DW Inc., which we refer to individually as an &#147;agent&#148; and
    together as the &#147;agents,&#148; who have agreed to use reasonable efforts
    to solicit offers to purchase these HITS. We will have the sole right to
    accept offers to purchase these HITS and may reject any offer in whole or
    in part. Each agent may reject, in whole or in part, any offer it solicited
    to purchase HITS. We will pay an agent, in connection with sales of these
    HITS resulting from a solicitation that agent made or an offer to purchase
    that agent received, a commission that will be specified in the applicable
    pricing supplement.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We may
    also sell the HITS to an agent as principal for its own account at discounts
    to be agreed upon at the time of sale within the range of the commissions
    stated above or as otherwise disclosed in the applicable pricing supplement.
    That agent may resell these HITS to investors and other purchasers at a fixed
    offering price or at prevailing market prices, or prices related thereto
    at the time of resale or otherwise, as that agent determines and as we will
    specify in the applicable pricing supplement. An agent may offer the HITS
    it has purchased as principal to other dealers, which may include Morgan
    Stanley &amp; Co. International Limited and Bank Morgan Stanley AG. That
    agent may sell the HITS to any dealer at a discount and, unless otherwise
    specified in the applicable pricing supplement, the discount allowed to any
    dealer will not be in excess of the discount that agent will receive from
    us. After the initial public offering of HITS that an agent is to resell
    on a fixed public offering price basis, the agent may change the public offering
    price, concession and discount.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Each
    of the agents may be deemed to be an &#147;underwriter&#148; within the meaning
    of the Securities Act of 1933, as amended. We and the agents have agreed
    to indemnify each other against certain liabilities, including liabilities
    under the Securities Act, or to contribute to payments made in respect of
    those liabilities. We have also agreed to reimburse the agents for specified
    expenses.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We estimate
    that we will spend approximately &#36;5,070,500 for printing, rating agency,
    trustee&#146;s and legal fees and other expenses allocable to the offering
    of the Series F medium-term notes, including the HITS, and the other securities
    registered on our shelf registration statement and estimate that we will
    spend corresponding amounts with respect to any additional securities that
    we may register on our shelf registration statement subsequent to our initial
    filing.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise provided in the applicable pricing supplement, we do not intend
    to apply for the listing of these HITS on a national securities exchange,
    but have been advised by the agents that they intend to make a market in
    these HITS as applicable laws and regulations permit. The agents are not
    obligated to do so, however, and the agents may discontinue making a market
    at any time without notice. No assurance can be given as to the liquidity
    of any trading market for these HITS.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Morgan
    Stanley &amp; Co. Incorporated and Morgan Stanley DW Inc. are our wholly-owned
    subsidiaries. The agents will conduct each offering of these HITS in compliance
    with the requirements of Rule 2720 of the NASD regarding an NASD member firm&#146;s
    distributing the securities of an affiliate. Following the initial distribution
    of these HITS, each agent may offer and sell those HITS in the course of
    its business as a broker-dealer. An agent may act as principal or agent in
    those transactions and will make any sales at varying prices related to prevailing
    market prices at the time of sale or otherwise. The agents may use this prospectus
    supplement in connection with any of those transactions. The agents are not
    obligated to make a market in any of these HITS and may discontinue any market-making
    activities at any time without notice.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Neither
    of the agents nor any dealer utilized in the initial offering of these HITS
    will confirm sales to accounts over which it exercises discretionary authority
    without the prior specific written approval of its customer.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In order
    to facilitate the offering of these HITS, the agents may engage in transactions
    that stabilize, maintain or otherwise affect the price of these HITS or the
    underlying stock. Specifically, the agents may sell more HITS than they are
    obligated to purchase in connection with the offering, creating a naked short
    position for their own accounts. The agents must close out any naked short
    position by purchasing HITS in the open market. A naked short position is
    more likely to be created if the agents are concerned that there may be downward
    pressure on the </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-29</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">price of these HITS in the open market
    after pricing that could adversely affect investors who purchase in the offering.
