Ownership Submission
FORM 5
Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).
Form 3 Holdings Reported
Form 4 Transactions Reported
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

ANNUAL STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
OMB APPROVAL
OMB Number: 3235-0362
Expires: January 31, 2005
Estimated average burden hours per response... 1.0

1. Name and Address of Reporting Person *
BACH ROBERT J
2. Issuer Name and Ticker or Trading Symbol
MICROSOFT CORP [MSFT]
5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
_____ Director _____ 10% Owner
__X__ Officer (give title below) _____ Other (specify below)
Senior Vice President
(Last)
(First)
(Middle)

ONE MICROSOFT WAY
3. Statement for Issuer's Fiscal Year Ended (Month/Day/Year)
06/30/2005
(Street)


REDMOND, WA 98052-6399
4. If Amendment, Date Original Filed(Month/Day/Year)
6. Individual or Joint/Group Reporting
(check applicable line)

_X_ Form Filed by One Reporting Person
___ Form Filed by More than One Reporting Person
(City)
(State)
(Zip)
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)
2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code
(Instr. 8)
4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)
5. Amount of Securities Beneficially Owned at end of Issuer's Fiscal Year
(Instr. 3 and 4)
6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)
7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Amount (A) or (D) Price
Common Stock             119,317 (1) D  

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly. Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 2270 (9-02)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)
2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (Month/Day/Year) 3A. Deemed Execution Date, if any (Month/Day/Year) 4. Transaction Code
(Instr. 8)
5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)
6. Date Exercisable and Expiration Date
(Month/Day/Year)
7. Title and Amount of Underlying Securities
(Instr. 3 and 4)
8. Price of Derivative Security
(Instr. 5)
9. Number of Derivative Securities Beneficially Owned at End of Issuer's Fiscal Year
(Instr. 4)
10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)
11. Nature of Indirect Beneficial Ownership
(Instr. 4)
(A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares
Performance Rights $ 0 (2)           08/31/2006(3) 08/31/2008 Common Stock
73,333
  73,333 (4) (5)
D
 
Employee Stock Option (right to buy) #083957 $ 6.2227 (6)           11/15/2004 07/15/2006 Common Stock
1,190,400
  1,190,400 (6)
D
 
Employee Stock Option (right to buy) #0285128 $ 25.1438 (7)           08/20/2005(8) 02/20/2011 Common Stock
1,111,111
  1,111,111 (7)
D
 
Employee Stock Option (right to buy) #0364000 $ 21.591 (9)           07/31/2005(10) 07/31/2012 Common Stock
555,556
  555,556 (9)
D
 

Reporting Owners

Reporting Owner Name / Address Relationships
Director 10% Owner Officer Other
BACH ROBERT J
ONE MICROSOFT WAY
REDMOND, WA 98052-6399
      Senior Vice President  

Signatures

Keith R. Dolliver, Attorney-in-Fact for Robert J. Bach 07/08/2005
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1) Includes 271 shares acquired on June 30, 2005 under the Microsoft employee stock purchase plan. Also includes an increase to the existing 2002, 2003 and 2004 stock awards in the aggregate of 2,600 shares in connection with the $3.00 special dividend paid to shareholders of record on November 17, 2004.
(2) 1-for-1
(3) One-third of the number of shares of common stock ultimately awarded under the shared performance stock award ("SPSA") will be distributed to the reporting person on or about August 31, 2006 (the "initial vest date"), an additional one-third shall vest and be distributed to the reporting person on each of the first and second anniversaries of the initial vest date, provided that the Reporting Person remains continuously employed through the applicable vesting date.
(4) Represents an increase in the minimum number of shares of common stock issuable under the SPSA for the fiscal 2004-2006 performance period in connection with the $3.00 special dividend paid to shareholders of record on November 17, 2004.
(5) The number of shares ultimately received depends on the company's performance against specified performance targets. At the end of the performance period, the number of shares of stock and stock awards will be determined by adjusting upward or downward from a target in a range between 33% and 150%. The number reported herein is based on the 33% minimum. The final performance percentage on which the payout will be based, considering company performance metrics established for the performance period, will be determined by the board or a board committee in its sole discretion. Shares of stock are issued at the end of the performance period and as the stock awards vest over the following two years, provided that the reporting person remains continuously employed through the applicable vest date.
(6) This option was previously reported as an option covering 1,071,360 shares at an exercise price of $6.9141 per share and has been adjusted in connection with the $3.00 special dividend paid to shareholders of record on November 17, 2004.
(7) This option was previously reported as an option covering 1,000,000 shares at an exercise price of $27.9375 per share and has been adjusted in connection with the $3.00 special dividend paid to shareholders of record on November 17, 2004.
(8) 833,333 shares are vested and immediately exercisable, 138,889 shares will vest and become exercisable on each of August 20, 2005 and February 20, 2006.
(9) This option was previously reported as an option covering 500,000 shares at an exercise price of $23.99 per share and has been adjusted in connection with the $3.00 special dividend paid to shareholders of record on November 17, 2004.
(10) 208,333 shares are vested and immediately exercisable, 69,445 shares will vest and become exercisable on July 31, 2005, 69,444 shares will vest and become exercisable on January 31, 2006, 69,445 shares will vest and become exercisable on July 31, 2006, 69,444 shares will vest and become exercisable on January 31, 2007, and 69,445 shares will vest and become exercisable on July 31, 2007.

Note: File three copies of this Form, one of which must be manually signed. If space provided is insufficient, see Instruction 6 for procedure.

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB number.