8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 21, 2010

Morgan Stanley

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(Exact name of Registrant as specified

in its charter)

Delaware	1-11758	36-3145972
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1585 Broadway, New York, New York 10036

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(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (212) 761-4000

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(Former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]         Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]         Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240. 14a-12)

[ ]         Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240. 14d-2(b))

[ ]         Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On July 21, 2010, Morgan Stanley (the "Registrant") released financial information with respect to its quarter ended June 30, 2010. A copy of the press release containing this information is annexed as Exhibit 99.1 to this Report and by this reference incorporated herein and made a part hereof. In addition, a copy of the Registrant's Financial Data Supplement for its quarter ended June 30, 2010 is annexed as Exhibit 99.2 to this Report and by this reference incorporated herein and made a part hereof.

The information furnished under Item 2.02 of this Report, including Exhibit 99.1 and Exhibit 99.2, shall be deemed to be "filed" for purposes of the Securities Exchange Act of 1934, as amended.

Item 8.01. Other Events

On July 1, 2010, Moody’s Investor Services announced that it was lowering the equity credit assigned to future, as well as outstanding, hybrid securities, such as the Registrant’s Equity Units that were issued to a subsidiary of China Investment Corporation in December 2007. The terms of the Equity Units permit the Registrant to redeem the junior subordinated debentures underlying the Equity Units upon the occurrence and continuation of such a change in equity credit (a “Rating Agency Event”). In response to this Rating Agency Event, the Registrant has obtained the necessary approvals from the Federal Reserve in connection with the redemption of the underlying debentures. As a consequence of such redemption these trust preferred securities will not be remarketed as would have been required under the terms of th e Equity Units.

Item 9.01. Financial Statements and Exhibits

99.1 Press release of the Registrant, dated July 21, 2010, containing financial information for the quarter ended June 30, 2010.

99.2 Financial Data Supplement of the Registrant for the quarter ended June 30, 2010.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

MORGAN STANLEY

(Registrant)

By: /s/ Paul C. Wirth

Paul C. Wirth

Finance Director and Controller

Dated: July 21, 2010

EX-99.1

Exhibit 99.1

Media Relations:  Jeanmarie McFadden   212-761-2433                                          Investor Relations:  Suzanne Charnas   212-761-3043

Morgan Stanley Reports Second Quarter 2010:

● Net Revenues of $8.0 Billion

● Income from Continuing Operations of $0.80 per Diluted Share (Includes $0.27 from Changes in Morgan Stanley’s Debt-Related Credit Spreads and $0.20 from a Discrete Tax Benefit)

● Book Value per Common Share Increased 7% During the Quarter to $29.65

NEW YORK, July 21, 2010 – Morgan Stanley (NYSE: MS) today reported income of $1.4 billion, or $0.80 per diluted share, from continuing operations applicable to Morgan Stanley for the quarter ended June 30, 2010 compared with a loss of $138 million, or $1.36 per diluted share, for the same period a year ago.  Net revenues were $8.0 billion for the current quarter compared with $5.2 billion a year ago.  Net revenues in the current quarter included positive revenue of $750 million compared with negative revenue of $2.3 billion in the prior year’s second quarter related to Morgan Stanley’s debt-related credit spreads (DVA).1, 2  Comparisons of current quarter results with the prior year were affected by the results of Morgan Stanley Smith Barney (MSSB),3 which closed on May 31, 2009.  The results for the quarter also included a tax benefit of $345 million, or $0.20 per diluted share, associated with the remeasurement of tax reserves based on the status of federal and state examinations.  The annualized return on average common equity from continuing operations was 12.2% in the quarter.

For the quarter net income applicable to Morgan Stanley, including discontinued operations, was $1.09 per diluted share compared with a net loss of $1.10 per diluted share in the second quarter of 2009.  Discontinued operations included an after-tax gain of $514 million related to the sale of substantially all of the retail asset management business, including Van Kampen Investments, Inc.4

Compensation expenses of $3.9 billion included a charge of $361 million related to the U.K. government’s payroll tax on 2009 discretionary bonuses.5Compensation expenses increased slightly from $3.8 billion a year ago as higher compensation costs related to MSSB3 were mostly offset by lower compensation costs in Institutional Secur ities.  The Firm’s compensation to net revenue ratio for the current quarter was 49% compared with 73% a year ago.  Non-compensation expenses of $2.4 billion increased from $2.0 billion a year ago, primarily due to the inclusion of MSSB.3

Business Highlights

● Investment banking revenues were $885 million: Morgan Stanley ranked #2 in global announced and completed M&A and #1 in global IPOs.6

● Sales and trading net revenues were $3.7 billion and included positive revenue of approximately $750 million related to DVA2 in the current quarter.

● Global Wealth Management delivered net revenues of $3.1 billion, with client assets of $1.5 trillion and 18,087 global representatives.

● Asset Management reported net revenues of $410 million, and Morgan Stanley completed the previously announced sale of substantially all of the retail asset management business, including Van Kampen Investments, Inc., to Invesco Ltd.

● Morgan Stanley and Mitsubishi UFJ Financial Group, Inc. commenced operations of the previously announced joint venture on May 1, 2010.7

1

James P. Gorman, President and Chief Executive Officer, said, “While markets were challenging this quarter, Morgan Stanley benefited from a deliberate and disciplined focus on execution.  We strengthened leading market positions in our client-focused Investment Banking business, improved client flows in Sales and Trading, and continued progress on the integration of Morgan Stanley Smith Barney as well as the repositioning of our Asset Management business.  We still have a great deal of work to do across our global franchise and anticipate that the difficult market environment may continue in the months ahead.  That said, we believe that regulatory reforms are a key step toward restoring trust in the industry and the markets.”

Summary of Business Segment Results
($ millions)
	Institutional Securities		Global Wealth Management		Asset Management
	Net	Pre-Tax	Net	Pre-Tax	Net	Pre-Tax
	Revenues	Income	Revenues	Income	Revenues	Income
2Q 2010	$4,502	$1,570	$3,074	$207	$410	($86)
1Q 2010	$5,344	$2,067	$3,105	$278	$653	$173
2Q 2009	$2,967	($298)	$1,923	($71)	$358	($210)

INSTITUTIONAL SECURITIES

Institutional Securities reported pre-tax income from continuing operations of $1.6 billion compared with a pre-tax loss from continuing operations of $298 million in the second quarter of last year.  The quarter’s pre-tax margin was 35%.8  Net revenues were $4.5 billion compared with $3.0 billion a year ago.  DVA resulted in positive revenue of approximately $750 million in the current quarter compared with negative revenue of $2.3 billion a year ago.2  Due to the divergence in DVA in the comparative periods, the following discussion for fixed income and equity sales and trading focuses on current quarter results.

· Advisory revenues of $288 million increased 7% from a year ago and reflected higher levels of completed activity compared with a year ago.

· Underwriting revenues of $597 million declined 30% from last year’s second quarter on lower levels of market activity.  Equity underwriting revenues of $269 million declined from $456 million a year ago.  Fixed income underwriting revenues decreased 18% to $328 million from last year’s second quarter.

· Fixed income sales and trading net revenues were $2.3 billion and reflected positive revenue of $602 million related to DVA noted above.2  Results for the current quarter reflected improving customer flows in Interest Rate, Credit & Currency (IRCC), which were partly offset by a challenging trading environment.  Net revenues in commodities for the current quarter were primarily driven by revenues recognized on certain structured transactions.

· Equity sales and trading net revenues were $1.4 billion for the quarter and reflected positive revenue of $129 million related to DVA noted above.2  Results in the cash and derivatives businesses reflected improving customer flows in a challenging trading environment.  Prime brokerage reported solid results for the quarter.

2

· Other sales and trading net losses of $101 million for the quarter included net mark-to-market losses of $277 million on loans and lending commitments, partly offset by net revenues of $176 million from other hedging activities.

· Investment losses of $68 million, which reflected lower equity valuations in the current quarter, declined from a loss of $184 million a year ago.  The prior year quarter primarily included losses on investments in real estate.

· Compensation expenses of $1.6 billion for the current quarter included a charge of $354 million related to the U.K. government’s payroll tax on 2009 discretionary bonuses.  Compensation costs decreased from $2.1 billion a year ago primarily reflecting lower net revenues, excluding the effect of changes in DVA noted above.2  The compensation to net revenue ratio for the current quarter was 36% compared with 71% a year ago.  Non-compensation expenses of $1.3 billion increased 12% from a year ago, and reflected higher legal costs.

· Morgan Stanley’s average aggregate trading and non-trading Value-at-Risk (VaR) measured at the 95% confidence level was $164 million compared with $169 million in the first quarter of 2010.  Average trading VaR was $139 million compared with $143 million in the first quarter of 2010.

GLOBAL WEALTH MANAGEMENT

Global Wealth Management Group reported pre-tax income from continuing operations of $207 million compared with a pre-tax loss from continuing operations of $71 million in the second quarter of last year.  Comparisons of the quarter’s results with prior periods were affected by the results of MSSB,3 which closed on May 31, 2009.  The quarter’s pre-tax margin was 7%.8Income after the non-controlling interest allocation to Citigroup Inc. and before taxes was $171 million.9

· Net revenues were $3.1 billion compared with $1.9 billion a year ago.  The increase primarily reflected incremental net revenues, following the closing of the MSSB transaction, which were partly offset by the effect of weaker market conditions.

