8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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, 2011

	Morgan Stanley
(Exact name of Registrant as specified
in its charter)

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

	1585 Broadway, New York, New York 10036
(Address of principal executive offices, including zip code)

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

(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, 2011, Morgan Stanley (the "Registrant") released financial information with respect to its quarter ended June 30, 2011. 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, 2011 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 9.01. Financial Statements and Exhibits

99.1	Press release of the Registrant, dated July 21, 2011, containing financial information for the quarter ended June 30, 2011.
99.2	Financial Data Supplement of the Registrant for the quarter ended June 30, 2011.

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
	Deputy Chief Financial Officer and Controller
Dated: July 21, 2011

EX-99.1

Exhibit 99.1

Media Relations:  Jeanmarie McFadden   212-761-2433 Investor Relations:  Celeste Mellet Brown   212-761-3896

Morgan Stanley Reports Second Quarter 2011:

● Net Revenues of $9.3 Billion:

● Highest Reported Ever in Fixed Income Underwriting

● Highest Reported in M&A and Equity Sales & Trading Since the Financial Crisis

● Solid Performance Across Other Businesses

● Net Loss of $0.38 per Diluted Share Included Negative Adjustment of $1.02 Related to the Previously Announced Conversion of the Firm’s Preferred Stock Held by Mitsubishi UFJ Financial Group, Inc.

● Morgan Stanley’s Tier 1 Common Ratio Increased 290 Basis Points During the Quarter to 14.6%, an Industry Leading Level

NEW YORK, July 21, 2011 – Morgan Stanley (NYSE: MS) today reported net revenues of $9.3 billion for the second quarter ended June 30, 2011 compared with $8.0 billion a year ago.  Results for the current quarter included positive revenue of $244 million compared with positive revenue of $750 million a year ago related to changes in Morgan Stanley’s debt-related credit spreads (Debt Valuation Adjustment, DVA).1,2  For the current quarter, income from continuing operations applicable to Morgan Stanley was $1.2 billion compared with $1.4 billion in the prior year quarter.  The earnings per share calculation for the current quarter included a negative adjustment of approximately $1.7 billion, or $1.02 per diluted share, related to the previously announced conversion of the Firm’s Series B Preferred Stock, held by Mitsubishi UFJ Financial Group, Inc. (MUFG), into common stock.  After considering this negative adjustment, the Firm reported a loss of $0.38 per diluted share,3from continuing operations applicable to Morgan Stanley for the current quarter compared with income of $0.80 per diluted share, for the same period a year ago.

The Firm’s current quarter compensation to net revenue ratio was 50% with compensation expense of $4.7 billion reflecting an increase in net revenues from a year ago.4  Non-compensation expenses of $2.7 billion reflected higher levels of business activity and the initial costs associated with the previously announced Chinese securities joint venture with Huaxin Securities Co. Ltd.

For the current quarter, the net loss applicable to Morgan Stanley, including discontinued operations, was $0.38 per diluted share, compared with net income of $1.09 per diluted share in the second quarter of 2010.

Business Highlights

● Investment Banking revenues were $1.5 billion – the highest second-quarter revenues since 2007 – reflecting an increase in both advisory and underwriting market volume from a year ago.  The Firm ranked #1 in global completed M&A, #2 in global announced M&A, #2 in global IPOs and #4 in global Equity,5 and arranged virtually all the major technology IPOs of the quarter.

1

● Equity sales and trading net revenues were $1.9 billion – the highest since 2008 – and reflected market share gains.

● Fixed income and commodities net revenues were $2.1 billion reflecting a solid performance in challenging markets.

● Global Wealth Management Group delivered net revenues of $3.5 billion, with client assets of $1.7 trillion and 17,638 global representatives.  Net new assets for the quarter were $2.9 billion with net flows in fee-based accounts of $9.7 billion.  Net revenues and annualized revenue per global representative were the highest since the inception of the Morgan Stanley Smith Barney joint venture (MSSB).

● Asset Management reported net revenues of $645 million and positive net flows of $15.7 billion.

● Morgan Stanley and Huaxin Securities Co. Ltd. launched their previously announced joint venture, Morgan Stanley Huaxin Securities, expanding the Firm’s foothold in China.

James P. Gorman, President and Chief Executive Officer, said, "While global markets remained challenging this quarter, the Firm delivered higher year-over-year revenues across our three major business segments.  Within Institutional Securities, our premier investment-banking franchise ranked #1 in global completed M&A during the quarter and had the highest second-quarter revenues since 2007.  Equities achieved further client gains as revenues rose despite a fall in overall market volumes, while Fixed Income showed continued progress and Wealth Management delivered its highest revenues and FA productivity since the MSSB joint venture was formed and had positive flows, as did Asset Management.  With respect to costs, our re-engineering initiative and additional expense management efforts underscore our focus to ensure that shareholders benefit from our progress.  We also completed the previously announced preferred stock conversion with MUFG, resulting in a one-time, non-cash charge this quarter but removing a significant yearly dividend payment and boosting the Firm’s Tier 1 common ratio to an industry-leading level.  With this additional capital cushion and the clear momentum across our main businesses, we are well positioned to help our clients navigate the constantly changing markets and create additional value for our shareholders."

Summary of Business Segment Results
(dollars in millions)
	Institutional Securities		Global Wealth Management Group		Asset Management
	Net	Pre-Tax	Net	Pre-Tax	Net	Pre-Tax
	Revenues (1)	Income	Revenues	Income	Revenues	Income
2Q 2011	$5,189	$1,457	$3,476	$322	$645	$165
1Q 2011	$3,592	$397	$3,437	$348	$626	$127
2Q 2010	$4,515	$1,595	$3,074	$207	$410	($86)

(1) Net revenues for 2Q 2011, 1Q 2011 and 2Q 2010 include positive (negative) revenue from DVA of $244 million, ($189) million and $750 million, respectively.

INSTITUTIONAL SECURITIES

Institutional Securities reported net revenues for the current quarter of $5.2 billion compared with $4.5 billion a year ago.  Results for the current quarter and the prior year quarter included the DVA related revenue noted above.2  Pre-tax income from continuing operations was $1.5 billion compared with $1.6 billion in the second quarter of last year.  The quarter’s pre-tax margin was 28%.6

● Advisory revenues of $533 million increased 85% from a year ago and reflected higher revenues across all regions.

2

● Underwriting revenues of $940 million increased 57% from last year’s second quarter on higher levels of market activity.  Equity underwriting revenues increased 56% from the prior year to $419 million reflecting revenue growth across all regions.  Fixed income underwriting revenues of $521 million, which were the highest reported for the Firm, increased 59% from last year’s second quarter primarily reflecting higher levels of acquisition finance activity in both the investment grade and non-investment grade markets.

● Fixed income and commodities sales and trading net revenues were $2.1 billion compared with $2.3 billion in the prior year quarter.  DVA resulted in positive revenue of $192 million in the current quarter compared with positive revenue of $602 million a year ago.2  The results for the current quarter reflected higher net revenues related to monoline exposure and increased net revenues in credit products offset by significantly lower results in commodities.

● Equity sales and trading net revenues were $1.9 billion compared with $1.4 billion in last year’s second quarter.2  Net revenues increased from a year ago primarily reflecting higher results in the derivatives and prime brokerage businesses.

● Other sales and trading net losses were $510 million compared with net losses of $100 million in the second quarter of last year.2  The current quarter reflected net losses on hedges to the Firm’s long-term debt compared with net gains in the prior year quarter, and losses associated with corporate lending activity.

● Investment gains were $150 million compared with losses of $68 million in the second quarter of last year.  The increase reflected higher equity valuations in the current quarter.

● The compensation to net revenue ratio for the current quarter was 43% with compensation expense of $2.2 billion reflecting an increase in net revenues from a year ago.4  Non-compensation expenses of $1.5 billion reflected higher levels of business activity and the initial costs of $130 million associated with the new Chinese securities joint venture.

● Morgan Stanley’s average trading Value-at-Risk measured at the 95% confidence level was $145 million compared with $121 million in the first quarter of 2011 and $139 million in the second quarter of the prior year.

GLOBAL WEALTH MANAGEMENT GROUP

Global Wealth Management Group reported pre-tax income from continuing operations of $322 million compared with $207 million in the second quarter of last year.  The quarter’s pre-tax margin was 9%.6  Income after the non controlling interest allocation to Citigroup Inc. and before taxes was $318 million.7

● Net revenues of $3.5 billion increased from $3.1 billion a year ago primarily reflecting higher asset management revenues and gains on securities held for sale.

● The compensation to net revenue ratio for the current quarter was 62% with compensation expense of $2.2 billion.4  Non-compensation expenses of $1.0 billion reflected incremental Federal Deposit Insurance Corporation fees of approximately $45 million.

