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| **Annual Report      Fiscal Year 2002 Table of Contents**                         | **Page** |  | **Page** |
| Company      Description                                                          |  | Notes      to Consolidated Financial Statements | 23 |
| Financial      Highlights                                                         | 1 |     Note      1 | 23 |
| Letter      to Shareholders                                                       | 2 |     Note      2 | 25 |
| Client      Profiles                                                              | 4 |     Note      3 | 26 |
|     The      Lieberts                                         | 4 |     Note      4 | 26 |
|     The      Nelsons                                          | 5 |     Note      5 | 26 |
|     MoSys                                                     | 7 |     Note      6 | 28 |
|     Larry      Richardson                                     | 9 |     Note      7 | 28 |
| Quarterly      Financial Information                                              | 10 |     Note      8 | 28 |
| Management’s      Financial Discussion                                       | 11 |     Note      9 | 29 |
| Consolidated      Five-Year Summary                                               | 18 |     Note      10 | 29 |
| Consolidated      Financial Statements                                            | 19 |     Note      11 | 30 |
|     Consolidated      Balance Sheets                          | 19 |     Note      12 | 30 |
|     Consolidated      Statements of Earnings                  | 20 |     Note      13 | 31 |
|     Consolidated      Statements of Stockholders’ Equity | 21 | Independent      Auditors’ Report | 32 |
|     Consolidated      Statements of Cash Flows                | 22 | Corporate      Organization | 33 |
|                                                                                   |  |     Board      of Directors A.G. Edwards, Inc. | 33 |
|                                                                                   |  |     Board      of Directors A.G. Edwards & Sons, Inc. | 34 |
|                                                                                   |  |     Boards      of Directors | 35 |
|                                                                                   |  |     Branch      Office Management AL to DC | 36 |
|                                                                                   |  |     Branch      Office Management DC to IA | 37 |
|                                                                                   |  |     Branch      Office Management IA to NE | 38 |
|                                                                                   |  |     Branch      Office Management NV to SC | 39 |
|                                                                                   |  |     Branch      Office Management SC to WY & UK | 40 |
|                                                                                   |  | Shareholder      Information | 41 |
|                                                                                   |  |  | Address      Information |  |

| **Company Description**      A.G. Edwards, Inc. is a holding company whose subsidiaries provide securities      and commodities brokerage, investment banking, trust, asset management,      retirement planning, and insurance products and services. Its principal      subsidiary, A.G. Edwards & Sons, Inc. is a St. Louis-based      financial services company with more than 700 locations in 49 states; the      District of Columbia; and an affiliated office in London, England. A.G.      Edwards & Sons, Inc. provides a full range of financial products and      services to individual and institutional investors. The firm also offers      investment banking services to corporate, governmental and municipal clients      through 12 regional offices and its St. Louis headquarters.      Back to Table of Contents                                                         |
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| *(In thousands,      except per share data and other data)* |
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|                                                             |  |   | 2002 |  |   | 2001 |  |   | 2000 |  |   | 1999 |  |   | 1998 |
| **Operating Results**                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Revenues                                                |   | **$** | **2,338,413** |   | $ | 2,741,206 |   | $ | 2,796,189 |   | $ | 2,235,171 |   | $ | 2,002,697 |
| Net Earnings                                                |   | **$** | **71,501** |   | $ | 287,477 |   | $ | 382,921 |   | $ | 292,117 |   | $ | 269,297 |
| Net Earnings as a Percent      of                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net      Revenues                         |   |   | **3.1%** |   |   | 10.5% |   |   | 13.7% |   |   | 13.1% |   |   | 13.4% |
| Return on Average Equity                                    |   |   | **4.4%** |   |   | 17.2% |   |   | 22.9% |   |   | 18.9% |   |   | 19.8% |
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| **Per Share Data**                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Diluted                                   |   | **$** | **0.88** |   | $ | 3.43 |   | $ | 4.08 |   | $ | 3.00 |   | $ | 2.75 |
|    Basic                                     |   | **$** | **0.89** |   | $ | 3.50 |   | $ | 4.16 |   | $ | 3.07 |   | $ | 2.81 |
| Cash Dividends                                              |   | **$** | **0.64** |   | $ | 0.64 |   | $ | 0.61 |   | $ | 0.57 |   | $ | 0.51 |
| Book Value                                                  |   | **$** | **20.42** |   | $ | 20.29 |   | $ | 19.69 |   | $ | 17.16 |   | $ | 15.21 |