· Compensation expenses of $2.0 billion increased from $1.4 billion a year ago due to the inclusion of MSSB for the full quarter.  The compensation to net revenue ratio for the current quarter was 64% compared with 71% a year ago.  Non-compensation expenses of $901 million increased from $632 million a year ago primarily due to the inclusion of MSSB.  The results for this quarter included costs of approximately $106 million related to the MSSB integration.

· Total client assets were $1.5 trillion at quarter-end.  Client assets in fee-based accounts were $396 billion and represented 26% of total client assets.

· The 18,087 global representatives at quarter-end achieved average annualized revenue per global representative of $679,000 and total client assets per global representative of $83 million.

ASSET MANAGEMENT

Asset Management reported a pre-tax loss from continuing operations of $86 million compared with a pre-tax loss from continuing operations of $210 million in last year’s second quarter.  Discontinued operations included the operating results and the gain related to the sale of substantially all of the retail asset management business, including Van Kampen Investments, Inc.

· Net revenues were $410 million compared with $358 million a year ago.

3

· Net revenues in the Core business10 were $300 million compared with $471 million in last year’s second quarter.  The decrease in net revenues primarily reflected gains of $128 million in the prior year related to the disposition of the remaining securities issued by structured investment vehicles held on the Firm’s balance sheet, and principal investment losses in the quarter compared with gains a year ago.

· Net revenues in the Merchant Banking business were $110 million compared with negative revenues of $113 million in last year’s second quarter.  The increase in net revenues primarily reflected principal trading losses in the prior year related to a mark-to-market loss on a lending facility to a real estate fund sponsored by Morgan Stanley as well as losses in other real estate investments compared with modest gains this quarter.

· Compensation expenses were $282 million compared with $331 million a year ago.  The decrease primarily reflected principal investment losses in the quarter in employee deferred compensation and co-investment plans compared with gains in the prior year, partly offset by certain international tax equalization payments.  The compensation to net revenue ratio for the quarter was 69% compared with 93% a year ago.  Non-compensation expenses of $214 million decreased 10% from a year ago.

· Assets under management or supervision at June 30, 2010 of $251 billion increased from $242 billion a year ago.  The increase reflected market appreciation partly offset by net customer outflows primarily in Morgan Stanley’s money market funds.

CAPITAL

Morgan Stanley’s Tier 1 capital ratio, under Basel I, was approximately 16.4% and Tier 1 common ratio was approximately 9.2%.8, 11

As of June 30, 2010, Morgan Stanley had not repurchased any shares of its common stock as part of its capital management share repurchase program.

Book value per common share was $29.65, based on 1.4 billion shares outstanding.  In addition to net income applicable to Morgan Stanley, book value increased by $0.51 per share related to an after-tax gain of $717 million on the sale of the Firm's non-controlling interest in its Japanese institutional securities business.  This gain was recorded in other comprehensive income.

OTHER MATTERS

The effective tax rate from continuing operations for the current quarter was 12.9%.  As noted previously, the results for the quarter included a tax benefit of $345 million associated with the remeasurement of tax reserves based on the status of federal and state examinations.  Excluding this benefit, the quarter’s annual effective tax rate would have been 33.5%.

Morgan Stanley announced that its Board of Directors declared a $0.05 quarterly dividend per common share. The dividend is payable on August 13, 2010 to common shareholders of record on July 30, 2010.

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services.  The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 42 countries.  For further information about Morgan Stanley, please visit www.morganstanley.com.

A financial summary follows.  Financial, statistical and business-related information, as well as information regarding business and segment trends, is included in the Financial Supplement.  Both the earnings release and the Financial Supplement are available online in the Investor Relations section at www.morganstanley.com.

# # #

(See Attached Schedules)

4

The information above contains forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made and which reflect management's current estimates, projections, expectations or beliefs and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of additional risks and uncertainties that may affect the future results of the Company, please see "Forward-Looking Statements" immediately preceding Part I, Item 1, "Competition" and "Supervision and Regulation" in Part I, Item 1, "Risk Factors" in Part I, Item 1A, "Legal Proceedings" in Part I, Item 3, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 and "Quantitative and Quali tative Disclosures about Market Risk" in Part II, Item 7A of the Company's Annual Report on Form 10-­K for the year ended December 31, 2009 and other items throughout the Form 10-K, the Company’s Quarterly Reports on Form 10-Q and the Company’s Current Reports on Form 8-K.

5

1 Represents the changes in Morgan Stanley’s credit spreads resulting from fluctuation in the fair value of certain of its long-term and short-term borrowings (commonly referred to as “DVA”).

2 Due to DVA, sales and trading net revenue for the quarter ended June 30, 2010 included positive revenue of $750 million (fixed income: $602 million; equity: $129 million; other: $19 million) and sales and trading net revenue for the quarter ended June 30, 2009 included negative revenue of $2.3 billion (fixed income: $1.3 billion; equity: $757 million; other: $237 million).

3 MSSB results included revenues and expenses (compensation and non-compensation), related to legacy Smith Barney operations, that were incremental to the Firm’s financial results subsequent to the closing on May 31, 2009.

4 The cumulative after-tax gain on the sale of this business is $673 million, of which $514 million is recorded in the current quarter.  Additional gains of $159 million were recorded in discontinued operations in prior quarters.

5 The charge is included in the business segments as follows: Institutional Securities: $354 million, Global Wealth Management: $4 million and Asset Management: $3 million.

6 Source: Thomson Reuters – for the period of January 1, 2010 to June 30, 2010 as of July 6, 2010.

7 The operating results of this joint venture were included in the Institutional Securities business segment and were not material to this quarter.

8 Pre-tax margin and Tier 1 common ratios are non-GAAP measures.  Pre-tax margin represents income or loss from continuing operations before tax, divided by net revenues.  The Tier 1 common ratio equals Tier 1 capital (see note 11) less qualifying perpetual preferred stock, qualifying trust preferred securities and qualifying restricted core capital elements, adjusted for the portion of goodwill and non-servicing assets associated with MSSB’s non-controlling interests divided by risk-weighted assets.  Morgan Stanley and investors utilize these measures to assess operating performance and capital adequacy.

9 Morgan Stanley owns 51% of MSSB, which is consolidated.  The results related to the 49% interest retained by Citigroup Inc. are reported in the net income / (loss) applicable to non-controlling interests on page 8 of Morgan Stanley’s Financial Supplement accompanying this release.

10 The Core business includes traditional, hedge funds and fund of funds asset management.

11 The Firm calculates its Tier 1 capital ratio and risk-weighted assets in accordance with the capital adequacy standards for financial holding companies adopted by the Federal Reserve Board.  These standards are based upon a framework described in the International Convergence of Capital Measurement and Capital Standards, July 1988, as amended, also referred to as Basel I.  These computations are preliminary estimates as of July 21, 2010 (the date of this release) and could be subject to revision in Morgan Stanley’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.

6

MORGAN STANLEY
Quarterly Financial Summary
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2010			Mar 31, 2010			June 30, 2009			Mar 31, 2010			June 30, 2009			June 30, 2010			June 30, 2009			Change
Net revenues
Institutional Securities	$	4,502		$	5,344		$	2,967			(16	%)		52	%	$	9,846		$	4,568			116	%
Global Wealth Management Group		3,074			3,105			1,923			(1	%)		60	%		6,179			3,222			92	%
Asset Management		410			653			358			(37	%)		15	%		1,063			380			180	%
Intersegment Eliminations		(36	)		(24	)		(51	)		(50	%)		29	%		(60	)		(76	)		21	%
Consolidated net revenues	$	7,950		$	9,078		$	5,197			(12	%)		53	%	$	17,028		$	8,094			110	%
Income / (loss) from continuing operations before tax
Institutional Securities	$	1,570		$	2,067		$	(298	)		(24	%)		*		$	3,637		$	(762	)		*
Global Wealth Management Group		207			278			(71	)		(26	%)		*			485			48			*
Asset Management		(86	)		173			(210	)		*			59	%		87			(493	)		*
Intersegment Eliminations		(13	)		(2	)		(5	)		*			(160	%)		(15	)		(7	)		(114	%)
Consolidated income / (loss) from continuing operations before tax	$	1,678		$	2,516		$	(584	)		(33	%)		*		$	4,194		$	(1,214	)		*
Income / (loss) applicable to Morgan Stanley
Institutional Securities	$	1,382		$	1,733		$	(122	)		(20	%)		*		$	3,115		$	39			*
Global Wealth Management Group		110			99			76			11	%		45	%		209			149			40	%
Asset Management		(44	)		14			(89	)		*			51	%		(30	)		(339	)		91	%
Intersegment Eliminations		(11	)		(1	)		(3	)		*			*			(12	)		(4	)		(200	%)
Consolidated income / (loss) applicable to Morgan Stanley	$	1,437		$	1,845		$	(138	)		(22	%)		*		$	3,282		$	(155	)		*
Earnings / (loss) applicable to Morgan Stanley common shareholders	$	1,578		$	1,411		$	(1,256	)		12	%		*		$	2,990		$	(1,834	)		*
Earnings per basic share:
Income from continuing operations	$	0.84		$	1.12		$	(1.36	)		(25	%)		*		$	1.96		$	(1.82	)		*
Discontinued operations	$	0.36		$	(0.05	)	$	0.26			*			38	%	$	0.31		$	0.11			182	%
Earnings per basic share	$	1.20		$	1.07		$	(1.10	)		12	%		*		$	2.27		$	(1.71	)		*
Earnings per diluted share:
Income from continuing operations	$	0.80		$	1.03		$	(1.36	)		(22	%)		*		$	1.82		$	(1.82	)		*
Discontinued operations	$	0.29		$	(0.04	)	$	0.26			*			12	%	$	0.26		$	0.11			136	%
Earnings per diluted share	$	1.09		$	0.99		$	(1.10	)		10	%		*		$	2.08		$	(1.71	)		*

