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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 informationgenerally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposesand is neither an offer to sell nor the solicitation of an offer to buy any security or instrument.

European OverviewOctober 8, 2001

Morgan Stanley International


Morgan Stanley EuropeanOverview

NOTICE

This presentation by Morgan Stanley is based oninformation generally available to the public anddoes not contain any material, non-publicinformation. The presentation has been preparedsolely for informational purposes and is neither anoffer to sell nor the solicitation of an offer to buyany security or instrument.


Our Business in EuropeFull Line of Financial Services


1

Morgan Stanley

PWMInvestment

Banking EquityFixed

IncomeAsset

ManagementPrivateEquityGroup

SecuritiesInternational

Private ClientsAsset

ManagementConsumer

Banking Group


European PresenceMorgan Stanley EuropeanOverview

2

UK (1977)

Spain (1993/1999)

Switzerland (1986)

Germany (1987)

France (1990)

Ireland (1998)

Italy (1989)

Netherlands (1997)

Russia (1994)

Luxembourg (1989)

Sweden (1999)

South Africa (1994)


Revenues and PBTMorgan Stanley EuropeanOverview

3

328 399

1,1461,364

1,646

5,054

3,848

2,867

1,757

1,429

0

1,000

2,000

3,000

4,000

5,000

1996 1997 1998 1999 2000

P.B.T. Revenues

US$ MM

Source Morgan Stanley Annual Reports


The Competitive Landscape - EuropeJanuary 1,1998 to September 30, 2001


Note(1) Includes global, Euro and foreign-targeted domestic bonds

4

23.224.4

35.439.3

0

10

20

30

40

50

GS MS ML JPMC

Completed European M&AMarket Share %

Source Thomson Financial Securities Data

10.410.812.6

14.3

0

4

8

12

16

GS MS UBSW ML

European Equity OfferingsMarket Share %

7.88.08.49.0

0

2

4

6

8

10

ML MS SSSB DB

International Bond(1)

Market Share %

9.2

12.2

20.120.4

0

4

8

12

16

20

24

MS CSFB GS ML

European High YieldMarket Share %

Source Capital Data Bondware

Source Capital Data BondwareSource Capital Data Bondware



Leadership and Creativity: Awards 2000 - 2001

• Bond House of the Year - IFR

• Best Investment Bank for Securitisation - Structured Finance International

• Asset Backed Trading House of the Year - Structured Finance International

• Energy and Commodity Derivatives House of the Year - Risk magazine

• Best Overall Capital Raising - Euroweek

• Best European Investment Grade Credit Research Team - Euromoney

• Best High Yield Credit Research Team - Credit Magazine

• Best Securitisation Credit Research Team - Credit Magazine

• Best European Investment Grade Credit Research Team - Credit Magazine

• Investment Bank of 2000 - Corporate Finance

• Best Bank for M&A - Corporate Finance

• Best Bank for High Yield Bonds - Corporate Finance

5


Near-term PressureIndustry Data for 2000 YTD -v- 2001 YTD (1)


6

European Securities Industry UK Asset Management Industry

M&A Volume

Equity UW

Debt UW

54.3%

57.9%

21.1%

AUM

7.0%

Notes1. As of October 5, 2000 and 2001 for Securities data; as at June 30, 2000 and 2001 for Asset Management data


European MarketsNew Markets - 2000


7

Bond Trading Equity Trading

Derivatives Commodities/Foreign Exchange

BBT - Europe

National MTS(France, Portugal, Belgium)


European M&AAnnounced Deals


8

380

537

818

1,521

1,393

556

0

200

400

600

800

1,000

1,200

1,400

1,600

1996 1997 1998 1999 2000 Q1-3 2001

Friendly Neutral Hostile

US$ Bn



European Financial ServicesEuropean Industry Consolidation 2000 - 2001(1)


9

Note(1) As of October 5, 2001

2,421 deals totalling $392 billion

/

/

//

/

/

/

/

/

/

/

/DONALDSON,LUFKIN & JENNETTE

/ ///

/



Equity Markets GrowthMorgan Stanley EuropeanOverview

10

Source Thomson Financial Securities DataNote(1) New issues includes all issues priced/issued in the following categories: primaries, secondaries, combination issues and convertible issues. It does not include bonds with warrants, funds,

rights, non-Rule 144A private placements, issues which are callable/putable in one year, which are not underwritten, where the manager was not available, with a minimum life under 1.5 yearsand which are self-funded ineligible issues.

