Annual Meeting with Shareholders
Philip J. Purcell Chairman & CEO March 19, 2002
Report on the Company
Robert G. Scott President & COO March 19, 2002
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Market Conditions – 2001 vs. 2000
Institutional Investors
Corporate Market
Retail Investors
50% 20%
Credit Cards
32%
Volume:
M&A Announced
Margin Debits
Unemployment rate
45%
NYSE
19% 8%
27% 32%
Equity Underwriting
IPO's
60%
Fund Flows:
43%
Bankruptcy filings
Interest Rates:
20%
NASDAQ
Volatility:
NASDAQ Amex QQQ
Fixed Income Issuance
Total Long-Term Fund Flows* Equity Fund Flows
90%
20%
2-Year Treasury
3.3%
40%
Retail Sales
Crude Oil (WTI)
18%
Market Performance: S&P
13%
Nasdaq
21%
Sources: NYSE, NASDAQ, SIA, Thomson Financial Securities Data, Investment Company Institute, Bloomberg *Fund flows include debt and equity funds.
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 March 19, 2002. 3
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Fiscal 2001 Operating Results
Net Revenues Net Income, EPS and Dividends
Net Income ($MM) 6,000
21.9
5,000 4,000 3,000 $2,586 $4,791
EPS ($)
$5,456
26.0 21.6 16.0
$6.00 $5.00
$4.73
$3,276
14.5
$4.10
$3,521 $4.00
$3.19
$2.76
$3.00 $2.00
2,000
$2.08
1,000
$0.28
'97 '98 '99 '00 '01
0 '97
$0.40
'98
$0.48
$0.80
$0.92
$1.00 $0.00
'99
'00
'01
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 March 19, 2002. 4
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Fiscal 2001 Operating Results
Return on Equity (%)
32.6 24.5
30.9
22.0
18.5
1997
1998
1999
2000
2001
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 March 19, 2002. 5
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Growth in Morgan Stanley Book Value
Book Value per Share
$18.64 $16.91 $14.85 $11.06 $11.94
1997
1998
1999
2000
2001
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 March 19, 2002. 6
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Morgan Stanley Market Position
1999 Institutional Clients(1) Listed Equities OTC Europe Equities Fixed Income Trading (Rank) High Yield Trading (Rank) Research Rank # of Positions 4.88% 3.14% 4.03% 5 NA 1 22 2000 5.41% 3.88% 5.76% 5 7 1 20 2001
Up/Flat
6.26% 5.25% 6.50% 5 8 3 18
Off Down
Note: (1) Sources: Listed and OTC: Autex; Europe Equities: Local Exchanges; Fiscal year basis. Research Ranking: Institutional Investor.
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 March 19, 2002. 7
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Morgan Stanley Market Position
1999 Corporate Clients(1) Equity Issuance IPOs 19.0% 15.9% 17.3% 14.4% 18.5% 14.5% 2000 2001
Up/Flat Off Down
Total Fixed Income Issuance
High Yield Issuance M&A Announced Rank
6.6%
9.2% 34.5% 2
6.8%
10.1% 34.1% 2
5.6%
7.7% 28.7% 3
Note: (1) Source: Thomson Financial Securities, Calendar year basis.
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 March 19, 2002. 8
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Morgan Stanley Market Position
1999 2000 2001
Up/Flat Off Down
Retail Clients(1)
FA Market Share Total Client Assets ($Bn) Mutual Fund Flows Equity Fund Flows Credit Cards(2) Receivables Share 7.7% 8.3% 8.6% 21.2% 595 3.2% 3.1% 21.6% 662 3.8% 6.0% 21.4% 595 0.8% 0.7%
Network Volume Share
6.4%
7.2%
6.9%
Notes:
(1) (2)
Sources: FA Market Share: Company Reports and SIA Yearbook (2001 share data is as of 3Q); Long-term and Equity Fund Flows: Strategic Insight (2001 data is year-to-date through November). Sources: Nilson, Faulkner and Gray. 2001 data is as of end of June.
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 March 19, 2002. 9
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MWD Stock Performance
MWD Stock Performance
$63.38 100 90 80 70 60 50 40 30 12/1/00 3/6/01
$55.50
$55.32
6/5/01
9/4/01
11/30/01 12/7/01
3/13/02 3/12/02
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 March 19, 2002. 10
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MWD Relative Stock Performance
Relative Stock Performance (Indexed)
600 500 400 300 200 100 0 6/2/97
MWD
1/20/98
9/8/98
4/28/99 12/14/99 8/2/00
S&P 500
3/22/01 11/13/01
S&P Financials
Source: Bloomberg
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 March 19, 2002. 11
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First Choice
Culture the key differentiator Significant strides in 2001
Incentives Compensation Measures Market share Client wallet share
Impact
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 March 19, 2002. 12
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Market Conditions – 1Q02 vs. 4Q01
Institutional Investors
Corporate Market
Retail Investors
33%
Credit Cards
32%
Volume:
M&A Announced
Margin Debits
Unemployment rate
2%
NYSE
NASDAQ
1%
Equity Underwriting
IPO's
97%
23%
Fund Flows:
Interest Rates:
5%
Volatility:
Nasdaq Amex QQQ
12% 4% 13%
Fixed Income Issuance
Total Long-Term Fund Flows* 85% Equity Fund Flows
9%
2-Year Treasury
3%
1%
23%
Retail Sales
Crude Oil (WTI)
Market Performance: S&P
3%
Nasdaq
15%
Sources: NYSE, NASDAQ, SIA, Thomson Financial Securities Data, Investment Company Institute, Bloomberg *Dec01-Jan02 vs. Oct01-Nov01; includes debt and equity funds.
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 March 19, 2002. 13
Report on the Company
Robert G. Scott President & COO March 19, 2002