    As an additional means of facilitating the offering, the agents may bid for,
    and purchase, these HITS or any underlying stock in the open market to stabilize
    the price of these HITS or of the underlying stock. Finally, in any offering
    of the HITS through a syndicate of underwriters or dealer group, the agent
    acting on behalf of the underwriting syndicate or for itself may also reclaim
    selling concessions allowed to an underwriter or a dealer for distributing
    these HITS in the offering, if the agent repurchases previously distributed
    HITS to cover syndicate short positions or to stabilize the price of these
    HITS. Any of these activities may raise or maintain the market price of these
    HITS above independent market levels or prevent or retard a decline in the
    market price of these HITS. The agents are not required to engage in these
    activities, and may end any of these activities at any time.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    agent or an affiliate of the agent will enter into a hedging transaction
    with us in connection with each offering of HITS. See &#147;Use of Proceeds
    and Hedging&#148; above.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Concurrently
    with the offering of these HITS through the agents, we may issue other debt
    securities under the indenture referred to in this prospectus supplement
    or under our subordinated debt indenture described in the accompanying prospectus
    similar to those described in this prospectus supplement. Those debt securities
    may include other Series F medium-term notes and medium-term notes under
    our Series G and Series H prospectus supplement, which we refer to as &#147;Euro
    medium-term notes.&#148; The other Series F medium-term notes and the Euro
    medium-term notes may have terms substantially similar to the terms of the
    HITS offered under this prospectus supplement. The Euro medium-term notes
    may be offered concurrently with the offering of these HITS, on a continuing
    basis outside the United States by us, under a distribution agreement with
    Morgan Stanley &amp; Co. International Limited, as agent for us. The terms
    of that distribution agreement, which we refer to as the Euro Distribution
    Agreement, are substantially similar to the terms of the distribution agreement
    for a U.S. offering, except for selling restrictions specified in the Euro
    Distribution Agreement.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">With
    respect to each issuance of HITS, the Agent for each issuance of HITS, acting
    as principal for its own account, will agree to purchase, and we will agree
    to sell, the principal amount of HITS set forth on the cover of the applicable
    pricing supplement. The Agent will propose initially to offer the HITS directly
    to the public at the public offering price set forth on the cover page of
    the applicable pricing supplement plus accrued coupon, if any, from the original
    issue date. The Agent may allow a concession not in excess of the agent&#146;s
    commissions specified in the applicable pricing supplement per HITS to other
    dealers. After the initial offering of the HITS, the Agent may vary the offering
    price and other selling terms from time to time.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">With
    respect to each issuance of HITS, we expect to deliver the HITS against payment
    therefor in New York, New York on the original issue date (settlement date)
    specified in the applicable pricing supplement. Under Rule 15c6-1 of the
    Exchange Act, trades in the secondary market generally are required to settle
    in three business days, unless the parties to any such trade expressly agree
    otherwise. Accordingly, if the original issue date for any issuance of HITS
    is more than three business days after the pricing date, purchasers who wish
    to trade HITS more than three business days prior to the original issue date
    will be required to specify alternative settlement arrangements to prevent
    a failed settlement.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-30</FONT></P>
<HR noshade align="center" width="100%" size=3>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>2
<FILENAME>logo.jpg
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 logo.jpg
M_]C_X``02D9)1@`!``$`8`!@``#__@`?3$5!1"!496-H;F]L;V=I97,@26YC
M+B!6,2XP,0#_VP"$``("`@("`@("`@("`@("`@("`@("`@("`@("`@("`@("
M`@("`@,#`@(#`@("`P0#`P,#!`0$`@,$!`0$!`,$!`,!`@("`@("`@("`@,"
M`@(#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#
M`P,#`P,#`__$`:(```$%`0$!`0$!```````````!`@,$!08'"`D*"P$``P$!