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| **Financial Condition**                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders’ Equity                                   |   | **$** | **1,647,796** |   | $ | 1,626,344 |   | $ | 1,717,122 |   | $ | 1,627,737 |   | $ | 1,463,121 |
| Total Assets                                                |   | **$** | **4,187,170** |   | $ | 4,859,984 |   | $ | 5,347,587 |   | $ | 3,803,132 |   | $ | 4,193,328 |
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| **Other Data**                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Full-Time Employees                                         |   |   | **16,791** |   |   | 17,086 |   |   | 15,451 |   |   | 13,953 |   |   | 12,967 |
| Financial Consultants                                       |   |   | **7,384** |   |   | 7,073 |   |   | 6,823 |   |   | 6,528 |   |   | 6,289 |
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| Locations                                                   |   |   | **705** |   |   | 696 |   |   | 672 |   |   | 639 |   |   | 594 |
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| **To Fellow Shareholders, Clients and Associates:**      Looking back on the challenges of the past year, I realize it is times like      these that test our character as a nation, as an industry and as a company.      Although we were all deeply affected by the terrible devastation of September      11, I am thankful that none of our employees were lost or injured in the      attacks. I am also proud of the way our employees, especially those in New      York, responded to the crisis, working tirelessly to ensure that our company      and our industry would be ready to serve investors when the markets reopened.      By working together, we demonstrated to the world the strength of our resolve      and the resilience of our free market system.      In the months before September 11, we, along with the rest of our industry,      were dealing with a slowdown in our revenues following one of this country’s      longest economic expansions. The tragic events of September 11 only      exacerbated these already challenging market conditions.      Despite the difficulties, we at A.G. Edwards chose to look at fiscal 2002      as a time of opportunity in many ways. Our ongoing commitment to support      our financial consultants and their one-on-one client relationships enabled      us to recruit many high-caliber financial consultants this year. We strengthened      our national sales network by adding more than 300 financial consultants      and nine new offices. While others in our industry reduced their ranks of      financial consultants and assigned clients with smaller assets to service      centers, we remained committed to providing personalized service to all      of our clients regardless of the size of their accounts.      To ensure our financial consultants and support staff are equipped to provide      our clients with the best service possible, we continued to invest in training.      A.G. Edwards University, our online training program introduced in December      2000, greatly enhanced our training efforts this year, with our employees      taking more than 16,000 online courses and more than 700 of our financial      consultants earning one or more professional accreditations.      We achieved record-breaking revenues in investment banking this year thanks      to the combined efforts of Investment Banking, Syndicate, and Institutional      Sales and Trading. Our investment banking revenues for the year grew to      $256 million from $173 million last year, despite the difficult market conditions.      We are proud of this accomplishment and the people who contributed to these      results. We remain committed to building our investment banking business.            This year we continued to grow our fee-based business, adding new services      that give our financial consultants options to help their clients meet their      investment objectives. Each year more of our clients choose to invest through      fee-based accounts and services. We are committed to providing our clients      the same level of excellent service and advice whether they choose to pay      by the transaction or use one of our fee-based pricing options.       During the year we also made some important financial decisions to ensure      that Edwards remains profitable, strong and independent. As firm revenues      slowed and expenses increased, we took a number of steps – some of      them difficult – to reduce long-term corporate expenses and better      position us for a strong future. The initial costs of taking these steps      were included in a fourth-quarter charge of $107 million ($67 million after      taxes). As a result, A.G. Edwards’ net earnings for the fiscal year      declined to $72 million, or $0.88 diluted earnings per share, on revenues      of $2.3 billion. We will maintain our cost-containment efforts while being      careful not to diminish our ability to serve our clients.      Some of the specific steps we took this year to reduce expenses included      a workforce reduction and the consolidation of several real estate holdings      in St. Louis as we near the completion of the new addition to our headquarters      complex. We also repositioned and, in some cases, eliminated technology      projects as we undertook a new technology initiative that will redesign      our operations platform enabling us to dramatically streamline our current      operations and prepare us for tightened trade settlement requirements. Establishing      an efficient, flexible technology infrastructure will help position Edwards      for a strong, competitive future.      I would like to take this opportunity to thank the A.G. Edwards Board of      Directors for their ongoing support and their commitment to keeping the      best interests of Edwards, our clients and our shareholders foremost in      mind when making decisions.      Unfortunately, we lost board member Charmaine Chapman, who died last July      after a long fight with cancer. We remember Charmaine not only for her four      years of service to A.G. Edwards, but also for her more than 30 years of      leadership with the United Way. She is missed.       