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): January 18, 2013

Morgan Stanley

(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

(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 January 18, 2013, Morgan Stanley (the "Registrant") released financial information with respect to its quarter and year ended December 31, 2012. 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 and year ended December 31, 2012 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 7.01 Regulation FD Disclosure

On January 18, 2013, Morgan Stanley (the “Registrant”) released financial information with respect to its quarter and year ended December 31, 2012 and held an investor conference call. Exhibit 99.3 is a copy of a presentation (the “Presentation”) presented on the conference call, furnished for, and posted on the Registrant’s website.

The Presentation is being furnished pursuant to Item 7.01, and the information contained therein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information contained in Exhibit 99.3 shall not be deemed to be incorporated by reference into the filings of the Registrant under the Securities Act of 1933, as amended.

Item 7.01 of this Current Report on Form 8-K (including Exhibit 99.3 hereto) 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 plans, estimates, projections, expectations or beliefs and which are subject to risks and uncertainties that may cause actual results to difer materially. For a discussion of additional risks and uncertainties that may afect the future results of Morgan Stanley, 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 I, Item 7 and “Quantitative and Qualitative Disclosures about Market Risk” in Part I, Item 7A, each of Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2011 and other items throughout the Form 10-K, Morgan Stanley’s Quarterly Reports on Form 10-Q, including “Risk Factors” in Part I, Item 1A therein, and Morgan Stanley’s Current Reports on Form 8-K, including any amendments thereto, which have been filed with the Securities and Exchange Commission and are available on Morgan Stanley’s webs ite at www.morganstanley.comand on the Securities and Exchange Commission’s webs ite at www.sec.gov.Morgan Stanley does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

Item 9.01. Financial Statements and Exhibits

99.1 Press release of the Registrant, dated January 18, 2013, containing financial information for the quarter and year ended December 31, 2012.

99.2 Financial Data Supplement of the Registrant for the quarter and year ended December 31, 2012.

99.3 Morgan Stanley Presentation, dated January 18, 2013.

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: January 18, 2013

EX-99.1

Exhibit 99.1

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

Morgan Stanley Reports Fourth Quarter and Full Year 2012:

· Fourth Quarter Net Revenues of $7.0 Billion Included the Negative Impact of $511 Million from the Tightening of Morgan Stanley’s Debt-Related Credit Spreads (DVA);1 Income from Continuing Operations of $0.28 per Diluted Share

· Excluding DVA, Fourth Quarter Net Revenues were $7.5 Billion and Income from Continuing Operations was $0.45 per Diluted Share2, 3

· Fourth Quarter Global Wealth Management Pre-Tax Margin of 17%, Highest Since the Inception of the Joint Venture; Investment Banking Ranked #1 in Global IPOs and #2 in Global Announced M&A and Global Equity;4 Solid Results in Equity Sales and Trading

· Full Year Net Revenues of $26.1 Billion Included the Negative Impact of $4.4 Billion from DVA; Loss from Continuing Operations of $0.03 per Diluted Share;  Excluding DVA, Net Revenues were $30.5 Billion and Income from Continuing Operations was $1.59 per Diluted Share2, 3

NEW YORK, January 18, 2013 – Morgan Stanley (NYSE: MS) today reported net revenues of $7.0 billion for the fourth quarter ended December 31, 2012 compared with $5.7 billion a year ago.  For the current quarter, income from continuing operations applicable to Morgan Stanley was $573 million, or $0.28 per diluted share,5 which included a net tax benefit of approximately $155 million,6 or $0.08 per diluted share, compared with a loss of $222 million, or a loss of $0.13 per diluted share,5 for the same period a year ago.  The prior year fourth quarter included a pre-tax loss of approximately $1.7 billion, or a loss of $0.58 per diluted share, related to the comprehensive settlement with MBIA Insurance Corporation (MBIA).

Results for the current quarter included negative revenue of $511 million compared with positive revenue of $216 million a year ago related to changes in Morgan Stanley’s debt-related credit spreads and other credit factors (Debt Valuation Adjustment, DVA).1

Excluding DVA, net revenues for the current quarter were $7.5 billion compared with $5.5 billion a year ago and income from continuing operations applicable to Morgan Stanley was $894 million, or $0.45 per diluted share, compared with a loss of $349 million, or $0.20 loss per diluted share a year ago.3, 5,7

Compensation expense of $3.6 billion in the current quarter declined from $3.8 billion a year ago.  Non-compensation expenses of $2.5 billion increased from $2.3 billion a year ago.

For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $0.25 per diluted share, compared with a net loss of $0.15 per diluted share in the fourth quarter of 2011.  Discontinued operations in the current quarter includes a provision of approximately $115 million related to a settlement with the Federal Reserve Board concerning the independent foreclosure review related to Saxon.8

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Summary of Firm Results (dollars in millions)
	As Reported		Excluding DVA (2), (3)
	Net	MS Earnings	Net	MS Earnings
	Revenues	Cont. Ops. (1)	Revenues	Cont. Ops. (1)
4Q 2012	$6,966	$547	$7,477	$867
3Q 2012	$5,280	$(1,032)	$7,542	$534
4Q 2011	$5,675	$(247)	$5,459	$(374)

(1) Represents income (loss) from continuing operations applicable to Morgan Stanley common shareholders less preferred dividends.

(2) Net revenues for 4Q 2012, 3Q 2012 and 4Q 2011 exclude positive (negative) revenue from DVA of $(511) million, $(2,262) million and $216 million, respectively.

(3) Earnings / (loss) from continuing operations applicable to Morgan Stanley common shareholders for 4Q 2012, 3Q 2012 and 4Q 2011 excludes after-tax DVA impact of $(321) million, $(1,568) million and $127 million, respectively, and includes a related allocation of earnings to Participating Restricted Stock Units of $1 million, $2 million and $0 million, respectively.

Fourth Quarter Business Overview

· Global Wealth Management Group net revenues were $3.5 billion and pre-tax margin was 17%.9  Average annualized revenue per global representative was $824,000, highest since the inception of the Joint Venture.

· Institutional Securities net revenues excluding DVA were $3.5 billion reflecting strong performance in Investment Banking, solid results in Equity sales and trading and a decline in Fixed Income & Commodities sales and trading.

· Asset Management reported net revenues of $599 million with assets under management or supervision of $338 billion.

James P. Gorman, Chairman and Chief Executive Officer, said,“After a year of significant challenges, Morgan Stanley has reached a pivot point.  We demonstrated meaningful progress in our Wealth Management Joint Venture, reaching the highest pre-tax margin since the inception of the JV.  We charted a path to acquire the remainder of the JV.  We are ahead of our risk weighted asset reduction targets for Fixed Income and Commodities, while continuing to focus on our strengths within business and strategic linkages across the Firm and investing for the evolving regulatory environment.  We continued to demonstrate leadership in Investment Banking and Equity sales and trading.  Our Firm is now poised to reach the returns of which it is capable on behalf of our shareholders.”

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FOURTH QUARTER RESULTS

Summary of Institutional Securities Results (dollars in millions)
	As Reported		Excluding DVA (1)
	Net	Pre-Tax	Net	Pre-Tax
	Revenues	Income	Revenues	Income
4Q 2012	$2,951	$57	$3,462	$568
3Q 2012	$1,367	$(1,920)	$3,629	$342
4Q 2011	$2,068	$(772)	$1,852	$(988)

(1) Net revenues and pre-tax income for 4Q 2012, 3Q 2012 and 4Q 2011 exclude positive (negative) revenue from DVA of $(511) million, $(2,262) million and $216 million, respectively.

INSTITUTIONAL SECURITIES

Institutional Securities reported a pre-tax gain from continuing operations of $57 million compared with a pre-tax loss of $772 million in the fourth quarter of last year.  Net revenues for the current quarter were $3.0 billion compared with $2.1 billion, inclusive of MBIA, a year ago.  DVA resulted in negative revenue of $511 million in the current quarter compared with positive revenue of $216 million a year ago.  Excluding DVA, net revenues for the current quarter were $3.5 billion compared with $1.9 billion a year ago.  The following discussion for sales and trading excludes DVA.

· Advisory revenues were $454 million compared with $406 million a year ago reflecting higher levels of market activity.  Equity underwriting revenues were $237 million compared with $189 million a year ago reflecting higher market volume.  Fixed income underwriting revenues were $534 million, our highest reported quarter, compared with $288 million a year ago.

· Fixed Income & Commodities sales and trading net revenues were $811 million compared with losses of $493 million a year ago.  Fixed Income, after considering the impact of MBIA, reflected a decline in rates, partly offset by relative improvement in credit products.  Commodities results declined meaningfully in a challenging market.10

· Equity sales and trading net revenues of $1.3 billion were essentially unchanged from the prior year quarter, although stronger performances were noted in the derivatives and prime brokerage businesses.10

· Compensation expense for the current quarter was $1.5 billion compared with $1.6 billion in the prior year quarter.  Non-compensation expenses of $1.4 billion increased from $1.3 billion a year ago.

· Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $78 million compared with $63 million in the third quarter of 2012 and $105 million in the fourth quarter of the prior year.11

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Summary of Global Wealth Management Group Results (dollars in millions)
	Net	Pre-Tax
	Revenues	Income (1)
4Q 2012	$3,461	$581
3Q 2012	$3,336	$239
4Q 2011	$3,219	$238

(1) 3Q 2012 pre-tax income includes $193 million of non-recurring costs associated with the Morgan Stanley Wealth Management (MSWM) integration and purchase of an additional 14% stake in the Joint Venture.

GLOBAL WEALTH MANAGEMENT GROUP

Global Wealth Management Group reported pre-tax income from continuing operations of $581 million compared with $238 million in the fourth quarter of last year.  The quarter’s pre-tax margin was 17%.9  Net revenues for the current quarter were $3.5 billion compared with $3.2 billion a year ago.  Income after the noncontrolling interest allocation to Citigroup Inc. (Citi) and before taxes was $474 million.12

· Asset management fee revenues of $1.9 billion increased 16% from last year’s fourth quarter primarily reflecting an increase in fee based assets and positive flows.

· Transactional revenues13 of $1.1 billion decreased 3% from a year ago reflecting reduced commissions and fees and a decrease in principal trading revenues driven by lower gains from investments associated with the Firm’s deferred compensation and co-investment plans, offset by higher investment banking revenues.

· Compensation expense for the current quarter was $2.0 billion compared with $2.1 billion a year ago.  Non-compensation expenses were $901 million compared with $922 million a year ago.

· Total client assets were $1.8 trillion at quarter end.  Client assets in fee based accounts were $573 billion, or 32% of total client assets.  Global fee based asset flows for the quarter were $3.7 billion.

· Global representatives of 16,780 were relatively unchanged from the prior quarter.  Average annualized revenue per global representative of $824,000 and total client assets per global representative of $106 million increased 13% and 14%, respectively, compared with the prior year quarter.

Summary of Asset Management Results (dollars in millions)
	Net	Pre-Tax
	Revenues	Income
4Q 2012	$599	$221
3Q 2012	$631	$198
4Q 2011	$424	$78

ASSET MANAGEMENT

Asset Management reported pre-tax income from continuing operations of $221 million compared with pre-tax income of $78 million in last year’s fourth quarter.14  The quarter’s pre-tax margin was 37%.9  Income after the noncontrolling interest allocation and before taxes was $172 million.