M`0$!`0$!`0````````$"`P0%!@<("0H+$``"`0,#`@0#!04$!````7T!`@,`
M!!$%$B$Q008346$'(G$4,H&1H0@C0K'!%5+1\"0S8G*""0H6%Q@9&B4F)R@I
M*C0U-C<X.3I#1$5&1TA)2E-455976%E:8V1E9F=H:6IS='5V=WAY>H.$A8:'
MB(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4U=;7
MV-G:X>+CY.7FY^CIZO'R\_3U]O?X^?H1``(!`@0$`P0'!00$``$"=P`!`@,1
M!`4A,08205$'87$3(C*!"!1"D:&QP0DC,U+P%6)RT0H6)#3A)?$7&!D:)B<H
M*2HU-C<X.3I#1$5&1TA)2E-455976%E:8V1E9F=H:6IS='5V=WAY>H*#A(6&
MAXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7&Q\C)RM+3U-76
MU]C9VN+CY.7FY^CIZO+S]/7V]_CY^O_``!$(`"<`Z@,!$0`"$0$#$0'_V@`,
M`P$``A$#$0`_`)_VN_VQ_P!I_P"$_P"UO\3]"\"^-FB^%/PBL?ACXQ\0>#QX
M?\/7?VCPQJS>`[#7K<7]QI,E\%NM3\4*&D%RK1K=9C9-@P!M\C]Y-'U6QUW2
M-+US3)UN=-UG3K'5=.N4(*7%CJ-M%>6DZ$<%7MYHV!]&H`_#[_@HK^V/^T'\
M-OC#X@\'_`7QH/"GASX3_#[PKK/Q$FCT;0-6:?Q%XVU^"UTNU:35]+NS`\>F
M:EH\B(C1@B6X+`E10!^SWPWU6_UWX=^`M;U6?[3J>L>"_"VJZC<[(XOM%_J&
MAV-W>3^5$JI'YEQ-(VU%51NP```*`.TH`*`"@`H`*`"@`H`*`"@`H`*`/R9^
M(_QY_:6_:3_:+\??LW?LG^)M`^%/A;X/1+;_`!/^+VLZ=!K&IS:Y)+]G?2]!
MLYK:Y2&..^BN;.-(XDFF>PO9WNH(4C20`Y+QIXF_;U_8;MK#XH?$KXDZ+^U+
M\"[;5;"T^(-JN@P:!XR\*Z?J%S%9KK%A)%:*\<*S3I&DDEY>P>=)%'<0PI*)
MX@/P/TN\7_$RWN?V?_%?Q@^'>I6M];M\)-?^(7@S5&A6YM)PGA&\\0:'=S6S
M-B6/<MNTD#$=&1L$'`!XW^P5\:?'?Q__`&:?"/Q.^(]UI]WXKUC5_%MG>7&E
MZ;#I-F]OI'B/4-,LA'96Y*(PMK>,,R_>8$GDT`?9-`!0`4`%`'`_%:_OM*^%
MWQ)U33+N>PU+3?`/C&_T^^M7,5S97UGX=U&XM+NWD',<\,\<<B,.C(#VH`^-
M_P#@F/\`$+QQ\3?V4M`\5_$/Q7KGC+Q+/XO\:6<VM^(;^;4M2DM;+5!%:6[W
M5PQ=HHH_E123M!P.*`/T&H`*`"@`H`*`/PO\5_#>#XO?\%$_VW/AE-&LC^,O
MV2Y-'L=P'[G5Y-(^$D^BW*YX#PZO#92@_P#3.@#[=_X)R_%$^.OV0O`,FN3F
M#6/AC!JWPU\3B[DQ+8R>!I3;6?VO>=T13PVVDLV_T;T.`#\??B9'/\1/V0_V
MS_VI+^(>9\;?VE/".E^&9W!,@\$>"/$*P:2L+MTMRVI+;$#C=HP'\-`'ZY_M
M`_M+2?LM?L7^!_'FDVEKJ'C36/!GP]\'^`=-O$:6UF\3ZQX5MIHKRZMHV5[F
MTL-/LKZ]:%2/-:VBA++Y^X`'@WAG]@K]HGQQX/T_XD?$3]LSXW^'OCUK6EPZ
M_%9:%K=S:^!?".K7D`O+/P_<:':74!NK>U=XH+G[$;&$,LBQ6[I&IE`/</V"
M?VDO'OQ6T[XD_!OXW"W'QS^`/B-_"OB[4+>..W3Q/IBW5[86&OM!#''$+U;K