We elected Peter Madoff to our board. Peter is senior managing director      of Bernard L. Madoff Investment Securities LLC, an international market      maker headquartered in New York. He brings many years of valuable securities      experience to the board.      As I look ahead, I realize that fiscal 2003 will most likely be another      challenging year for our industry and our firm. However, economic conditions      do seem to be improving, and I continue to be impressed by our employees’      consistent dedication to doing whatever it takes to keep A.G. Edwards strong.      To be successful in the future, we must stay focused on reducing costs and      growing our revenues through financial consultant training and recruitment,      opening new branches, and increasing average production per financial consultant.      Each one of us must remain committed to doing our personal best and holding      ourselves individually accountable for our performance.      Most importantly, we must continue to strive to make Edwards the best brokerage      firm in the industry, with the best-trained employees, the best array of      financial products and the best client-centered service. This is how we      pass the ultimate test with our clients — by delivering the best value      for what we charge. That’s how our clients know it’s worth it.      Thank you for your continued loyalty and support.      Sincerely,       Robert L. Bagby      Chairman and CEO      April 5, 2002 Back      to Table of Contents                                    End      of Page 3                                          ***As the stock market in the 1990s soared and the availability of financial      information proliferated, some investors questioned the need for a relationship      with a financial consultant.***      Many opted for the market’s short-term action, hoping for quick trading      gains, rather than taking a long-term approach to their future. But market      volatility once again demonstrated the complexities of investing, underscoring      the importance of planning and reminding investors of the value of a relationship      with a financial consultant who offers professional financial advice and      service. At A.G. Edwards we never lost sight of that. ***We      remain committed to building and nurturing personal relationships with each      of our clients regardless of account size or market conditions. We believe      it’s worth it – now more than ever.***      By looking beyond daily market fluctuations, a financial consultant offers      experience, perspective and the ability to assess each situation objectively,      with each client’s individual goals in mind. After all, planning for      the future goes beyond stock quotes and trade executions. It involves collaboration,      understanding and trust. Our financial consultants earn that trust from      their clients daily by being there in good times and bad, asking the right      questions, listening to their clients’ answers, explaining things,      and presenting sound advice and solutions to situations ranging from the      basic to the complex.       It is for these reasons we will continue to provide **all** clients the      service and attention of an A.G. Edwards financial consultant, whether they’re      a seasoned investor or just starting out. It’s worth it for our clients      because they can talk face to face with a highly trained professional who      knows about their lives and is personally committed to their long-term financial      success. It’s worth it because their financial consultants have access      to the specialized knowledge and resources of our headquarters personnel      as they develop comprehensive financial plans tailored to a client’s      specific needs. But most importantly, it’s worth it because they can      develop meaningful long-term relationships with their financial consultant      built on a foundation of trust. ***Jack Liebert understands the value of hard work,      having co-founded his own company more than 37 years ago. With A.G. Edwards’      help, the company was taken public and later merged with a global corporation.***      “My wife Evelyn and I knew at that point we could provide nicely for      our children, our grandchildren and even our great-grandchildren,”      Jack says. “We worked hard to get where we are, and we wanted to make      sure our family was taken care of.” He also wanted to be actively involved      with his three children and their efforts to finance and develop luxury      golf resort community projects. “We are a very close-knit family,”      Jack says, “so it just seemed natural for us to go into business together.”      But along with the family business came additional financial responsibilities      and complexities, which created a need for a more detailed financial plan      that included not only Jack and Evelyn, but their three children as well.      Jack said he had stayed in touch with A.G. Edwards after his company’s      initial public offering, “so we knew someone there could help us.”      They found that someone in financial consultant Michael McCain. **“We clicked right away,” Jack says. “Evelyn and I could      tell Mike was smart and sincere, and he immediately understood the importance      of getting our children involved in our planning process. As a result, he      helps all of our kids with their financial plans.”** Mike also works      closely with Jack’s attorney and accountant to develop a detailed estate      plan, so, as Jack puts it, “our kids don’t get stuck with a lot      of problems along with their inheritance.”      “The Lieberts do almost everything together, so their finances are      quite interconnected,” Mike says. “It’s important to first      look at the family as a whole and then assess how each individual’s      needs and circumstances factor into the equation.” |
