David Sidwell: The company has been focused on building out the product offerings for its clients, and continues to see good opportunities to provide solutions to them. That would include advisory services, M&A broadly, as well as providing of leveraged finance and ultimately distribution. That is the context for this business. Morgan Stanley identified this as an area that it had not invested sufficiently in, and has been making that investment. As a result of that the company has been growing the balances to the extent that it can hedge the exposure it does. The company risk manages the portfolio in terms of making sure that it maintains high credit standards. It, in all cases understands how the extension of credit fits within the overall strategy for the clients, and the revenues it gets from this bundled service. It focused on its ability to distribute. An essential part of this increase is dedicated on continuing to develop the business in support of Morgan Stanley’s clients.

Guy Moszkowski (Merrill Lynch): You brought the excess unallocated capital balance down on an average basis for the quarter, from about $5.1 billion to about $4.2 billion. What do you think about the split between redeploying some of that in the businesses in the quarter versus sort of net share repurchase?

David Sidwell: There has been no change in philosophy, which is a good place to start. every quarter, the company looks at the future expectation around the generation of equity which is primarily through earnings as well as on exercise of options, but it is primarily earnings, the uses of capital which would include the company’s dividend payments, and also both the organic and acquisition needs of its various businesses. In the second quarter, there was a mixture of uses of capital across its institutional business and its asset management business. What the company does each quarter is look at its expectations going out and determines an amount of share repurchases that it feels comfortable with. That determination also considers the price of its stock. The company actively manages its capital base and its share repurchases within the context of the approval it receives from its board which was to buyback $6 billion worth over the 18 months period till the end of June 2008.

Guy Moszkowski (Merrill Lynch): How would you the reduction in excess capital that you achieved during the quarter of almost $1 billion up between the net shares repurchase and redeployment into the business?

David Sidwell: The company deployed for instance in Institutional Securities an additional on average $2.8 billion. It deployed an additional $400 million in asset management.

Guy Moszkowski (Merrill Lynch): Could you give a sense for the international revenue contribution ex-Discover, and if you grow it down to the institutional business to what percentage would that be?

David Sidwell: Morgan Stanley’s Discover business is primarily a US business. It is using its year-to-date revenue, which is a better place to go using its full firm 58% of its businesses in the US. That has decreased from around 60% to 61% in 2006. Europe has seen the increase and is around 30%, it was around 26%, and the balance is Asia, which has been around 12% consistently in both timeframes. On balance the Discover revenues had been over $1 billion in the quarter.

William Tanona (Goldman Sachs): Investment banking was strong this quarter and you have highlighted your record investment banking pipeline. Was there anything in this quarter that was of meaningful significance?

David Sidwell: The actual timing of when the pipeline shows up in revenues is always subject to the specifics of any deal. All of the investment banking businesses whether with advisory, equity or debt was the diversification and that would include across all of the regions did well. The pipeline is also very well diversified.

William Tanona (Goldman Sachs): You have been targeting people to a low 20% margins on the Investment Management business. Margins went down dramatically considering that you had some investment gains there and given the hedge funds that you had purchased. Why are the core business margins going down so dramatically it appears?

David Sidwell: The company had said that the margin would trend to 20% over the last couple of quarters when it has given guidance because it is continuing to make investments not just in its Private Equity business which it is in the process of building the team and infrastructure funds business, but also given the nature of the range from the acquisitions or some of the alternatives. The company indicated that the payouts would be higher compared with revenues in the near-term as it earns its provisions in a number of those transactions. Morgan Stanley’s expectation was that margins were going to be lower. The investment revenues have benefited from a robust market conditions and that is why the company would expect the margins to potentially be a few points higher than the 20% guidance that it had given and that includes the benefit of moving the real estate investing business into this business.

William Tanona (Goldman Sachs): How long it is going to take before you start seeing industry like margins particularly as you move more into this alternative space?

David Sidwell: It is taking three to five years. The company has received the benefit of this significant investment gains and by nature they are going to be lumpy. At the movement from this low 20''s margin to get to the high 20''s low 30’s are going to take some time.

William Tanona (Goldman Sachs): How much of the flow came from alternatives?

David Sidwell: Of the $9.3 billion about a third was in real estate and the other largest component was from core.

William Tanona (Goldman Sachs): What would be your expectations for this year on the non-comp side?

David Sidwell: There have been strong revenue environment over the first half of the year. The first quarter tends to be the lowest and there is an improvement during or an increase over the rest of the year. The company is trying to stay focused on having a non-comp to revenue ratio be better than it was last year. It continues to invest in people in the space needed to house those people relate to technology as it is optimistic long-term about the markets it is operating in.

Mike Mayo (Deutsche Bank): Are your backlogs at record levels or just up from the first quarter?

David Sidwell: They are up substantially, both from this time last year and from the first quarter.

Mike Mayo (Deutsche Bank): Your non-U.S. was 42%. What was the growth rate of the U.S. versus non-U.S.?