Notes:	-	Results include Morgan Stanley Smith Barney (MSSB) effective from May 31, 2009.
	-	Results for the quarters ended June 30, 2010 and June 30, 2009 include positive / (negative) revenue of $0.7 billion and $(2.3) billion, respectively, related to the movement in Morgan Stanley's credit spreads on certain long-term debt.  The effect of movement in these credit spreads for the quarter ended March 31, 2010 was immaterial.
	-	Income / (loss) applicable to Morgan Stanley represents consolidated income / (loss) from continuing operations applicable to Morgan Stanley before gain / (loss) from discontinued operations.
	-	For the quarter ended June 30, 2010, discontinued operations primarily included the operating results of the retail asset management business including Van Kampen and an after-tax gain of approximately $514 million related to the sale of this business.  For the quarter ended March 31, 2010, discontinued operations included a loss of $932 million (reported in Institutional Securities) on the disposition of Revel Entertainment Group, LLC, (Revel), a subsidiary of the Firm, a gain of $775 million (not reported in a business segment) related to a legal settlement with Discover Financial Servic es and the operating results of the retail asset management business, including Van Kampen (reported in Asset Management).
	-	Summation of the quarters' earnings per common share may not equal the year-to-date amounts due to the averaging effect of the number of shares and share equivalents throughout the year.

7

MORGAN STANLEY
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2010			Mar 31, 2010			June 30, 2009			Mar 31, 2010			June 30, 2009			June 30, 2010			June 30, 2009			Change
Revenues:
Investment banking	$	1,080		$	1,060		$	1,266			2	%		(15	%)	$	2,140		$	2,139			--
Principal transactions:
Trading		3,346			3,751			1,732			(11	%)		93	%		7,097			3,087			130	%
Investments		(52	)		369			(125	)		*			58	%		317			(1,275	)		*
Commissions		1,316			1,261			973			4	%		35	%		2,577			1,743			48	%
Asset management, distribution and admin. fees		1,974			1,963			1,158			1	%		70	%		3,937			2,024			95	%
Other		134			293			390			(54	%)		(66	%)		427			637			(33	%)
Total non-interest revenues		7,798			8,697			5,394			(10	%)		45	%		16,495			8,355			97	%
Interest income		1,755			1,748			1,648			--			6	%		3,503			3,893			(10	%)
Interest expense		1,603			1,367			1,845			17	%		(13	%)		2,970			4,154			(29	%)
Net interest		152			381			(197	)		(60	%)		*			533			(261	)		*
Net revenues		7,950			9,078			5,197			(12	%)		53	%		17,028			8,094			110	%
Non-interest expenses:
Compensation and benefits		3,887			4,418			3,803			(12	%)		2	%		8,305			5,781			44	%
Non-compensation expenses:
Occupancy and equipment		403			392			373			3	%		8	%		795			710			12	%
Brokerage, clearing and exchange fees		371			348			267			7	%		39	%		719			515			40	%
Information processing and communications		416			395			313			5	%		33	%		811			595			36	%
Marketing and business development		153			134			120			14	%		28	%		287			230			25	%
Professional services		497			395			384			26	%		29	%		892			687			30	%
Other		545			480			521			14	%		5	%		1,025			790			30	%
Total non-compensation expenses		2,385			2,144			1,978			11	%		21	%		4,529			3,527			28	%
Total non-interest expenses		6,272			6,562			5,781			(4	%)		8	%		12,834			9,308			38	%
Income / (loss) from continuing operations before taxes		1,678			2,516			(584	)		(33	%)		*			4,194			(1,214	)		*
Income tax provision / (benefit) from continuing operations		217			436			(319	)		(50	%)		*			653			(914	)		*
Income / (loss) from continuing operations		1,461			2,080			(265	)		(30	%)		*			3,541			(300	)		*
Gain / (loss) from discontinued operations after tax		523			(69	)		298			*			76	%		454			143			*
Net income / (loss)	$	1,984		$	2,011		$	33			(1	%)		*		$	3,995		$	(157	)		*
Net income / (loss) applicable to non-controlling interests		24			235			(116	)		(90	%)		*			259			(129	)		*
Net income / (loss) applicable to Morgan Stanley		1,960			1,776			149			10	%		*			3,736			(28	)		*
Earnings / (loss) applicable to Morgan Stanley common shareholders	$	1,578		$	1,411		$	(1,256	)		12	%		*		$	2,990		$	(1,834	)		*
Amounts applicable to Morgan Stanley:
Income / (loss) from continuing operations		1,437			1,845			(138	)		(22	%)		*			3,282			(155	)		*
Gain / (loss) from discontinued operations after tax		523			(69	)		287			*			82	%		454			127			*
Net income / (loss) applicable to Morgan Stanley	$	1,960		$	1,776		$	149			10	%		*		$	3,736		$	(28	)		*
Pre-tax profit margin		21	%		28	%		*									25	%		*
Compensation and benefits as a % of net revenues		49	%		49	%		73	%								49	%		71	%
Non-compensation expenses as a % of net revenues		30	%		24	%		38	%								27	%		44	%
Effective tax rate from continuing operations		12.9	%		17.3	%		54.6	%								15.6	%		75.3	%

Notes:	-	Results include MSSB effective from May 31, 2009.
	-	Pre-tax profit margin is a non-GAAP measure that the Firm and investors use to assess operating performance.  Pre-tax profit margin is defined as income / (loss) from continuing operations before taxes, as a % of net revenues.
	-	The quarter ended June 30, 2010 included a discrete tax benefit of $345 million related to the remeasurement of tax reserves based on the status of federal and state tax examinations.  Excluding this benefit, the effective tax rate for the quarter would have been 33.5%.
	-	The quarter ended March 31, 2010 included a discrete tax benefit of $382 million associated with prior year undistributed earnings of certain non-U.S. subsidiaries that were determined to be indefinitely reinvested abroad.  Excluding this benefit, the effective tax rate for the quarter would have been 32.5%.

8

EX-99.2

Exhibit 99.2

MORGAN STANLEY
Financial Supplement - 2Q 2010
Table of Contents
	Page #
	1	…………….	Quarterly Financial Summary
	2	…………….	Quarterly Consolidated Income Statement Information
	3 - 4	…………….	Quarterly Consolidated Financial Information and Statistical Data
	5	…………….	Quarterly Institutional Securities Income Statement Information
	6 - 7	…………….	Quarterly Institutional Securities Financial Information and Statistical Data
	8	…………….	Quarterly Global Wealth Management Group Income Statement Information
	9	…………….	Quarterly Global Wealth Management Group Financial Information and Statistical Data
	10	…………….	Quarterly Asset Management Income Statement Information
	11	…………….	Quarterly Asset Management Financial Information and Statistical Data
	12	…………….	Earnings Per Share Appendix I
	13	…………….	Earnings Per Share Appendix II
	14 - 15	…………….	End Notes
	16	…………….	Legal Notice

MORGAN STANLEY
Quarterly Financial Summary
(unaudited, dollars in millions)
		Quarter Ended									Percentage Change From:				Six Months Ended						Percentage
		June 30, 2010			Mar 31, 2010			June 30, 2009			2Q10 vs. 1Q10		2Q10 vs. 2Q09		June 30, 2010			June 30, 2009			Change
Net revenues
	Institutional Securities	$	4,502		$	5,344		$	2,967		(16	%)	52	%	$	9,846		$	4,568		116	%
	Global Wealth Management Group		3,074			3,105			1,923		(1	%)	60	%		6,179			3,222		92	%
	Asset Management		410			653			358		(37	%)	15	%		1,063			380		180	%
	Intersegment Eliminations		(36	)		(24	)		(51	)	(50	%)	29	%		(60	)		(76	)	21	%
	Consolidated net revenues	$	7,950		$	9,078		$	5,197		(12	%)	53	%	$	17,028		$	8,094		110	%
Income / (loss) from continuing operations before tax
	Institutional Securities	$	1,570		$	2,067		$	(298	)	(24	%)	*		$	3,637		$	(762	)	*
	Global Wealth Management Group		207			278			(71	)	(26	%)	*			485			48		*
	Asset Management		(86	)		173			(210	)	*		59	%		87			(493	)	*
	Intersegment Eliminations		(13	)		(2	)		(5	)	*		(160	%)		(15	)		(7	)	(114	%)
	Consolidated income / (loss) from continuing operations before tax	$	1,678		$	2,516		$	(584	)	(33	%)	*		$	4,194		$	(1,214	)	*
Income / (loss) applicable to Morgan Stanley
	Institutional Securities	$	1,382		$	1,733		$	(122	)	(20	%)	*		$	3,115		$	39		*
	Global Wealth Management Group		110			99			76		11	%	45	%		209			149		40	%
	Asset Management		(44	)		14			(89	)	*		51	%		(30	)		(339	)	91	%
	Intersegment Eliminations		(11	)		(1	)		(3	)	*		*			(12	)		(4	)	(200	%)
	Consolidated income / (loss) applicable to Morgan Stanley	$	1,437		$	1,845		$	(138	)	(22	%)	*		$	3,282		$	(155	)	*
Earnings / (loss) applicable to Morgan Stanley common shareholders		$	1,578		$	1,411		$	(1,256	)	12	%	*		$	2,990		$	(1,834	)	*
Earnings per basic share:
	Income from continuing operations	$	0.84		$	1.12		$	(1.36	)	(25	%)	*		$	1.96		$	(1.82	)	*
	Discontinued operations	$	0.36		$	(0.05	)	$	0.26		*		38	%	$	0.31		$	0.11		182	%
Earnings per basic share		$	1.20		$	1.07		$	(1.10	)	12	%	*		$	2.27		$	(1.71	)	*
Earnings per diluted share:
	Income from continuing operations	$	0.80		$	1.03		$	(1.36	)	(22	%)	*		$	1.82		$	(1.82	)	*
	Discontinued operations	$	0.29		$	(0.04	)	$	0.26		*		12	%	$	0.26		$	0.11		136	%
Earnings per diluted share		$	1.09		$	0.99		$	(1.10	)	10	%	*		$	2.08		$	(1.71	)	*