· Net revenues of $599 million increased from $424 million in last year’s fourth quarter primarily reflecting higher results in the Traditional Asset Management business and gains on principal investments in the Merchant Banking and Real Estate Investing businesses.15

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· Compensation expense for the current quarter was $168 million compared with $183 million a year ago.  Non-compensation expenses of $210 million increased from $163 million a year ago on higher brokerage and clearing expenses.

· Assets under management or supervision at December 31, 2012 of $338 billion increased 18% from the prior year.  The increase primarily reflected positive net customer flows in Morgan Stanley’s liquidity funds and market appreciation.

FULL YEAR RESULTS

Full year net revenues were $26.1 billion compared with $32.2 billion a year ago.  Income from continuing operations applicable to Morgan Stanley for the current year was $48 million, or a loss of $0.03 per diluted share,5 compared with income of $4.2 billion, or $1.26 per diluted share,5 a year ago.  Results for the current year included a net tax benefit of approximately $73 million or $0.04 per diluted share.6  The Firm’s prior year earnings reflected the impact of several key actions executed in connection with strategic and other matters.16

Results for the year included negative revenue of $4.4 billion compared with positive revenue of $3.7 billion a year ago related to DVA.  Excluding DVA, net revenues for the current year were $30.5 billion compared with $28.6 billion in 2011 and income from continuing operations applicable to Morgan Stanley was $3.2 billion, or $1.59 per diluted share, compared with income of $1.9 billion, or a loss of $0.08 per diluted share a year ago.3,5,7

The Firm’s compensation expense of $15.6 billion for the current year decreased from $16.3 billion a year ago.  Non-compensation expenses of $10.0 billion increased from $9.8 billion a year ago.

For the current year, the net loss applicable to Morgan Stanley, including discontinued operations, was $0.06 per diluted share, compared with net income of $1.23 per diluted share a year ago.8

Summary of Firm Results (dollars in millions)
	As Reported		Excluding DVA (2), (3)
	Net	MS Earnings	Net	MS Earnings
	Revenues	Cont. Ops. (1)	Revenues	Cont. Ops. (1)
FY 2012	$26,112	$(50)	$30,514	$3,055
FY 2011	$32,236	$2,117	$28,555	$(136)

(1) Represents income (loss) from continuing operations applicable to Morgan Stanley common shareholders less preferred dividends and a one-time negative adjustment of $1.7 billion in FY 2011 related to the conversion of the Firm’s Series B Preferred Stock held by Mitsubishi UFJ Financial Group, Inc. (MUFG) into common stock.

(2) Net revenues for FY 2012 and FY 2011 exclude positive (negative) revenue from DVA of $(4,402) million and $3,681 million, respectively.

(3) Earnings / (loss) from continuing operations applicable to Morgan Stanley common shareholders for FY 2012 and FY 2011 excludes after-tax DVA impact of $(3,118) million and $2,275 million, respectively, and includes a related allocation of earnings to Participating Restricted Stock Units of $13 million and $(22) million, respectively.

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Summary of Segments Results (dollars in millions)
	As Reported				Excluding DVA (1)
	Net Revenues		Pre-Tax Income		Net Revenues		Pre-Tax Income
	FY 2012	FY 2011	FY 2012	FY 2011	FY 2012	FY 2011	FY 2012	FY 2011
Institutional Securities	$10,553	$17,175	$(1,671)	$4,591	$14,955	$13,494	$2,731	$910
Global Wealth Management	$13,516	$13,289	$1,600	$1,255	$13,516	$13,289	$1,600	$1,255
Asset Management	$2,219	$1,887	$590	$253	$2,219	$1,887	$590	$253

(1) Institutional Securities net revenues and pre-tax income for FY 2012 and FY 2011 exclude positive (negative) revenue from DVA of $(4,402) million and $3,681 million, respectively.

INSTITUTIONAL SECURITIES

Institutional Securities reported a pre-tax loss from continuing operations of $1.7 billion compared with pre-tax income of $4.6 billion in 2011.  Net revenues for the current year were $10.6 billion compared with $17.2 billion, inclusive of MBIA, a year ago.  DVA resulted in negative revenue of $4.4 billion in the current year compared with positive revenue of $3.7 billion a year ago.  Excluding DVA, net revenues for the current year were $15.0 billion compared with $13.5 billion a year ago.  Compensation expense was $6.7 billion compared with $7.2 billion a year ago.  Non-compensation expenses of $5.6 billion increased from $5.4 billion a year ago primarily due to increased litigation costs.

GLOBAL WEALTH MANAGEMENT GROUP

Global Wealth Management Group reported pre-tax income from continuing operations of $1.6 billion compared with $1.3 billion a year ago.  Net revenues for the current year were $13.5 billion compared with $13.3 billion a year ago.  The year’s pre-tax margin was 12%.9  Income after the noncontrolling interest allocation to Citi and before taxes was $1.3 billion.12Compensation expense was $8.1 billion compared with $8.3 billion a year ago.  Non-compensation expenses of $3.8 billion increased from $3.7 billion a year ago reflecting non-recurring costs of approximately $176 million primarily associated with the MSWM integration.

ASSET MANAGEMENT

Asset Management reported pre-tax income from continuing operations of $590 million compared with $253 million a year ago.14  The year’s reported pre-tax margin was 27%.9  Income after the noncontrolling interest allocation and before taxes was $403 million.  Net revenues of $2.2 billion increased from $1.9 billion a year ago primarily reflecting higher results in the Traditional Asset Management business and gains on principal investments in the Merchant Banking and Real Estate Investing businesses.15  Compensation expense of $841 million and non-compensation expenses of $788 million were essentially unchanged from a year ago.

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CAPITAL

Morgan Stanley’s Tier 1 capital ratio under Basel I was approximately 17.9% and Tier 1 common ratio was approximately 14.7% at December 31, 2012.17

At December 31, 2012, book value and tangible book value per common share were $30.65 and $26.81,18 respectively, based on approximately 2.0 billion shares outstanding.

OTHER MATTERS

The effective tax rate from continuing operations for the current quarter was 11.1%.  The current quarter includes a net tax benefit of approximately $155 million consisting of a discrete benefit from remeasurement of reserves and an out of period tax provision to adjust previously recorded deferred tax assets.6

The Firm declared a $0.05 quarterly dividend per common share.  The dividend is payable on February 15, 2013 to common shareholders of record on February 5, 2013.

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 43 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, each of the Company's Annual Report on Form 10-­K for the year ended December 31, 2011 and other items throughout the Form 10-K, the Company’s Quarterly Reports on Form 10-Q, including “Risk Factors” in Part II, Item 1A therein, and the Company’s Current Reports on Form 8-K, including any amendments thereto.

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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 and other credit factors (commonly referred to as “DVA”).

2 From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings releases, earnings conference calls, financial presentations and otherwise.  For these purposes, “GAAP” refers to generally accepted accounting principles in the United States.  The Securities and Exchange Commission (SEC) defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial positions, or cash flows that is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measure calculated and presented in accordance with GAAP.  Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to investors in order to provide them with greater transparency about, or an alternative method for assessing our financial condition and operating results.  These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies.  Whenever we refer to a non-GAAP financial measure, we will also generally present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference with such comparable GAAP financial measure.

 

3 Income (loss) per diluted share amounts, excluding DVA, are non-GAAP financial measures that the Firm considers useful for investors to allow better comparability of period to period operating performance.  Such exclusions are provided to differentiate revenues associated with Morgan Stanley borrowings, regardless of whether the impact is either positive, or negative, that result solely from fluctuations in credit spreads and other credit factors.  The reconciliation of income (loss) per diluted share from continuing operations applicable to Morgan Stanley common shareholders and average diluted shares from a non-GAAP to GAAP basis is as follows (shares and DVA are presented in millions):

	4Q 2012	4Q 2011	FY 2012	FY 2011
Income (loss) per diluted share applicable to MS – Non-GAAP	$0.45	$(0.20)	$1.59	$(0.08)
DVA impact	$(0.17)	$0.07	$(1.62)	$1.34
Income (loss) per diluted share applicable to MS – GAAP	$0.28	$(0.13)	$(0.03)	$1.26
Average diluted shares – Non-GAAP	1,937	1,850	1,919	1,655
DVA impact	0	0	(33)	20
Average diluted shares – GAAP	1,937	1,850	1,886	1,675

 

4 Source: Thomson Reuters – for the period of January 1, 2012 to December 31, 2012 as of January 3, 2013.

5 Includes preferred dividends and other adjustments related to the calculation of earnings per share for the fourth quarter of 2012 and 2011 of approximately $26 million and $25 million, respectively.  Includes preferred dividends and other adjustments related to the calculation of earnings per share for the year ended 2012 and 2011 of approximately $98 million and $2.0 billion, respectively.  Refer to page 3 of Morgan Stanley’s Financial Supplement accompanying this release for the calculation of earnings per share.

6For the quarter ended December 31, 2012, the Firm recognized, in income from continuing operations, a net tax benefit of approximately $155 million.  This included a discrete benefit of approximately $299 million related to the remeasurement of reserves due to either the expiration of the applicable statute of limitations, or new information regarding the status of certain Internal Revenue Service examinations.  The Firm also recognized, in the quarter ended December 31, 2012, an out of period net tax provision of approximately $144 million, principally in the Asset Management business segment, primarily related to the overstatement of deferred tax assets associated with partnership investments in prior periods.  For the full year ended December 31, 2012, the Firm recognized, in income from continuing operations, the discrete tax benefit noted above and an out of period net tax provision of approximately $226 million to adjust previously recorded deferred tax assets.  The Firm has evaluated the effects of the understatement of the income tax provision both qualitatively and quantitatively and concluded that it did not have a material impact on any prior annual or quarterly consolidated results.  A comprehensive review of the Firm’s deferred tax accounts continues, and as such, the net tax provisions noted above could be subject to revision.

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7 Income (loss) applicable to Morgan Stanley, excluding DVA, is a non-GAAP financial measure that the Firm considers useful for investors to allow for better comparability of period-to-period operating performance. The reconciliation of income (loss) from continuing operations applicable to Morgan Stanley from a non-GAAP to GAAP basis is as follows (amounts are presented in millions):

	4Q 2012	3Q 2012	4Q 2011	FY 2012	FY 2011
Income (loss) applicable to MS – Non-GAAP	$894	$560	$(349)	$3,166	$1,886
DVA after-tax impact	$(321)	$(1,568)	$127	$(3,118)	$2,275
Income (loss) applicable to MS – GAAP	$573	$(1,008)	$(222)	$48	$4,161

8 Discontinued operations for the current year primarily reflected an after-tax gain and other operating income related to Quilter Holdings Ltd. (reported in the Global Wealth Management business segment), and an after-tax loss and operating results related to Saxon (reported in the Institutional Securities business segment), which includes the fourth quarter provision of approximately $115 million related to a settlement with the Federal Reserve Board concerning the independent foreclosure review related to Saxon.  The independent foreclosure review was one of the requirements imposed by the April 2, 2012 Consent Order that the Firm entered into with the Federal Reserve Board.  The other requirements of the Consent Order are not impacted by the settlement and the settlement does not include civil money penalties which may be imposed by the Federal Reserve Board.