● Total client assets were $1.7 trillion at quarter-end.  Client assets in fee-based accounts were $509 billion and represented 30% of total client assets.  Net new assets for the quarter were $2.9 billion and net new flows in fee-based accounts were $9.7 billion.

● The 17,638 global representatives at quarter-end achieved average annualized revenue per global representative of $785,000 and total client assets per global representative of $97 million.

3

ASSET MANAGEMENT

Asset Management reported pre-tax income from continuing operations of $165 million compared with a pre-tax loss from continuing operations of $86 million in last year’s second quarter.  Results for the current quarter included gains of $95 million compared with a loss of $1 million in the prior year quarter related to principal investments held by certain consolidated real estate funds.8  The quarter’s pre-tax margin was 26%.6  Income after the non controlling interest allocation and before taxes was $73 million.

● Net revenues of $645 million increased from $410 million a year ago primarily reflecting gains on principal investments in the Real Estate Investing business and higher results in the Traditional Asset Management business.

● The compensation to net revenue ratio for the current quarter was 44% with compensation expense of $285 million.4  Non-compensation expenses were $195 million.

● Assets under management or supervision at June 30, 2011 of $296 billion increased from $244 billion a year ago.  The increase reflected market appreciation and net customer inflows.  In addition, the business recorded positive net flows of $15.7 billion in the current quarter compared with net outflows of $1.2 billion in the second quarter of last year.  The increase in flows for the current quarter reflected the initial sweep of MSSB client cash balances of approximately $18.5 billion into liquidity funds.

CAPITAL

As previously announced, on June 30, 2011 MUFG exchanged all of its shares of Series B Non-Cumulative Non-Voting Perpetual Convertible Preferred Stock into Morgan Stanley common stock.  MUFG received approximately 385 million shares of the Firm’s common stock, including approximately 75 million shares resulting from the adjustment to the conversion ratio pursuant to the transaction agreement.  As a result of the adjustment to the conversion ratio, the Firm incurred a one-time, non-cash negative adjustment of approximately $1.7 billion in its calculation of basic and diluted earnings per share for the three and six month periods ending on June 30, 2011.  This negative adjustment, which was recorded in retained earnings, did not affect Morgan Stanley’s period end common equity as of June 30, 2011 because it was entirely offset by an increase in common stock and paid-in capital.  As a result of the conversion, MUFG did not receive the previously declared dividend that would otherwise have been payable on July 15, 2011 in respect of the Series B Preferred Stock.

Morgan Stanley’s Tier 1 capital ratio, under Basel I, was approximately 16.8% and Tier 1 common ratio was approximately 14.6% at June 30, 2011.  The Firm’s Tier 1 common ratio increased 290 basis points during the current quarter. Approximately 270 basis points of this increase was a result of the MUFG transaction.6, 9

At June 30, 2011, book value and tangible book value per common share were $30.17 and $26.61, respectively, based on 1.9 billion shares outstanding.  Book value and tangible book value per common share were reduced by approximately $2.29 and $1.41, respectively, due to the increase in period end common shares outstanding resulting from the MUFG preferred stock conversion.

OTHER MATTERS

The effective tax rate from continuing operations for the current quarter was 27.9%.

Morgan Stanley’s Board of Directors declared on July 19, 2011 a $0.05 quarterly dividend per common share.  The dividend is payable on August 15, 2011 to common shareholders of record on July 29, 2011.

4

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 1,300 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)

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 Qualitative 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, 2010 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, including any amendments thereto.

5

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

2 Due to DVA, sales and trading net revenue for the quarter ended June 30, 2011 included positive revenue of $244 million (fixed income: $192 million; equity: $52 million) and 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).

3 Includes preferred dividends and other adjustments related to the calculation of earnings per share of approximately $1.8 billion for the quarter ended June 30, 2011 and $382 million for the quarter ended June 30, 2010.  Refer to page 3 of Morgan Stanley’s Financial Supplement accompanying this release for the calculation of earnings per share.

4 The compensation to net revenue ratio is a non-GAAP financial measure that the Firm considers a useful measure for the Firm and investors to assess operating performance.

5 Source: Thomson Reuters – for the period of January 1, 2011 to June 30, 2011 as of July 5, 2011.

6 Pre-tax margin and Tier 1 common ratios are non-GAAP financial measures that the Firm considers to be useful measures that the Firm and investors use to assess operating performance and capital adequacy.  Pre-tax margin represents income (loss) from continuing operations before taxes, divided by net revenues.  The Tier 1 common ratio equals Tier 1 capital (see note 9) less qualifying perpetual preferred stock and qualifying restricted core capital elements, such as qualifying trust preferred securities and qualifying non controlling interests, adjusted for the portion of goodwill and non-servicing intangible assets associated with MSSB non controlling interests divided by risk-weighted assets.

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

8 Results for the second quarter of 2011 and 2010 included pre-tax income of $91 million and a pre-tax loss of $4 million, respectively, related to principal investments held by certain consolidated real estate funds.  The limited partnership interests in these funds are reported in net income (loss) applicable to non controlling interests on page 11 of Morgan Stanley’s Financial Supplement accompanying this release.

9 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, 2011 (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, 2011.

6

MORGAN STANLEY
Quarterly Financial Summary
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Net revenues
Institutional Securities	$	5,189		$	3,592		$	4,515			44	%		15	%	$	8,781		$	9,853			(11	%)
Global Wealth Management Group		3,476			3,437			3,074			1	%		13	%		6,913			6,179			12	%
Asset Management		645			626			410			3	%		57	%		1,271			1,063			20	%
Intersegment Eliminations		(28	)		(20	)		(36	)		(40	%)		22	%		(48	)		(60	)		20	%
Consolidated net revenues	$	9,282		$	7,635		$	7,963			22	%		17	%	$	16,917		$	17,035			(1	%)
Income (loss) from continuing operations before tax
Institutional Securities	$	1,457		$	397		$	1,595			*			(9	%)	$	1,854		$	3,660			(49	%)
Global Wealth Management Group		322			348			207			(7	%)		56	%		670			485			38	%
Asset Management		165			127			(86	)		30	%		*			292			88			*
Intersegment Eliminations		0			0			(13	)		--			*			0			(15	)		*
Consolidated income (loss) from continuing operations before tax	$	1,944		$	872		$	1,703			123	%		14	%	$	2,816		$	4,218			(33	%)
Income (loss) applicable to Morgan Stanley
Institutional Securities	$	990		$	714		$	1,384			39	%		(28	%)	$	1,704		$	3,115			(45	%)
Global Wealth Management Group		180			183			110			(2	%)		64	%		363			209			74	%
Asset Management		19			69			(44	)		(72	%)		*			88			(29	)		*
Intersegment Eliminations		0			0			(11	)		--			*			0			(12	)		*
Consolidated income (loss) applicable to Morgan Stanley	$	1,189		$	966		$	1,439			23	%		(17	%)	$	2,155		$	3,283			(34	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	(558	)	$	736		$	1,578			*			*		$	188		$	2,990			(94	%)
Earnings per basic share:
Income from continuing operations	$	(0.38	)	$	0.50		$	0.84			*			*		$	0.12		$	1.96			(94	%)
Discontinued operations	$	-		$	0.01		$	0.36			*			*		$	0.01		$	0.31			(97	%)
Earnings per basic share	$	(0.38	)	$	0.51		$	1.20			*			*		$	0.13		$	2.27			(94	%)
Earnings per diluted share:
Income from continuing operations	$	(0.38	)	$	0.50		$	0.80			*			*		$	0.12		$	1.82			(93	%)
Discontinued operations	$	-		$	-		$	0.29			--			*		$	0.01		$	0.26			(96	%)
Earnings per diluted share	$	(0.38	)	$	0.50		$	1.09			*			*		$	0.13		$	2.08			(94	%)

Notes:	-	Results for the quarters ended June 30, 2011, March 31, 2011 and June 30, 2010 include positive (negative) revenue of $244 million, $(189) million and $750 million, respectively, related to the movement in Morgan Stanley's credit spreads on certain long-term and short-term debt.
	-	Income (loss) applicable to Morgan Stanley represents consolidated income (loss) from continuing operations applicable to Morgan Stanley before gain (loss) from discontinued operations.

