Lehman Brothers European Investment Banking Conference Amelia C. Fawcett Chief Administrative Officer (Europe) February 8, 2002

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 February 8, Notice This presentation by Morgan Stanley 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 February 8, 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 February 8, Agenda Morgan Stanley in Europe Secular Trends and Firm Strategy Culture as a Competitive Differentiator

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 February 8, Our Business in Europe Full Line of Financial Services Morgan Stanley International PWM Investment Banking Fixed Income Investment Management Private Equity Group Institutional Securities Individual Investor Group Investment Management Consumer Banking Group Consumer Banking Group International Equity

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 February 8, European Presence UK (1977) France (1990) Germany (1987) Ireland (1998) Italy (1989) Luxembourg (1989) Netherlands (1997) Portugal (2000) Russia (1994) Spain (1993/1999) Sweden (1999) Switzerland (1986) Israel (2001) South Africa (1994)

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 February 8, Revenues and PBT for Morgan Stanley Europe Revenues and PBT (US$ MM) SourceMorgan Stanley 10-K Filings and Morgan Stanley PBT CAGR : 28%

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 February 8, Headcount vs. PBT Indexed Growth in European Headcount and PBT SourceMorgan Stanley

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 February 8, Efficiency Gains in Securities Processing Morgan Stanley Institutional Securities Trading Volume and Cost per Trade Indexed, Global SourceMorgan Stanley

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 February 8, The Competitive Landscape - Europe Announced European M&A 2001 Market Share European Equity Issues (1) % of US$ Volume European SecuritizationInternational Bonds Note 1. Includes Equity and Equity Linked issues Source Thomson Financial (M&A), Thomson Financial/IFR (Equity), Dealogic/Bondware (Bonds), Euroweek and Morgan Stanley (Securitization)

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 February 8, The Competitive Landscape - Europe Market Share European SecuritizationInternational Bonds Source Thomson Financial (M&A), Thomson Financial/IFR (Equity), Dealogic/Bondware (Bonds), Euroweek and Morgan Stanley (Securitization) % of US$ Volume Announced European M&AEuropean Equity Issues (1) Note 1. Includes Equity and Equity Linked issues

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 February 8, Global Secular Trends and Firm Strategy Institutional Investors Low cost positions in commodity products Highest quality in complex products Innovation of new products/services Leading intermediary across geography and products Morgan Stanley Strategy Higher penetration of financial markets in commerce Continued growth in global trading in financial markets Pressure on margins Secular Trends

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 February 8, Global Secular Trends and Firm Strategy Corporate Clients Unique global network of information/contacts for our clients Most experienced professionals to help solve complex problems and create opportunities for clients Culture and incentive system which dedicates the entire firm to client objectives Morgan Stanley Strategy Secular Trends Globalization of industry sectors Restructuring of selected economic areas Disintermediation of banks

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 February 8, Growth in European Securities Trading Average Combined Daily Volume of Major European Stock Exchanges US$ Bn Source Morgan Stanley and Stock Exchanges ’95-’0122% CAGR

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 February 8, Growth in European Equity Markets New Equity Issuance Volumes US$ Bn Source Thomson Financial Securities Data ’92-’0127% CAGR

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 February 8, Market Capitalization Market Capitalization as a Percentage of GDP 2001 Source Thomson Financial Securities Data, OECD/FactSet

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 February 8, Growth in European Debt Markets Debt Issuance by European Corporates, Issues >€750 MM 12 Months Moving Average of Volume, US$ Bn per Month Source Thomson Financial Securities Data ’97-’0180% CAGR (1) Note 1. CAGR of full year volume of debt issuance

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 February 8, Composition of Debt Markets Source Thomson Financial Securities Data EU 1999 EU 2001US 2001 Outstanding Bonds by Rating

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 February 8, Disintermediation in the US Percent of Private Non-financial Debt Outstanding % Source Federal Reserve Board

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 February 8, Disintermediation Underway in Europe Corporate Debt in Euroland % Source ECB

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 February 8, Growth in European Mergers & Acquisitions Announced Transactions US$ Bn SourceThomson Financial Securities Data and Morgan Stanley ’92-’0115% CAGR

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 February 8, Delivering the Firm for Corporate Clients France Telecom  Orange IPO and Exchangeable  Bond  Convertible Vivendi Universal  Acquisition of USA Networks BT  Wireless Demerger (mmO2)  Bond Arbed and Aceralia  Merger with Usinor General Healthcare Securitisation

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 February 8, Innovation: Prime Brokerage Business Morgan Stanley Prime Brokerage Net Revenues Indexed, Global Net Revenues CAGR: 23% SourceMorgan Stanley

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 February 8, Innovation: Credit Derivatives Business Morgan Stanley Credit Derivatives Revenues Indexed, Global SourceMorgan Stanley

23 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 February 8, European Market Conditions 46%52% 25% 56% Source Thomson Financial Securities Data Market Conditions 2001 vs Announced M&A Volume Completed M&A Volume Debt Underwriting Equity Underwriting % Change in US$ Volume

24 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 February 8, European Secular Trends Secular Fundamentals Remain Equification “Debtification” Restructuring Pension Reform Fiscal Reform Europe is one of our great global opportunities

25 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 February 8, Requirements for Success “By general consensus in the investment banking community, there is something special about Morgan Stanley's London office” “…what keeps them here is a team culture, a sense that this is a meritocracy…” Fortune, Best Companies to Work for – 10 Great Companies in Europe (February 4, 2002) Importance of Culture “…[Morgan Stanley’s] recent success has been nothing short of sensational.” “Several employees in our survey praise Morgan Stanley for being a meritocracy.” The Sunday Times, 50 Best Companies to Work for 2001 (February 4, 2001)

Lehman Brothers European Investment Banking Conference Amelia C. Fawcett Chief Administrative Officer (Europe) February 8, 2002