9 Pre-tax margin is a non-GAAP financial measure that the Firm considers useful for investors to assess operating performance.  Pre-tax margin represents income (loss) from continuing operations before taxes, divided by net revenues.

10 Sales and trading net revenues, including Fixed Income & Commodities (FIC) and Equity sales and trading net revenues excluding DVA, are non-GAAP financial measures that the Firm considers useful for investors to allow better comparability of period-to-period operating performance.  The reconciliation of sales and trading, including FIC and Equity sales and trading net revenues from a non-GAAP to GAAP basis is as follows (amounts are presented in millions):

	4Q 2012	4Q 2011	FY 2012	FY 2011
Sales & Trading – Non-GAAP	$2,047	$867	$10,612	$9,268
DVA impact	$(511)	$216	$(4,402)	$3,681
Sales & Trading – GAAP	$1,536	$1,083	$6,210	$12,949
FIC Sales & Trading – Non-GAAP	$811	$(493)	$5,631	$4,444
DVA impact	$(330)	$239	$(3,273)	$3,062
FIC Sales & Trading – GAAP	$481	$(254)	$2,358	$7,506
Equity Sales & Trading – Non-GAAP	$1,271	$1,277	$5,477	$6,151
DVA impact	$(181)	$(23)	$(1,130)	$619
Equity Sales & Trading – GAAP	$1,090	$1,254	$4,347	$6,770

11 VaR 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.  Further discussion of the calculation of VaR and the limitations of the Firm's VaR methodology will be disclosed in Part II, Item 7A “Quantitative and Qualitative Disclosures about Market Risk” included in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2012.  Refer to page 8 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR disclosure.

9

12 During the quarter ended September 30, 2012, Morgan Stanley completed the purchase of an additional 14% stake in the Joint Venture from Citi, increasing the Firm’s interest from 51% to 65%.  Prior to September 17, 2012, Citi’s results related to its 49% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests on page 10 of Morgan Stanley’s Financial Supplement accompanying this release.  Due to the terms of the revised agreement with Citi, subsequent to the purchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income (loss) applicable to redeemable noncontrolling interests on page 10 of Morgan Stanley’s Financial Supplement accompanying this release.

13 Transactional revenues include investment banking, principal transactions - trading and commissions and fee revenues.

14 Results for the fourth quarter of 2012 and 2011 included pre-tax income of $49 million and $44 million, respectively, related to principal investments held by certain consolidated real estate funds.  Results for the full year ended 2012 and 2011 included pre-tax income of $185 million and $145 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 noncontrolling interests on page 12 of Morgan Stanley’s Financial Supplement accompanying this release.

15 Results for the current quarter included gains of $50 million compared with gains of $45 million in the prior year quarter related to principal investments held by certain consolidated real estate funds.  Results for the current year included gains of $192 million compared with gains of $169 million in the prior year related to principal investments held by certain consolidated real estate funds.

16 Morgan Stanley executed several key strategic actions in 2011 which affected earnings including the conversion of the Firm’s Series B Preferred Stock held by MUFG into common stock which resulted in a negative adjustment to earnings per share of approximately $1.7 billion, a pre-tax loss of approximately $1.7 billion related to MBIA and the restructuring of the sale of Revel Entertainment Group, LLC (Revel) which resulted in a discrete net tax benefit of $447 million.  Also impacting the Firm’s 2011 earnings was a pre-tax loss of approximately $783 million arising from the Firm’s 40% stake in a Japanese securities joint venture (Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. or MUMSS) controlled and managed by our partner, MUFG.

17 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.  In accordance with the Federal Reserve Board’s definition, Tier 1 common capital is defined as Tier 1 capital less non-common elements in Tier 1 capital, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust preferred securities and mandatory convertible preferred securities.  These computations are preliminary estimates as of January 18, 2013 (the date of this release) and could be subject to revision in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2012.

18 Tangible common equity and tangible book value per common share are non-GAAP financial measures that the Firm considers to be useful measures of capital adequacy.  Tangible common equity equals common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction and includes only the Firm’s share of the Joint Venture’s goodwill and intangible assets.  Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.

10

MORGAN STANLEY

Quarterly Financial Summary

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Net revenues
Institutional Securities	$	2,951		$	1,367		$	2,068			116	%		43	%	$	10,553		$	17,175			(39	%)
Global Wealth Management Group		3,461			3,336			3,219			4	%		8	%		13,516			13,289			2	%
Asset Management		599			631			424			(5	%)		41	%		2,219			1,887			18	%
Intersegment Eliminations		(45	)		(54	)		(36	)		17	%		(25	%)		(176	)		(115	)		(53	%)
Consolidated net revenues	$	6,966		$	5,280		$	5,675			32	%		23	%	$	26,112		$	32,236			(19	%)
Income (loss) from continuing operations before tax
Institutional Securities	$	57		$	(1,920	)	$	(772	)		*			*		$	(1,671	)	$	4,591			*
Global Wealth Management Group		581			239			238			143	%		144	%		1,600			1,255			27	%
Asset Management		221			198			78			12	%		183	%		590			253			133	%
Intersegment Eliminations		0			0			0			--			--			(4	)		0			*
Consolidated income (loss) from continuing operations before tax	$	859		$	(1,483	)	$	(456	)		*			*		$	515		$	6,099			(92	%)
Income (loss) applicable to Morgan Stanley
Institutional Securities	$	353		$	(1,269	)	$	(359	)		*			*		$	(833	)	$	3,468			*
Global Wealth Management Group		277			157			131			76	%		111	%		799			658			21	%
Asset Management		(57	)		104			6			*			*			86			35			146	%
Intersegment Eliminations		0			0			0			--			--			(4	)		0			*
Consolidated income (loss) applicable to Morgan Stanley	$	573		$	(1,008	)	$	(222	)		*			*		$	48		$	4,161			(99	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	481		$	(1,047	)	$	(275	)		*			*		$	(117	)	$	2,067			*
Earnings per basic share:
Income from continuing operations	$	0.29		$	(0.55	)	$	(0.13	)		*			*		$	(0.03	)	$	1.28			*
Discontinued operations	$	(0.04	)	$	-		$	(0.02	)		*			(100	%)	$	(0.03	)	$	(0.03	)		--
Earnings per basic share	$	0.25		$	(0.55	)	$	(0.15	)		*			*		$	(0.06	)	$	1.25			*
Earnings per diluted share:
Income from continuing operations	$	0.28		$	(0.55	)	$	(0.13	)		*			*		$	(0.03	)	$	1.26			*
Discontinued operations	$	(0.03	)	$	-		$	(0.02	)		*			(50	%)	$	(0.03	)	$	(0.03	)		--
Earnings per diluted share	$	0.25		$	(0.55	)	$	(0.15	)		*			*		$	(0.06	)	$	1.23			*
Financial Metrics:
Return on average common equity
from continuing operations		3.6	%		*			*									*			3.9	%
Return on average common equity		3.2	%		*			*									*			3.8	%
Tier 1 common capital ratio		14.7	%		13.9	%		12.6	%
Tier 1 capital ratio		17.9	%		16.9	%		16.2	%
Book value per common share	$	30.65		$	30.53		$	31.42
Tangible book value per common share	$	26.81		$	26.65		$	27.95

Notes:	-	Results for the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011, include positive (negative) revenue of $(511) million, $(2,262) million and $216 million, respectively, related to the movement in Morgan Stanley's credit spreads and other credit factors on certain long-term and short-term debt (Debt Valuation Adjustment, DVA). The twelve months ended December 31, 2012 and December 31, 2011 include positive (negative) revenue of $(4,402) million and $3,681 million, respectively, related to the movement in DVA.
	-	Income (loss) applicable to Morgan Stanley represents income (loss) from continuing operations, adjusted for the portion of net income (loss) applicable to noncontrolling interests related to continuing operations. For the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011 net income (loss) applicable to noncontrolling interests include $3 million, $17 million, and $2 million respectively, reported as a gain in discontinued operations. The twelve months ended December 31, 2012 and  December 31, 2011 net income (loss) applicable to noncontrolling interests include $29 million and $7 million respectively, reported as a gain in discontinued operations.
	-	Tier 1 common capital ratio equals Tier 1 common equity divided by Risk Weighted Assets (RWA).
	-	Tier 1 capital ratio equals Tier 1 capital divided by RWA.
	-	Book value per common share equals common equity divided by period end common shares outstanding.
	-	Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
	-	The return on average common equity and tangible book value per common share are non-GAAP measures that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance and capital adequacy.
	-	See page 4 of the financial supplement for additional information related to the calculation of the financial metrics.

11

MORGAN STANLEY

Quarterly Consolidated Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Revenues:
Investment banking	$	1,439		$	1,152		$	1,051			25	%		37	%	$	4,758		$	4,991			(5	%)
Principal transactions:
Trading		1,513			607			969			149	%		56	%		6,991			12,384			(44	%)
Investments		304			290			140			5	%		117	%		742			573			29	%
Commissions and fees		1,052			988			1,149			6	%		(8	%)		4,257			5,347			(20	%)
Asset management, distribution and admin. fees		2,331			2,257			2,004			3	%		16	%		9,008			8,410			7	%
Other		152			141			92			8	%		65	%		555			175			*
Total non-interest revenues		6,791			5,435			5,405			25	%		26	%		26,311			31,880			(17	%)
Interest income		1,744			1,379			1,685			26	%		4	%		5,988			7,258			(17	%)
Interest expense		1,569			1,534			1,415			2	%		11	%		6,187			6,902			(10	%)
Net interest		175			(155	)		270			*			(35	%)		(199	)		356			*
Net revenues		6,966			5,280			5,675			32	%		23	%		26,112			32,236			(19	%)
Non-interest expenses:
Compensation and benefits		3,633			3,928			3,792			(8	%)		(4	%)		15,622			16,333			(4	%)
Non-compensation expenses:
Occupancy and equipment		394			386			381			2	%		3	%		1,546			1,548			--
Brokerage, clearing and exchange fees		369			359			379			3	%		(3	%)		1,536			1,633			(6	%)
Information processing and communications		474			493			471			(4	%)		1	%		1,913			1,811			6	%
Marketing and business development		163			138			160			18	%		2	%		602			595			1	%
Professional services		558			476			487			17	%		15	%		1,923			1,794			7	%
Other		516			983			461			(48	%)		12	%		2,455			2,423			1	%
Total non-compensation expenses		2,474			2,835			2,339			(13	%)		6	%		9,975			9,804			2	%
Total non-interest expenses		6,107			6,763			6,131			(10	%)		--			25,597			26,137			(2	%)
Income (loss) from continuing operations before taxes		859			(1,483	)		(456	)		*			*			515			6,099			(92	%)
Income tax provision / (benefit) from continuing operations		95			(525	)		(298	)		*			*			(152	)		1,410			*
Income (loss) from continuing operations		764			(958	)		(158	)		*			*			667			4,689			(86	%)
Gain (loss) from discontinued operations after tax		(63	)		2			(26	)		*			(142	%)		(38	)		(44	)		14	%
Net income (loss)	$	701		$	(956	)	$	(184	)		*			*		$	629		$	4,645			(86	%)
Net income applicable to redeemable noncontrolling interests		116			8			0			*			*			124			0			*
Net income applicable to nonredeemable noncontrolling interests		78			59			66			32	%		18	%		524			535			(2	%)
Net income (loss) applicable to Morgan Stanley		507			(1,023	)		(250	)		*			*			(19	)		4,110			*
Preferred stock dividend / Other		26			24			25			8	%		4	%		98			2,043			(95	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	481		$	(1,047	)	$	(275	)		*			*		$	(117	)	$	2,067			*
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		573			(1,008	)		(222	)		*			*			48			4,161			(99	%)
Gain (loss) from discontinued operations after tax		(66	)		(15	)		(28	)		*			(136	%)		(67	)		(51	)		(31	%)
Net income (loss) applicable to Morgan Stanley	$	507		$	(1,023	)	$	(250	)		*			*		$	(19	)	$	4,110			*
Pre-tax profit margin		12	%		*			*									2	%		19	%
Compensation and benefits as a % of net revenues		52	%		74	%		67	%								60	%		51	%
Non-compensation expenses as a % of net revenues		36	%		54	%		41	%								38	%		30	%
Effective tax rate from continuing operations		11.1	%		35.4	%		65.4	%								*			23.1	%