7

MORGAN STANLEY
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Revenues:
Investment banking	$	1,695		$	1,214		$	1,080			40	%		57	%	$	2,909		$	2,140			36	%
Principal transactions:
Trading		3,485			2,977			3,353			17	%		4	%		6,462			7,111			(9	%)
Investments		402			329			(52	)		22	%		*			731			317			131	%
Commissions		1,291			1,449			1,308			(11	%)		(1	%)		2,740			2,568			7	%
Asset management, distribution and admin. fees		2,206			2,109			1,974			5	%		12	%		4,315			3,937			10	%
Other		275			(444	)		159			*			73	%		(169	)		453			*
Total non-interest revenues		9,354			7,634			7,822			23	%		20	%		16,988			16,526			3	%
Interest income		1,957			1,854			1,747			6	%		12	%		3,811			3,483			9	%
Interest expense		2,029			1,853			1,606			9	%		26	%		3,882			2,974			31	%
Net interest		(72	)		1			141			*			*			(71	)		509			*
Net revenues		9,282			7,635			7,963			22	%		17	%		16,917			17,035			(1	%)
Non-interest expenses:
Compensation and benefits		4,675			4,333			3,886			8	%		20	%		9,008			8,302			9	%
Non-compensation expenses:
Occupancy and equipment		401			402			401			--			--			803			791			2	%
Brokerage, clearing and exchange fees		416			405			371			3	%		12	%		821			719			14	%
Information processing and communications		448			445			416			1	%		8	%		893			811			10	%
Marketing and business development		154			147			153			5	%		1	%		301			287			5	%
Professional services		494			428			496			15	%		--			922			891			3	%
Other		750			603			537			24	%		40	%		1,353			1,016			33	%
Total non-compensation expenses		2,663			2,430			2,374			10	%		12	%		5,093			4,515			13	%
Total non-interest expenses		7,338			6,763			6,260			9	%		17	%		14,101			12,817			10	%
Income (loss) from continuing operations before taxes		1,944			872			1,703			123	%		14	%		2,816			4,218			(33	%)
Income tax provision / (benefit) from continuing operations		542			(256	)		240			*			126	%		286			676			(58	%)
Income (loss) from continuing operations		1,402			1,128			1,463			24	%		(4	%)		2,530			3,542			(29	%)
Gain (loss) from discontinued operations after tax		4			2			521			100	%		(99	%)		6			453			(99	%)
Net income (loss)	$	1,406		$	1,130		$	1,984			24	%		(29	%)	$	2,536		$	3,995			(37	%)
Net income (loss) applicable to noncontrolling interests		213			162			24			31	%		*			375			259			45	%
Net income (loss) applicable to Morgan Stanley		1,193			968			1,960			23	%		(39	%)		2,161			3,736			(42	%)
Preferred stock dividend / Other		1,751			232			382			*			*			1,973			746			164	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	(558	)	$	736		$	1,578			*			*		$	188		$	2,990			(94	%)
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		1,189			966			1,439			23	%		(17	%)		2,155			3,283			(34	%)
Gain (loss) from discontinued operations after tax		4			2			521			100	%		(99	%)		6			453			(99	%)
Net income (loss) applicable to Morgan Stanley	$	1,193		$	968		$	1,960			23	%		(39	%)	$	2,161		$	3,736			(42	%)
Pre-tax profit margin		21	%		11	%		21	%								17	%		25	%
Compensation and benefits as a % of net revenues		50	%		57	%		49	%								53	%		49	%
Non-compensation expenses as a % of net revenues		29	%		32	%		30	%								30	%		27	%
Effective tax rate from continuing operations		27.9	%		*			14.1	%								10.2	%		16.0	%

Notes:	-	Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance.  Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	The quarter ended June 30, 2011, preferred stock dividend/other included a one-time negative adjustment of approximately $1.7 billion related to the conversion of Series B Non-Cumulative Non-Voting Perpetual Convertible Preferred Stock held by Mitsubishi UFJ Financial Group, Inc. (MUFG), into Morgan Stanley common stock.
	-	Other revenue for the quarter ended March 31, 2011 included a loss of $655 million related to the Firm's 40% stake in a securities joint venture, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. ("MUMSS"), controlled and managed by our partner MUFG.
	-	The quarter ended March 31, 2011 included a discrete net tax benefit of $447 million from the remeasurement of a deferred tax asset and the reversal of a related valuation allowance that are both associated with the sale of Revel Entertainment Group, LLC. Excluding this discrete tax gain and tax benefit of $230 million related to the MUMSS loss, the effective tax rate for the quarter was 27.6%.
	-	The quarter ended June 30, 2010 included a discrete tax benefit of approximately $345 million related to the remeasurement of tax reserves based on the status of federal and state tax examinations. Excluding this benefit, the effective rate would have been 34.4%.
	-	The six months ended June 30, 2010 included discrete tax gains / benefits of approximately $727 million related to the remeasurement of tax reserves based on the status of federal and state tax examinations and benefits on the repatriation of undistributed earnings on certain non-U.S. subsidiaries that were determined to be indefinitely reinvested abroad.  Excluding these gains / benefits, the effective tax rate would have been 33.3%.
	-	Preferred stock dividend / Other includes allocation of earnings to Participating Restricted Stock Units and China Investment Corporation equity units.

8

MORGAN STANLEY

Quarterly Earnings Per Share

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

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Income (loss) from continuing operations	$	1,402		$	1,128		$	1,463			24	%		(4	%)	$	2,530		$	3,542			(29	%)
Net income (loss) from continuing operations applicable to noncontrolling interest		213			162			24			31	%		*			375			259			45	%
Income from continuing operations applicable to Morgan Stanley		1,189			966			1,439			23	%		(17	%)		2,155			3,283			(34	%)
Less: Preferred Dividends		(24	)		(220	)		(220	)		89	%		89	%		(244	)		(440	)		45	%
Less: MUFG preferred stock conversion		(1,726	)		0			0			*			*			(1,726	)		0			*
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income to CIC Equity Units and Participating Restricted Stock Units		(561	)		746			1,219			*			*			185			2,843			(93	%)
Basic EPS Adjustments:
Less: Allocation of undistributed earnings to CIC Equity Units		0			0			(67	)		--			*			0			(165	)		*
Less: Allocation of earnings to Participating Restricted Stock Units		(1	)		(12	)		(38	)		92	%		97	%		(3	)		(91	)		97	%
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(562	)	$	734		$	1,114			*			*		$	182		$	2,587			(93	%)
Gain (loss) from discontinued operations after tax		4			2			521			100	%		(99	%)		6			453			(99	%)
Gain (loss) from discontinued operations after tax applicable to noncontrolling interests		0			0			0			--			--			0			0			--
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley		4			2			521			100	%		(99	%)		6			453			(99	%)
Less: Allocation of undistributed earnings to CIC Equity Units		0			0			(41	)		--			*			0			(36	)		*
Less: Allocation of earnings to Participating Restricted Stock Units		0			0			(16	)		--			*			0			(14	)		*
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		4			2			464			100	%		(99	%)		6			403			(99	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	(558	)	$	736		$	1,578			*			*		$	188		$	2,990			(94	%)
Average basic common shares outstanding (millions)		1,464			1,456			1,318			1	%		11	%		1,460			1,316			11	%
Earnings per basic share:
Income from continuing operations	$	(0.38	)	$	0.50		$	0.84			*			*		$	0.12		$	1.96			(94	%)
Discontinued operations	$	-		$	0.01		$	0.36			*			*		$	0.01		$	0.31			(97	%)
Earnings per basic share	$	(0.38	)	$	0.51		$	1.20			*			*		$	0.13		$	2.27			(94	%)
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(562	)	$	734		$	1,114			*			*		$	182		$	2,587			(93	%)
Diluted EPS Adjustments:
Income impact of assumed conversions:
Preferred stock dividends (Series B - Mitsubishi)		0			0			196			--			*			0			392			*
Assumed conversion of CIC		0			0			91			--			*			0			91			*
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(562	)	$	734		$	1,401			*			*		$	182		$	3,070			(94	%)
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		4			2			464			100	%		(99	%)		6			403			(99	%)
Assumed conversion of CIC		0			0			41			--			*			0			41			*
Earnings (loss) applicable to common shareholders plus assumed conversions	$	(558	)	$	736		$	1,906			*			*		$	188		$	3,514			(95	%)
Average diluted common shares outstanding and common stock equivalents (millions)		1,464			1,472			1,748			(1	%)		(16	%)		1,477			1,688			(13	%)
Earnings per diluted share:
Income from continuing operations	$	(0.38	)	$	0.50		$	0.80			*			*		$	0.12		$	1.82			(93	%)
Discontinued operations	$	-		$	-		$	0.29			--			*		$	0.01		$	0.26			(96	%)
Earnings per diluted share	$	(0.38	)	$	0.50		$	1.09			*			*		$	0.13		$	2.08			(94	%)

Note:   -  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 page 13 of the financial supplement and Note 2 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2010.

