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Morgan฀Stanley฀Annual฀Report฀2003

Table of contents

  • Page 1
    Morgan฀Stanley฀Annual฀Report฀2003

  • Page 2
    For฀a฀more฀complete฀discussion฀of฀our฀2003฀results,฀please฀refer฀to฀our฀ Annual฀Report฀on฀Form฀10-K฀and฀visit฀us฀online฀at฀www.morganstanley.com.

  • Page 3
    "Client฀focus฀has฀become฀ the฀foundation฀of฀ everything฀we฀do ...฀ engraved฀in฀our฀culture฀ throughout฀the฀firm." Philip฀J.฀Purcell Chairman฀&฀Chief฀Executive฀Officer,฀ Morgan฀Stanley

  • Page 4
    ... BusinessWeek฀Magazine -฀Top฀100฀Brands฀ Nikkei฀Japan฀Annual฀Fixed฀Income฀ Research฀Poll -฀Top-Ranked฀Credit฀Analysts...Associates -฀Best฀Overall฀Equity฀Sales,฀Research฀and฀ Trading฀Services฀ Wall฀Street฀Journal -฀#1฀"Best฀on฀the฀Street"฀...

  • Page 5
    Morgan฀Stanley฀Annual฀Report฀2003 letter฀to฀shareholders฀ from฀Philip฀J.฀Purcell 1 In฀2003,฀as฀the฀securities฀markets฀ended฀a฀three-year฀slide,฀your฀company฀ delivered฀strong฀business฀results฀and฀established฀positive฀momentum฀for฀ the...

  • Page 6
    ... MWD MER JPM GS 0 1999 2000 2001 2002 2003 C:฀Citigroup LEH:฀Lehman฀Brothers MWD:฀Morgan฀Stanley MER:฀Merrill฀Lynch JPM:฀JPMorgan฀Chase GS:฀Goldman฀Sachs ...฀ 2 S&P฀500฀Index฀and฀MSCI฀World฀Index 1999฀ 2000฀ 2001฀ 2002฀ 2003 1,500 1,389฀ 1,315฀ 1,...

  • Page 7
    ... we฀build฀with฀our฀clients.฀ That฀is฀what฀gets฀us฀the฀ first฀call฀when฀a฀client฀has฀ a฀problem฀that฀needs฀a฀ solution฀and฀the฀last฀call฀ after฀he฀has฀surveyed฀the฀ competition." Stephan฀F.฀Newhouse President,฀ Morgan฀Stanley฀

  • Page 8
    ...the฀Year Family฀Digest฀ -฀Best฀Companies฀for฀African-Americans Hispanic฀Magazine฀ -฀100฀Companies฀Providing฀the฀ Most...Committee฀for฀the฀Arts -฀฀ Business฀in฀the฀Arts฀Award฀for฀Innovation The฀Harlem฀School฀of฀the฀Arts -฀Dorothy฀Maynor...

  • Page 9
    Morgan฀Stanley฀Annual฀Report฀2003 3 2003฀financial฀results Our฀consolidated฀financial฀performance฀for฀the฀year...from฀6.19%฀on฀a฀managed฀basis฀in฀2002฀to฀6.60%฀in฀2003.฀A฀ strong฀focus฀on฀costs฀mitigated฀much฀of฀this฀increase,฀...

  • Page 10
    ...10.4% 9 3 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source:฀McLagan Global฀Announced฀M&A฀Market฀Share฀(%)฀and฀Rank฀(#) (Calendar฀Year) 36 RANK...฀solutions฀and฀ focused฀on฀differentiating฀ Morgan฀Stanley฀in฀terms฀of฀ our฀people฀and...

  • Page 11
    "Our฀work฀with฀Morgan฀ Stanley฀over฀the฀course฀ of฀a฀decade฀rests฀on฀the฀ quality฀of฀our฀personal฀ relationships.฀You฀need฀a฀ strong฀investment฀bank฀ in฀the฀background,฀but฀ you฀also฀need฀...

  • Page 12
    ...2003,฀ Morgan฀Stanley...฀acted฀as฀sole฀financial฀ advisor฀to฀FleetBoston฀in฀its฀merger฀ with฀Bank฀of฀America.฀This฀$47฀billion฀ transaction฀-฀by฀far฀the฀largest฀bank฀ deal฀of฀the฀year฀-฀created฀a฀financial฀ services...

  • Page 13
    Morgan฀Stanley฀Annual฀Report฀2003 5 difficult฀to฀forecast.฀As฀a฀result,฀we฀are฀not฀anticipating฀...฀be฀two฀key฀drivers฀to฀wealth฀ creation฀in฀financial฀services:฀Financial฀institutions฀with฀returns฀higher฀ than฀the฀cost฀of฀...