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 and full year ended December 31, 2011, Principal Transactions - Trading included a loss of $1,742 million related to the comprehensive settlement with MBIA Insurance Corporation (MBIA).
	-	Other revenues for the full year ended December 31, 2011, included a loss of approximately $783 million related to the 40% stake in a Japanese securities joint venture, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. ("MUMSS") controlled and managed by our partner, Mitsubishi UFJ Financial Group Inc. (MUFG).
	-	In the quarter ended December 31, 2012, discontinued operations included the provision of $115 million related to a settlement with the Federal Reserve Board concerning the independent foreclosure review related to Saxon.  For the full year ended December 31, 2012, discontinued operations primarily reflected an after-tax gain and other operating income related to Quilter Holdings Ltd. (reported in the Global Wealth Management business segment), and an after-tax loss and operating results related to Saxon (reported in the Institutional Securities business segment), which includes the provision related to a settlement with the Federal Reserve Board concerning Saxon.
	-	For the quarter ended December 31, 2012, the effective tax rate from continuing operations was 11.1%. The current quarter includes a net tax benefit of approximately $155 million consisting of a discrete benefit from remeasurement of reserves and an out of period tax provision to adjust previously recorded deferred tax assets.
	-	During the quarter ended September 30, 2012, Morgan Stanley completed the purchase of an additional 14% stake in Morgan Stanley Smith Barney (Joint Venture) from Citigroup Inc. (Citi), increasing the Firm’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related to its 49% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests. Due to the terms of the revised agreement with Citi, subsequent to the purchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income (loss) applicable to redeemable noncontrolling interests.
	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	The full year ended December 31, 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 MUFG, into Morgan Stanley common stock (MUFG conversion).
	-	Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs).

12

MORGAN STANLEY

Quarterly Earnings Per Share

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

	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Income (loss) from continuing operations	$	764		$	(958	)	$	(158	)		*			*		$	667		$	4,689			(86	%)
Net income applicable to redeemable noncontrolling interests		116			8			0			*			*			124			0			*
Net income applicable to nonredeemable noncontrolling interests		75			42			64			79	%		17	%		495			528			(6	%)
Net income (loss) from continuing operations applicable to noncontrolling interest		191			50			64			*			198	%		619			528			17	%
Income (loss) from continuing operations applicable to Morgan Stanley		573			(1,008	)		(222	)		*			*			48			4,161			(99	%)
Less: Preferred Dividends		24			24			24			--			--			96			292			(67	%)
Less: MUFG preferred stock conversion		-			-			-			--			--			-			1,726			*
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income to Participating Restricted Stock Units		549			(1,032	)		(246	)		*			*			(48	)		2,143			*
Basic EPS Adjustments:
Less: Allocation of earnings to Participating Restricted Stock Units		2			0			1			*			100	%		2			26			(92	%)
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	547		$	(1,032	)	$	(247	)		*			*		$	(50	)	$	2,117			*
Gain (loss) from discontinued operations after tax		(63	)		2			(26	)		*			(142	%)		(38	)		(44	)		14	%
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests		3			17			2			(82	%)		50	%		29			7			*
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley		(66	)		(15	)		(28	)		*			(136	%)		(67	)		(51	)		(31	%)
Less: Allocation of earnings to Participating Restricted Stock Units		0			0			0			--			--			0			(1	)		*
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		(66	)		(15	)		(28	)		*			(136	%)		(67	)		(50	)		(34	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	481		$	(1,047	)	$	(275	)		*			*		$	(117	)	$	2,067			*
Average basic common shares outstanding (millions)		1,892			1,889			1,850			--			2	%		1,886			1,655			14	%
Earnings per basic share:
Income from continuing operations	$	0.29		$	(0.55	)	$	(0.13	)		*			*		$	(0.03	)	$	1.28			*
Discontinued operations	$	(0.04	)	$	-		$	(0.02	)		*			(100	%)	$	(0.03	)	$	(0.03	)		--
Earnings per basic share	$	0.25		$	(0.55	)	$	(0.15	)		*			*		$	(0.06	)	$	1.25			*
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	547		$	(1,032	)	$	(247	)		*			*		$	(50	)	$	2,117			*
Diluted EPS Adjustments:
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	547		$	(1,032	)	$	(247	)		*			*		$	(50	)	$	2,117			*
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		(66	)		(15	)		(28	)		*			(136	%)		(67	)		(50	)		(34	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	481		$	(1,047	)	$	(275	)		*			*		$	(117	)	$	2,067			*
Average diluted common shares outstanding and common stock equivalents (millions)		1,937			1,889			1,850			3	%		5	%		1,886			1,675			13	%
Earnings per diluted share:
Income from continuing operations	$	0.28		$	(0.55	)	$	(0.13	)		*			*		$	(0.03	)	$	1.26			*
Discontinued operations	$	(0.03	)	$	-		$	(0.02	)		*			(50	%)	$	(0.03	)	$	(0.03	)		--
Earnings per diluted share	$	0.25		$	(0.55	)	$	(0.15	)		*			*		$	(0.06	)	$	1.23			*

Notes:	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	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 pages 15 and 16 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, 2011.

13

EX-99.2

Exhibit 99.2

MORGAN STANLEY
Financial Supplement - 4Q 2012
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 - 9	…………….	Quarterly Institutional Securities Financial Information and Statistical Data
10	…………….	Quarterly Global Wealth Management Group Income Statement Information
11	…………….	Quarterly Global Wealth Management Group Financial Information and Statistical Data
12	…………….	Quarterly Asset Management Income Statement Information
13	…………….	Quarterly Asset Management Financial Information and Statistical Data
14	…………….	Country Risk Exposure - European Peripherals and France Appendix I
15	…………….	Earnings Per Share Appendix II
16	…………….	Earnings Per Share Appendix III
17 - 18	…………….	End Notes
19	…………….	Legal Notice

MORGAN STANLEY
Quarterly Financial Summary
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Net revenues
Institutional Securities	$	2,951		$	1,367		$	2,068			116	%		43	%	$	10,553		$	17,175			(39	%)
Global Wealth Management Group		3,461			3,336			3,219			4	%		8	%		13,516			13,289			2	%
Asset Management		599			631			424			(5	%)		41	%		2,219			1,887			18	%
Intersegment Eliminations		(45	)		(54	)		(36	)		17	%		(25	%)		(176	)		(115	)		(53	%)
Consolidated net revenues	$	6,966		$	5,280		$	5,675			32	%		23	%	$	26,112		$	32,236			(19	%)
Income (loss) from continuing operations before tax
Institutional Securities	$	57		$	(1,920	)	$	(772	)		*			*		$	(1,671	)	$	4,591			*
Global Wealth Management Group		581			239			238			143	%		144	%		1,600			1,255			27	%
Asset Management		221			198			78			12	%		183	%		590			253			133	%
Intersegment Eliminations		0			0			0			--			--			(4	)		0			*
Consolidated income (loss) from continuing operations before tax	$	859		$	(1,483	)	$	(456	)		*			*		$	515		$	6,099			(92	%)
Income (loss) applicable to Morgan Stanley
Institutional Securities	$	353		$	(1,269	)	$	(359	)		*			*		$	(833	)	$	3,468			*
Global Wealth Management Group		277			157			131			76	%		111	%		799			658			21	%
Asset Management		(57	)		104			6			*			*			86			35			146	%
Intersegment Eliminations		0			0			0			--			--			(4	)		0			*
Consolidated income (loss) applicable to Morgan Stanley	$	573		$	(1,008	)	$	(222	)		*			*		$	48		$	4,161			(99	%)
Financial Metrics:
Return on average common equity
from continuing operations		3.6	%		*			*									*			3.9	%
Return on average common equity		3.2	%		*			*									*			3.8	%
Tier 1 common capital ratio		14.7	%		13.9	%		12.6	%
Tier 1 capital ratio		17.9	%		16.9	%		16.2	%
Book value per common share	$	30.65		$	30.53		$	31.42
Tangible book value per common share	$	26.81		$	26.65		$	27.95

Notes:	-	Results for the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011, include positive (negative) revenue of $(511) million, $(2,262) million and $216 million, respectively, related to the movement in Morgan Stanley's credit spreads and other credit factors on certain long-term and short-term debt (Debt Valuation Adjustment, DVA). The twelve months ended December 31, 2012 and December 31, 2011 include positive (negative) revenue of $(4,402) million and $3,681 million, respectively, related to the movement in DVA.
	-	Income (loss) applicable to Morgan Stanley represents income (loss) from continuing operations, adjusted for the portion of net income (loss) applicable to noncontrolling interests related to continuing operations. For the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011 net income (loss) applicable to noncontrolling interests include $3 million, $17 million, and $2 million respectively, reported as a gain in discontinued operations. The twelve months ended December 31, 2012 and  December 31, 2011 net income (loss) applicable to noncontrolling interests include $29 million and $7 million respectively, reported as a gain in discontinued operations.
	-	Tier 1 common capital ratio equals Tier 1 common equity divided by Risk Weighted Assets (RWA).
	-	Tier 1 capital ratio equals Tier 1 capital divided by RWA.
	-	Book value per common share equals common equity divided by period end common shares outstanding.
	-	Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
	-	The return on average common equity and tangible book value per common share are non-GAAP measures that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance and capital adequacy.
	-	See page 4 of the financial supplement for additional information related to the calculation of the financial metrics.
	-	Refer to Legal Notice on page 19.

