Morgan Stanley

One theme, which we never tire of repeating, is the great breadth and depth of our firm, which gives us a diverse stream of revenues and the capabilities to offer a wide range of opportunities to our customers.

We have three core businesses -- securities, asset management and credit services -- each requiring different expertise, each meeting particular customer needs and each offering significant opportunities for growth. We achieved record results and market share gains this past year in both our securities and credit services businesses; and in the third, asset management, we improved our results substantially from a year earlier and took steps to capitalize on some strategic long-term growth opportunities.

Within each of our core businesses, we have established strong brands and broad market presence as well as considerable diversity in products and services. Our capabilities for institutional customers include products and services in mergers and acquisitions, equities, fixed income securities, commodities and foreign exchange -- in markets throughout the world. This past year we achieved record revenues and net income in our institutional business, with substantial growth in nearly every category. It also was a record year for our Private Client Group, which serves more than 4 million individual investor accounts. The breadth of this business is reflected in 475 branch offices and more than 12,000 financial advisors. The synergy between the origination capabilities of our institutional securities business and distribution capabilities of our Private Client Group is illustrated by the large increases in new equity issue sales to individual investors over the past three years.

In credit services, our Discover Card is a franchise of unique breadth that serves more than 48 million cardmembers and over 3.5 million merchant outlets. One of Discover's key growth initiatives this past year was a concerted marketing campaign to expand its merchant network by emphasizing its cost and services advantage. This resulted in the enrollment of more than 615,000 new merchant locations, the highest yearly increase in our history. Discover also added to its cardholder base 5.5 million new accounts and grew transaction volume by 22 percent and managed consumer loans by 17 percent, to $38 billion.

In asset management, our strategy is to offer a full range of funds, international expertise and asset allocation skills -- the "best of our best" -- to both our institutional clients and our retail clients. The scope of this business now includes more than 400 funds and three well-established distribution channels: relationships with our individual clients through our financial advisors; relationships with corporations, governments and other institutions through Morgan Stanley Investment Management and Miller Anderson & Sherrerd; and relationships with millions of investors who purchase our Van Kampen funds through brokers, banks, financial planners or other financial intermediaries.