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| **After selling the company      he co-founded in Columbus, Ohio, Jack Liebert (left) and his wife, Evelyn,      moved to Naples, Florida, and turned to Michael McCain, senior vice president-investments      at A.G. Edwards, to help them address their current business needs and pass      along their assets smoothly to their children and grandchildren.** |

| When addressing the Lieberts’      unique situation, Mike says he takes advantage of the resources available      at A.G. Edwards’ headquarters. “It’s a good feeling to know      I have folks in St. Louis to consult with and help me develop solutions      that really fit my clients’ circumstances, no matter how complex their      financial issues are.” ****Back      to Table of Contents                                                                                        ***When Dr. Martine Nelson first met Vicky Campbell,      it wasn’t to discuss finances. Martine, a pediatrician, first met Vicky,      her A.G. Edwards financial consultant, when Vicky’s daughter was sick      and Martine had just opened her practice.*** Over time all three      of Vicky’s children became patients, and the two women became better      acquainted. “I knew what Vicky did for a living,” Martine explains,      “but that was never a topic we discussed unless I had a question. I      liked that.”      Over time Martine and her husband, Glenn, also a doctor, realized they needed      help developing a financial plan. “At the time, Glenn and I didn’t      have a lot of money to invest,” Martine says. **“But our children      were getting older, and both of us realized we needed a plan for our future      – and theirs.”**      As she and Glenn considered their options, both felt it was important to      work with someone who not only knew what they were doing, but also was easy      to talk to. “When it came to talking about money, both Glenn and I      felt kind of like one of our patients – somewhat apprehensive but wanting      help,” Martine says. “So we wanted to work with someone who could      put us at ease just as we do with our patients. Vicky immediately came to      mind.” |
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| **Dr. Martine Nelson takes time to get to know the young patients      who come to her pediatric office in Naperville, Illinois, so they feel comfortable      with her. It’s that same approach to client care that Martine and her      husband, Glenn, appreciate when working with Vicky Campbell, senior vice      president-investments at A.G. Edwards.** |

| The Nelsons sat down with Vicky      and talked at length about their situation and their goals. “She really      listened to us and asked a lot of questions about what we wanted to do,”      Martine recalls. “During those first few meetings, the size of our      portfolio wasn’t an issue. We told her how much money we had, but she      focused more on our plans for the future – the kids’ college educations,      our medical practices and, of course, our retirement.”***Understanding a client’s specific needs      is critical to gaining – and maintaining – a client’s trust      for the long term.*** “She took the time to really get      to know both Glenn and me and how we wanted to approach investing,”      Martine says. As Vicky learned more, it became apparent the couple needed      to first address other financial obligations, such as establishing their      medical practices and repaying their college and medical school loans, before      committing to a regular investing plan.       “Vicky never pushed us to do things we couldn’t do,” Martine      says. “She got us started by consolidating all of our investments and      getting us going with a simple buy-and-hold investing plan. Then, once we      were in a position to do more, she worked with us to accelerate our savings      efforts by investing more regularly.” For instance, Vicky arranged      for Martine and Glenn to make monthly contributions to a 529 college savings      plan for their two sons. |
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| **Vicky Campbell knows there’s more to a client relationship than the      contents of a portfolio.** |   | **Patients rely on Dr. Glenn Nelson for medical advice. He and his wife, Martine,      rely on A.G. Edwards’ Vicky Campbell for financial advice.** |

| Martine later asked Vicky to      develop a retirement program for the employees in her medical practice.      “I figured I already was entrusting her with my family’s financial      future, so I could also trust her to do the same for my employees,”      Martine recalls. “I want to take good care of them. After all, they      work hard for my patients and me.” Back      to Table of Contents                                                                                        ***Knowledge and commitment are qualities that Monolithic      System Technology CEO Fu-Chieh Hsu admires most in business colleagues.      And he saw those qualities in John Moriarty, managing director-Investment      Banking at A.G. Edwards.*** “I first heard about A.G. Edwards      from one of my board members who had worked with the firm and couldn’t      say enough good things about them,” Fu-Chieh says.       Fu-Chieh met John when the Monolithic System Technology (also known as MoSys)      board of directors was considering an initial public offering to help the      technology company continue to grow while also rewarding its loyal employees.      Founded by Fu-Chieh in 1992, the company has grown to a $22 million revenue      concern that designs the underlying memory technology to support consumer      products and business devices, ranging from video games to digital cameras.            “When I first met John, it was obvious he had done his homework,”      Fu-Chieh says. “He knew a lot about our company, our industry and the      competitive environment. But he also asked questions and listened to what      we had to say. He really seemed to grasp the qualities that set us apart      from other technology firms. That’s the type of initiative and understanding      we wanted and, as it turned out, we needed.” |