1

MORGAN STANLEY
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Revenues:
Investment banking	$	1,439		$	1,152		$	1,051			25	%		37	%	$	4,758		$	4,991			(5	%)
Principal transactions:
Trading		1,513			607			969			149	%		56	%		6,991			12,384			(44	%)
Investments		304			290			140			5	%		117	%		742			573			29	%
Commissions and fees		1,052			988			1,149			6	%		(8	%)		4,257			5,347			(20	%)
Asset management, distribution and admin. fees		2,331			2,257			2,004			3	%		16	%		9,008			8,410			7	%
Other		152			141			92			8	%		65	%		555			175			*
Total non-interest revenues		6,791			5,435			5,405			25	%		26	%		26,311			31,880			(17	%)
Interest income		1,744			1,379			1,685			26	%		4	%		5,988			7,258			(17	%)
Interest expense		1,569			1,534			1,415			2	%		11	%		6,187			6,902			(10	%)
Net interest		175			(155	)		270			*			(35	%)		(199	)		356			*
Net revenues		6,966			5,280			5,675			32	%		23	%		26,112			32,236			(19	%)
Non-interest expenses:
Compensation and benefits		3,633			3,928			3,792			(8	%)		(4	%)		15,622			16,333			(4	%)
Non-compensation expenses:
Occupancy and equipment		394			386			381			2	%		3	%		1,546			1,548			--
Brokerage, clearing and exchange fees		369			359			379			3	%		(3	%)		1,536			1,633			(6	%)
Information processing and communications		474			493			471			(4	%)		1	%		1,913			1,811			6	%
Marketing and business development		163			138			160			18	%		2	%		602			595			1	%
Professional services		558			476			487			17	%		15	%		1,923			1,794			7	%
Other		516			983			461			(48	%)		12	%		2,455			2,423			1	%
Total non-compensation expenses		2,474			2,835			2,339			(13	%)		6	%		9,975			9,804			2	%
Total non-interest expenses		6,107			6,763			6,131			(10	%)		--			25,597			26,137			(2	%)
Income (loss) from continuing operations before taxes		859			(1,483	)		(456	)		*			*			515			6,099			(92	%)
Income tax provision / (benefit) from continuing operations (1)		95			(525	)		(298	)		*			*			(152	)		1,410			*
Income (loss) from continuing operations		764			(958	)		(158	)		*			*			667			4,689			(86	%)
Gain (loss) from discontinued operations after tax		(63	)		2			(26	)		*			(142	%)		(38	)		(44	)		14	%
Net income (loss)	$	701		$	(956	)	$	(184	)		*			*		$	629		$	4,645			(86	%)
Net income applicable to redeemable noncontrolling interests		116			8			0			*			*			124			0			*
Net income applicable to nonredeemable noncontrolling interests		78			59			66			32	%		18	%		524			535			(2	%)
Net income (loss) applicable to Morgan Stanley		507			(1,023	)		(250	)		*			*			(19	)		4,110			*
Preferred stock dividend / Other		26			24			25			8	%		4	%		98			2,043			(95	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	481		$	(1,047	)	$	(275	)		*			*		$	(117	)	$	2,067			*
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		573			(1,008	)		(222	)		*			*			48			4,161			(99	%)
Gain (loss) from discontinued operations after tax		(66	)		(15	)		(28	)		*			(136	%)		(67	)		(51	)		(31	%)
Net income (loss) applicable to Morgan Stanley	$	507		$	(1,023	)	$	(250	)		*			*		$	(19	)	$	4,110			*
Pre-tax profit margin		12	%		*			*									2	%		19	%
Compensation and benefits as a % of net revenues		52	%		74	%		67	%								60	%		51	%
Non-compensation expenses as a % of net revenues		36	%		54	%		41	%								38	%		30	%
Effective tax rate from continuing operations		11.1	%		35.4	%		65.4	%								*			23.1	%

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 and full year ended December 31, 2011, Principal Transactions - Trading included a loss of $1,742 million related to the comprehensive settlement with MBIA Insurance Corporation (MBIA).
	-	Other revenues for the full year ended December 31, 2011, included a loss of approximately $783 million related to the 40% stake in a Japanese securities joint venture, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. ("MUMSS") controlled and managed by our partner, Mitsubishi UFJ Financial Group Inc. (MUFG).
	-	In the quarter ended December 31, 2012, discontinued operations included the provision of $115 million related to a settlement with the Federal Reserve Board concerning the independent foreclosure review related to Saxon.  For the full year ended December 31, 2012, discontinued operations primarily reflected an after-tax gain and other operating income related to Quilter Holdings Ltd. (reported in the Global Wealth Management business segment), and an after-tax loss and operating results related to Saxon (reported in the Institutional Securities business segment), which includes the provision related to a settlement with the Federal Reserve Board concerning Saxon.
	-	For the quarter ended December 31, 2012, the effective tax rate from continuing operations was 11.1%. The current quarter includes a net tax benefit of approximately $155 million consisting of a discrete benefit from remeasurement of reserves and an out of period tax provision to adjust previously recorded deferred tax assets.
	-	During the quarter ended September 30, 2012, Morgan Stanley completed the purchase of an additional 14% stake in Morgan Stanley Smith Barney (Joint Venture) from Citigroup Inc. (Citi), increasing the Firm’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related to its 49% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests. Due to the terms of the revised agreement with Citi, subsequent to the purchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income (loss) applicable to redeemable noncontrolling interests.
	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss)  applicable to nonredeemable noncontrolling interests.
	-	The full year ended December 31, 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 MUFG, into Morgan Stanley common stock (MUFG conversion).
	-	Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs).
	-	Refer to End Notes on pages 17-18 and Legal Notice on page 19.

2

MORGAN STANLEY
Quarterly Earnings Per Share
(unaudited, dollars in millions, except for per share data)
	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Income (loss) from continuing operations	$	764		$	(958	)	$	(158	)		*			*		$	667		$	4,689			(86	%)
Net income applicable to redeemable noncontrolling interests		116			8			0			*			*			124			0			*
Net income applicable to nonredeemable noncontrolling interests		75			42			64			79	%		17	%		495			528			(6	%)
Net income (loss) from continuing operations applicable to noncontrolling interest		191			50			64			*			198	%		619			528			17	%
Income (loss) from continuing operations applicable to Morgan Stanley		573			(1,008	)		(222	)		*			*			48			4,161			(99	%)
Less: Preferred Dividends		24			24			24			--			--			96			292			(67	%)
Less: MUFG preferred stock conversion		-			-			-			--			--			-			1,726			*
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income to Participating Restricted Stock Units		549			(1,032	)		(246	)		*			*			(48	)		2,143			*
Basic EPS Adjustments:
Less: Allocation of earnings to Participating Restricted Stock Units		2			0			1			*			100	%		2			26			(92	%)
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	547		$	(1,032	)	$	(247	)		*			*		$	(50	)	$	2,117			*
Gain (loss) from discontinued operations after tax		(63	)		2			(26	)		*			(142	%)		(38	)		(44	)		14	%
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests		3			17			2			(82	%)		50	%		29			7			*
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley		(66	)		(15	)		(28	)		*			(136	%)		(67	)		(51	)		(31	%)
Less: Allocation of earnings to Participating Restricted Stock Units		0			0			0			--			--			0			(1	)		*
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		(66	)		(15	)		(28	)		*			(136	%)		(67	)		(50	)		(34	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	481		$	(1,047	)	$	(275	)		*			*		$	(117	)	$	2,067			*
Average basic common shares outstanding (millions)		1,892			1,889			1,850			--			2	%		1,886			1,655			14	%
Earnings per basic share:
Income from continuing operations	$	0.29		$	(0.55	)	$	(0.13	)		*			*		$	(0.03	)	$	1.28			*
Discontinued operations	$	(0.04	)	$	-		$	(0.02	)		*			(100	%)	$	(0.03	)	$	(0.03	)		--
Earnings per basic share	$	0.25		$	(0.55	)	$	(0.15	)		*			*		$	(0.06	)	$	1.25			*
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	547		$	(1,032	)	$	(247	)		*			*		$	(50	)	$	2,117			*
Diluted EPS Adjustments:
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	547		$	(1,032	)	$	(247	)		*			*		$	(50	)	$	2,117			*
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		(66	)		(15	)		(28	)		*			(136	%)		(67	)		(50	)		(34	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	481		$	(1,047	)	$	(275	)		*			*		$	(117	)	$	2,067			*
Average diluted common shares outstanding and common stock equivalents (millions)		1,937			1,889			1,850			3	%		5	%		1,886			1,675			13	%
Earnings per diluted share:
Income from continuing operations	$	0.28		$	(0.55	)	$	(0.13	)		*			*		$	(0.03	)	$	1.26			*
Discontinued operations	$	(0.03	)	$	-		$	(0.02	)		*			(50	%)	$	(0.03	)	$	(0.03	)		--
Earnings per diluted share	$	0.25		$	(0.55	)	$	(0.15	)		*			*		$	(0.06	)	$	1.23			*

Notes:	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	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 pages 15 and 16 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, 2011.
	-	Refer to Legal Notice on page 19.

3

MORGAN STANLEY
Quarterly Consolidated Financial Information and Statistical Data
(unaudited)
	Quarter Ended									Percentage Change From:						Twelve Months Ended				Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012		Dec 31, 2011		Change
Regional revenues (1)
Americas	$	5,568		$	4,744		$	3,716			17	%		50	%	$	20,200	$	22,306		(9	%)
EMEA (Europe, Middle East, Africa)		656			296			1,237			122	%		(47	%)		3,078		6,619		(53	%)
Asia		742			240			722			*			3	%		2,834		3,311		(14	%)
Consolidated net revenues	$	6,966		$	5,280		$	5,675			32	%		23	%	$	26,112	$	32,236		(19	%)
Worldwide employees		57,061			57,726			61,546			(1	%)		(7	%)
Firmwide deposits	$	83,266		$	70,757		$	65,662			18	%		27	%
Total assets	$	782,373		$	764,985		$	749,898			2	%		4	%
Risk weighted assets (2)	$	306,479		$	314,770		$	314,817			(3	%)		(3	%)
Global Liquidity Reserve (Billions) (3)	$	182		$	170		$	182			7	%		--
Long-Term Debt Outstanding	$	169,571		$	168,444		$	184,234			1	%		(8	%)
Maturities of Long-Term Debt Outstanding (next 12 months)	$	25,303		$	20,214		$	35,082			25	%		(28	%)
Common equity		60,514			60,291			60,541			--			--
Preferred equity		1,508			1,508			1,508			--			--
Morgan Stanley shareholders' equity		62,022			61,799			62,049			--			--
Junior subordinated debt issued to capital trusts		4,827			4,833			4,853			--			(1	%)
Less: Goodwill and intangible assets (4)		(7,587	)		(7,665	)		(6,691	)		1	%		(13	%)
Tangible Morgan Stanley shareholders' equity	$	59,262		$	58,967		$	60,211			1	%		(2	%)
Tangible common equity	$	52,927		$	52,626		$	53,850			1	%		(2	%)
Leverage ratio		13.2	x		13.0	x		12.5	x
Tier 1 common capital (5)	$	45,189		$	43,728		$	39,785			3	%		14	%
Tier 1 capital (6)	$	54,755		$	53,352		$	51,114			3	%		7	%
Tier 1 common capital ratio		14.7	%		13.9	%		12.6	%
Tier 1 capital ratio		17.9	%		16.9	%		16.2	%
Tier 1 leverage ratio		7.1	%		7.2	%		6.6	%
Period end common shares outstanding (000's)		1,974,042			1,975,040			1,926,986			--			2	%
Book value per common share	$	30.65		$	30.53		$	31.42
Tangible book value per common share	$	26.81		$	26.65		$	27.95

Notes:	-	All data presented in millions except number of employees, liquidity, ratios and book values.
	-	The number of worldwide employees for all periods has been restated to exclude employees of Quilter.
	-	Tangible common equity and tangible book value per common share are non-GAAP financial measures that the Firm considers to be useful measures of capital adequacy. Tangible common equity equals common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction and includes only the Firm’s share of the Wealth Management Joint Venture’s goodwill and intangible assets. Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
	-	Leverage ratio equals total assets divided by tangible Morgan Stanley shareholders' equity.
	-	Tier 1 leverage ratio equals Tier 1 capital divided by adjusted average total assets (which reflects adjustments for disallowed goodwill, certain intangible assets, deferred tax assets and financial and non-financial equity investments).
	-	Refer to End Notes on pages 17-18 and Legal Notice on page 19.