Notes:	-	Results include Morgan Stanley Smith Barney (MSSB) effective from May 31, 2009.
	-	Results for the quarters ended June 30, 2010 and June 30, 2009 include positive / (negative) revenue of $0.7 billion and $(2.3) billion, respectively, related to the movement in Morgan Stanley's credit spreads on certain long-term debt. The effect of movement in these credit spreads for the quarter ended March 31, 2010 was immaterial.
	-	Income / (loss) applicable to Morgan Stanley represents consolidated income / (loss) from continuing operations applicable to Morgan Stanley before gain / (loss) from discontinued operations.
	-	For the quarter ended June 30, 2010, discontinued operations primarily included the operating results of the retail asset management business including Van Kampen and an after-tax gain of approximately $514 million related to the sale of this business. For the quarter ended March 31, 2010, discontinued operations included a loss of $932 million (reported in Institutional Securities) on the disposition of Revel Entertainment Group, LLC, (Revel), a subsidiary of the Firm, a gain of $775 million (not reported in a business segment) related to a legal settlement with Discover Financial Services and the operating results of the retail asset management business, including Van Kampen (reported in Asset Management).
	-	Summation of the quarters' earnings per common share may not equal the year-to-date amounts due to the averaging effect of the number of shares and share equivalents throughout the year.
	-	Refer to Legal Notice on page 16.

1

MORGAN STANLEY
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:				Six Months Ended						Percentage
	June 30, 2010			Mar 31, 2010			June 30, 2009			2Q10 vs. 1Q10		2Q10 vs. 2Q09		June 30, 2010			June 30, 2009			Change
Revenues:
Investment banking	$	1,080		$	1,060		$	1,266		2	%	(15	%)	$	2,140		$	2,139		--
Principal transactions:
Trading		3,346			3,751			1,732		(11	%)	93	%		7,097			3,087		130	%
Investments		(52	)		369			(125	)	*		58	%		317			(1,275	)	*
Commissions		1,316			1,261			973		4	%	35	%		2,577			1,743		48	%
Asset management, distribution and admin. fees		1,974			1,963			1,158		1	%	70	%		3,937			2,024		95	%
Other		134			293			390		(54	%)	(66	%)		427			637		(33	%)
Total non-interest revenues		7,798			8,697			5,394		(10	%)	45	%		16,495			8,355		97	%
Interest income		1,755			1,748			1,648		--		6	%		3,503			3,893		(10	%)
Interest expense		1,603			1,367			1,845		17	%	(13	%)		2,970			4,154		(29	%)
Net interest		152			381			(197	)	(60	%)	*			533			(261	)	*
Net revenues		7,950			9,078			5,197		(12	%)	53	%		17,028			8,094		110	%
Non-interest expenses:
Compensation and benefits		3,887			4,418			3,803		(12	%)	2	%		8,305			5,781		44	%
Non-compensation expenses:
Occupancy and equipment		403			392			373		3	%	8	%		795			710		12	%
Brokerage, clearing and exchange fees		371			348			267		7	%	39	%		719			515		40	%
Information processing and communications		416			395			313		5	%	33	%		811			595		36	%
Marketing and business development		153			134			120		14	%	28	%		287			230		25	%
Professional services		497			395			384		26	%	29	%		892			687		30	%
Other		545			480			521		14	%	5	%		1,025			790		30	%
Total non-compensation expenses		2,385			2,144			1,978		11	%	21	%		4,529			3,527		28	%
Total non-interest expenses		6,272			6,562			5,781		(4	%)	8	%		12,834			9,308		38	%
Income / (loss) from continuing operations before taxes		1,678			2,516			(584	)	(33	%)	*			4,194			(1,214	)	*
Income tax provision / (benefit) from continuing operations		217			436			(319	)	(50	%)	*			653			(914	)	*
Income / (loss) from continuing operations		1,461			2,080			(265	)	(30	%)	*			3,541			(300	)	*
Gain / (loss) from discontinued operations after tax		523			(69	)		298		*		76	%		454			143		*
Net income / (loss)	$	1,984		$	2,011		$	33		(1	%)	*		$	3,995		$	(157	)	*
Net income / (loss) applicable to non-controlling interests		24			235			(116	)	(90	%)	*			259			(129	)	*
Net income / (loss) applicable to Morgan Stanley		1,960			1,776			149		10	%	*			3,736			(28	)	*
Earnings / (loss) applicable to Morgan Stanley common shareholders	$	1,578		$	1,411		$	(1,256	)	12	%	*		$	2,990		$	(1,834	)	*
Amounts applicable to Morgan Stanley:
Income / (loss) from continuing operations		1,437			1,845			(138	)	(22	%)	*			3,282			(155	)	*
Gain / (loss) from discontinued operations after tax		523			(69	)		287		*		82	%		454			127		*
Net income / (loss) applicable to Morgan Stanley	$	1,960		$	1,776		$	149		10	%	*		$	3,736		$	(28	)	*
Pre-tax profit margin		21	%		28	%		*							25	%		*
Compensation and benefits as a % of net revenues		49	%		49	%		73	%						49	%		71	%
Non-compensation expenses as a % of net revenues		30	%		24	%		38	%						27	%		44	%
Effective tax rate from continuing operations		12.9	%		17.3	%		54.6	%						15.6	%		75.3	%

Notes:	-	Results include MSSB effective from May 31, 2009.
	-	Pre-tax profit margin is a non-GAAP measure that the Firm and investors use to assess operating performance.  Pre-tax profit margin is defined as income / (loss) from continuing operations before taxes, as a % of net revenues.
	-	The quarter ended June 30, 2010 included a discrete tax benefit of $345 million related to the remeasurement of tax reserves based on the status of federal and state tax examinations. Excluding this benefit, the effective tax rate for the quarter would have been 33.5%.
	-	The quarter ended March 31, 2010 included a discrete tax benefit of $382 million associated with prior year undistributed earnings of certain non-U.S. subsidiaries that were determined to be indefinitely reinvested abroad.  Excluding this benefit, the effective tax rate for the quarter would have been 32.5%.
	-	Refer to Legal Notice on page 16.

2

MORGAN STANLEY
Quarterly Consolidated Financial Information and Statistical Data
(unaudited)
		Quarter Ended									Percentage Change From:				Six Months Ended				Percentage
		June 30, 2010			Mar 31, 2010			June 30, 2009			2Q10 vs. 1Q10		2Q10 vs. 2Q09		June 30, 2010		June 30, 2009		Change
Morgan Stanley
Regional revenue (1)
Americas		$	5,663		$	6,199		$	4,523		(9	%)	25	%	$	11,862	$	7,112	67	%
EMEA (Europe, Middle East, Africa)			1,717			2,013			7		(15	%)	*			3,730		66	*
Asia			570			866			667		(34	%)	(15	%)		1,436		916	57	%
Consolidated net revenues		$	7,950		$	9,078		$	5,197		(12	%)	53	%	$	17,028	$	8,094	110	%
Worldwide employees			62,926			61,552			61,197		2	%	3	%
Total assets		$	809,456		$	819,719		$	676,957		(1	%)	20	%
Firmwide Deposits			61,368			63,926			62,382		(4	%)	(2	%)
Consolidated assets under management or supervision (billions):
Asset Management			251			262			242		(4	%)	4	%
Global Wealth Management			403			413			322		(2	%)	25	%
Total			654			675			564		(3	%)	16	%
Common equity			41,415			38,667			36,989		7	%	12	%
Preferred equity			9,597			9,597			9,597		--		--
Morgan Stanley shareholders' equity			51,012			48,264			46,586		6	%	10	%
Junior subordinated debt issued to capital trusts			10,508			10,554			10,666		--		(1	%)
Less: Goodwill and intangible assets (2)			(7,148	)		(7,570	)		(7,726	)	6	%	7	%
Tangible Morgan Stanley shareholders' equity		$	54,372		$	51,248		$	49,526		6	%	10	%
Tangible common equity		$	34,267		$	31,097		$	29,263		10	%	17	%
Leverage Ratio			14.9	x		16.0	x		13.7	x
Aggregate trading and non-trading Value-at-Risk (pre-tax) (3)		$	164		$	169		$	154
Average common shares outstanding (000's)
	Basic		1,317,686			1,314,608			1,138,444		--		16	%
	Diluted		1,748,209			1,626,207			1,138,444		8	%	54	%
Period end common shares outstanding (000's)			1,397,007			1,398,470			1,359,204		--		3	%
Return on average common equity
	from continuing operations		12.2	%		17.1	%		*
Return on average common equity			17.4	%		16.3	%		*
Book value per common share (4)		$	29.65		$	27.65		$	27.21		7	%	9	%
Tangible book value per common share		$	24.53		$	22.24		$	21.53		10	%	14	%

Notes:	-	All data presented in millions except ratios, book values and number of employees.
	-	Results include MSSB effective from May 31, 2009.
	-	The number of worldwide employees for all periods has been restated to exclude employees of the retail asset management business, including Van Kampen.
	-	Goodwill and intangible assets exclude non-controlling interests and reflect the Firm's share of MSSB's goodwill and intangible assets.
	-	Tangible common equity is a non-GAAP measure that the Firm and investors use to assess capital adequacy.  Tangible common equity equals common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction.
	-	Leverage ratio is a non-GAAP measure that the Firm and investors use to assess capital adequacy.  Leverage ratio equals total assets divided by tangible Morgan Stanley shareholders' equity.
	-	Book value per common share equals common equity divided by period end common shares outstanding.
	-	Tangible book value per common share is a non-GAAP measure that the Firm and investors use to assess capital adequacy.  Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
	-	Tangible MS shareholders' equity is a non-GAAP measure that the Firm and investors use to assess capital adequacy.
	-	Refer to End Notes on pages 14-15 and Legal Notice on page 16.