M3KJWN)(8XXYE^R7(16NG1`#\XOV>/B1^V;^TGXD^-G[/_P`/?BKX@\-V=G\3
M_$.M^,_C1XBU._UC4?`O@>"^NM'T+P1X,@\P36E_J=_;WTVVVGM&\K3B$G@C
M29G`/K7]H#XD?&/]G+P7^SK^Q7\'?'VH^-_V@/BM/=:._P`6_%43RZOI7AZY
MUVZ-QXDGBO[S4FCOF>\NXDN9YKPVUGX?NY5!F\DQ`&_>_L9_M"_!W0-1^*?P
MU_;)^+7BOXK^'M*N=>U30_BC?RZY\+?&KV%N][J.B7.@3W4TFBVMTL<J07'G
M73PL4(,6?-B`.I_X)G_$?XD?$/\`9&U+QGXEUK5OB#XY/C;XA_V:_BC7;F26
M_N+:&QGTK17U:\%PVG::UY)Y2L$=+=)V98R%VD`\^\-_LB?M8_'Z/4/B%^TK
M^TO\4/A!XAO]5U(Z!\*O@UKL>D:!X.TVVNY;>P%Q>:;J#VNI-*D*3)M$TS0O
M$\]X\TCI"`=5^Q5\5OBWH/Q\^/7[('Q=\>O\5[CX26.F>)?!7Q$OQ&NO:CX<
MU#^R2VGZU(DLK75Q';^(-&?,TT\L$R7D332Q^5Y8&WR/!O%'C;]K?QK_`,%`
M_CY\#O@K\3I?#>AS>#-"6;4O$]Y/JN@?"S0I])\&W&K>)_"?A61_(NO%4UU=
M-:VHV85]7GE=XPOFP@;?(QOVD?`7QR_X)_Z9X%_:&\)_M0_%OXKV\_Q!T;PY
M\1?!GQ,U6;5-!\1VNK6NHW\TEEI\EY-#IT4B:9<P!%#3P-=02PW(\DJP!^X^
MFWL6I:=8:C""L-_96M[$K?>$5U!'/&#[A9!0!^(?C^R^./\`P3V_:@^+?Q[\
M+?#74?B[^SQ\<;X:YXQ70$G.K^$;^6]GU.?[5);Q7#:7/9:C?ZHT%Q=0-8W=
MK?K%)-!<Q[H@#[<^#W[=?[)/[4UF?`\7B'3+35O$=N+"[^&GQ3TNSTV;6?/1
M6DTR&'4&N-'\1[F&!;6UU<22;<^3V`!:_;2^!-UXS^`FKVO@?XC^)_@OH/PO
M\#^/M:?PU\.H8-(T3Q5I-KX4NI$\*:MI]C/:0Q:'LLY8A#&C(%O9?W9XH`^1
M?^"2GP7\16OPG\&_&IOC'X]N/#=\/'^AI\&I9V'@&PNU\1W%D=:MK?[:R_V@
MSV3W)86Z'S+R7YL9+@'N_P`5_@M^US^T7\:O%WA[6?BGKO[.W[./A2"QB\)2
M_"_6(&\8?$N>[1FN=0U#5+.Y@N=)\F2%_,MKH"*!9;:.*WN7>6Z4`\,AO/C'
M^PO^U'^S]\+KWXY^,_CA\&?V@=3N?"C:/\2KP:MXH\(ZZ+W3=.@O[/5))Y9E
MA%WKFDRJ4$$4T7VV%X-\44X`.I_X*1_%;XU_#KXL?LC:9\%_$6K66K>*O&.K
MV3^%(-<N=%\/>,]035_!\.D:5XH\B6-9])>:\EAE$C`"&ZGP06R`-O(I?%#]
MD#]INR^'OC3XX^(OVTOBF/C9X7\,Z_XYAT/PC=3^'_A/83:)8W>N2>%=+\/P
M72;].\FV>TCNY(8@YV23VCC<&`/H?X%_&S7OV@OV"+[XF^*D@7Q3J7PJ^)VD
M^(IK6%+:WO=6\.:?XCT.YU.*WC`2V^VBQCNFBC`1'N'5`J!0`#SO_@DA(D7[
M%WAV65UCCC\:^/Y)'<A41$U?<[LQX554$DGH!0!XGX$B^,?_``4C\:_%'Q>G
MQM\>_!/]FOP'XMNO`W@/P_\`"^]?1->\:7FGHD]QKNL:NKKOWV=Q8W++/'=Q
MH=32V@BC^S32S@%R\N/C-_P3Y^/'P2\.ZS\:/&?QJ_9R^.'B0>!KFV^)-VVJ
M>)O`_B2XGL[6UO+35I)9&$2R:E:7/[D00S007T+VRRQ0W%`;>1ZOJOQ`\=_!