  • Page 14
    ...฀or฀Very฀Satisfied) 58 58% 54 54% 12,546 11,086 50 46 2002 2003 Non-sales Financial฀Advisors฀฀ (excludes฀trainees) 42 2002 2003 Source:฀฀ Morgan฀Stanley฀Retail฀ National฀Client฀Satisfaction฀Survey Client฀Assets฀ (Dollars฀in฀Billions) 660 $ 654 $ 595 440...

  • Page 15
    "The฀thing฀I฀liked฀most฀ about฀Morgan฀Stanley฀ was฀that฀they฀built฀a฀ personal฀relationship.฀ They฀asked฀me,฀ 'What's฀your฀goal?฀ What's฀your฀life฀financial฀ strategy?'฀There's฀ nothing฀impersonal฀ about฀what฀they฀do.฀ That's฀...

  • Page 16
    the฀ClientOne฀commitment In฀2003,฀Morgan฀Stanley's฀Individual฀ Investor฀Group฀launched฀new฀initiatives฀to฀enhance฀the฀client฀experience฀ at฀Morgan฀Stanley฀and฀sharpen฀our฀ focus฀on฀clients.฀One฀of฀the฀most฀ significant฀was฀ClientOne...

  • Page 17
    Morgan฀Stanley฀Annual฀Report฀2003 7 market฀share Our฀overall฀market฀share฀performance฀in฀our฀securities฀businesses฀was฀the฀ strongest฀ever.฀Our฀full-year฀results฀in฀a฀number...our฀people,฀products฀and฀ services.฀I฀believe฀all฀of฀this฀...

  • Page 18
    ...Fund฀Market฀Share* 3.3% 3.0% 2.7% 3 2 1 0 2001 2002 ฀2003 ฀ *฀Includes฀long-term฀open-end฀mutual฀funds Source:฀Strategic฀Insight Lipper...Year Nov฀2002 Sources:฀Lipper,฀Performance฀Link 3฀Year Nov฀2003 5฀Year 10฀Year ฀ *฀Reflects฀recent฀change฀in...

  • Page 19
    "Morgan฀Stanley฀was฀among฀ our฀very฀first฀strategic฀ partnerships,฀starting฀ almost฀a฀decade฀ago.฀ In฀the฀investment฀world,฀ it's฀a฀miracle฀to฀have฀a฀ relationship฀that฀lasts฀that฀ long.฀It฀takes฀a฀massive฀ amount฀of฀trust฀-฀...

  • Page 20
    ...฀represents฀both฀organizations'฀commitment฀to฀working฀ together฀to฀achieve฀superior฀results฀ over฀the฀long฀term.฀Morgan฀Stanley฀ manages฀more฀than฀$2.5฀billion฀for฀ Verizon's฀pension฀fund,฀401(k)฀and฀ defined฀contribution฀plan฀in...

  • Page 21
    Morgan฀Stanley฀Annual฀Report฀2003 9 •฀Weak฀inflows฀in฀...equity฀funds'฀outstanding฀performance. Discover฀Card฀market฀share฀declined฀because฀we฀...฀improve. client฀relationships Though฀there฀are฀a฀number฀of฀factors฀in฀our฀success฀this฀year...

  • Page 22
    ...฀Financial฀Services 5.92% ฀ *฀Net฀principal฀charge-off฀rate฀and฀30+฀day฀delinquency฀rate฀reported฀on฀a฀managed฀loan฀basis.฀For฀a฀ reconciliation฀of฀credit฀card฀loan฀and฀asset฀quality฀data,฀see฀Morgan฀Stanley's฀2003฀Annual฀Report...

  • Page 23
    ... "For฀nearly฀18฀years,฀ we฀have฀been฀Discover฀ Card฀customers.฀We฀ were฀intrigued฀from฀ the฀beginning฀by฀the....฀ It฀always฀made฀us฀feel฀ appreciated฀by฀the฀ Discover฀Card฀folks.฀ Thanks฀for฀making฀ us฀happy฀to฀be฀your฀ customer...

  • Page 24
    ...฀largest฀reward฀programs฀in฀ the฀world฀and฀Discover฀Card's฀most฀ popular฀feature,฀earning฀Cardmembers฀ more฀than฀$3฀billion฀in฀awards฀since฀ 1986.฀In฀2003,฀Discover฀introduced฀a฀ new฀Discover฀Platinum฀Card฀with฀the฀ Cashback฀Bonus...

  • Page 25
    Morgan฀Stanley฀Annual฀Report฀2003 11 set฀in฀...unique฀product฀solutions฀for฀complex฀client฀problems.฀And฀ superior฀execution฀will฀give฀...฀Individual฀Investor฀Group฀determined฀that฀a฀ new฀service฀model฀segmented฀by฀client฀needs฀was฀in...