3

MORGAN STANLEY
Quarterly Consolidated Financial Information and Statistical Data
(unaudited)
		Quarter Ended (Billions)
		June 30, 2010					Mar 31, 2010
		Average tier 1 capital (1)			Average common equity (1)	Return on average common equity		Average tier 1 capital (1)		Average common equity (1)	Return on average common equity
Institutional Securities	$	26.3		$	17.5	30%	$	24.9	$	17.3	39%
Global Wealth Management Group		3.0			6.8	6%		3.0		6.9	5%
Asset Management		2.0			1.7	*		2.2		2.1	2%
Parent capital		20.2			13.6			18.4		11.3
Total - continuing operations			51.5		39.6	12%		48.5		37.6	17%
Discontinued operations			0.2		0.4			0.2		0.5
Firm	$		51.7	$	40.0	17%	$	48.7	$	38.1	16%
		Six Months Ended (Billions)
		June 30, 2010
			Average tier 1 capital (1)		Average common equity (1)	Return on average common equity
Institutional Securities	$		25.6	$	17.4	34%
Global Wealth Management Group			3.0		6.8	6%
Asset Management			2.1		1.9	*
Parent capital			19.3		12.6
Total - continuing operations			50.0		38.7	15%
Discontinued operations			0.2		0.4
Firm	$		50.2	$	39.1	17%

Notes:	-	Excluding the effect of the discrete tax benefits in the quarters ended June 30, 2010 and March 31, 2010, the return on average common equity for Institutional Securities would have been 22% and 30%, respectively.
	-	Beginning with the quarter ended June 30, 2010, the Firm's capital estimate is based on the Required Capital Framework, an internal capital adequacy measure. The quarter ended March 31, 2010 has been restated to conform to the current framework. Quarterly data for 2009 has not been restated.
	-	Refer to End Notes on pages 14-15 and Legal Notice on page 16.

4

MORGAN STANLEY
Quarterly Institutional Securities Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:				Six Months Ended						Percentage
	June 30, 2010			Mar 31, 2010			June 30, 2009			2Q10 vs. 1Q10		2Q10 vs. 2Q09		June 30, 2010			June 30, 2009			Change
Revenues:
Investment banking	$	885		$	887		$	1,126		--		(21	%)	$	1,772		$	1,937		(9	%)
Principal transactions:
Trading		3,109			3,411			1,520		(9	%)	105	%		6,520			2,626		148	%
Investments		(68	)		174			(184	)	*		63	%		106			(974	)	*
Commissions		625			581			565		8	%	11	%		1,206			1,077		12	%
Asset management, distribution and admin. fees		39			26			19		50	%	105	%		65			45		44	%
Other		26			140			311		(81	%)	(92	%)		166			497		(67	%)
Total non-interest revenues		4,616			5,219			3,357		(12	%)	38	%		9,835			5,208		89	%
Interest income		1,367			1,408			1,388		(3	%)	(2	%)		2,775			3,406		(19	%)
Interest expense		1,481			1,283			1,778		15	%	(17	%)		2,764			4,046		(32	%)
Net interest		(114	)		125			(390	)	*		71	%		11			(640	)	*
Net revenues		4,502			5,344			2,967		(16	%)	52	%		9,846			4,568		116	%
Compensation and benefits		1,638			2,171			2,109		(25	%)	(22	%)		3,809			3,149		21	%
Non-compensation expenses		1,294			1,106			1,156		17	%	12	%		2,400			2,181		10	%
Total non-interest expenses		2,932			3,277			3,265		(11	%)	(10	%)		6,209			5,330		16	%
Income / (loss) from continuing operations before taxes		1,570			2,067			(298	)	(24	%)	*			3,637			(762	)	*
Income tax provision / (benefit) from continuing operations		197			330			(168	)	(40	%)	*			527			(775	)	*
Income / (loss) from continuing operations		1,373			1,737			(130	)	(21	%)	*			3,110			13		*
Gain / (loss) from discontinued operations after tax		(25	)		(938	)		315		97	%	*			(963	)		326		*
Net income / (loss)		1,348			799			185		69	%	*			2,147			339		*
Net income / (loss) applicable to non-controlling interests		(9	)		4			3		*		*			(5	)		(10	)	50	%
Net income / (loss) applicable to Morgan Stanley	$	1,357		$	795		$	182		71	%	*		$	2,152		$	349		*
Amounts applicable to Morgan Stanley:
Income / (loss) from continuing operations		1,382			1,733			(122	)	(20	%)	*			3,115			39		*
Gain / (loss) from discontinued operations after tax		(25	)		(938	)		304		97	%	*			(963	)		310		*
Net income / (loss) applicable to Morgan Stanley	$	1,357		$	795		$	182		71	%	*		$	2,152		$	349		*
Return on average common equity
from continuing operations		30	%		39	%		N/A							34%			N/A
Pre-tax profit margin		35	%		39	%		*							37%			*
Compensation and benefits as a % of net revenues		36	%		41	%		71%							39%			69%

Notes:	-	Pre-tax profit margin is a non-GAAP measure that the Firm and investors use to assess operating performance.  Pre-tax profit margin is defined as income / (loss) from continuing operations before taxes, as a % of net revenues.
	-	For the quarter ended March 31, 2010, discontinued operations included a loss of $932 million on the disposition of Revel.
	-	Excluding the effect of the discrete tax benefits in the quarters ended June 30, 2010 and March 31, 2010, the return on average common equity for Institutional Securities would have been 22% and 30%, respectively.
	-	Beginning with the quarter ended June 30, 2010, the Firm's estimation of segment capital is based on the Required Capital Framework, an internal capital adequacy measure.  Segment capital for the quarter ended March 31, 2010 has been restated to conform to this framework.  Quarterly segment capital for 2009, however, has not been restated under this framework.  As a result, the business segment's return on average common equity from continuing operations for the quarter and six months ended June 30, 2009 is not available.
	-	Refer to Legal Notice on page 16.

5

	MORGAN STANLEY
	Quarterly Financial Information and Statistical Data
	Institutional Securities
	(unaudited, dollars in millions)
		Quarter Ended							Percentage Change From:				Six Months Ended						Percentage
		June 30, 2010			Mar 31, 2010		June 30, 2009		2Q10 vs. 1Q10		2Q10 vs. 2Q09		June 30, 2010			June 30, 2009			Change
Investment Banking
Advisory revenue		$	288		$	327	$	268	(12	%)	7	%	$	615		$	679		(9	%)
Underwriting revenue
	Equity		269			264		456	2	%	(41	%)		533			611		(13	%)
	Fixed income		328			296		402	11	%	(18	%)		624			647		(4	%)
Total underwriting revenue		$	597		$	560	$	858	7	%	(30	%)	$	1,157		$	1,258		(8	%)
Total investment banking revenue		$	885		$	887	$	1,126	--		(21	%)	$	1,772		$	1,937		(9	%)
Sales & Trading
	Equity	$	1,415		$	1,419	$	776	--		82	%	$	2,834		$	1,730		64	%
	Fixed income		2,345			2,723		903	(14	%)	160	%		5,068			2,147		136	%
	Other		(101	)		1		35	*		*			(100	)		(769	)	87	%
Total sales & trading net revenue		$	3,659		$	4,143	$	1,714	(12	%)	113	%	$	7,802		$	3,108		151	%
Average Daily 95% / One-Day Value-at-Risk ("VaR") (1)
Primary Market Risk Category ($ millions, pre-tax)
	Interest rate and credit spread	$	132		$	127	$	124
	Equity price	$	29		$	26	$	19
	Foreign exchange rate	$	26		$	32	$	17
	Commodity price	$	29		$	27	$	23
Trading VaR		$	139		$	143	$	132

Note: Refer to End Notes on pages 14-15 and Legal Notice on page 16.