M?_@I9HGA#Q%XQ\27_P`(OVD/A[(/"7A_5]8O;SP]X;\=:1%$DL.AV,\I@TV:
M>ZT(J4A5=Q\6*"#\E`&]_P`%+?BAXY\)_#?X7_##X5^(=:\,_$GXW_%CPUX,
MT+4_#FH7.FZU;:=%<12:C):W5DZ3PQO?W>B6\C(PS'=NI^5C0!^A>@:0=$T+
M1=&EO;W5)-(TG3=,DU+4+B:YO]1>PLX;1[Z^N)7+SWD[1&661R69Y&8DDT`?
ME/\`"S_E+_\`M$_]D"T7_P!)?A!0!\N?$#XI']CSQ)_P4B^#4=PNEK\2=.T_
MXA_"*V5BCOJ'Q4E30?$"Z5&,9EM;;Q,'4(,H/"[_`-SY0-O*QZO^UI\+E^#7
M_!)OP7\/6@6VO]'3X6WFMQA/+8>(=?U^+7]>\Q<9WKJVIW:'/.(P.U`%+_@I
M#')9?LZ_L.^)+Q'/AC0/%_P[;Q!(5)MX5G\$Z;=6[7&.%4VFF:JH)'=A_%@@
M'[C030W$,-Q;R)+!/%'-!+&P:.2&5`\<D;*<,C(RD$<$$$4`?CQ^R$?[8_X*
M5?MS:_HK"3P]96=MHE]/;X:U.N)JVAVCQ%T^4S_;-#UT^N8I?4T`7_\`@DS;
MP+#^UM=+$BW,O[0.IV\LX4"5X+=-0D@B9^I2.2ZN64=C.Y_B-`&?\>E.C?\`
M!6_]E/6-;_=Z/JWPROM(T.XFXMQJ[6GQ2LEMHRWR_:#?ZE8@`<[K^'N10!^L
M'CXA?`OC1F(55\)^(RS,0JJ!H]X268D!0!U)Z4`?D3_P3S^*VG_`[_@FWXX^
M+&IV;ZC;>!O$WQ&UJ/3(W$+:E?J-%M]*T[SL'R%NM4N+.!I<-L68O@[<$`E^
M#?[-GQH_;>\$Z)\=?VEOVAOB+H7A?QZL^M^$_A!\)=23PGX>TGPY)<30:>+Z
M5X[F&5IXH1(J/:W-SY3QM->O*[)&`8_[&_PC\(?`O_@I-^T/\,?`IU8^'/#O
MP3TE[237=4;6-6FN-5N?AKJU_/>W[11F662]O9W`\M`JNJ@8&2!MY6/0/@G_
M`,I9_P!J/_LDNA?^DOPWH`U_^"Q__)IVD?\`97_!W_IG\5T`?IYX/_Y%+PM_
MV+NB?^FRUH`\R^$_[0_PF^-VM?$3PW\//$$NK:O\+M>_X1KQEIU]I6HZ-<V&
MHE[NW81V>KVUO/<V8NK&_MC.L7EF6TD4$C:6`/DG]MG]A3X#_%'X8_$'Q_I7
MA;1_A[\3_"OAC7?%^E^-/"UK!H0O;WP]IMQJ[6OB:RLEBM=3M;I+1XGNGC6Z
MA:19HY_D9)`/P.0_9:^*'C'XL?\`!,OQCKWCF_N=6UW1_AC\:/"/]M7LDDU]
MJ^F^'-`UNTTN[O;B5B]U=I9-%:23L6>5K(NY:1F)`.T_X)/?\F3_``]_[&+X
M@_\`J8ZM0!\]>'M>^.W_``47^*OQ=TWPW\8?$?P(_9G^%'B:7P5#:^`&%EXT
M\>:A%+<HUU>:M'*DD"3PV?VMEDD>WMXKVTA6TGF,TX`/'?CO^R7\-?V8OVG?