66

145

127

10298

62

46

0

20

40

60

80

100

120

140

1995 1996 1997 1998 1999 2000 Q1-3 2001UK Germany France Italy Spain

New Equity Issuance VolumesUS$ Bn


Securities Trading GrowthMorgan Stanley EuropeanOverview

11

8

10

1414

22

30

25

0

5

10

15

20

25

30

1995 1996 1997 1998 1999 2000 H1 2001UK Germany France Italy

Average Combined Daily Turnover for LSE, Deutsche Börse, Euronext and Milan Stock ExchangeUS$ Bn

Source London Stock Exchange, Deutsche Börse, Paris Bourse, Milan Stock Exchange

CAGR

3-year 21.3%

5-year 20.1%


Market CapitalisationAs a % of GDP


12

141

7667

86

0

25

50

75

100

125

150

US GDP EMU Germany France

Year-end 2000, %

Source MSCI, IMF


Debt Markets GrowthMorgan Stanley EuropeanOverview

13

International Corporate Transactions >€750 MM12 Months Moving Average by Value

0

5,000

10,000

15,000

20,000

1996 1997 1998 1999 2000 2001

EMU

Deutsche Telekom Launch




14

AA/AAA91%

BBB/A9%

BBB/A23%

AA/AAA77%

BBB/A78%

AA/AAA22%

Eurozone 1999 Eurozone 2001 US 2001

Outstanding Bonds by Rating




15

9,7329,349

3,823

6,111

2,8522,000

971

4,111

0

2,000

4,000

6,000

8,000

10,000

US GDP EU GDP US Bonds EU Bonds0

2,000

4,000

6,000

8,000

10,000

Government Bonds Non-Government Bonds

European Environment Debt Markets GrowthGDP € Bonds € MM


Asset ManagementOverview by Country


16

Total Assets, 2000$Bn

29762877

1020977

800

320193 183

0

250

500

750

1000

1250

1500

1750

2000

2250

2500

2750

3000

UK Germany France Italy Netherlands Scandinavia Switzerland Spain

Source: Morgan Stanley Equity Research Estimates utilising research from Watson Wyatt, JP Morgan, Greenwich Associates, ING Barings and W Mercer.

NoteThe totals do not include direct retail investment in stocks and bonds..


13

987

11

77

6

7

55

4

5

43

3

2

1

1

1

1

11

1

1

1

1

1

40

28

26

22

0

5

10

15

20

25

30

35

40

1998 1999 2000 2005ENorth America Europe Asia Latin America Middle East

Eastern Bloc Africa

Individual Wealth of High Net Worth IndividualsUS$ Trillion

Asset ManagementHigh Net Worth Individual Wealth By Region


17

Source Cap Gemini Ernst & Young Lorenz curve analysis; base data from multiple sources, including MSCI


1998E to 2002E%

Asset ManagementProjected Retirement Funding Gaps


18

Source Cerulli Associates and Sanford C. Bernstein & Co.

-75 -77

-114

-127

-115-109

38 42

-30 -32

93 96

0

-2

-16-22

-9 -13

-140

-120

-100

-80

-60

-40

-20

0

20

40

60

80

100

US UK Italy France Germany Spain

1998E retirement shortfall after 1st and 2nd pillars

1998E retirement shortfall after 1st, 2nd and 3rd pillars

2002E retirement shortfall after 1st, 2nd and 3rd pillars

NotesAfter 1st/2nd pillars, gap remaining after accounting for social security and occupational pension schemes.After 1st, 2nd and 3rd pillars, gap remaining after accounting for social security, occupational pension and household savings..