6

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Institutional Securities - Corporate Lending
(unaudited, dollars in billions)
	Quarter Ended									Percentage Change From:
	June 30, 2010			Mar 31, 2010			June 30, 2009			2Q10 vs. 1Q10		2Q10 vs. 2Q09
Corporate funded loans
Investment grade	$	5.1		$	5.7		$	7.2		(11	%)	(29	%)
Non-investment grade		6.8			7.7			10.2		(12	%)	(33	%)
Total corporate funded loans	$	11.9		$	13.4		$	17.4		(11	%)	(32	%)
Corporate lending commitments
Investment grade	$	43.6		$	42.0		$	35.7		4	%	22	%
Non-investment grade		11.6			11.6			6.0		--		93	%
Total corporate lending commitments	$	55.2		$	53.6		$	41.7		3	%	32	%
Corporate funded loans plus lending commitments
Investment grade	$	48.7		$	47.7		$	42.9		2	%	14	%
Non-investment grade	$	18.4		$	19.3		$	16.2		(5	%)	14	%
% investment grade		73	%		71	%		73	%
% non-investment grade		27	%		29	%		27	%
Total corporate funded loans and lending commitments	$	67.1		$	67.0		$	59.1		--		14	%
Hedges	$	20.1		$	22.3		$	31.8		(10	%)	(37	%)

Notes:	-	In connection with certain of its Institutional Securities business activities, the Firm provides loans or lending commitments to select clients related to its leveraged acquisition finance or relationship lending activities.  For a further discussion of this activity, see the Firm's Annual Report on Form 10-K for the year ended December 31, 2009.
	-	For the quarters ended June 30, 2010, Mar 31, 2010 and June 30, 2009, the leveraged acquisition finance portfolio of pipeline commitments and closed deals were $4.9 billion, $5.7 billion and $4.2 billion, respectively.
	-	The hedge balance reflects the notional amount utilized by the lending business.
	-	Refer to Legal Notice on page 16.

7

MORGAN STANLEY
Quarterly Global Wealth Management Group Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:				Six Months Ended						Percentage
	June 30, 2010			Mar 31, 2010			June 30, 2009			2Q10 vs. 1Q10		2Q10 vs. 2Q09		June 30, 2010			June 30, 2009			Change
Revenues:
Investment banking	$	201		$	173		$	165		16	%	22	%	$	374		$	226		65	%
Principal transactions:
Trading		249			342			303		(27	%)	(18	%)		591			549		8	%
Investments		0			6			1		*		*			6			(13	)	*
Commissions		692			682			412		1	%	68	%		1,374			674		104	%
Asset management, distribution and admin. fees		1,572			1,628			816		(3	%)	93	%		3,200			1,327		141	%
Other		72			83			66		(13	%)	9	%		155			112		38	%
Total non-interest revenues		2,786			2,914			1,763		(4	%)	58	%		5,700			2,875		98	%
Interest income		387			339			265		14	%	46	%		726			491		48	%
Interest expense		99			148			105		(33	%)	(6	%)		247			144		72	%
Net interest		288			191			160		51	%	80	%		479			347		38	%
Net revenues		3,074			3,105			1,923		(1	%)	60	%		6,179			3,222		92	%
Compensation and benefits		1,966			1,972			1,362		--		44	%		3,938			2,206		79	%
Non-compensation expenses		901			855			632		5	%	43	%		1,756			968		81	%
Total non-interest expenses		2,867			2,827			1,994		1	%	44	%		5,694			3,174		79	%
Income / (loss) from continuing operations before taxes		207			278			(71	)	(26	%)	*			485			48		*
Income tax provision / (benefit) from continuing operations		61			64			(29	)	(5	%)	*			125			17		*
Income / (loss) from continuing operations		146			214			(42	)	(32	%)	*			360			31		*
Gain / (loss) from discontinued operations after tax		0			0			0		--		--			0			0		--
Net income / (loss)		146			214			(42	)	(32	%)	*			360			31		*
Net income / (loss) applicable to non-controlling interests		36			115			(118	)	(69	%)	*			151			(118	)	*
Net income / (loss) applicable to Morgan Stanley	$	110		$	99		$	76		11	%	45	%	$	209		$	149		40	%
Amounts applicable to Morgan Stanley:
Income / (loss) from continuing operations		110			99			76		11	%	45	%		209			149		40	%
Gain / (loss) from discontinued operations after tax		0			0			0		--		--			0			0		--
Net income / (loss) applicable to Morgan Stanley	$	110		$	99		$	76		11	%	45	%	$	209		$	149		40	%
Return on average common equity
from continuing operations		6	%		5	%		N/A							6	%		N/A
Pre-tax profit margin		7	%		9	%		*							8	%		2%
Compensation and benefits as a % of net revenues		64	%		64	%		71%							64	%		69%

Notes:	-	Results include MSSB effective from May 31, 2009.
	-	The tax provision / (benefit) for all periods includes the Firm's interest in MSSB.
	-	Net income / (loss) applicable to non-controlling interests reflects the 49% allocation of MSSB's pre-tax results to Citigroup.
	-	Pre-tax profit margin is a non-GAAP measure that the Firm and investors use to assess operating performance.  Pre-tax profit margin is defined as income / (loss) from continuing operations before taxes, as a % of net revenues.
	-	Beginning with the quarter ended June 30, 2010, the Firm's estimation of segment capital is based on the Required Capital Framework, an internal capital adequacy measure. Segment capital for the quarter ended March 31, 2010 has been restated to conform to this framework. Quarterly segment capital for 2009, however, has not been restated under this framework. As a result, the business segment's return on average common equity from continuing operations for the quarter and six months ended June 30, 2009 is not available.
	-	Refer to Legal Notice on page 16.

8

	MORGAN STANLEY
	Quarterly Financial Information and Statistical Data
	Global Wealth Management Group
	(unaudited)
		Quarter Ended							Percentage Change From:
		June 30, 2010			Mar 31, 2010		June 30, 2009		2Q10 vs. 1Q10		2Q10 vs. 2Q09
Global representatives			18,087			18,140		18,444	--		(2	%)
Annualized revenue per global
	representative (000's)	$	679		$	685	$	671	(1	%)	1	%
Assets by client segment (billions)
	$10m or more		440			481		389	(9	%)	13	%
	$1m - $10m		627			670		562	(6	%)	12	%
Subtotal - > $1m			1,067			1,151		951	(7	%)	12	%
	$100k - $1m		389			408		412	(5	%)	(6	%)
	< $100k		44			45		57	(2	%)	(23	%)
Total client assets (billions)		$	1,500		$	1,604	$	1,420	(6	%)	6	%
% of assets by client segment > $1m			71%			72%		67%
Fee-based client account assets (billions)		$	396		$	413	$	325	(4	%)	22	%
Fee-based assets as a % of client assets			26%			26%		23%
Bank deposit program (millions)		$	109,518		$	113,545	$	105,675	(4	%)	4	%
Client assets per global
	representative (millions)	$	83		$	88	$	77	(6	%)	8	%
Global retail net new assets (billions)
	Domestic	$	(7.9	)	$	6.9	$	0.4	*		*
	International	$	2.4		$	2.4	$	0.0	--		*
Total retail net new assets (1)		$	(5.5	)	$	9.3	$	0.4	*		*
Global retail locations (1)			881			905		958	(3	%)	(8	%)

Notes:	-	Results include MSSB effective from May 31, 2009.
	-	Annualized revenue per global representative is defined as annualized revenue divided by average global representative headcount.
	-	Fee-based client account assets represents the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
	-	For the quarters ended June 30, 2010, Mar 31, 2010 and June 30, 2009, approximately $52 billion, $56 billion and $50 billion of the assets in the bank deposit program are attributed to Morgan Stanley.
	-	Client assets per global representative represents total client assets divided by period end global representative headcount.
	-	Refer to End Notes on pages 14-15 and Legal Notice on page 16.

9

MORGAN STANLEY
Quarterly Asset Management Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:				Six Months Ended						Percentage
	June 30, 2010			Mar 31, 2010			June 30, 2009			2Q10 vs. 1Q10		2Q10 vs. 2Q09		June 30, 2010			June 30, 2009			Change
Revenues:
Investment banking	$	7		$	-		$	5		*		40	%	$	7		$	6		17	%
Principal transactions:
Trading		(10	)		(1	)		(90	)	*		89	%		(11	)		(87	)	87	%
Investments (1)		16			189			58		(92	%)	(72	%)		205			(288	)	*
Commissions		0			0			0		--		--			0			0		--
Asset management, distribution and admin. fees		383			414			396		(7	%)	(3	%)		797			765		4	%
Other		36			71			12		(49	%)	200	%		107			28		*
Total non-interest revenues		432			673			381		(36	%)	13	%		1,105			424		161	%
Interest income		3			6			4		(50	%)	(25	%)		9			11		(18	%)
Interest expense		25			26			27		(4	%)	(7	%)		51			55		(7	%)
Net interest		(22	)		(20	)		(23	)	(10	%)	4	%		(42	)		(44	)	5	%
Net revenues		410			653			358		(37	%)	15	%		1,063			380		180	%
Compensation and benefits		282			275			331		3	%	(15	%)		557			424		31	%
Non-compensation expenses		214			205			237		4	%	(10	%)		419			449		(7	%)
Total non-interest expenses		496			480			568		3	%	(13	%)		976			873		12	%
Income / (loss) from continuing operations before taxes		(86	)		173			(210	)	*		59	%		87			(493	)	*
Income tax provision / (benefit) from continuing operations		(39	)		43			(120	)	*		68	%		4			(153	)	*
Income / (loss) from continuing operations		(47	)		130			(90	)	*		48	%		83			(340	)	*
Gain / (loss) from discontinued operations after tax		541			95			(19	)	*		*			636			(187	)	*
Net income / (loss)		494			225			(109	)	120	%	*			719			(527	)	*
Net income / (loss) applicable to non-controlling interests (1)		(3	)		116			(1	)	*		(200	%)		113			(1	)	*
Net income / (loss) applicable to Morgan Stanley	$	497		$	109		$	(108	)	*		*		$	606		$	(526	)	*
Amounts applicable to Morgan Stanley:
Income / (loss) from continuing operations		(44	)		14			(89	)	*		51	%		(30	)		(339	)	91	%
Gain / (loss) from discontinued operations after tax		541			95			(19	)	*		*			636			(187	)	*
Net income / (loss) applicable to Morgan Stanley	$	497		$	109		$	(108	)	*		*		$	606		$	(526	)	*
Return on average common equity
from continuing operations		*			2	%		N/A							*			N/A
Pre-tax profit margin		*			26	%		*							8%			*
Compensation and benefits as a % of net revenues		69%			42	%		93%							52%			112%