MV$IO!.L^//$.L>,_C9IZ^(=;\>^)U\0:A>)HGB/P0UGY"Q6%I%:@2ZI=LY2,
M[C*@)^49`/H;_@HQ_P`G.?\`!/O_`+*W+_ZD_@*@#]+/CO\`\D/^,G_9*OB'
M_P"HCK%`'YW_`+!'_*,:_P#^Q3^//_I9XMH`E_X)C6=[J'_!/N\T_3`QU&^O
MOB]9Z>J9WF]N6NX+0+CG=Y[QXQWH`^+O^"=?[-_Q2^+GP/UG5O`G[7GQ0^"D
M6B_$'7M%UKP!X0LWDL;34X[#1[D:K<[?$5B5N[RWGB5LP?\`+F!N.TA0#[+\
M0_\`!-?X@>--8\$WGQ-_;5^*/Q"MO!OBK3?%6A:/XK\/PWT":IID\5T[60NO
M%TGD7$EM;O&TJ(Y5"Q*D`B@#J/\`@J9X*U9?@_X%^/OA&)U\:?LW_$?P]XYL
M;B%2)%T*\U&QM-5B=DPXMUU6#P]<R8.!%:39&&-`?@>=V'BK2OVM?^"AGP5U
MW0F6_P#A[\!?@3I_Q5RDJS6\/B[XC6-M?Z9!,5RB7L$6L^''*<,LN@R@X,9`
M`/V#H`^"_!'[-WQ$\._M^_%K]I:^E\._\*Y\:_"W3O!VC0V^I7,GB-=7M8/`
M$<K7FF-8+#!:;O#6I8D6[D)#0_(-YV@;>5CSC]L;]A35OVC?VB?V??BKH\OA
M^#PYX2N]/TWXL6^I7,]MJ.H^&-#\1VNOZ=%I,$5E,FH7,T5UKEG(LTL&Q98"
M&8`A0#W+]O#X#^-_VCOV==>^%GP\DT.#Q+J/B#PKJ=LWB&_GTS3%M=&U6.]N
MQ)=6UE=.DGDH=BB$@G@D=:`.R^(O[.'ASXT_LVV/P#^(Q,*?\(9X6TDZOI16
M>XT'Q1X<TNRALM=TAYT03-;:A;,0DBH)X))87VK.V`#X?\/?#K_@JE\-/"-O
M\%?"?BSX$^*/"^DV,?AWPO\`%_7I=3B\6Z)X=AB%I8M-8S*PEOK*S$:0_:-.
MU5D\E%:>XVA@!MY6/L3]D#]E?1OV5_A[J&AG6I?&'C_QEJ\GBCXE>.;I)(Y_
M$7B&</A+9)I'EBTJT\Z<0B5VDDDNKJYE(DNF1`-O(\Z_84_9L^(O[.=M\=8O
MB#+X=D?XB_%C4?&OA_\`X1[4KG40FCW4<RQKJ!N-/M?LUYEUS$GF@<_.:`V\
MCL?VPOV3X/VE_#GA74/#GB9_A_\`%_X7ZT/$WPO\>P1NW]E:HLMK<2Z?J(@'
MG'3+BXL;&;S(MTEO/9PRHDJB6&<#\#Y:\3^`?^"CWQ0\$^(_A[\;O&?P>^''
MPSM?#>M'QOXX^&4=W/X]\=:/9:?--/I&G1W+_8]#BU**)HKNX6UTS;%+*%C9
M&:WD`V\CF_\`@G!\+M$^,O\`P3L\6?"WQ,;FUT/Q[XH^(^B3W=L%^U67VC^R
MA::I9A\))/9ZC;PW"*WRM):!6X)H`F^&'PN_X*>_`;P9:_`/P!/\!?$?@C0)
MKC3_``9\5?$EU>?VGX?T"YNYKA(VT3SEEG>W-Q*\,%SIFHB'(A\VXAC0*`==
M^SO^Q/\`'OX`?M6'XSWWQ.T#XJ>'_B)X)O\`3/C)XA\2?;;/QE-XFOUM=5N9
M?#NG16K6RZ8/$>DZ2ELSW2F*P\V`P*4CP`>R_#?]FSXB>$_V[?C9^T;J<OAW
M_A7OQ`\":9X<T&*UU*YE\0KJ%I!X0CE-_IK6"0V]ONT.]PZW4A(:+Y1N.T#;
MRL:'_!0?]G7X@?M-_`JP^'/PUE\/P^(+;Q_X?\2R-XDU&XTO3_[.TS3]=M;D
M+<6UC=N;GS=1MRJ>4`P#_,,#(!]H:!8S:9H.B:;<E#<:?I&FV,YC8M&9K2SA
M@E,;$`LF^-L$@9&.!0!^<GQ[_8S^*UC\:+K]IW]C[X@:1\./BKK-H+;Q[X1\
M1Q2'P5\0`OE"2YO%BM+J.*[N4@@-Q%/:M')-;QW<4UK=>9+,`>9^,_A/_P`%
M._VC=!N/A?\`%'Q-\#?@Y\.M=B73_&>J^`QJ>H^(=;TAB!>6,,+7E\QAND!5
MX([S2ED5C'+(8G>-@-O(^_/"O[._A+P!^SE/^SEX+FGTWP\?A_XC\%1:M<HD
M]_+=^)M,U&UU3Q%?K&$2>^N-1U.YO9$0(FZ3RT"HJA0#Y$_8+^#'[8'[."1_
M!CXDV'PJO/@9H1\4ZEHWB;0=3O;KQ=/JVK:@E]:P0PLT"_V9)<37T[B[L4FC
M\T()655``V^1P%K^S-^V!^RE\6OBAXC_`&0U^&OCSX6?%[6I/$M]X#^(=_/I
M5QX2UR::ZGWVLJ7EEY]O;R7US%%+!>LTMKY,5Q;-+;1S$#;Y'%_$+]B']MGX
MD^*?AE^T7XM^+?PZU[X\>`_'&CZYI'P]FAU#3?A3X0\-:1=V6JVFF:+-:Z?)