Asset ManagementOutlook for Key Products


19

Annual New Flows into European Equity by Investment Vehicle by Year%

220

87 77 70

454

204

131

8660

481

248

201

135

92

676

317289

153132

890

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

850

900

Mutual Funds Pension Funds Insurance Funds Households Total

2000 2001 2005 2010

Source Morgan Stanley Equity Research estimates


Asset ManagementMarket Overview


20

Retail Distribution%

25

7075

88

31

8690 91

50

12

13

116

10 5

11

1310

7

14

5 1

34

1 1

33

2

32

0%

20%

40%

60%

80%

100%

UK Retail FranceRetail

NetherlandsRetail

SwitzerlandRetail

Banks Brokers Insurance Agents True Direct Other

Source: Morgan Stanley Investment Management research estimates using JP Morgan and Greenwich Associates researchNoteFor Italy, there is no number available for insurance agents, but this is an important channel.



European Household Assets by Products

Source The Financial Accounts by the Bank of Spain, Geldvermögen privater Haushalte, national statistics of Deutsche Bundesbank, Banca d’Italia, Appendice alla Relazione Annuale , Nationalaccounts, Financial statistics, McKinsey EFIC

Notes(1) 1997 data, does not include trust assets of €916 MM(2) Includes “unlisted” shares (e.g., in 1998 ~60% of French and Italian equities were non-traded shares)

21

3726

16

25

3752

46

23

1621

31

10

35

3

2

56

16

29

0

10

20

30

40

50

60

70

80

90

100

UK Germany France US Japan

Cash/deposits Securities(2)/Mutual Life Insurance Pension Funds

Currency and Deposits Securities Insurance and Pensions

(1)

Personal Financial Assets 1999%

21

Financial Assetsper Capita (€) 76,000 39,000 51,000 84,000 96,000

Total Asset Value(€ Trillion) 4.5 3.2 3.0 18.1 12.2



International Private Client Group

Morgan Stanley European Capabilities

Asset Management

• Mutual Funds

• Sub-Advisory

AB Asesores

• Spain

• Portugal

Quilter

• United KingdomPWM

• London, Geneva, Madrid, Milan, Zurich, Amsterdam

• Investment Group

22



International Private Client Group

United Kingdom

December 2000 - Morgan Stanleyacquires Quilter Holding Limited

• Private client and middle-marketdiscretionary asset manager andstockbroker

• Provides discretionary investmentmanagement services to privateindividuals, small pension fundsand the trustees of familysettlements and charities

Spain

1998 - Morgan Stanley acquiredlargest independent brokeragehouse in Spain

• Over 375 Financial Advisers In 45Branches In Spain

•Personal Investment

• Asset Management

• Brokerage and Research

• Venture Capital

• Corporate Finance

23


• Equification

• “Debtification”

• Restructuring

• Pension Reform

• Fiscal Reform

The European OpportunitySecular Fundamentals Remain


24

Europe is one of the Firm’sgreat global opportunities


Clients

• Increased focus on strategic clients

Results

• Increased focus on financial results

Investment

• Continued investment in strategicareas

Focus

• Focus on productivity, efficiencyand costs

Consolidate

• Consolidate growth

Implications for Morgan Stanley EuropeMorgan Stanley EuropeanOverview

25

Obsessiveclient focuswill be key



Requirements for Success

What are the Requirements for Success?

• Intellectual capital

• Scale

• Obsessive client service

• Visionary management

• Global infrastructure

• Risk management

Morgan Stanley is Well-positioned

• Manufacturer and Distributor

• Leading brand

• Global network

• Leadership positions across all markets

• Market capitalization of $55Bn(1)

26

Note1. As at October 4, 2001.

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