Europe Update23 October 2003

Morgan Stanley

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 given on 23 October, 2003.

Table of ContentsMorgan Stanley

Section 1 European Overview

Section 2 European Markets

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 given on 23 October, 2003.

Morgan Stanley

Section 1

European Overview

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 given on 23 October, 2003.

European Overview

Size MattersMorgan Stanley

Notes1. EU-15 and EU-25 on a purchasing-power parity basis. Assuming an FX Rate of 1.1 USD/EUR2. EU-15 and EU-25: CAGR 1999-2001, U.S.: 2002 estimate; EU-25 weighted against nominal GDP

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Key Statistics

EU 15 US EU-25

Population (000)

377,850 287,596 452,700

Area (km²)

3,234,568 9,159,115 3,973,140

GDP ($Bn) (1)

9,647 11,090 10,528

GDP Growth (2)

2.6% 2.5% 2.7%

Inflation

2.1% 2.8% N/A

Unemployment

7.5% 4.1% 8.8%

Sources EU Commission (GDP as of 2001, all others as of 2002)/U.S. figures as of September 2002

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 given on 23 October, 2003.

European Overview

Our European PresenceMorgan Stanley

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U.K. (1977)

France (1990)

Germany (1987)

Ireland (2003)

Italy (1989)

Luxembourg (1989)

Netherlands (1997)

Portugal (2000)

Russia (1994)

Spain (‘93/’99)

Sweden (1999)

Switzerland (1986)

Israel (2001)

South Africa (1994)

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 given on 23 October, 2003.

European Overview

Our European BusinessFull Line of Financial Services

Morgan Stanley

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Morgan Stanley

Private Wealth Mgmt

Institutional Invest Mgmt

Private Equity

Banking Team

Mergers, Acquisitions & Restructuring

Real Estate Group

Global Capital MarketsEquity Capital Debt CapitalMarkets Markets

Securitised Product Group

Institutional Securities Joint Ventures Investment Banking Division

Equity Fixed Income

Investment Banking

Institutional Securities

Individual Investor Group

Investment Management

Consumer Banking Group

Equity Research

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 given on 23 October, 2003.

European Overview

European Market ConditionsMorgan Stanley

Note1. As of 22 October 2003

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Market Conditions

% Change in US$ Volume

Source Thomson Financial Securities Data

Equity Underwriting

2001 vs. 2000 2002 vs. 2001 2003 vs. 2002 YTD (1)

Debt Underwriting

2001 vs. 2000 2002 vs. 2001 2003 vs. 2002 YTD (1)

Announced M&A Volume

2001 vs. 2000 2002 vs. 2001 2003 vs. 2002 YTD (1)

Completed M&A Volume

2001 vs. 2000 2002 vs. 2001 2003 vs. 2002 YTD (1)

52% 33% 46% 20%8%

25% 12% 56% 15%52% 14%

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 given on 23 October, 2003.

European Overview

European Revenues1997 and 2002

Morgan Stanley

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Global and European Revenues

Europe 18%

Europe 12%

1997 2002

Global Revenues $14.8Bn

European Revenues $1.7Bn

Global Revenues $19.1Bn

European Revenues $3.3Bn

Source Morgan Stanley 1997 Annual Report and 2002 10K Filing

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 given on 23 October, 2003.

Morgan Stanley

Section 2

European Markets

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 given on 23 October, 2003.

European Markets

European M&A Volumes Are Improving2002-2003

Morgan Stanley

6

46

42

28

41

35

50

54

68

3033

67

61

44

26

30

4446

52

48

75

19

31

0

10

20

30

40

50

60

70

80

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

European Monthly M&A Volumes (Announced)$Bn

Source Thomson Financial Securities Data

2002 2003

(1)

# Deals 60 38 95 64 86 64 81 58 68 76 78 93 62 54 67 70 67 74 73 57 61 47

Note1. October 2003 includes month through October 20th 2003

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 given on 23 October, 2003.