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| **When looking to take his company public, Monolithic System Technology CEO      Fu-Chieh Hsu (left) wanted to work with an investment firm that showed a      commitment to his company’s unique vision for success. He chose A.G.      Edwards and John Moriarty, managing director-Investment Banking at      A.G. Edwards, to make that vision a reality.** |

| As plans to take the company      public neared fruition, the bottom dropped out of the Nasdaq market and      technology stocks in general. But as other investment firms were advising      their corporate clients to delay their initial public offerings, John was      not deterred. “This company had a great story – breakthrough technology,      a strong business model and a proven revenue stream,” John says. “As      I saw it, it was our job to help them get that story out to prospective      investors.” In the end, the initial public offering enjoyed broad participation      from individual and institutional investors alike. “A.G. Edwards never      lost sight of our goals,” Fu-Chieh says. “That commitment meant      a lot.” **It’s a commitment that continued after MoSys’      initial public offering. “They always look at our situation carefully      and help us find ways to maintain investors’ confidence,” Fu-Chieh      says.**      One instance took place roughly three months after MoSys’ initial public      offering. “When the tragic events in September occurred, it seemed      like every stock in the market fell, and we were no exception,” Fu-Chieh      recalls. “We looked to John for guidance, and he immediately gave us      ideas and developed an action plan,” which called for MoSys executives      to meet with major shareholders.      Later, a longtime corporate partner who had financed MoSys as a start-up      company indicated its intention to sell its position in the stock to secure      profits. “Long-term start-up investors sometimes need liquidity,”      John explains. “As a result, this type of situation can have a significant      impact on a company’s stock if it’s not handled right.” Which      is why A.G. Edwards’ Investment Banking, Institutional Sales and Nasdaq      Trading personnel worked with MoSys to attract new investors and complete      the transaction in an orderly and efficient manner. In both instances, John      says communication was the key. “As a newly public company,” John      explains, “it’s crucial for MoSys to keep telling its story about      the company’s unique business model and how it is well-positioned for      long-term growth.”      These efforts reaffirmed Fu-Chieh’s decision to work with John and      A.G. Edwards. “They were there for us when we needed them most. So      I felt it was worth it for us to expand our relationship with A.G. Edwards      by asking them to handle our stock-option exercises as well as my own personal      account. They did such a wonderful job, it just made sense.” Back to Table of Contents                                                                                        ***Municipal clients – whether a state agency,      a city or a school district – also want to work with someone who can      bring the resources and expertise to offer innovative solutions for complex      financing needs.*** As managing director-Investment Banking      for A.G. Edwards, Larry J. Richardson works closely with his municipal clients      to help them finance a variety of community-improvement projects. “Public      entities want to work with a firm that understands their financing requirements      and also respects their need to make their bonds available to a wide range      of investors so their constituents can take part in helping their community,”      Larry explains. “For example, we provided the city of Chicago a detailed      plan of how A.G. Edwards would sell its Midway and O’Hare airport-improvement      bonds to individuals and institutions in Illinois and across the country.      We’ve also worked with the city on a number of other occasions with      this approach in mind.” Larry says he enjoys how the relationships      with his municipal clients also benefit other A.G. Edwards clients. **“Not      only do we help these municipalities finance projects to better their communities,”      he says, “we also provide our other clients with access to investments      that can fit nicely in their personal financial plans.”*****Listening. Understanding. Explaining. Planning.      Caring. These are the qualities that make a relationship with an A.G. Edwards      financial consultant worth it.*** For Jack, it’s worth      it because his legacy is in the hands of someone he trusts who has the sophisticated      resources needed to help that legacy live on with the generations who follow      him. For Martine, it’s worth it because she works with someone who      cares more about her and her family than the size of her portfolio. For      Monolithic Systems and our other corporate and municipal clients, it’s      worth it because they have a firm committed to helping them address their      financing needs in a way that’s as individual as each client.**Relationships matter. Our clients and their needs matter. That’s      why we believe every client deserves a personal financial consultant who      shows them each and every day why it’s worth it to bring their dreams      to us.** |
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| **Serving municipal clients for more than 12 years, Larry J. Richardson,      managing director-Investment Banking at A.G. Edwards, works to satisfy      the financing needs of municipalities and public agencies while also creating      investment opportunities for A.G. Edwards’ other clients.** |

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