9

EX-99.2

Exhibit 99.2

MORGAN STANLEY
Financial Supplement - 2Q 2011
Table of Contents
	Page #
	1	…………….	Quarterly Financial Summary
	2	…………….	Quarterly Consolidated Income Statement Information
	3	…………….	Quarterly Earnings Per Share Summary
	4 - 5	…………….	Quarterly Consolidated Financial Information and Statistical Data
	6	…………….	Quarterly Institutional Securities Income Statement Information
	7 - 8	…………….	Quarterly Institutional Securities Financial Information and Statistical Data
	9	…………….	Quarterly Global Wealth Management Group Income Statement Information
	10	…………….	Quarterly Global Wealth Management Group Financial Information and Statistical Data
	11	…………….	Quarterly Asset Management Income Statement Information
	12	…………….	Quarterly Asset Management Financial Information and Statistical Data
	13	…………….	Earnings Per Share Appendix I
	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, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Net revenues
Institutional Securities	$	5,189		$	3,592		$	4,515			44	%		15	%	$	8,781		$	9,853			(11	%)
Global Wealth Management Group		3,476			3,437			3,074			1	%		13	%		6,913			6,179			12	%
Asset Management		645			626			410			3	%		57	%		1,271			1,063			20	%
Intersegment Eliminations		(28	)		(20	)		(36	)		(40	%)		22	%		(48	)		(60	)		20	%
Consolidated net revenues	$	9,282		$	7,635		$	7,963			22	%		17	%	$	16,917		$	17,035			(1	%)
Income (loss) from continuing operations before tax
Institutional Securities	$	1,457		$	397		$	1,595			*			(9	%)	$	1,854		$	3,660			(49	%)
Global Wealth Management Group		322			348			207			(7	%)		56	%		670			485			38	%
Asset Management		165			127			(86	)		30	%		*			292			88			*
Intersegment Eliminations		0			0			(13	)		--			*			0			(15	)		*
Consolidated income (loss) from continuing operations before tax	$	1,944		$	872		$	1,703			123	%		14	%	$	2,816		$	4,218			(33	%)
Income (loss) applicable to Morgan Stanley
Institutional Securities	$	990		$	714		$	1,384			39	%		(28	%)	$	1,704		$	3,115			(45	%)
Global Wealth Management Group		180			183			110			(2	%)		64	%		363			209			74	%
Asset Management		19			69			(44	)		(72	%)		*			88			(29	)		*
Intersegment Eliminations		0			0			(11	)		--			*			0			(12	)		*
Consolidated income (loss) applicable to Morgan Stanley	$	1,189		$	966		$	1,439			23	%		(17	%)	$	2,155		$	3,283			(34	%)

Notes:	-	Results for the quarters ended June 30, 2011, March 31, 2011 and June 30, 2010 include positive (negative) revenue of $244 million, $(189) million and $750 million, respectively, related to the movement in Morgan Stanley's credit spreads on certain long-term and short-term debt.
	-	Income (loss) applicable to Morgan Stanley represents consolidated income (loss) from continuing operations applicable to Morgan Stanley before gain (loss) from discontinued operations.
	-	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, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Revenues:
Investment banking	$	1,695		$	1,214		$	1,080			40	%		57	%	$	2,909		$	2,140			36	%
Principal transactions:
Trading		3,485			2,977			3,353			17	%		4	%		6,462			7,111			(9	%)
Investments		402			329			(52	)		22	%		*			731			317			131	%
Commissions		1,291			1,449			1,308			(11	%)		(1	%)		2,740			2,568			7	%
Asset management, distribution and admin. fees		2,206			2,109			1,974			5	%		12	%		4,315			3,937			10	%
Other		275			(444	)		159			*			73	%		(169	)		453			*
Total non-interest revenues		9,354			7,634			7,822			23	%		20	%		16,988			16,526			3	%
Interest income		1,957			1,854			1,747			6	%		12	%		3,811			3,483			9	%
Interest expense		2,029			1,853			1,606			9	%		26	%		3,882			2,974			31	%
Net interest		(72	)		1			141			*			*			(71	)		509			*
Net revenues		9,282			7,635			7,963			22	%		17	%		16,917			17,035			(1	%)
Non-interest expenses:
Compensation and benefits		4,675			4,333			3,886			8	%		20	%		9,008			8,302			9	%
Non-compensation expenses:
Occupancy and equipment		401			402			401			--			--			803			791			2	%
Brokerage, clearing and exchange fees		416			405			371			3	%		12	%		821			719			14	%
Information processing and communications		448			445			416			1	%		8	%		893			811			10	%
Marketing and business development		154			147			153			5	%		1	%		301			287			5	%
Professional services		494			428			496			15	%		--			922			891			3	%
Other		750			603			537			24	%		40	%		1,353			1,016			33	%
Total non-compensation expenses		2,663			2,430			2,374			10	%		12	%		5,093			4,515			13	%
Total non-interest expenses		7,338			6,763			6,260			9	%		17	%		14,101			12,817			10	%
Income (loss) from continuing operations before taxes		1,944			872			1,703			123	%		14	%		2,816			4,218			(33	%)
Income tax provision / (benefit) from continuing operations		542			(256	)		240			*			126	%		286			676			(58	%)
Income (loss) from continuing operations		1,402			1,128			1,463			24	%		(4	%)		2,530			3,542			(29	%)
Gain (loss) from discontinued operations after tax		4			2			521			100	%		(99	%)		6			453			(99	%)
Net income (loss)	$	1,406		$	1,130		$	1,984			24	%		(29	%)	$	2,536		$	3,995			(37	%)
Net income (loss) applicable to noncontrolling interests		213			162			24			31	%		*			375			259			45	%
Net income (loss) applicable to Morgan Stanley		1,193			968			1,960			23	%		(39	%)		2,161			3,736			(42	%)
Preferred stock dividend / Other		1,751			232			382			*			*			1,973			746			164	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	(558	)	$	736		$	1,578			*			*		$	188		$	2,990			(94	%)
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		1,189			966			1,439			23	%		(17	%)		2,155			3,283			(34	%)
Gain (loss) from discontinued operations after tax		4			2			521			100	%		(99	%)		6			453			(99	%)
Net income (loss) applicable to Morgan Stanley	$	1,193		$	968		$	1,960			23	%		(39	%)	$	2,161		$	3,736			(42	%)
Pre-tax profit margin		21	%		11	%		21	%								17	%		25	%
Compensation and benefits as a % of net revenues		50	%		57	%		49	%								53	%		49	%
Non-compensation expenses as a % of net revenues		29	%		32	%		30	%								30	%		27	%
Effective tax rate from continuing operations		27.9	%		*			14.1	%								10.2	%		16.0	%

Notes:	-	Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	The quarter ended June 30, 2011, preferred stock dividend/other included a one-time negative adjustment of approximately $1.7 billion related to the conversion of Series B Non-Cumulative Non-Voting Perpetual Convertible Preferred Stock held by Mitsubishi UFJ Financial Group, Inc. (MUFG), into Morgan Stanley common stock (MUFG conversion).
	-	Other revenue for the quarter ended March 31, 2011 included a loss of $655 million related to the Firm's 40% stake in a securities joint venture, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. ("MUMSS"), controlled and managed by our partner MUFG.
	-	The quarter ended March 31, 2011 included a discrete net tax benefit of $447 million from the remeasurement of a deferred tax asset and the reversal of a related valuation allowance that are both associated with the sale of Revel Entertainment Group, LLC (Revel). Excluding this discrete tax gain and tax benefit of $230 million related to the MUMSS loss, the effective tax rate for the quarter was 27.6%.
	-	The quarter ended June 30, 2010 included a discrete tax benefit of approximately $345 million related to the remeasurement of tax reserves based on the status of federal and state tax examinations. Excluding this benefit, the effective rate would have been 34.4%.
	-	The six months ended June 30, 2010 included discrete tax gains / benefits of approximately $727 million related to the remeasurement of tax reserves based on the status of federal and state tax examinations and benefits on the repatriation of undistributed earnings on certain non-U.S. subsidiaries that were determined to be indefinitely reinvested abroad. Excluding these gains / benefits, the effective tax rate would have been 33.3%.
	-	Preferred stock dividend / Other includes allocation of earnings to Participating Restricted Stock Units (RSUs) and China Investment Corporation (CIC) equity units.
	-	Refer to Legal Notice on page 16.

