The document contains a 20 slide presentation by Morgan Stanley at a financial services conference on May 13, 2002. The presentation discusses Morgan Stanley's sales and trading business, balance sheet, financial instruments, research capabilities, and initial public offering underwriting discipline. Key points include that sales and trading revenues accounted for 37% of Morgan Stanley's revenues in 2001, the balance sheet was concentrated in cash, financing transactions, and financial instruments, and the firm passed on underwriting many internet company IPOs that later suffered large stock price declines.

1. Goldman Sachs & Co.
Financial Services Conference
Philip J. Purcell Stephen S. Crawford
Chairman & CEO Chief Financial Officer
May 13, 2002

2. 1
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 May 13, 2002.
Sales and Trading
3,956
4,403
6,622
8,851
8,258
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. 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 May 13, 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. 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 May 13, 2002.
Balance Sheet(1)
$MMs
Note: (1) As of 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%
% of
Total

5. 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 May 13, 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. 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 May 13, 2002.
Financial Instruments – Derivatives(1)
0
2,000
4,000
6,000
<1 Yrs 1-3 Yrs 3-5 Yrs 5+ Yrs
0
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 NIG
Note: (1) As of February 28, 2002

7. 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 May 13, 2002.
Revenue Drivers
 Trading Volumes
 Volatility
 Primary Activity
 Market Direction

8. 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 May 13, 2002.
Business Model
Increase Flow
Lowers Risk
Strengthens Client
Relationships

9. 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 May 13, 2002.
6.5 11.1 14.9 18.3 21.7
78.3
34
57
66
72 78
22
13 23 30 35 38 41 44 47 49 51 53 55 57 59 60
40
Consolidation and Fragmentation
2001 Mutual Funds 2001 Passive Funds
Top 15 Complexes (Cumulative Share %) (%)
2001 Separately Managed Accounts
(Cumulative Share %)
2001 Hedge Funds
(%)
38
56
75
25
BHT SSGA Vanguard Deutsche Mellon Other
Brandes Rittenhouse Alliance 1838
Advisors
Lazard Other
Top 20 Next 20 Next 60 Next 535
Source for above charts: Morgan Stanley/Freeman Securities Research

10. 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 May 13, 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

11. 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 May 13, 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 Making
Total Number of Stocks
650
1,600
End-2000 1Q2002

12. 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 May 13, 2002.
Services and Advice
 Analytics
 Financing
 Settlement
 Securities lending
 Dedicated trading
 Tax and regulatory advice
 Technology

13. 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 May 13, 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 2002
YTD
Gross
Volumes
Operations
Expenses
Cost per Trade

14. 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 May 13, 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 19% 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. 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 May 13, 2002.
Relative Returns
Annual ROE Comparison
(Indexed to MWD)
20%
35%
50%
65%
80%
95%
110%
125%
140%
1996 1997 1998 1999 2000 2001 1Q2002
MWD
LEH
GS
MER
JPM
C
Source: Company filings and Morgan Stanley Research

16. 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 May 13, 2002.
Provisions Address:
New NASD and NYSE Rules
 Promises of Favorable Research
 Limitations on Relationships and Communications
 Analyst Compensation
 Firm Compensation
 Restrictions on Personal Trading by Analysts
 Disclosures of Financial Interests in Covered Companies
 Disclosures in Research Reports Regarding the Firm's
Ratings
 Disclosures During Public Appearances by Analysts

17. 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 May 13, 2002.
Value Added By Morgan Stanley
Percent of Analysts Beating Passive Portfolio
69
65
42
54 53
1997 1998 1999 2000 2001
Passive Portfolio
Note: Active: Portfolio weighted by Morgan Stanley research recommendations (prior to 3/18/02)
Passive: Equal-weighted performance
(%)

18. 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 May 13, 2002.
Average Return(1) For All IPOs
Source: Thomson Financial
Note: (1) Based on difference between offer price and price on 5/7/02
13.64
(3.18)
(18.55) (19.70)
(21.98)
(26.57)
Morgan
Stanley
Citigroup JP Morgan CSFB Merrill Goldman
Sachs
Jan 1, 1999 to May 7, 2002
(%)

19. 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 May 13, 2002.
12.3 %
16.9 %
Disciplined Underwriting
MWD IPO Market Share ($ volume)(1):
1995-2001
Internet
Industry
Total
IPO
Market
Share
Source: Thomson Financial
Note: (1) Deals of $10MM or more

20. 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 May 13, 2002.
Disciplined Underwriting
Passed On The IPO...
1-800-Flowers
Buy.com
Earthlink
Excite
Exodus
GeoCites
Infospace
Internet Capital Group
IXL
Lycos
Network Solutions
NetZero
Pets.com
Startmedia
Theglobe.com
UUNet
USWeb
VerticalNet
Webvan
Yahoo!

21. 20
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 May 13, 2002.
An Analyst Stands His Ground
Qwest Stock Price ($)
Qwest Communications
0
10
20
30
40
50
1/2/01 3/2/01 5/2/01 7/2/01 9/2/01 11/2/01 1/2/02 3/2/02 5/2/02
June 20, 2001
Morgan Stanley
Downgrade Report
Qwest: Report is
“Hogwash”
June 25, 2001
Other Analysts
Defend Qwest;
Dismiss “Accounting
Esoterics”
Aug. 14, 2001
Qwest Reports 12%
Increase in Revenues
for Quarter Nov. 14, 2001
Qwest Reports
Revenue Flat,
But Key Areas
Growing
Feb. 13, 2002
Company Announces
It will Draw Down
$4Bn Bank Loan
Apr. 4, 2002
SEC Announces
It Has Begun Formal
Investigation of Qwest
Jan. 25, 2001
Morgan Stanley
Downgrades

22. 21
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 May 13, 2002.
Not Linked to Investment Banking Revenue

23. 22
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 May 13, 2002.
Note: (1) Competitors include Bernstein, CSFB, Deutsche Banc, Goldman Sachs, Merrill Lynch, Prudential Securities, and UBS Warburg
A More Robust Ratings System
 Revised stock rating system
March 18th, 2002 based on
intensive client survey
 No other firm has made
similar wholesale changes in
their ratings
 Number of stocks rated
Underweight is more than 2x
major competitors combined(1)
Overweight
34%
Underweight
19%
Equal-Weight
47%