New Issue: Morgan Stanley prices upsized $2.8 million 11% HITS exchangeable for Toll

By Jennifer Chiou

New York, June 26 - Morgan Stanley priced an upsized $2.8 million issue of 11% notes structured as High Income Trigger Securities (HITS) due July 20, 2007 exchangeable for Toll Brothers, Inc. stock, according to an FWP filing with the Securities and Exchange Commission.

The deal was increased from the original size of $2.5 million.

Payout at maturity will be determined according to the performance of Toll Brothers stock up to and including July 18, 2007, the determination date. If the stock price has not decreased below the trigger level of $19.83, 75% of the initial share price, investors will receive par in cash. If Toll Brothers stock has dropped below the trigger price, investors will collect Toll Brothers shares at an exchange ratio equal to $10.00 divided by the initial share price.

Issuer:	Morgan Stanley
Issue:	HITS (High Income Trigger Securities) senior medium-term series F notes
Underlying stock:	Toll Brothers Inc.
Amount:	$2.8 million
Maturity:	July 20, 2007
Coupon:	11%, payable quarterly
Price:	Par of $10.00
Initial share price:	$26.44
Payout at maturity:	If the stock price drops below the trigger price, payout is 0.37821 shares of Toll Brothers stock; otherwise par
Trigger price:	$19.83, 75% of initial share price
Exchange ratio:	0.37821 shares of Wynne Resorts stock per HITS
Determination date:	July 18, 2007
Pricing date:	June 23
Settlement date:	June 30
Underwriter:	Morgan Stanley & Co.

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