2

MORGAN STANLEY

Quarterly Earnings Per Share

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

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Income (loss) from continuing operations	$	1,402		$	1,128		$	1,463			24	%		(4	%)	$	2,530		$	3,542			(29	%)
Net income (loss) from continuing operations applicable to noncontrolling interest		213			162			24			31	%		*			375			259			45	%
Income from continuing operations applicable to Morgan Stanley		1,189			966			1,439			23	%		(17	%)		2,155			3,283			(34	%)
Less: Preferred Dividends		(24	)		(220	)		(220	)		89	%		89	%		(244	)		(440	)		45	%
Less: MUFG preferred stock conversion		(1,726	)		0			0			*			*			(1,726	)		0			*
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income to CIC Equity Units and Participating Restricted Stock Units		(561	)		746			1,219			*			*			185			2,843			(93	%)
Basic EPS Adjustments:
Less: Allocation of undistributed earnings to CIC Equity Units		0			0			(67	)		--			*			0			(165	)		*
Less: Allocation of earnings to Participating Restricted Stock Units		(1	)		(12	)		(38	)		92	%		97	%		(3	)		(91	)		97	%
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(562	)	$	734		$	1,114			*			*		$	182		$	2,587			(93	%)
Gain (loss) from discontinued operations after tax		4			2			521			100	%		(99	%)		6			453			(99	%)
Gain (loss) from discontinued operations after tax applicable to noncontrolling interests		0			0			0			--			--			0			0			--
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley		4			2			521			100	%		(99	%)		6			453			(99	%)
Less: Allocation of undistributed earnings to CIC Equity Units		0			0			(41	)		--			*			0			(36	)		*
Less: Allocation of earnings to Participating Restricted Stock Units		0			0			(16	)		--			*			0			(14	)		*
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		4			2			464			100	%		(99	%)		6			403			(99	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	(558	)	$	736		$	1,578			*			*		$	188		$	2,990			(94	%)
Average basic common shares outstanding (millions)		1,464			1,456			1,318			1	%		11	%		1,460			1,316			11	%
Earnings per basic share:
Income from continuing operations	$	(0.38	)	$	0.50		$	0.84			*			*		$	0.12		$	1.96			(94	%)
Discontinued operations	$	-		$	0.01		$	0.36			*			*		$	0.01		$	0.31			(97	%)
Earnings per basic share	$	(0.38	)	$	0.51		$	1.20			*			*		$	0.13		$	2.27			(94	%)
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(562	)	$	734		$	1,114			*			*		$	182		$	2,587			(93	%)
Diluted EPS Adjustments:
Income impact of assumed conversions:
Preferred stock dividends (Series B - Mitsubishi)		0			0			196			--			*			0			392			*
Assumed conversion of CIC		0			0			91			--			*			0			91			*
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(562	)	$	734		$	1,401			*			*		$	182		$	3,070			(94	%)
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		4			2			464			100	%		(99	%)		6			403			(99	%)
Assumed conversion of CIC		0			0			41			--			*			0			41			*
Earnings (loss) applicable to common shareholders plus assumed conversions	$	(558	)	$	736		$	1,906			*			*		$	188		$	3,514			(95	%)
Average diluted common shares outstanding and common stock equivalents (millions)		1,464			1,472			1,748			(1	%)		(16	%)		1,477			1,688			(13	%)
Earnings per diluted share:
Income from continuing operations	$	(0.38	)	$	0.50		$	0.80			*			*		$	0.12		$	1.82			(93	%)
Discontinued operations	$	-		$	-		$	0.29			--			*		$	0.01		$	0.26			(96	%)
Earnings per diluted share	$	(0.38	)	$	0.50		$	1.09			*			*		$	0.13		$	2.08			(94	%)

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 page 13 of the financial supplement and Note 2 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2010.
	-	Refer to Legal Notice on page 16.

3

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited)

	Quarter Ended									Percentage Change From:						Six Months Ended				Percentage
	June 30, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011		June 30, 2010		Change
Regional revenue (1)
Americas	$	6,629		$	5,490		$	5,673			21	%		17	%	$	12,119	$	11,873		2	%
EMEA (Europe, Middle East, Africa)		1,572			1,704			1,720			(8	%)		(9	%)		3,276		3,726		(12	%)
Asia		1,081			441			570			145	%		90	%		1,522		1,436		6	%
Consolidated net revenues	$	9,282		$	7,635		$	7,963			22	%		17	%	$	16,917	$	17,035		(1	%)
Worldwide employees		62,964			62,494			61,958			1	%		2	%
Total assets	$	830,747		$	836,185		$	809,456			(1	%)		3	%
Firmwide Deposits		65,525			63,495			61,368			3	%		7	%
Consolidated assets under management or supervision (billions):
Asset Management		296			276			244			7	%		21	%
Global Wealth Management		516			510			403			1	%		28	%
Total		812			786			647			3	%		26	%
Common equity (2)		58,199			48,589			41,415			20	%		41	%
Preferred equity (2)		1,508			9,597			9,597			(84	%)		(84	%)
Morgan Stanley shareholders' equity		59,707			58,186			51,012			3	%		17	%
Junior subordinated debt issued to capital trusts		4,826			4,845			10,508			--			(54	%)
Less: Goodwill and intangible assets (3)		(6,860	)		(6,916	)		(7,148	)		1	%		4	%
Tangible Morgan Stanley shareholders' equity	$	57,673		$	56,115		$	54,372			3	%		6	%
Tangible common equity	$	51,339		$	41,673		$	34,267			23	%		50	%
Leverage Ratio		14.4	x		14.9	x		14.9	x
Return on average common equity
from continuing operations		*			6.2	%		12.2	%
Return on average common equity		*			6.2	%		17.4	%
Period end common shares outstanding (000's)		1,929,033			1,545,064			1,397,007			25	%		38	%
Book value per common share (4)	$	30.17		$	31.45		$	29.65			(4	%)		2	%
Tangible book value per common share (4)	$	26.61		$	26.97		$	24.53			(1	%)		8	%

Notes:	-	All data presented in millions except ratios, book values and number of employees.
	-	Consolidated assets under management has been recast to exclude the share of minority stake assets which represents Asset Management's proportional share of assets managed by entities in which it owns a minority stake.
	-	Goodwill and intangible assets exclude noncontrolling interests and reflect the Firm's share of Morgan Stanley Smith Barney (MSSB) goodwill and intangible assets.
	-	Tangible common equity is a non-GAAP measure that the Firm considers to be a useful 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 considers to be a useful measure that the Firm and investors use to assess capital adequacy. Leverage ratio equals total assets divided by tangible Morgan Stanley shareholders' equity.
	-	For the quarter ended June 30, 2011, the negative adjustment related to the MUFG conversion was included in the numerator in the calculation of the return on average common equity. Excluding this negative adjustment, the return on average common equity for the Firm would have been 9%.
	-	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 considers to be a useful 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 Morgan Stanley shareholders' equity is a non-GAAP measure that the Firm considers to be a useful 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.

4

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited, dollars in billions)

	Quarter Ended
	June 30, 2011							Mar 31, 2011							June 30, 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			Average tier 1 capital (1)		Average common equity (1)		Return on average common equity
Institutional Securities	$	25.1	$	22.1		*		$	23.0	$	20.7		10	%	$	26.8	$	17.8		29	%
Global Wealth Management Group		3.4		7.1		*			3.1		6.7		9	%		3.0		6.8		6	%
Asset Management		1.4		2.0		*			1.4		1.9		12	%		1.6		2.0		*
Parent capital		20.7		18.4					21.8		18.8					20.0		13.0
Total - continuing operations		50.6		49.6		*			49.3		48.1		6	%		51.4		39.6		12	%
Discontinued operations		0.0		0.0					0.0		0.0					0.2		0.4
Firm	$	50.6	$	49.6		*		$	49.3	$	48.1		6	%	$	51.6	$	40.0		17	%
	Six Months Ended														Six Months Ended
	June 30, 2011														June 30, 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	$	24.1	$	21.2		*									$	25.8	$	17.6		34	%
Global Wealth Management Group		3.2		7.0		4	%									3.0		6.8		6	%
Asset Management		1.4		2.0		*										1.7		2.1		*
Parent capital		21.3		18.7												19.4		12.2
Total - continuing operations		50.0		48.9		1	%									49.9		38.7		15	%
Discontinued operations		0.0		0.0												0.2		0.4
Firm	$	50.0	$	48.9		1	%								$	50.1	$	39.1		17	%

Notes:	-	For the quarter and six months ended June 30, 2011 the negative adjustment of $1.7 billion related to the MUFG conversion was allocated to the business segments and included in the numerator for the purpose of calculating the  return on average common equity as follows: Institutional Securities $1.4 billion, Global Wealth Management $0.2 billion and Asset Management $0.1 billion.
		Excluding this negative adjustment, the return on average common equity for the quarter and six months ended June 30, 2011 would have been:
		Quarter: Firm: 9%, Institutional Securities: 18%, Global Wealth Management: 10% and Asset Management: 4%
		Six Months: Firm: 8%, Institutional Securities: 14%, Global Wealth Management: 10% and Asset Management: 8%
		The return on average common equity is a non-GAAP measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance.
	-	Excluding the discrete tax benefits for the quarters ended March 31, 2011 and June 30, 2010, the return on average common equity for Institutional Securities would have been 1% and 22%, respectively.
		Excluding the discrete tax benefits for the six months ended June 30, 2010, the return on average common equity for Institutional Securities would have been 26%.
	-	Refer to End Notes on pages 14-15 and Legal Notice on page 16.

