UBS Warburg Global Financial Services Conference,Stephen Crawford Chief Financial Officer April 24, 2002,Sales and Trading,Sales and Trading Net Revenues,($MM, % Total),1997-2001 CAGR: 20%,Diversification,Sales and Trading Net Revenues,($MM, % Total),Equity,Fixed Income,Balance Sheet(1),$MMs,Note: (1) As February 28, 2002,Financial Instruments Cash(1),Bank Loans: $4.9Bn Private Equity: $900MM(2) High Yield: $1.6Bn,Loans and Commitments,Investment Grade,Non-Investment Grade,75%,25%,Note: (1) As of February 28, 2002 (2) Of which only $250 MM is in inventory,Selected Financial Instruments,Total: $10.2Bn,Financial Instruments Derivatives(1),Maturity Profile by Counterparty Rating,($MMs),Counterparty Rating by Product,($MMs),Note: (1) As February 28, 2002,Product Lifecycle,Time,Margins,Volume,Credit Derivatives 2002,Interest Rate Swaps 2002,Revenue Drivers,Trading Volumes Volatility Primary Activity Market Direction,Business Model,Consolidation and Fragmentation,2001 Mutual Funds,2001 Passive Funds,Top 15 Complexes (Cumulative Share %),(%),2001 Separately Managed Accounts,(Cumulative Share %),2001 Hedge Funds,(%),Source for above charts: Morgan Stanley/Freeman Securities Research,Client Service Model,Three customer segments Mutual funds Hedge funds Asset owners Different value chains Best execution Enhanced services Advice Capital One prerequisite: Scale operations,Execution,Applied OTC market making technology and strategy to options business Making markets in 40,000 instruments, representing 435 names from standing start in August 1999 Largely automated operations handful of traders,OTC Market Making,Automated Options Market Making,Total Number of Stocks,Services and Advice,Analytics Financing Settlement Securities lending Dedicated trading Tax and regulatory advice Technology,Research,Japan II First Teams 2002,Chemicals Construction Metals Software/Business,Autos & Auto Parts Insurance Telecommunications Equipment Equity Strategy,Global II First Teams 2001,Top Ranked Analysts by Institutional Investor,Morgan Stanley Proprietary Research Ratings System,Ratings as of 3/18/2002:,O or Over = Overweight E or Equal = Equal-weight U or Under = Underweight,Pre- 3/18/2002 Ratings:,SB = Strong Buy O = Outperform N = Neutral U = Underperform,Currently 22% of stocks are ranked Underweight by MWD Analysts,North America II First Teams 2001,Medical Supplies & Devices Cable Publishing & Information Services Radio & TV Broadcasting Enterprise Software Internet Infrastructure Services,Specialty Chemicals Data Networking Autos & Auto Parts Brokers & Asset Managers Insurance/Nonlife,Europe II First Teams 2002,Autos & Auto Parts Luxury Goods Telecommunications Equipment Tobacco,Convertibles Economics/Developed Markets Equity Strategy/Developed Markets,Scale,Morgan Stanley Institutional Securities Trading Volume and Cost per Trade,(Indexed),Gross Volumes,Operations Expenses,Cost per Trade,Risk Efficiency,Firm Risk Efficiency and VaR,Ratio,($MM),Note: (1) Ex-ante Risk Efficiency is calculated as Average P&L / Average VaR (2) Ex-post Risk Efficiency is calculated as Average P&L / Standard Deviation (P&L),Source: FIBV,European Opportunity: Equities,Equity Capital Markets Penetration, U.S.,Equity Capital Markets Penetration, Europe,Market Capitalization/GDP (%),Turnover Velocity of Domestic Shares, U.S. (1),(%),Market Capitalization/GDP (%),Turnover Velocity of Domestic Shares, Europe (2),(%),Notes: (1) Based on blended turnover velocity of NYSE and Nasdaq. Turnover velocity defined as Total Trading Volume/Exchange Market Capitalization, calculated using monthly figures. (2) Based on blended turnover of LSE, Deutsche Brse, Euronext Paris, and Milan. Turnover velocity declined as Total Trading Volume/Exchange Market Capitalization, calculated using monthly figures. From 1995-2000, Euronext data is for Euronext Paris only; 2001 data consolidates other Euronext exchanges (Brussels, Amsterdam). Consequently, 2001 weighted-average turnover velocity gives greater weight to Euronext than in previous years.,Source: FIBV, Bureau of Economic Analysis,Source: FIBV, Bureau of Economic Analysis, Eurostat Yearbook 2001,Source: FIBV,European Opportunity: Fixed Income,Percent of Private Non-financial Debt Outstanding in U.S.,(%),Main Financial Liabilities of Euro-Area Non-Financial Corporations,(Bn),Source: Federal Reserve Board,Source: ECB Monthly Bulletin, March 2002,Note: (1) Data reflects expanded Euro-Area (addition of Greece) from 1Q01 onward.,4Q97 3Q01 CAGR:,10.4%,13.8%,9.9%,(1),(1),(1),Relative Returns,Annual ROE Comparison,(Indexed to MWD),MWD,LEH,GS,MER,JPM,C,Source: Company filings and Morgan Stanley Research,