4

MORGAN STANLEY
Quarterly Consolidated Financial Information and Statistical Data
(unaudited, dollars in billions)
	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Average Tier 1 Common Capital (1)
Institutional Securities	$	22.3		$	22.1		$	24.4			1	%		(9	%)	$	22.2		$	25.9			(14	%)
Global Wealth Management Group		3.8			3.8			3.3			--			15	%		3.8			3.3			15	%
Asset Management		1.3			1.3			1.4			--			(7	%)		1.3			1.5			(13	%)
Parent capital		17.1			16.2			11.5			6	%		49	%		15.5			5.3			192	%
Total - continuing operations		44.5			43.4			40.6			3	%		10	%		42.8			36.0			19	%
Discontinued operations		0.0			0.0			0.0			--			--			0.0			0.0			--
Firm	$	44.5		$	43.4		$	40.6			3	%		10	%	$	42.8		$	36.0			19	%
Average Common Equity (1)
Institutional Securities	$	28.3		$	28.8		$	31.3			(2	%)		(10	%)	$	29.0		$	32.7			(11	%)
Global Wealth Management Group		13.3			13.2			13.0			1	%		2	%		13.3			13.2			1	%
Asset Management		2.4			2.4			2.5			--			(4	%)		2.4			2.6			(8	%)
Parent capital		16.3			16.6			13.8			(2	%)		18	%		16.1			5.9			173	%
Total - continuing operations		60.3			61.0			60.6			(1	%)		--			60.8			54.4			12	%
Discontinued operations		0.0			0.0			0.0			--			--			0.0			0.0			--
Firm	$	60.3		$	61.0		$	60.6			(1	%)		--		$	60.8		$	54.4			12	%
Return on average Tier 1 common capital
Institutional Securities		6	%		*			*									*			7	%
Global Wealth Management Group		29	%		16	%		16	%								21	%		13	%
Asset Management		*			32	%		1	%								6	%		*
Total - continuing operations		5	%		*			*									*			6	%
Firm		4	%		*			*									*			6	%
Return on average common equity
Institutional Securities		5	%		*			*									*			5	%
Global Wealth Management Group		8	%		5	%		4	%								6	%		3	%
Asset Management		*			17	%		1	%								3	%		*
Total - continuing operations		4	%		*			*									*			4	%
Firm		3	%		*			*									*			4	%

Notes:	-	Beginning in the quarter ended March 31, 2012, Firm and segment required Capital is met by Tier 1 common capital. Prior to the quarter ended March 31, 2012, the Firm's required Capital was met by regulatory Tier 1 capital or Tier 1 common equity. Segment capital for prior quarters has been recast under this framework.  Tier 1 common capital is defined as Tier 1 capital less non-common elements in Tier 1 capital, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust preferred securities and mandatory convertible preferred securities.
	-	The return on average common equity and average Tier 1 common capital are non-GAAP measures that the Firm considers to be useful measures that the Firm and investors use to assess operating performance.
	-	For the full year ended December 31, 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 would have been: Firm: 7%, Institutional Securities: 10%, Global Wealth Management: 5% and Asset Management: 1%, for the full year ended December 31, 2011.
	-	Refer to End Notes on pages 17-18 and Legal Notice on page 19.

5

MORGAN STANLEY
Quarterly Institutional Securities Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Revenues:
Investment banking	$	1,225		$	969		$	883			26	%		39	%	$	3,929		$	4,228			(7	%)
Principal transactions:
Trading		1,246			314			664			*			88	%		5,853			11,294			(48	%)
Investments		148			74			65			100	%		128	%		219			239			(8	%)
Commissions and fees		474			468			523			1	%		(9	%)		1,999			2,611			(23	%)
Asset management, distribution and admin. fees		38			41			29			(7	%)		31	%		144			124			16	%
Other		42			62			37			(32	%)		14	%		195			(241	)		*
Total non-interest revenues		3,173			1,928			2,201			65	%		44	%		12,339			18,255			(32	%)
Interest income		1,329			986			1,301			35	%		2	%		4,391			5,740			(24	%)
Interest expense		1,551			1,547			1,434			--			8	%		6,177			6,820			(9	%)
Net interest		(222	)		(561	)		(133	)		60	%		(67	%)		(1,786	)		(1,080	)		(65	%)
Net revenues		2,951			1,367			2,068			116	%		43	%		10,553			17,175			(39	%)
Compensation and benefits		1,486			1,637			1,550			(9	%)		(4	%)		6,653			7,199			(8	%)
Non-compensation expenses		1,408			1,650			1,290			(15	%)		9	%		5,571			5,385			3	%
Total non-interest expenses		2,894			3,287			2,840			(12	%)		2	%		12,224			12,584			(3	%)
Income (loss) from continuing operations before taxes		57			(1,920	)		(772	)		*			*			(1,671	)		4,591			*
Income tax provision / (benefit) from continuing operations		(331	)		(662	)		(419	)		50	%		21	%		(1,028	)		879			*
Income (loss) from continuing operations		388			(1,258	)		(353	)		*			*			(643	)		3,712			*
Gain (loss) from discontinued operations after tax		(60	)		(15	)		(35	)		*			(71	%)		(119	)		(99	)		(20	%)
Net income (loss)		328			(1,273	)		(388	)		*			*			(762	)		3,613			*
Net income applicable to redeemable noncontrolling interests		-			-			-			--			--			-			-			--
Net income applicable to nonredeemable noncontrolling interests		38			12			6			*			*			194			244			(20	%)
Net income (loss) applicable to Morgan Stanley	$	290		$	(1,285	)	$	(394	)		*			*		$	(956	)	$	3,369			*
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		353			(1,269	)		(359	)		*			*			(833	)		3,468			*
Gain (loss) from discontinued operations after tax		(63	)		(16	)		(35	)		*			(80	%)		(123	)		(99	)		(24	%)
Net income (loss) applicable to Morgan Stanley	$	290		$	(1,285	)	$	(394	)		*			*		$	(956	)	$	3,369			*
Return on average common equity
from continuing operations		5	%		*			*									*			5	%
Pre-tax profit margin		2	%		*			*									*			27	%
Compensation and benefits as a % of net revenues		50	%		120	%		75	%								63	%		42	%

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.
	-	For the quarter and full year ended December 31, 2011, Principal Transactions - Trading included a loss of $1,742 million related to MBIA.
	-	Other revenues for the full year ended December 31, 2011 included a loss of approximately $783 million related to MUMSS.
	-	The quarter ended December 31, 2012 included a net tax benefit of approximately $314 million, consisting of a discrete tax benefit of approximately $299 million related to the remeasurement of reserves, as well as an out of period net tax benefit of approximately $15 million to adjust previously recorded deferred tax assets.  The quarter ended September 30, 2012, included an out of period net income tax provision of approximately $82 million, primarily related to the overstatement of tax benefits associated with repatriated earnings of a foreign subsidiary in 2010.
	-	The full year ended December 31, 2012 included an out of period net tax provision of approximately $67 million to adjust previously recorded deferred tax assets.  The full year ended December 31, 2011 included a net discrete 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.
	-	In the quarter ended December 31, 2012, discontinued operations includes the provision of $115 million related to a settlement with the Federal Reserve Board concerning the independent foreclosure review related to Saxon. For full year ended December 31, 2011, discontinued operations included charges related to losses associated with the planned disposition of Saxon.
	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	For the full year ended December 31, 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 10% for the twelve months ended December 31, 2011.
	-	Refer to Legal Notice on page 19.

6

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Institutional Securities
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Investment Banking
Advisory revenues	$	454		$	339		$	406			34	%		12	%	$	1,369		$	1,737			(21	%)
Underwriting revenues
Equity		237			199			189			19	%		25	%		891			1,132			(21	%)
Fixed income		534			431			288			24	%		85	%		1,669			1,359			23	%
Total underwriting revenues		771			630			477			22	%		62	%		2,560			2,491			3	%
Total investment banking revenues	$	1,225		$	969		$	883			26	%		39	%	$	3,929		$	4,228			(7	%)
Sales & Trading
Equity	$	1,090		$	587		$	1,254			86	%		(13	%)	$	4,347		$	6,770			(36	%)
Fixed Income & Commodities		481			(163	)		(254	)		*			*			2,358			7,506			(69	%)
Other		(35	)		(162	)		83			78	%		*			(495	)		(1,327	)		63	%
Total sales & trading net revenues	$	1,536		$	262		$	1,083			*			42	%	$	6,210		$	12,949			(52	%)
Investments & Other
Investments	$	148		$	74		$	65			100	%		128	%	$	219		$	239			(8	%)
Other		42			62			37			(32	%)		14	%		195			(241	)		*
Total investments & other revenues	$	190		$	136		$	102			40	%		86	%	$	414		$	(2	)		*
Total Institutional Securities net revenues	$	2,951		$	1,367		$	2,068			116	%		43	%	$	10,553		$	17,175			(39	%)

Notes:	- For the periods noted below, sales and trading net revenues included positive (negative) revenue related to DVA as follows:
	December 31, 2012: Total QTD: $(511) million; Fixed Income & Commodities: $(330) million; Equity: $(181) million
	September 30, 2012: Total QTD: $(2,262) million; Fixed Income & Commodities: $(1,621) million; Equity: $(641) million
	December 31, 2011: Total QTD: $216 million; Fixed Income & Commodities: $239 million; Equity: $(23) million
	December 31, 2012: Total YTD: $(4,402) million; Fixed Income & Commodities: $(3,273) million; Equity: $(1,130) million
	December 31, 2011: Total YTD: $3,681 million; Fixed Income & Commodities: $3,062 million; Equity: $619 million
	- For the quarter and full year ended Decemer 31, 2011, Fixed Income and Commodities sales and trading net revenues includes a loss of $1,742 million related to MBIA.
	- Refer to Legal Notice on page 19.