5

MORGAN STANLEY

Quarterly Institutional Securities Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Revenues:
Investment banking	$	1,473		$	1,008		$	885			46	%		66	%	$	2,481		$	1,772			40	%
Principal transactions:
Trading		3,209			2,646			3,116			21	%		3	%		5,855			6,534			(10	%)
Investments		150			143			(68	)		5	%		*			293			106			176	%
Commissions		603			670			617			(10	%)		(2	%)		1,273			1,197			6	%
Asset management, distribution and admin. fees		34			31			39			10	%		(13	%)		65			65			--
Other		130			(573	)		51			*			155	%		(443	)		193			*
Total non-interest revenues		5,599			3,925			4,640			43	%		21	%		9,524			9,867			(3	%)
Interest income		1,573			1,480			1,359			6	%		16	%		3,053			2,755			11	%
Interest expense		1,983			1,813			1,484			9	%		34	%		3,796			2,769			37	%
Net interest		(410	)		(333	)		(125	)		(23	%)		*			(743	)		(14	)		*
Net revenues		5,189			3,592			4,515			44	%		15	%		8,781			9,853			(11	%)
Compensation and benefits		2,240			1,953			1,637			15	%		37	%		4,193			3,806			10	%
Non-compensation expenses		1,492			1,242			1,283			20	%		16	%		2,734			2,387			15	%
Total non-interest expenses		3,732			3,195			2,920			17	%		28	%		6,927			6,193			12	%
Income (loss) from continuing operations before taxes		1,457			397			1,595			*			(9	%)		1,854			3,660			(49	%)
Income tax provision / (benefit) from continuing operations		350			(378	)		220			*			59	%		(28	)		550			*
Income (loss) from continuing operations		1,107			775			1,375			43	%		(19	%)		1,882			3,110			(39	%)
Gain (loss) from discontinued operations after tax		1			(3	)		(27	)		*			*			(2	)		(963	)		100	%
Net income (loss)		1,108			772			1,348			44	%		(18	%)		1,880			2,147			(12	%)
Net income (loss) applicable to noncontrolling interests		117			61			(9	)		92	%		*			178			(5	)		*
Net income (loss) applicable to Morgan Stanley	$	991		$	711		$	1,357			39	%		(27	%)	$	1,702		$	2,152			(21	%)
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		990			714			1,384			39	%		(28	%)		1,704			3,115			(45	%)
Gain (loss) from discontinued operations after tax		1			(3	)		(27	)		*			*			(2	)		(963	)		100	%
Net income (loss) applicable to Morgan Stanley	$	991		$	711		$	1,357			39	%		(27	%)	$	1,702		$	2,152			(21	%)
Return on average common equity
from continuing operations		*			10	%		29	%								*			34	%
Pre-tax profit margin		28	%		11	%		35	%								21	%		37	%
Compensation and benefits as a % of net revenues		43	%		54	%		36	%								48	%		39	%

Notes:	-	Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	Other revenues for the quarter ended March 31, 2011 included a loss of $655 million related to MUMSS.
	-	For the quarter and six months ended June 30, 2011, the negative adjustment related to the MUFG conversion was included in the numerator in the calculation of the return on average common equity. Excluding this negative adjustment, the return on average common equity for Institutional Securities would have been 18% and 14%, respectively, for the quarter and six months ended June 30, 2011.
	-	The quarter ended March 31, 2011 included a discrete net tax benefit of $447 million from the remeasurement of a deferred tax asset and the reversal of a related valuation allowance that are both associated with the sale of Revel and the tax benefit of $230 million related to the MUMSS loss.
	-	Excluding the discrete tax benefits for the quarter and six months ended June 30, 2010, the return on average common equity for Institutional Securities would have been 22% and 26%, respectively.
	-	Refer to Legal Notice on page 16.

6

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, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Investment Banking
Advisory revenues	$	533		$	385		$	288			38	%		85	%	$	918		$	615			49	%
Underwriting revenues
Equity		419			285			269			47	%		56	%		704			533			32	%
Fixed income		521			338			328			54	%		59	%		859			624			38	%
Total underwriting revenues		940			623			597			51	%		57	%		1,563			1,157			35	%
Total investment banking revenues	$	1,473		$	1,008		$	885			46	%		66	%	$	2,481		$	1,772			40	%
Sales & Trading
Equity	$	1,853		$	1,702		$	1,415			9	%		31	%	$	3,555		$	2,834			25	%
Fixed income and Commodities		2,093			1,770			2,332			18	%		(10	%)		3,863			5,049			(23	%)
Other		(510	)		(458	)		(100	)		(11	%)		*			(968	)		(101	)		*
Total sales & trading net revenues	$	3,436		$	3,014		$	3,647			14	%		(6	%)	$	6,450		$	7,782			(17	%)
Investments & Other
Investments	$	150		$	143		$	(68	)		5	%		*		$	293		$	106			176	%
Other		130			(573	)		51			*			155	%		(443	)		193			*
Total investments & other revenues	$	280		$	(430	)	$	(17	)		*			*		$	(150	)	$	299			*
Total Institutional Securities net revenues	$	5,189		$	3,592		$	4,515			44	%		15	%	$	8,781		$	9,853			(11	%)
Average Daily 95% / One-Day Value-at-Risk ("VaR") (1)
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread	$	131		$	105		$	132
Equity price	$	31		$	28		$	29
Foreign exchange rate	$	20		$	18		$	26
Commodity price	$	30		$	33		$	29
Trading VaR	$	145		$	121		$	139

Notes:	-	Other revenues for the quarter ended March 31, 2011 included a loss of $655 million related to MUMSS.
	-	Refer to End Notes on pages 14-15 and Legal Notice on page 16.

7

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Institutional Securities - Corporate Lending

(unaudited, dollars in billions)

	Quarter Ended									Percentage Change From:
	June 30, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010
Corporate funded loans
Investment grade	$	7.2		$	5.3		$	5.1			36	%		41	%
Non-investment grade		7.1			6.5			6.8			9	%		4	%
Total corporate funded loans	$	14.3		$	11.8		$	11.9			21	%		20	%
Corporate lending commitments
Investment grade	$	53.2		$	48.7		$	43.6			9	%		22	%
Non-investment grade		18.5			14.8			11.6			25	%		59	%
Total corporate lending commitments	$	71.7		$	63.5		$	55.2			13	%		30	%
Corporate funded loans plus lending commitments
Investment grade	$	60.4		$	54.0		$	48.7			12	%		24	%
Non-investment grade	$	25.6		$	21.3		$	18.4			20	%		39	%
% investment grade		70	%		72	%		73	%
% non-investment grade		30	%		28	%		27	%
Total corporate funded loans and lending commitments	$	86.0		$	75.3		$	67.1			14	%		28	%
Hedges	$	34.0		$	23.9		$	20.1			42	%		69	%

Notes:	-	In connection with certain of its Institutional Securities business activities, the Firm provides loans or lending commitments to select clients related to its event driven 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, 2010.
	-	For the quarters ended June 30, 2011, March 31, 2011 and June 30, 2010 the leveraged acquisition finance portfolio of pipeline commitments and closed deals to non-investment grade borrowers were $7.2 billion, $3.7 billion and $4.9 billion, respectively.
	-	The hedge balance reflects the notional amount utilized by the lending business.
	-	Refer to Legal Notice on page 16.