Notes:	-	Gain / (loss) from discontinued operations primarily includes the results of substantially all of the retail asset management business, including Van Kampen.  The quarter ended June 30, 2010 also included an after-tax gain of approximately $514 million related to the sale of this business.
	-	Pre-tax profit margin is a non-GAAP measure that the Firm and investors use to assess operating performance.  Pre-tax profit margin is defined as income / (loss) from continuing operations before taxes, as a % of net revenues.
	-	Beginning with the quarter ended June 30, 2010, the Firm's estimation of segment capital is based on the Required Capital Framework, an internal capital adequacy measure. Segment capital for the quarter ended March 31, 2010 has been restated to conform to this framework. Quarterly segment capital for 2009, however, has not been restated under this framework. As a result, the business segment's return on average common equity from continuing operations for the quarter and six months ended June 30, 2009 is not available.
	-	Refer to End Notes on pages 14-15 and Legal Notice on page 16.

10

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Asset Management
(unaudited, dollars in billions)
	Quarter Ended									Percentage Change From:				Six Months Ended						Percentage
	June 30, 2010			Mar 31, 2010			June 30, 2009			2Q10 vs. 1Q10		2Q10 vs. 2Q09		June 30, 2010			June 30, 2009			Change
Assets under management or supervision
Net flows by asset class
Core Asset Management
Equity	$	(0.8	)	$	(1.3	)	$	(4.0	)	38	%	80	%	$	(2.1	)	$	(5.6	)	63	%
Fixed income - Long Term		(0.1	)		1.6			(4.4	)	*		98	%		1.5			(8.9	)	*
Money Market		0.1			(8.4	)		(13.0	)	*		*			(8.3	)		(22.3	)	63	%
Alternatives		(0.7	)		0.5			(0.7	)	*		--			(0.2	)		(4.6	)	96	%
Total Core Asset Management		(1.5	)		(7.6	)		(22.1	)	80	%	93	%		(9.1	)		(41.4	)	78	%
Merchant Banking
Private Equity		0.1			0.3			0.0		(67	%)	*			0.4			(0.3	)	*
Infrastructure		0.0			0.0			0.0		--		--			0.0			0.0		--
Real Estate		0.2			0.5			(1.9	)	(60	%)	*			0.7			(2.3	)	*
Total Merchant Banking		0.3			0.8			(1.9	)	(63	%)	*			1.1			(2.6	)	*
Total net flows	$	(1.2	)	$	(6.8	)	$	(24.0	)	82	%	95	%	$	(8.0	)	$	(44.0	)	82	%
Assets under management or supervision by asset class
Core Asset Management
Equity	$	73		$	81		$	67		(10	%)	9	%
Fixed income - Long Term		56			56			49		--		14	%
Money Market		50			51			59		(2	%)	(15	%)
Alternatives		41			43			37		(5	%)	11	%
Total Core Asset Management		220			231			212		(5	%)	4	%
Merchant Banking
Private Equity		5			5			4		--		25	%
Infrastructure		4			4			4		--		--
Real Estate		15			15			17		--		(12	%)
Total Merchant Banking		24			24			25		--		(4	%)
Total Assets Under Management or Supervision	$	244		$	255		$	237		(4	%)	3	%
Share of minority stake assets		7			7			5		--		40	%
Total	$	251		$	262		$	242		(4	%)	4	%

Notes:	-	Data excludes substantially all of the retail asset management business, including Van Kampen.
	-	Alternatives include a range of alternative investment products such as hedge funds, funds of hedge funds and funds of private equity funds.
	-	Net Flows by region [inflow / (outflow)] for the quarters ended June 30, 2010, Mar 31, 2010 and June 30, 2009 are:
		U.S.: $(0.7) billion, $(7.7) billion and $(17.1) billion
		Non-U.S.: $(0.5) billion, $0.9 billion and $(6.9) billion
	-	Assets under management or supervision by region for the quarters ended June 30, 2010, Mar 31, 2010 and June 30, 2009 are:
		U.S.: $164 billion, $170 billion and $163 billion
		Non-U.S.: $80 billion, $85 billion and $74 billion
	-	The share of minority stake assets represents Asset Management's proportional share of assets managed by entities in which it owns a minority stake.
	-	Refer to Legal Notice on page 16.

11

This page represents an addendum to the 2Q 2010 Financial Supplement, Appendix I
	MORGAN STANLEY
	Earnings Per Share
	(unaudited, in millions, except for per share data)
		Quarter Ended						Six Months Ended
		June 30, 2010			Mar 31, 2010			June 30, 2010
	Basic Earnings Per Share
	Income from continuing operations applicable to Morgan Stanley	$	1,437		$	1,845		$	3,282
	Gain / (loss) from discontinued operations applicable to Morgan Stanley after tax		523			(69	)		454
	Net Income / (loss) applicable to Morgan Stanley	$	1,960		$	1,776		$	3,736
	Less: Preferred Dividends (Series A)		(11	)		(11	)		(22	)
	Less: Preferred Dividends (Series B – Mitsubishi)		(196	)		(196	)		(392	)
	Less: Preferred Dividends (Series C – Mitsubishi)		(13	)		(13	)		(26	)
	Income applicable to Morgan Stanley, prior to allocation of income to CIC Equity Units and Participating Restricted Stock Units		1,740			1,556			3,296
	Less: Allocation of income / (loss) to CIC Equity Units:
	From continuing operations		(67	)		(99	)		(165	)
	From discontinued operations		(41	)		6			(36	)
	Total allocation of income to CIC Equity Units		(108	)		(93	)		(201	)
	Less: Allocation of income / (loss) to Participating Restricted Stock Units:
	From continuing operations		(38	)		(54	)		(91	)
	From discontinued operations		(16	)		2			(14	)
	Total allocation of income to Participating Restricted Stock Units		(54	)		(52	)		(105	)
	Earnings / (loss) applicable to Morgan Stanley common shareholders	$	1,578		$	1,411		$	2,990
	Weighted average common shares outstanding		1,318			1,315			1,316
	Earnings per basic common share
	Income / (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	0.84		$	1.12		$	1.96
	Gain / (loss) on discontinued operations applicable to Morgan Stanley common shareholders	$	0.36		$	(0.05	)	$	0.31
	Earnings / (loss) per basic common share	$	1.20		$	1.07		$	2.27
	Diluted Earnings Per Share
	Earnings / (loss) applicable to Morgan Stanley common shareholders	$	1,578		$	1,411		$	2,990
	Income impact of assumed conversions:
	Preferred stock dividends (Series B - Mitsubishi)		196			196			392
	Assumed Conversion of CIC (1)		132			0			132
	Income / (loss) available to common shareholders plus assumed conversions	$	1,906		$	1,607		$	3,514
	Weighted average common shares outstanding		1,318			1,315			1,316
	Effect of dilutive securities:
	Stock options, Restricted Stock Units		4			1			4
	Series B Preferred Stock		310			310			310
	CIC Stock purchase contract		116			0			58
	Weighted average common shares outstanding and common stock equivalents		1,748			1,626			1,688
	Earnings per diluted common share
	Income / (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	0.80		$	1.03		$	1.82
	Gain / (loss) on discontinued operations applicable to Morgan Stanley common shareholders	$	0.29		$	(0.04	)	$	0.26
	Earnings / (loss) per diluted common share	$	1.09		$	0.99		$	2.08

Notes:	-	The Firm calculates earnings per share using the two-class method as described under the accounting guidance for earnings per share.  For further discussion of the Firm's earnings per share calculations, see Note 2 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2009.
	-	Refer to End Notes on pages 14-15 and Legal Notice on page 16.