7

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Institutional Securities
(unaudited, dollars in millions)
	Current VaR Methodology						Prior VaR Methodology
	Quarter Ended						Quarter Ended
	Dec 31, 2012		Sept 30, 2012		Dec 31, 2011		Dec 31, 2012		Sept 30, 2012		Dec 31, 2011
Average Daily 95% / One-Day Value-at-Risk ("VaR")
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread	$	60	$	53	$	51	$	83	$	76	$	57
Equity price		21		26		29		27		32		29
Foreign exchange rate		11		12		13		16		17		12
Commodity price		22		22		26		25		27		28
Aggregation of Primary Risk Categories		69		58		62		88		79		66
Credit Portfolio VaR		20		23		83		25		28		103
Trading VaR	$	78	$	63	$	105	$	98	$	82	$	123

Notes:	-	VaR 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. The Firm modified its VaR model to make it more responsive to recent market conditions. The change has been approved by Firm’s regulators for use in the Firm's regulatory capital calculations. Further discussion of the calculation of VaR and the limitations of the Firm's 2012 VaR methodology, will be disclosed in Part II, Item 7A "Quantitative and Qualitative Disclosures about Market Risk" included in the Firm's 10-K for the year ended December 31, 2012.
	-	Refer to Legal Notice on page 19.

8

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Institutional Securities - Corporate Loans and Commitments
(unaudited, dollars in billions)
	Quarter Ended									Percentage Change From:
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011
Loans and commitments at fair value
Corporate funded loans:
Investment grade	$	3.8		$	4.2		$	6.6			(10	%)		(42	%)
Non-investment grade		3.6			5.6			7.3			(36	%)		(51	%)
Total corporate funded loans	$	7.4		$	9.8		$	13.9			(24	%)		(47	%)
Corporate lending commitments:
Investment grade	$	17.3		$	24.2		$	45.2			(29	%)		(62	%)
Non-investment grade		6.4			8.2			14.1			(22	%)		(55	%)
Total corporate lending commitments	$	23.7		$	32.4		$	59.3			(27	%)		(60	%)
Corporate funded loans plus lending commitments:
Investment grade	$	21.1		$	28.4		$	51.8			(26	%)		(59	%)
Non-investment grade		10.0			13.8			21.4			(28	%)		(53	%)
Total loans and commitments at fair value	$	31.1		$	42.2		$	73.2			(26	%)		(58	%)
% investment grade		68	%		67	%		71	%
% non-investment grade		32	%		33	%		29	%
Held for investment (HFI) portfolio	$	49.8		$	40.5		$	9.7			23	%		*
Held for sale (HFS) portfolio	$	7.1		$	9.7		$	-			(27	%)		*
Total Corporate Lending Exposure	$	88.0		$	92.4		$	82.9			(5	%)		6	%
Hedges	$	19.7		$	19.6		$	35.8			1	%		(45	%)

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, 2012.
	-	Total Corporate Lending exposure represents the Firm's potential loss assuming the market price of funded loans and lending commitments was zero.
	-	On December 31, 2012, September 30, 2012 and December 31, 2011, the "event-driven" portfolio of pipeline commitments and closed deals to non-investment grade borrowers were $3.9 billion, $6.5 billion and $3.8 billion, respectively.
	-	On December 31, 2012, September 30, 2012 and December 31, 2011, the HFI portfolio allowance for loan losses for funded loans was $93 million, $85 million and $6 million, respectively, and the HFI portfolio allowance for credit losses for loan commitments was $84 million, $60 million and $18 million, respectively.
	-	Held for sale portfolio reflects loans and commitments carried at the lower of cost or fair market value.
	-	The hedge balance reflects the notional amount utilized by the corporate lending business.
	-	Refer to Legal Notice on page 19.

9

MORGAN STANLEY
Quarterly Global Wealth Management Group Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Revenues:
Investment banking	$	209		$	199		$	165			5	%		27	%	$	836		$	750			11	%
Principal transactions:
Trading		288			312			313			(8	%)		(8	%)		1,193			1,119			7	%
Investments		3			4			(2	)		(25	%)		*			10			4			150	%
Commissions and fees		579			521			626			11	%		(8	%)		2,261			2,737			(17	%)
Asset management, distribution and admin. fees		1,882			1,810			1,622			4	%		16	%		7,288			6,792			7	%
Other		99			80			78			24	%		27	%		316			410			(23	%)
Total non-interest revenues		3,060			2,926			2,802			5	%		9	%		11,904			11,812			1	%
Interest income		529			507			480			4	%		10	%		2,015			1,863			8	%
Interest expense		128			97			63			32	%		103	%		403			386			4	%
Net interest		401			410			417			(2	%)		(4	%)		1,612			1,477			9	%
Net revenues		3,461			3,336			3,219			4	%		8	%		13,516			13,289			2	%
Compensation and benefits		1,979			2,050			2,059			(3	%)		(4	%)		8,128			8,286			(2	%)
Non-compensation expenses		901			1,047			922			(14	%)		(2	%)		3,788			3,748			1	%
Total non-interest expenses		2,880			3,097			2,981			(7	%)		(3	%)		11,916			12,034			(1	%)
Income (loss) from continuing operations before taxes		581			239			238			143	%		144	%		1,600			1,255			27	%
Income tax provision / (benefit) from continuing operations		197			93			93			112	%		112	%		559			458			22	%
Income (loss) from continuing operations		384			146			145			163	%		165	%		1,041			797			31	%
Gain (loss) from discontinued operations after tax		1			5			4			(80	%)		(75	%)		68			14			*
Net income (loss)		385			151			149			155	%		158	%		1,109			811			37	%
Net income applicable to redeemable noncontrolling interests		116			8			0			*			*			124			0			*
Net income applicable to nonredeemable noncontrolling interests		(9	)		(3	)		16			(200	%)		*			143			146			(2	%)
Net income (loss) applicable to Morgan Stanley	$	278		$	146		$	133			90	%		109	%	$	842		$	665			27	%
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		277			157			131			76	%		111	%		799			658			21	%
Gain (loss) from discontinued operations after tax		1			(11	)		2			*			(50	%)		43			7			*
Net income (loss) applicable to Morgan Stanley	$	278		$	146		$	133			90	%		109	%	$	842		$	665			27	%
Return on average common equity
from continuing operations		8	%		5	%		4	%								6	%		3	%
Pre-tax profit margin		17	%		7	%		7	%								12	%		9	%
Compensation and benefits as a % of net revenues		57	%		61	%		64	%								60	%		62	%

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 portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	The full year ended December 31, 2012, included non-recurring costs of $193 million related to the MSWM integration and the purchase of an additional 14% stake in the Joint Venture reported in the quarter ended September 30, 2012.
	-	The full year ended December 31, 2012 and December 31, 2011, discontinued operations included the operating results related to Quilter.
	-	During the quarter ended September 30, 2012, Morgan Stanley completed the purchase of an additional 14% stake in the Joint Venture from Citi, increasing the Firm’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related to its 49% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests. Due to the terms of the revised agreement with Citi, subsequent to the purchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income (loss) applicable to redeemable noncontrolling interests.
	-	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 5% for the full year ended December 31, 2011.
	-	Refer to Legal Notice on page 19.

10

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Global Wealth Management Group
(unaudited)
	Quarter Ended									Percentage Change From:
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011
Global representatives		16,780			16,829			17,512			--			(4	%)
Annualized revenue per global
representative (000's)	$	824		$	790		$	732			4	%		13	%
Assets by client segment (billions)
$10m or more		584			572			508			2	%		15	%
$1m - $10m		724			723			704			--			3	%
Subtotal - > $1m		1,308			1,295			1,212			1	%		8	%
$100k - $1m		422			426			383			(1	%)		10	%
< $100k		46			47			42			(2	%)		10	%
Total client assets (billions)	$	1,776		$	1,768		$	1,637			--			8	%
% of assets by client segment > $1m		74	%		73	%		74	%
Fee-based client account assets (billions)	$	573		$	556		$	485			3	%		18	%
Fee-based assets as a % of client assets		32	%		31	%		30	%
Bank deposit program (millions)	$	130,798		$	117,552		$	110,561			11	%		18	%
Client assets per global
representative (millions)	$	106		$	105		$	93			1	%		14	%
Global fee based asset flows (billions)	$	3.7		$	7.5		$	4.8			(51	%)		(23	%)
Global retail locations		712			727			753			(2	%)		(5	%)

Notes:	-	Annualized revenue per global representative is defined as annualized revenue divided by average global representative headcount.
	-	Full year average annualized revenue per global representative is $793 thousand and $741 thousand for 2012 and 2011, respectively.
	-	Fee-based client account assets represent 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 December 31, 2012, September 30, 2012 and December 31, 2011, approximately $72 billion, $60 billion and $56 billion, respectively, of the assets in the bank deposit program are attributable to Morgan Stanley.
	-	Global fee based asset flows represent 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 19.

11

MORGAN STANLEY
Quarterly Asset Management Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Revenues:
Investment banking	$	5		$	4		$	3			25	%		67	%	$	17		$	13			31	%
Principal transactions:
Trading		(19	)		(17	)		(7	)		(12	%)		(171	%)		(45	)		(22	)		(105	%)
Investments (1)		153			212			77			(28	%)		99	%		513			330			55	%
Commissions and fees		0			0			0			--			--			0			0			--
Asset management, distribution and admin. fees		447			437			379			2	%		18	%		1,703			1,582			8	%
Other		16			(1	)		(14	)		*			*			55			25			120	%
Total non-interest revenues		602			635			438			(5	%)		37	%		2,243			1,928			16	%
Interest income		3			2			0			50	%		*			10			10			--
Interest expense		6			6			14			--			(57	%)		34			51			(33	%)
Net interest		(3	)		(4	)		(14	)		25	%		79	%		(24	)		(41	)		41	%
Net revenues		599			631			424			(5	%)		41	%		2,219			1,887			18	%
Compensation and benefits		168			241			183			(30	%)		(8	%)		841			848			(1	%)
Non-compensation expenses		210			192			163			9	%		29	%		788			786			--
Total non-interest expenses		378			433			346			(13	%)		9	%		1,629			1,634			--
Income (loss) from continuing operations before taxes		221			198			78			12	%		183	%		590			253			133	%
Income tax provision / (benefit) from continuing operations		229			44			28			*			*			317			73			*
Income (loss) from continuing operations		(8	)		154			50			*			*			273			180			52	%
Gain (loss) from discontinued operations after tax		(4	)		12			5			*			*			9			41			(78	%)
Net income (loss)		(12	)		166			55			*			*			282			221			28	%
Net income applicable to redeemable noncontrolling interests		0			0			0			--			--			-			-			--
Net income applicable to nonredeemable noncontrolling interests		49			50			44			(2	%)		11	%		187			145			29	%
Net income (loss) applicable to Morgan Stanley	$	(61	)	$	116		$	11			*			*		$	95		$	76			25	%
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		(57	)		104			6			*			*			86			35			146	%
Gain (loss) from discontinued operations after tax		(4	)		12			5			*			*			9			41			(78	%)
Net income (loss) applicable to Morgan Stanley	$	(61	)	$	116		$	11			*			*		$	95		$	76			25	%
Return on average common equity
from continuing operations		*			17	%		1	%								3	%		*
Pre-tax profit margin		37	%		31	%		18	%								27	%		13	%
Compensation and benefits as a % of net revenues		28	%		38	%		43	%								38	%		45	%

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 and the full year ended December 31, 2012 included an out of period net tax provision of approximately $159 million, primarily related to the overstatement of deferred tax assets associated with partnership investments in prior periods. The Firm has evaluated the effects of the understatement of the income tax provision both qualitatively and quantitatively, and concluded that it did not have a material impact on any prior annual or quarterly consolidated results.  A comprehensive review of the Firm's deferred tax accounts continues, and as such, the net tax provisions noted above could be subject to revision.
	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	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 1% for the twelve months ended December 30, 2011.
	-	Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	Refer to End Notes on pages 17-18 and Legal Notice on page 19.