M/>ZC)JUJSWQEC4W,3QK]LDD@5R`?5G[6/[-'Q-^-WQ@_9-\>^%)?#$&E_!GQ
ML/$GC>/5-3N[&Y:U?5_"NH2+H<$6GW`O9/+T>]`262#DQ`M\Q(`/LOXG>'=0
M\7?#7XA>$])-NNJ>)_`_BSP[IC7<C0VJZAK6@:AIMF;F5$=HK<7%S'O=4<JN
M2%)&"`?+7[)/[-_C'X1?LAP_L_\`Q$O-'M_$=S8?$72M0OO#EW+JNG6MMXSU
M#6GMKBVGN;6T:>6*TU.-F1HD&]"N2.:`/$OV$O@;^V'^S)?+\&?'%I\*-6^`
M.GZCXJUBU\5Z1J-])XP>_P!30RV$=C:L\&RSN+](YI8KRR9X1-,J7#A4%`%'
MQ-^R3^TE^S_\8?''Q>_8D\5>"#X>^*-^-7\>?!7XCBYM_#IUIY[BZFU#0KJT
M"+'']JNKR2%5N=.EMA?S0"2XMMD40!H^#OV:OVLOC;\9?`'Q<_:\\;^$O#7A
MKX3ZF==\$?"+X0WNJP6-SX@7RVBU#7M5\_?Y!>.,3J;V_>XBB-J/LUO<3K*`
M?H-\6O"_AOQK\+OB'X2\8306OA;Q#X+\2:5KUY<[1!I^EW>DW<=WJ3LV`GV2
M(FY#\;3;ANU`'Y9_\$:OA,/"_P`%_'GQ4O%\^\^(_C#^Q=%OY(Y$>X\(^!(I
M=.LYH!,-\=O-K5]K*[.@%C$/X!@`_8Z@`H`*`"@`H`*`"@`H`\)_:%T'X\Z[
MX%MH_P!G/QEX7\%?$33?$%AJ@N/&6G?VAX>UO18+34(K_P`/7JKIU\]J+F>X
MLI5N(X-Z&TP'3?N`!\$^+/A[_P`%3/C3X=O_`(7>-/$W[/OPJ\(>(K6;2/%G
MC+P4=<N_$=[H5TODZC9Z;;N]T8OM=JTL3K'_`&:[I*Z?:85=L@'Z&_`7X+>%
M?V>_A/X/^$G@TSS:/X3L&A?4+Q8TOM9U2\GEOM8UJ^6$!$N;W4;BXG,:?+&K
MI$A*QK0!Z_0`4`%`!0`4`%`!0`4`%`!0`4`%`!0`4`%`!0`4`?FE^T%\+OV\
M?CKXD\:?"+3_`!/\(_AM^SCXHOVL+GQAI:ZK=_$F]\#SK;&]T:2T9Y(EO[D"
MZ@E6(6,<L4OEM<B-Y%D`V\C[U^&GP\\,?"7P#X2^&W@RS-AX9\&:)9:'I,#,
@'F:&TCQ)=W<H`\Z^NKAIKF>7`\R:XE?`W8H`[B@#_]D_
`
end
</TEXT>
</DOCUMENT>
</SUBMISSION>