  • Page 26
    ...building฀capabilities฀across฀a฀number฀of฀service฀and฀product฀platforms,฀...these฀objectives.฀Tiering฀of฀clients฀into฀Platinum,฀Gold฀ and฀Blue฀gives฀us฀the...฀cost,฀most฀flexible฀provider฀of฀ card฀services. Some฀of฀the฀changes฀we฀have...

  • Page 27
    "When฀we฀began฀BlackRock฀ in฀1988,฀one฀of฀our฀first฀ relationships฀was฀with฀ Morgan฀Stanley,฀and฀ in฀the฀last฀few฀years฀ that฀relationship฀has฀ become฀more฀robust฀ than฀ever.฀From฀fixed฀ income฀to฀equities,฀ investment฀banking฀...

  • Page 28
    ...฀the฀fixed฀income฀division฀and฀elsewhere฀across฀the฀firm.฀ BlackRock฀is฀one฀of฀the฀world's฀largest฀ asset฀managers,฀and฀Morgan฀Stanley฀ generates฀trading฀ideas฀and฀provides฀ liquidity฀to฀help฀BlackRock฀seize฀opportunities฀as฀they...

  • Page 29
    Morgan฀Stanley฀Annual฀Report฀2003 13 Rights...problems.฀And฀in฀nominating฀the฀ respected฀Howard฀Davies,฀former฀Chairman฀of฀the฀Financial฀Services...We฀have฀seen฀ it฀in฀our฀client฀satisfaction฀numbers.฀We฀have฀seen฀it฀in฀the฀deals฀we฀...

  • Page 30
    ...administration฀ ฀ Merchant฀and฀cardmember฀ ฀ Servicing฀ Interest฀and฀dividends฀ Other฀฀ ฀ Total...on฀sale฀of฀business฀ (Dollars฀in฀Millions,฀Except฀Share฀and฀per฀Share฀Data)฀ 2003฀ 2002฀ 2001฀ 2000฀ 1999 14 $฀ 2,440฀ 6,138฀ 86฀ 2,...

  • Page 31
    Morgan฀Stanley฀Annual฀Report฀2003 15 looking฀ahead The฀global฀economy,฀corporate฀profits฀and฀the฀securities฀market฀should฀be฀ stronger฀in฀2004฀than฀in฀2003.฀We฀expect฀a฀more฀favorable฀environment,฀ and฀we฀should฀increase฀our฀...

  • Page 32
    Morgan฀Stanley฀Annual฀Report฀2003 morgan฀stanley฀at฀a฀glance 16 Institutional฀Securities฀Net฀Income (Dollars฀in฀Millions) 2003 $ 2,437 Individual฀Investor฀Group฀Net฀Income (Dollars฀in฀Millions) 2003 $265 2002 $1,664 2002 $ 59 2001 $ 2,335 2001 $ 23 ...

  • Page 33
    Morgan฀Stanley฀Annual฀Report฀2003 17 Investment฀Management฀Net฀Income (Dollars฀in฀Millions) 2003 $ 326 Credit฀Services฀Net฀Income (Dollars฀in฀Millions) 2003 $ 688 2002 $ 418 2002 $ 760 2001 $ 425 2001 $ 689 2000 $ 612 2000 $725 Investment฀Management ...

  • Page 34
    Morgan฀Stanley฀Annual฀Report฀2003 officers฀and฀directors 18 Board฀of฀Directors Management฀Committee Other฀Officers Alexander฀C.฀Frank Chairman฀&฀ Chief฀Executive฀Officer Robert฀G.฀Scott Philip฀J.฀Purcell Chairman฀&฀ Chief฀Executive฀Officer ...

  • Page 35
    Morgan฀Stanley฀Annual฀Report฀2003 international฀locations 19 Worldwide฀Headquarters฀-฀ New฀York 1585฀Broadway New฀York,฀NY฀10036 Phone฀(212)฀761-4000 Fax฀(212)฀761-0086 Amsterdam Rembrandt฀Tower,฀11th฀Floor Amstelplein฀1 1096฀HA฀Amsterdam The฀...

  • Page 36
    ...Annual฀Report฀2003 stockholder฀information 20 Common฀Stock The฀common฀stock฀of฀Morgan฀Stanley฀is฀listed฀on฀the฀New฀ York฀Stock฀Exchange฀and฀on฀the฀Pacific฀Exchange.฀Ticker฀ Symbol:฀MWD Independent฀Auditors Deloitte฀&฀Touche฀LLP Two฀World...

  • Page 37

  • Page 38
    Morgan฀Stanley 1585฀Broadway New฀York,฀NY฀10036-8293 212-761-4000 morganstanley.com