UBS WarburgGlobal Financial Services Conference

Stephen Crawford

Chief Financial Officer

April 24, 2002

2

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Sales and Trading

3,956 4,403

6,622

8,8518,258

2,035

1997 1998 1999 2000 2001 1Q2002

Sales and Trading Net Revenues

($MM, % Total)

% of Firm Revenues 27% 27% 31% 34% 37% 39%

1997-2001 CAGR: 20%

3

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Diversification

47%

53%

63%

37%

57%

43%

68%

32%

56%

44%

46%

54%

1997 1998 1999 2000 2001 1Q02

Sales and Trading Net Revenues

($MM, % Total)

Equity Fixed Income

4

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Balance Sheet(1)

$MMs

Note: (1) As February 28, 2002

Total Assets

Cash and cash equivalents

Financing transactions, including:Reverse repos and securities borrowed

Financial instruments, including:Cash products ($118,770)Derivative products ($31,814)

Receivables, net of allowances:

Other assets, primarily includes:Aircraft, cash collateral, goodwill, office facilities etc.

Asset Class

$491,651

74,298

194,222

158,846

47,885

16,400

Balance$MMs

15%

40%

32%

10%

3%

% ofTotal

5

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 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

6

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Financial Instruments – Derivatives(1)

0

2,000

4,000

6,000

<1 Yrs 1-3 Yrs 3-5 Yrs 5+ Yrs0

2,000

4,000

6,000

8,000

Interest FX Equity Commodities

Maturity Profile by Counterparty Rating

($MMs)

Counterparty Rating by Product

($MMs)

AAA AA A BBB NIGNote: (1) As February 28, 2002

7

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Product Lifecycle

Time

Margins Volume

CreditDerivatives 2002

Interest RateSwaps 2002

8

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Revenue Drivers

Trading Volumes

Volatility

Primary Activity

Market Direction

9

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Business Model

Increase FlowLowers Risk Strengthens Client

Relationships

10

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

6.5 11.1 14.9 18.3 21.7

78.3

34

5766 72 78

22

13 23 30 35 38 41 44 47 49 51 53 55 57 59 6040

Consolidation and Fragmentation

2001 Mutual Funds 2001 Passive Funds

Top 15 Complexes (Cumulative Share %) (%)

2001 Separately Managed Accounts

(Cumulative Share %)

Fidelity

Vangu

ard

Cap R

esea

rch

Putna

m F

unds

Frank

lin T

emple

ton

Mor

gan

Stanle

y

Janu

s

TIAA-C

REFM

FS

Oppen

heim

erAIM

Amer

ican

Expre

ssT. R

owe

Price

Amer

ican

Centu

ry

PIMCO

All Oth

ers

2001 Hedge Funds

(%)

3856

75

25

BHT SSGA Vanguard Deutsche Mellon Other

Brandes Rittenhouse Alliance 1838Advisors

Lazard OtherTop 20 Next 20 Next 60 Next 535Source for above charts: Morgan Stanley/Freeman Securities Research

11

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

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

12

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

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 MakingTotal Number of Stocks

650

1,600

End-2000 1Q2002

13

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Services and Advice

Analytics

Financing

Settlement

Securities lending

Dedicated trading

Tax and regulatory advice

Technology

14

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

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

15

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Scale

Morgan Stanley Institutional Securities Trading Volume and Cost per Trade

(Indexed)

0

100

200

300

400

500

600

1997 1998 1999 2000 2001 2002YTD

GrossVolumes

OperationsExpenses

Cost per Trade

16

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1997 1998 1999 2000 2001 20020.0

10.0

20.0

30.0

40.0

50.0

60.0

Risk EfficiencyFirm Risk Efficiency and VaR

Ratio ($MM)

Ex-ante Risk Efficiency(1) Ex-post Risk Efficiency(2) Firm Avg. VaR

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)

17

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

131 139 141 151198

278

226

95 96 97 98 99 00 01

7588

101 108 113131

119

95 96 97 98 99 00 01Source: FIBV

46 54 6379

107 10890

95 96 97 98 99 00 01

European Opportunity: Equities

Equity Capital Markets Penetration, U.S. Equity Capital Markets Penetration, EuropeMarket Capitalization/GDP (%)

Turnover Velocity of Domestic Shares, U.S. (1)

(%)

94 108129

144181

154

121

95 96 97 98 99 00 01

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 Börse, 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

18

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

2,404

303

2,450

320

2,504

322

2,528

333

2,601

334

2,594

335

2,686

341

2,701

354

2,796

364

2,895

369

2,998

381

3,101

402

3,199

419

3,319

454

3,388

479

3,428

492

4Q97 1Q98 2Q98 3Q98 4Q98 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01

European Opportunity: Fixed IncomePercent of Private Non-financial Debt Outstanding in U.S.

(%)

25

30

35

40

45

50

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Bank Loans Bonds

Main Financial Liabilities of Euro-Area Non-Financial Corporations

(€Bn)

Source: Federal Reserve Board

Bank Loans BondsSource: ECB Monthly Bulletin, March 2002Note: (1) Data reflects expanded Euro-Area (addition of Greece) from 1Q01 onward.

2,707 2,769 2,826 2,861 2,934 2,929 3,028 3,055 3,159 3,263 3,379 3,502 3,618 3,773 3,867 3,920

4Q97 – 3Q01 CAGR:

10.4%

13.8%

9.9%

(1) (1) (1)

19

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented on April 24, 2002.

Relative Returns

Annual ROE Comparison

(Indexed to MWD)

20%

40%

60%

80%

100%

120%

140%

160%

1996 1997 1998 1999 2000 2001 1Q2002

MWD

LEH

GSMER

JPM

C

Source: Company filings and Morgan Stanley Research