8

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, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Revenues:
Investment banking	$	219		$	204		$	201			7	%		9	%	$	423		$	374			13	%
Principal transactions:
Trading		289			334			249			(13	%)		16	%		623			591			5	%
Investments		5			4			0			25	%		*			9			6			50	%
Commissions		689			779			692			(12	%)		--			1,468			1,374			7	%
Asset management, distribution and admin. fees		1,781			1,683			1,572			6	%		13	%		3,464			3,200			8	%
Other		145			91			72			59	%		101	%		236			155			52	%
Total non-interest revenues		3,128			3,095			2,786			1	%		12	%		6,223			5,700			9	%
Interest income		466			454			387			3	%		20	%		920			726			27	%
Interest expense		118			112			99			5	%		19	%		230			247			(7	%)
Net interest		348			342			288			2	%		21	%		690			479			44	%
Net revenues		3,476			3,437			3,074			1	%		13	%		6,913			6,179			12	%
Compensation and benefits		2,150			2,125			1,966			1	%		9	%		4,275			3,938			9	%
Non-compensation expenses		1,004			964			901			4	%		11	%		1,968			1,756			12	%
Total non-interest expenses		3,154			3,089			2,867			2	%		10	%		6,243			5,694			10	%
Income (loss) from continuing operations before taxes		322			348			207			(7	%)		56	%		670			485			38	%
Income tax provision / (benefit) from continuing operations		138			91			61			52	%		126	%		229			125			83	%
Income (loss) from continuing operations		184			257			146			(28	%)		26	%		441			360			23	%
Gain (loss) from discontinued operations after tax		0			0			0			--			--			0			0			--
Net income (loss)		184			257			146			(28	%)		26	%		441			360			23	%
Net income (loss) applicable to noncontrolling interests		4			74			36			(95	%)		(89	%)		78			151			(48	%)
Net income (loss) applicable to Morgan Stanley	$	180		$	183		$	110			(2	%)		64	%	$	363		$	209			74	%
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		180			183			110			(2	%)		64	%		363			209			74	%
Gain (loss) from discontinued operations after tax		0			0			0			--			--			0			0			--
Net income (loss) applicable to Morgan Stanley	$	180		$	183		$	110			(2	%)		64	%	$	363		$	209			74	%
Return on average common equity
from continuing operations		*			9	%		6	%								4	%		6	%
Pre-tax profit margin		9	%		10	%		7	%								10	%		8	%
Compensation and benefits as a % of net revenues		62	%		62	%		64	%								62	%		64	%

Notes:	-	The tax provision / (benefit) for all periods includes the Firm's interest in MSSB.
	-	Net income (loss) applicable to noncontrolling interests reflects the 49% allocation of MSSB's pre-tax results to Citigroup.
	-	For the quarter and six months ended June 30, 2011, the negative adjustment related to the MUFG conversion was included in the numerator in the calculation of the return on average common equity.  Excluding this negative adjustment, the return on average common equity for Global Wealth Management would have been 10% and 10%, respectively, for the quarter and six months ended June 30, 2011.
	-	Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	Refer to Legal Notice on page 16.

9

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Global Wealth Management Group

(unaudited)

	Quarter Ended									Percentage Change From:
	June 30, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010
Global representatives		17,638			17,800			18,087			(1	%)		(2	%)
Annualized revenue per global
representative (000's)	$	785		$	767		$	679			2	%		16	%
Assets by client segment (billions)
$10m or more		539			545			440			(1	%)		23	%
$1m - $10m		735			733			627			--			17	%
Subtotal - > $1m		1,274			1,278			1,067			--			19	%
$100k - $1m		397			401			389			(1	%)		2	%
< $100k		38			39			44			(3	%)		(14	%)
Total client assets (billions)	$	1,709		$	1,718		$	1,500			(1	%)		14	%
% of assets by client segment > $1m		75	%		74	%		71	%
Fee-based client account assets (billions)	$	509		$	501		$	396			2	%		29	%
Fee-based assets as a % of client assets		30	%		29	%		26	%
Bank deposit program (millions)	$	110,354		$	111,502		$	109,518			(1	%)		1	%
Client assets per global
representative (millions)	$	97		$	97		$	83			--			17	%
Global retail net new assets (billions)	$	2.9		$	11.4		$	(5.5	)		(75	%)		*
Global fee based asset flows (billions)	$	9.7		$	17.8		$	6.3			(46	%)		54	%
Global retail locations		804			832			881			(3	%)		(9	%)

Notes:	-	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, 2011, March 31, 2011 and June 30, 2010, approximately $56 billion, $54 billion and $52 billion, respectively, of the assets in the bank deposit program are attributable to Morgan Stanley.
	-	Global fee based asset flows represents the net asset flows, excluding interest and dividends, in client accounts where the basis of payment for services is a fee calculated on those assets.
	-	Client assets per global representative represents total client assets divided by period end global representative headcount.
	-	Refer to Legal Notice on page 16.

10

MORGAN STANLEY

Quarterly Asset Management Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Revenues:
Investment banking	$	3		$	2		$	7			50	%		(57	%)	$	5		$	7			(29	%)
Principal transactions:
Trading		(11	)		(1	)		(10	)		*			(10	%)		(12	)		(11	)		(9	%)
Investments (1)		247			182			16			36	%		*			429			205			109	%
Commissions		0			0			0			--			--			0			0			--
Asset management, distribution and admin. fees		413			409			383			1	%		8	%		822			797			3	%
Other		3			42			36			(93	%)		(92	%)		45			106			(58	%)
Total non-interest revenues		655			634			432			3	%		52	%		1,289			1,104			17	%
Interest income		3			4			3			(25	%)		--			7			9			(22	%)
Interest expense		13			12			25			8	%		(48	%)		25			50			(50	%)
Net interest		(10	)		(8	)		(22	)		(25	%)		55	%		(18	)		(41	)		56	%
Net revenues		645			626			410			3	%		57	%		1,271			1,063			20	%
Compensation and benefits		285			255			282			12	%		1	%		540			557			(3	%)
Non-compensation expenses		195			244			214			(20	%)		(9	%)		439			418			5	%
Total non-interest expenses		480			499			496			(4	%)		(3	%)		979			975			--
Income (loss) from continuing operations before taxes		165			127			(86	)		30	%		*			292			88			*
Income tax provision / (benefit) from continuing operations		54			31			(39	)		74	%		*			85			4			*
Income (loss) from continuing operations		111			96			(47	)		16	%		*			207			84			146	%
Gain (loss) from discontinued operations after tax		3			5			541			(40	%)		(99	%)		8			635			(99	%)
Net income (loss)		114			101			494			13	%		(77	%)		215			719			(70	%)
Net income (loss) applicable to noncontrolling interests (1)		92			27			(3	)		*			*			119			113			5	%
Net income (loss) applicable to Morgan Stanley	$	22		$	74		$	497			(70	%)		(96	%)	$	96		$	606			(84	%)
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		19			69			(44	)		(72	%)		*			88			(29	)		*
Gain (loss) from discontinued operations after tax		3			5			541			(40	%)		(99	%)		8			635			(99	%)
Net income (loss) applicable to Morgan Stanley	$	22		$	74		$	497			(70	%)		(96	%)	$	96		$	606			(84	%)
Return on average common equity
from continuing operations		*			12	%		*									*			*
Pre-tax profit margin		26	%		20	%		*									23	%		8	%
Compensation and benefits as a % of net revenues		44	%		41	%		69	%								43	%		52	%

Notes:	-	For the quarter and six months ended June 30, 2011, the negative adjustment related to the MUFG conversion was included in the numerator in the calculation of the return on average common equity. Excluding this negative adjustment, the return on average common equity for Asset Management would have been 4% and 8%, respectively, for the quarter and six months ended June 30, 2011.
	-	Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	Refer to End Notes on pages 14-15 and Legal Notice on page 16.

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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, 2011			Mar 31, 2011			June 30, 2010			Mar 31, 2011			June 30, 2010			June 30, 2011			June 30, 2010			Change
Net Revenues
Traditional Asset Management	$	366		$	325		$	255			13	%		44	%	$	691		$	541			28	%
Real Estate Investing (1)		175			118			61			48	%		187	%		293			262			12	%
Merchant Banking (2)		104			183			94			(43	%)		11	%		287			260			10	%
Total Asset Management	$	645		$	626		$	410			3	%		57	%	$	1,271		$	1,063			20	%
Assets under management or supervision
Net flows by asset class (3)
Traditional Asset Management
Equity	$	1.4		$	2.0		$	(0.9	)		(30	%)		*		$	3.4		$	(1.4	)		*
Fixed income		(2.4	)		(0.6	)		(1.3	)		*			(85	%)		(3.0	)		0.5			*
Liquidity		16.5			1.6			0.1			*			*			18.1			(8.3	)		*
Alternatives		0.2			(0.1	)		0.4			*			(50	%)		0.1			(0.2	)		*
Total Traditional Asset Management		15.7			2.9			(1.7	)		*			*			18.6			(9.4	)		*
Real Estate Investing		(0.1	)		0.2			0.2			*			*			0.1			0.7			(86	%)
Merchant Banking
Private Equity		0.1			0.0			0.1			*			--			0.1			0.4			(75	%)
FrontPoint (4)		0.0			(1.7	)		0.2			*			*			(1.7	)		0.3			*
Total Merchant Banking		0.1			(1.7	)		0.3			*			(67	%)		(1.6	)		0.7			*
Total net flows	$	15.7		$	1.4		$	(1.2	)		*			*		$	17.1		$	(8.0	)		*
Assets under management or supervision by asset class (5)
Traditional Asset Management
Equity	$	119		$	116		$	87			3	%		37	%
Fixed income		61			61			59			--			3	%
Liquidity		72			55			50			31	%		44	%
Alternatives		18			18			17			--			6	%
Total Traditional Asset Management		270			250			213			8	%		27	%
Real Estate Investing		17			17			15			--			13	%
Merchant Banking
Private Equity		9			9			9			--			--
FrontPoint (4)		0			0			7			--			*
Total Merchant Banking		9			9			16			--			(44	%)
Total Assets Under Management or Supervision	$	296		$	276		$	244			7	%		21	%
Share of minority stake assets		7			8			7			(13	%)		--