12

This page represents an addendum to the 2Q 2010 Financial Supplement, Appendix II

MORGAN STANLEY

Earnings Per Share Calculation Under Two-Class Method

Three Months Ended June 30, 2010

(unaudited, in millions, except for per share data)

	Allocation of net income from continuing operations
	(A)	(B)	(C)	(D)	(E)	(F)	(G)		(H)
							(D)+(E)+(F)		(G)/(A)
	Weighted Average # of Shares	% Allocation (3)	Net income from continuing operations applicable to Morgan Stanley (4)	Distributed Earnings (5)	Undistributed Earnings Not in Excess of Reference Dividend (6)	Undistributed Earnings in Excess of Reference Dividend (6)	Total Earnings Allocated		Basic EPS (10)
Basic Common Shares	1,318	89%		$66	$290	$756	$1,112	(7)	$0.84
Participating Restricted Stock Units (1)	45	3%		$2	$10	$26	$38	(8)	N/A
CIC Equity Units (2)	116	8%		$0	$0	$67	$67	(9)	N/A
	1,479	100%	$1,217	$68	$300	$849	$1,217
	Allocation of gain from discontinued operations
	(A)	(B)	(C)	(D)	(E)	(F)	(G)		(H)
							(D)+(E)+(F)		(G)/(A)
	Weighted Average # of Shares	% Allocation (3)	Gain from Discontinued Operations Applicable to Common Shareholders, after Tax (4)	Distributed Earnings (5)	Undistributed Earnings Not in Excess of Reference Dividend (6)	Undistributed Earnings in Excess of Reference Dividend (6)	Total Earnings Allocated		Basic EPS (10)
Basic Common Shares	1,318	89%		$0	$0	$466	$466	(7)	$0.36
Participating Restricted Stock Units (1)	45	3%		$0	$0	$16	$16	(8)	N/A
CIC Equity Units (2)	116	8%		$0	$0	$41	$41	(9)	N/A
	1,479	100%	$523	$0	$0	$523	$523
	Allocation of net income available to common shareholders
	(A)	(B)	(C)	(D)	(E)	(F)	(G)		(H)
							(D)+(E)+(F)		(G)/(A)
	Weighted Average # of Shares	% Allocation (3)	Net income applicable to Morgan Stanley (4)	Distributed Earnings (5)	Undistributed Earnings Not in Excess of Reference Dividend (6)	Undistributed Earnings in Excess of Reference Dividend (6)	Total Earnings Allocated		Basic EPS (10)
Basic Common Shares	1,318	89%		$66	$290	$1,222	$1,578	(7)	$1.20
Participating Restricted Stock Units (1)	45	3%		$2	$10	$42	$54	(8)	N/A
CIC Equity Units (2)	116	8%		$0	$0	$108	$108	(9)	N/A
	1,479	100%	$1,740	$68	$300	$1,372	$1,740

Note: Refer to End Notes on pages 14-15 and Legal Notice on page 16.

13

MORGAN STANLEY

End Notes

Page 3:
(1)	Reflects the regional view of the Firm's consolidated net revenues, on a managed basis, based on the following methodology: Institutional Securities: investment banking - client location, equity capital markets - client location, debt capital markets - revenue recording location, sales & trading - trading desk location. Global Wealth Management: financial advisor location. Asset Management: client location except for the merchant banking business which is based on asset location.  All periods exclude net revenues related to sub stantially all of the retail asset management business, including Van Kampen.
(2)	Goodwill and intangible balances net of allowable mortgage servicing rights deduction for quarters ended June 30, 2010, Mar 31, 2010 and June 30, 2010 of $125 million, $157 million and $173 million, respectively.
(3)	Represents average daily 95% / one-day value-at-risk ("VaR").  Includes non-trading VaR for the quarters ended June 30, 2010, Mar 31, 2010 and June 30, 2009 of $67 million, $62 million and $66 million, respectively.  Counterparty portfolio VaR which reflects adjustments, net of hedges, related to counterparty credit risk and other market risks is included in trading VaR for all periods.  See page 6 for total trading VaR.  For further discussion of the calculation of VaR and the limitations of the Firm's VaR methodology, see Part II, Item 7A "Quantitative and Qualitative Disclosures about Market Risk" in the Firm's Annual Report on Form 10-K for the year ended December 31, 2009.
(4)	In addition to net income applicable to Morgan Stanley, book value increased by $0.51 per share related to an after-tax gain of $717 million on the sale of the Firm's non-controlling interest in its Japanese institutional securities business and $0.10 per share due to an after-tax gain of $133 million on the remeasurement of pension plan liabilities and assets associated with the plan's curtailment.  The latter two items were recorded in other comprehensive income.
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(1)	The Firm’s capital management approach includes an estimation of an amount of capital the Firm and its businesses require over a wide range of market environments.  Beginning with the quarter ended June 30, 2010, the Firm's capital estimation is based on the Required Capital Framework, an internal capital adequacy measure.  Tier 1 capital and common equity are designated to segments based on the capital usage calculated by the Required Capital Framework which considers a combination of a base amount of capital and a n amount of economic capital reserved to absorb an extreme stress event.  The Firm defines parent capital as capital not specifically designated to a particular business segment.  The Firm generally uses parent capital for prospective regulatory requirements, organic growth, acquisitions and other capital needs while maintaining adequate capital ratios.  The Firm's Required Capital is met by regulatory Tier 1 capital.  The framework will evolve over time in response to changes in the business and regulatory environment and to incorporate enhancements in modeling techniques.
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(1)	Represents the loss amount that one would not expect to exceed, on average, more than five times every one hundred trading days in the Firm's trading positions if the portfolio were held constant for a one-day period.  Trading VaR for all periods includes counterparty portfolio VaR which reflects adjustments, net of hedges, related to counterparty credit risk and other market risks.  For further discussion of the calculation of VaR and the limitations of the Firm's VaR methodology, see Part II, Item 7A "Quantitative and Qualitative Disclosures about Market Risk" in the Firm's Annual Report on Form 10-K for the year ended December 31, 2009.
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(1)	For the 2010 periods, the retail net new assets and retail locations metrics have been expanded to include the non-U.S. businesses. The quarter ended June 30, 2010 includes $2.4 billion of net new money inflows and 29 additional retail locations, respectively related to the non-U.S. businesses.  The quarter ended March 31, 2010 has been restated to include $2.4 billion of net new money inflows and 28 additional retail locations, respectively related to non-U.S. businesses.  2009 periods have not been restated and reflect only the U.S. retail branch system.  Certain legacy Smith Barney middle markets activities, which are primarily institutional client focused, are required under the MSSB joint venture agreement to be transitioned from Citigroup to Morgan Stanley.  As this transition progresses, commencing with the quarter ended June 30, 2010, these legacy activities have been excluded from the 2010 retail net new assets metrics.  The quarter ended June 30, 2010 excludes $2.3 billion of these legacy net new money outflows.  The quarters ended March 31, 2010 and June 30, 2009 have been restated to exclude $1.1 billion and $2.5 billion, respectively, of these legacy net new money outflows.

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MORGAN STANLEY

End Notes

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(1)	The quarters ended June 30, 2010 and March 31, 2010 include investment gains / (losses) for certain funds included in the Firm's consolidated financial statements.  The limited partnership interests in these gains were reported in net income / (loss) applicable to non-controlling interests.
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(1)	Prior to the quarter ended June 30, 2010, Morgan Stanley included the CIC Equity Units in diluted EPS using the more dilutive of the two-class method or treasury stock method.  Beginning in the quarter ended June 30, 2010, Morgan Stanley included the CIC Equity Units in diluted EPS using the more dilutive of the two-class method or the if-converted method.  The change in method had no impact to EPS for the quarter ended June 30, 2010.
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(1)	Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of EPS pursuant to the two-class method.  Restricted Stock Units ("RSUs") that pay dividend equivalents subject to vesting are not deemed participating securities and are included in diluted shares outstanding (if dilutive) under the treasury stock method.
(2)	For further information on the CIC Equity Units, see Note 13 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2009.
(3)	The percentage of weighted basic common shares, participating RSUs and weighted CIC Equity Units to the total weighted average of basic common shares, participating RSUs and CIC Equity Units.
(4)	Represents net income from continuing operations, gain / (loss) from discontinued operations (after tax), and net income applicable to Morgan Stanley, respectively, for the quarter ended June 30, 2010 prior to allocations to participating RSUs and CIC Equity Units.
(5)	Distributed earnings represent the dividends declared on common shares and participating RSUs, respectively, for the quarter ended June 30, 2010.  The amount of dividends declared is based upon the number of common shares outstanding as of the dividend record date.  During the quarter ended June 30, 2010, a $0.05 dividend was declared on common shares outstanding and participating RSUs.  Under the terms of the securities purchase agreement for the sale of Equity Units to CIC, if a quarterly dividend is declared above $0.27 (the "reference dividend"), the CIC Equity Units will participate via an increase in the number of shares the Firm will be required to deliver upon settlement of the contract.  No cash dividends will be paid to the CIC Equity Units prior to settlement of the contract.  Therefore, no distributed earnings will be allocated to the CIC Equity Units in the calculation of earnings per share under the two-class method.
(6)	The two-class method assumes all of the earnings for the reporting period are distributed and allocates to the participating RSUs and CIC Equity Units what they would be entitled to based on the contractual rights and obligations of the participating security.  With respect to the CIC Equity Units, the amount allocated is representative of the value of the increase in the number of shares that the Firm would be required to deliver upon settlement of the contract. No actual cash dividends will be paid to the CIC Equity Units. Assumi ng the reference dividend of $0.27 has been paid to the basic common shareholders, CIC Equity Units would receive a pro-rata allocation of the remaining undistributed earnings.
(7)	Total income applicable to common shareholders to be allocated to the common shares in calculating basic and diluted EPS for common shares (see Appendix I).
(8)	Total income applicable to common shareholders to be allocated to the participating RSUs reflected as a deduction to the numerator in determining basic and diluted EPS for common shares (see Appendix I).
(9)	Total income applicable to common shareholders to be allocated to the CIC Equity Units reflected as a deduction to the numerator in determining basic EPS for common shares (see Appendix I).
(10)	Basic and diluted EPS data are required to be presented only for classes of common stock, as described under the accounting guidance for earnings per share.

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MORGAN STANLEY

Legal Notice

This Financial Supplement contains financial, statistical and business-related information, as well as business and segment trends. The information should be read in conjunction with the Firm's second quarter earnings press release issued July 21, 2010.

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