Morgan Stanley European Markets

European Equity New Issue Market By Offering TypeEquity and Equity-Linked Offerings Since 1996 (1)

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Source EquityWare

23%

35% 37%

20%

9%5%

35%

29% 28%

10%

9%

1%

7%

7% 9%

7%

6%

8%

19%

16% 13%

32%

22% 39%

3%4% 8%

21%

36%

35%

13%9% 6%

11%19%

12%

US$163Bn US$216Bn US$258Bn US$165Bn US$111Bn US$80Bn

0%

20%

40%

60%

80%

100%

1998 1999 2000 2001 2002 2003 YTD

0

60

120

180

240

300

IPO Marketed Follow -On Block Trade/ Bought Deal Equity-Linked

ABO Rights TOTAL

European New Issue Market By Offering Type% of Total Volume Total Yearly New Issue Volume ($Bn)

Notes1. Includes rights issues and domestic tranches2. YTD through September 12, 2003

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 given on 23 October, 2003.

European Markets

Growth of ExchangesMorgan Stanley

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1,2121,4232,120

1,5511,4921,068812594

1,9882,120

1,842

1,3401,108

749506

360

4,001

4,520

4,559

3,399

2,888

1,989

1,413

1,153

635

634

1,020

539

487

203

103

87

7,836

8,697

9,541

6,829

5,975

4,009

2,834

2,194

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1995 1996 1997 1998 1999 2000 2001 2002

Deutsche Börse Euronext Paris London Italy

Total Value of Share TradingUS$Bn

Source World Federation of Exchanges

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 given on 23 October, 2003.

European Markets

European Debt MarketMorgan Stanley

9

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Jan-96 Feb-97 Mar-98 Apr-99 May-00 Jun-01 Jul-02 Sep-03

All-International Corporate Bond Issuance—12 Months Moving Average € MM

Source BondWareNotes1. EMU market the beginning of a more active primary corporate bond market in Europe2. The DT multi-tranche bond offering in the summer of 2000 was the first of many jumbo deals pushing new issuance volumes to record highs3. Since 2002 the market has been characterised by de-leveraging through debt reduction and general balance-sheet repair

DT

EMU

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 given on 23 October, 2003.

European Markets

European Asset ManagementMorgan Stanley

U.S.49%

International51%

Breakdown of Global AUM by Client Type, 2001%

Source UBS Warburg, Oliver, Wyman & Company Sept 02 research report

Source UBS Warburg, Oliver, Wyman & Company Sept 02 research reportSource UBS Warburg, Cerulli, Oliver, Wyman & Company Sept 02 research report, Japan Investment Trust Association

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14.5

6.02.8 1.2 0.5

10.5

9.0

3.22.5 1.5

25.0

15.0

6.03.7

2.0

0

5

10

15

20

25

30

U.S. Europe Japan Asia ex-Japan

Rest ofWorld

Institutional Retail

Breakdown of Global AUM, 2001$ Trillion

0

1

2

3

4

5

Institutional Private banking

Retail: Life & Pensions Retail: Mutual Funds

Asset Ownership by Source, 2001$ Trillion

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 given on 23 October, 2003.

European Markets

European Asset ManagementMorgan Stanley

Notes1. Mutual fund figures are used as the best available approximation of industry growth rates 2. Figures for Europe are from Sector Analysis 2002 and refer to growth in the demand for third party funds. All other figures are taken from Cerulli 2002. Japan figures refer to the growth in

onshore and cross-border fund assets, U.S. figures refer to the growth in U.S. mutual fund assets, and Asia ex-Japan figures refer to the growth in Asian mutual fund assets

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Source Cerulli 2002

1010

14

21

0

5

10

15

20

25

Europe Asia ex-Japan Japan U.S.

Projected Global Fund Growth (2001-2006E) (1)(2)

%

6.4

1.2

2.6

374

274

126

0

1

2

3

4

5

6

7

U.S. (per capita $23K) Japan (per capita $9K) Europe (per capita $7K)

050

100150

200250

300350

400

PopulationAssets

Total Pension Assets vs. Total Populations Worldwide, 2001 $Bn $MM

Source Charterhouse Securities 2002

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 given on 23 October, 2003.

European Markets

European Credit Cards BusinessRemaining Focused in a Competitive Market

Morgan Stanley

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