Notes:	-	Beginning in the quarter ended March 31, 2011, the Asset Management segment was organized into three businesses including Traditional Asset Management, Real Estate Investing and Merchant Banking. Traditional Asset Management includes Long-Only, Liquidity and Alternative Investment Partners fund of funds businesses.  Real Estate Investing was previously reported as part of Merchant Banking.  Merchant Banking includes Private Equity and Infrastructure businesses and hedge fund investments. The Firm's equity investment in FrontPoint Partners LLC (FrontPoint), subsequent to the restructuring of that business, is included in Merchant Banking.  The results of the FrontPoint business for all periods prior to the restructuring are also included in Merchant Banking.
	-	Fixed income outflows for the quarter ended June 30, 2011 include $1.3 billion due to the revised treatment of assets under management (AUM) previously reported as a net flows.
	-	Alternatives include a range of alternative investment products such as hedge funds, funds of hedge funds and funds of private equity funds.
	-	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 End Notes on pages 14-15 and Legal Notice on page 16.

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This page represents an addendum to the 2Q 2011 Financial Supplement, Appendix I

MORGAN STANLEY

Earnings Per Share Calculation Under Two-Class Method

Three Months Ended June 30, 2011

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

	Allocation of net income from continuing operations
	(A)	(B)	(C)	(D)	(E)	(F)		(G)
						(D)+(E)		(F)/(A)
	Weighted Average # of Shares	% Allocation (2)	Net income from continuing operations applicable to Morgan Stanley (3)	Distributed Earnings (4)	Undistributed Earnings (5)	Total Earnings Allocated		Basic EPS (8)
Basic Common Shares	1,464	99%		$73	($635)	($562)	(6)	($0.38)
Participating Restricted Stock Units (1)	22	1%		$1	$0	$1	(7)	N/A
	1,486	100%	($561)	$74	($635)	($561)
	Allocation of gain (loss) from discontinued operations
	(A)	(B)	(C)	(D)	(E)	(F)		(G)
						(D)+(E)		(F)/(A)
	Weighted Average # of Shares	% Allocation (2)	Gain (loss) from Discontinued Operations Applicable to Common Shareholders, after Tax (3)	Distributed Earnings (4)	Undistributed Earnings (5)	Total Earnings Allocated		Basic EPS (8)
Basic Common Shares	1,464	99%		$0	$4	$4	(6)	$0.00
Participating Restricted Stock Units (1)	22	1%		$0	$0	$0	(7)	N/A
	1,486	100%	$4	$0	$4	$4
	Allocation of net income applicable to common shareholders
	(A)	(B)	(C)	(D)	(E)	(F)		(G)
						(D)+(E)		(F)/(A)
	Weighted Average # of Shares	% Allocation (2)	Net income applicable to Morgan Stanley (3)	Distributed Earnings (4)	Undistributed Earnings (5)	Total Earnings Allocated		Basic EPS (8)
Basic Common Shares	1,464	99%		$73	($631)	($558)	(6)	($0.38)
Participating Restricted Stock Units (1)	22	1%		$1	$0	$1	(7)	N/A
	1,486	100%	($557)	$74	($631)	($557)

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

13

MORGAN STANLEY

End Notes

Page 4:
(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.  The MUMSS related loss of $655 million in the quarter ended March 31, 2011 was reported in the Asia region within Institutional Securities.
(2)	The increase in common equity and decrease in preferred equity during the quarter ended June 30, 2011 reflect the MUFG conversion.
(3)	Goodwill and intangible balances net of allowable mortgage servicing rights deduction for quarters ended June 30, 2011, March 31, 2011 and June 30, 2010 of $120 million, $130 million and $125 million, respectively.
(4)	For the quarter ended June 30, 2011 book value and tangible book value decreased by $2.29 and $1.41 per share, respectively, related to the conversion of Firm convertible preferred stock held by MUFG into approximately 385 million shares of common stock.
Page 5:
(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.  Tier 1 capital and common equity are designated to segments based on the capital usage calculated by the Firm’s Required Capital framework, an internal adequacy measure, which considers a combination of a base amount of capital and an amount of economic capital reserved to absorb extreme stress events.  The Firm defines parent capital as capital not specifically designated to a particular business segment.  The Firm generally holds parent capital for prospective regulatory requirements, organic growth, acquisitions and other capital needs.  The Firm's Required Capital is met by regulatory Tier 1 capital. The Required Capital framework will continue to evolve over time in response to changes in the business and regulatory environment and to incorporate enhancements in modeling techniques.  On March 31, 2011, the Federal Reserve implemented a limit on the amount of the restricted core capital elements (trust preferred securities and certain noncontrolling interests) to 15% of the sum of all core capital elements, including restricted core capital elements, net of goodwill less any associated deferred tax liability.  This restriction resulted in approximately $3.9 billion of restricted capital being reclassed from Tier 1 capital to Tier 2 capital for March 31, 2011.  To enhance the comparability of the first quarter’s average Tier 1 capital and average common equity by segment to subsequent quarterly averages, the Firm applied this limitation to the full quarter average, as if the rule were in place from January 1, 2011.  The MUFG conversion, which occurred on June 30, 2011, did not have a material effect on Firm or business segment average common equity for the quarter and six months ended June 30, 2011.
Page 7:
(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, 2010.
Page 11:
(1)	The quarters ended June 30, 2011, March 31, 2011 and June 30, 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 noncontrolling interests.

14

MORGAN STANLEY

End Notes

Page 12:
(1)	Real Estate Investing revenues include gains or losses related to principal investments held by certain consolidated real estate funds.  These gains or losses are offset in the net income (loss) applicable to noncontrolling interest. The investment gains (losses) for the quarters ended June 30, 2011, March 31, 2011 and June 30, 2010 are $95 million, $42 million and $(1) million, respectively.
(2)	Merchant Banking revenues include gains or losses related to entities in which Asset Management owns a minority stake, including FrontPoint subsequent to the Firm's restructuring of its ownership of that business during the quarter ended March 31, 2011.
(3)	Net Flows by region [inflow / (outflow)] for the quarters ended June 30, 2011, March 31, 2011 and June 30, 2010 are:
	North America: $14.5 billion, $0.1 billion and $(0.6) billion
	International: $1.2 billion, $1.3 billion and $(0.6) billion
(4)	On March 1, 2011, Morgan Stanley completed the restructuring of its ownership of FrontPoint.  The quarter ended March 31, 2011 included two months of net flows related to FrontPoint whereas the quarter ended June 30, 2010 included three months of net flows related to FrontPoint.  Assets under management or supervision for the quarters ended June 30, 2011 and March 31, 2011 exclude FrontPoint whereas the quarter ended June 30, 2010 include assets under management or supervision of $7.0 billion related to FrontPoint.
(5)	Assets under management or supervision by region for the quarters ended June 30, 2011, March 31, 2011 and June 30, 2010 are:
	North America: $193 billion, $176 billion and $162 billion
	International: $103 billion, $100 billion and $82 billion
Page 13:
(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)	The percentage of weighted basic common shares and participating RSUs to the total weighted average of basic common shares and participating RSUs.
(3)	Represents net income from continuing operations, gain (loss) from discontinued operations (after tax), and net income applicable to Morgan Stanley for the quarter ended June 30, 2011 prior to allocations to participating RSUs.
(4)	Distributed earnings represent the dividends declared on common shares and participating RSUs for the quarter ended June 30, 2011.  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, 2011, a $0.05 dividend was declared on common shares outstanding and participating RSUs.
(5)	The two-class method assumes all of the earnings for the reporting period are distributed and allocates to the participating RSUs what they would be entitled to based on their contractual rights and obligations of the participating security.
(6)	Total income applicable to common shareholders to be allocated to the common shares in calculating basic and diluted EPS for common shares.
(7)	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.
(8)	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.

15

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, 2011.

16