12

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Asset Management
(unaudited)
	Quarter Ended									Percentage Change From:						Twelve Months Ended						Percentage
	Dec 31, 2012			Sept 30, 2012			Dec 31, 2011			Sept 30, 2012			Dec 31, 2011			Dec 31, 2012			Dec 31, 2011			Change
Net Revenues (millions)
Traditional Asset Management	$	376		$	372		$	290			1	%		30	%	$	1,427		$	1,273			12	%
Real Estate Investing (1)		127			125			111			2	%		14	%		520			442			18	%
Merchant Banking		96			134			23			(28	%)		*			272			172			58	%
Total Asset Management	$	599		$	631		$	424			(5	%)		41	%	$	2,219		$	1,887			18	%
Assets under management or supervision (billions)
Net flows by asset class (2)
Traditional Asset Management
Equity	$	(0.4	)	$	(1.8	)	$	1.0			78	%		*		$	(1.9	)	$	3.7			*
Fixed Income		3.7			(3.4	)		(1.5	)		*			*			(0.8	)		(5.5	)		85	%
Liquidity		(2.6	)		15.9			6.7			*			*			26.0			20.1			29	%
Alternatives		0.1			0.3			7.8			(67	%)		(99	%)		1.1			7.9			(86	%)
Total Traditional Asset Management		0.8			11.0			14.0			(93	%)		(94	%)		24.4			26.2			(7	%)
Real Estate Investing		0.4			(0.2	)		0.3			*			33	%		0.9			1.0			(10	%)
Merchant Banking		0.0			0.0			0.2			--			*			0.0			(1.4	)		*
Total net flows	$	1.2		$	10.8		$	14.5			(89	%)		(92	%)	$	25.3		$	25.8			(2	%)
Assets under management or supervision by asset class (3)
Traditional Asset Management
Equity	$	120		$	117		$	104			3	%		15	%
Fixed Income		62			57			57			9	%		9	%
Liquidity		100			102			74			(2	%)		35	%
Alternatives		27			27			25			--			8	%
Total Traditional Asset Management		309			303			260			2	%		19	%
Real Estate Investing		20			19			18			5	%		11	%
Merchant Banking		9			9			9			--			--
Total Assets Under Management or Supervision	$	338		$	331		$	287			2	%		18	%
Share of minority stake assets		5			5			6			--			(17	%)

Notes:	-  The alternatives asset class includes a range of investment products such as funds of hedge funds, funds of private equity funds and funds of real estate 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 17-18 and Legal Notice on page 19.

13

This page represents an addendum to the 4Q 2012 Financial Supplement, Appendix I

MORGAN STANLEY
Country Risk Exposure (1) - European Peripherals and France
As of December 31, 2012
(unaudited, dollars in millions)
				Net								Exposure
	Net			Counterparty		Funded		Unfunded		CDS		Before
	Inventory (2)			Exposure (3)		Lending		Commitments		Adjustment (4)		Hedges			Hedges (5)			Net Exposure
Greece
Sovereigns	$	6		$	34	$	-	$	-	$	-	$	40		$	-		$	40
Non-sovereigns		59			3		52		-		-		114			(48	)		66
Sub-total		65			37		52		-		-		154			(48	)		106
Ireland
Sovereigns		90			7		-		-		5		102			2			104
Non-sovereigns		84			29		72		56		19		260			(22	)		238
Sub-total		174			36		72		56		24		362			(20	)		342
Italy
Sovereigns		619			287		-		-		490		1,396			(203	)		1,193
Non-sovereigns		448			774		384		727		153		2,486			(496	)		1,990
Sub-total		1,067			1,061		384		727		643		3,882			(699	)		3,183
Spain
Sovereigns		691			2		-		-		468		1,161			(6	)		1,155
Non-sovereigns		298			301		123		807		167		1,696			(362	)		1,334
Sub-total		989			303		123		807		635		2,857			(368	)		2,489
Portugal
Sovereigns		(31	)		32		-		-		31		32			(78	)		(46	)
Non-sovereigns		113			32		98		-		60		303			(31	)		272
Sub-total		82			64		98		-		91		335			(109	)		226
Total Euro Peripherals (6) (7)
Sovereigns		1,375			362		-		-		994		2,731			(285	)		2,446
Non-sovereigns		1,002			1,139		729		1,590		399		4,859			(959	)		3,900
Sub-total	$	2,377		$	1,501	$	729	$	1,590	$	1,393	$	7,590		$	(1,244	)	$	6,346
France (6) (7)
Sovereigns		(3,086	)		15		-		-		32		(3,039	)		(230	)		(3,269	)
Non-sovereigns		(870	)		2,244		270		1,926		259		3,829			(812	)		3,017
Sub-total	$	(3,956	)	$	2,259	$	270	$	1,926	$	291	$	790		$	(1,042	)	$	(252	)

(1)	Country risk exposure is measured in accordance with the Firm’s internal risk management standards and includes obligations from sovereign and non-sovereigns, which includes governments, corporations, clearinghouses and financial institutions.
(2)	Net inventory representing exposure to both long and short single name and index positions (i.e., bonds and equities at fair value and CDS based on notional amount assuming zero recovery adjusted for any fair value receivable or payable).
(3)	Net counterparty exposure (i.e., repurchase transactions, securities lending and OTC derivatives) taking into consideration legally enforceable master netting agreements and collateral.
(4)	CDS adjustment represents credit protection purchased from European peripheral banks on European peripheral sovereign and financial institution risk, or French banks on French sovereign and financial institution risk. Based on the CDS notional amount assuming zero recovery adjusted for any fair value receivable or payable.
(5)	Represents CDS hedges on net counterparty exposure and funded lending. Based on the CDS notional amount assuming zero recovery adjusted for any fair value receivable or payable.
(6)	In addition, at December 31, 2012, the Firm had European Peripherals and French exposure for overnight deposits with banks of approximately $81 million and $27 million, respectively.
(7)	At December 31, 2012, the benefit of collateral received against counterparty credit exposure was $5.0 billion in the European Peripherals with 97% of such collateral consisting of cash and German government obligations, and $7.5 billion in France with nearly all collateral consisting of cash and US government obligations. These amounts do not include collateral received on secured financing transactions.
	- Refer to Legal Notice on page 19.

14

This page represents an addendum to the 4Q 2012 Financial Supplement, Appendix II

MORGAN STANLEY
Earnings Per Share Calculation Under Two-Class Method
Three Months Ended December 31, 2012
(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		1,891		100%				$95		$452		$547	(6)	$0.29
Participating Restricted Stock Units (1)		7		0%				$0		$2		$2	(7)	NA
		1,898		100%		$549		$95		$454		$549
	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		1,891		100%				$0		($66)		($66)	(6)	($0.04)
Participating Restricted Stock Units (1)		7		0%				$0		$0		$0	(7)	NA
		1,898		100%		($66)		$0		($66)		($66)
	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		1,891		100%				$95		$386		$481	(6)	$0.25
Participating Restricted Stock Units (1)		7		0%				$0		$2		$2	(7)	N/A
		1,898		100%		$483		$95		$388		$483

Note: - Refer to End Notes on pages 17-18 and Legal Notice on page 19.

15

This page represents an addendum to the 4Q 2012 Financial Supplement, Appendix III

MORGAN STANLEY
Earnings Per Share Calculation Under Two-Class Method
Twelve Months Ended December 31, 2012
(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		1,886		100%				$377		($427)		($50)	(6)	($0.03)
Participating Restricted Stock Units (1)		9		0%				$2		$0		$2	(7)	NA
		1,895		100%		$(48)		$379		($427)		($48)
	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		1,886		100%				$0		($67)		($67)	(6)	($0.03)
Participating Restricted Stock Units (1)		9		0%				$0		$0		$0	(7)	NA
		1,895		100%		($67)		$0		($67)		($67)
	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		1,886		100%				$377		($494)		($117)	(6)	($0.06)
Participating Restricted Stock Units (1)		9		0%				$2		$0		$2	(7)	N/A
		1,895		100%		($115)		$379		($494)		($115)

Note: - Refer to End Notes on pages 17-18 and Legal Notice on page 19.

16

MORGAN STANLEY

End Notes

Page 2:
(1)	For the quarter ended December 31, 2012, the Firm recognized, in income from continuing operations, a net tax benefit of approximately
	$155 million.  This included a discrete benefit of approximately $299 million related to the remeasurement of reserves due to either the expiration of the
	applicable statute of limitations, or new information regarding the status of certain Internal Revenue Service examinations. The Firm also recognized,
	in the quarter ended December 31, 2012, an out of period net tax provision of approximately $144 million, principally in the Asset Management
	business segment, primarily related to the overstatement of deferred tax assets associated with partnership investments in prior periods.  For the
	full year ended December 31, 2012, the Firm recognized, in income from continuing operations, the discrete tax benefit noted above and an out of period
	net tax provision of approximately $226 million to adjust previously recorded deferred tax assets.  The Firm has evaluated the effects of the understatement
	of the income tax provision both qualitatively and quantitatively and concluded that it did not have a material impact on any prior annual or quarterly
	consolidated results.  A comprehensive review of the Firm’s deferred tax accounts continues, and as such, the net tax provisions noted
	above could be subject to revision.  The quarter ended September 30, 2012, included an out of period net income tax provision of approximately
	$82 million, primarily related to the overstatement of tax benefits associated with repatriated earnings of a foreign subsidiary in 2010. The full year
	ended December 31, 2011, income tax provision / (benefit) from continuing operations included a net discrete tax benefit of $447 million associated
	with the sale of Revel Entertainment Group, LLC. (Revel) and the tax benefit of $230 million related to the MUMSS loss.
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.
(2)	Risk weighted assets (RWA) are calculated in accordance with the regulatory capital requirements of the Federal Reserve. RWAs reflect both on
	and off-balance sheet risk of the Firm. Market RWAs reflect capital charges attributable to the risk of loss resulting from adverse changes
	in market prices and other factors. Credit RWAs reflect capital charges attributable to the risk of loss arising from a borrower or counterparty
	failing to meet its financial obligations.
(3)	The Global Liquidity Reserve, which is held within the Parent and operating subsidiaries, is comprised of highly liquid and diversified cash and cash
	equivalents and unencumbered securities. Eligible unencumbered securities include U.S. government securities, U.S. agency securities, U.S.
	agency mortgage-backed securities, FDIC-guaranteed corporate debt and non-U.S. government securities. For a further discussion of the Firm's
	Global Liquidity Reserve, see the Firm's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.
(4)	Goodwill and intangible balances includes only the Firm's share of the Wealth Management Joint Venture's goodwill and intangible assets net of
	allowable mortgage servicing rights deduction for quarters ended December 31, 2012, September 30, 2012 and December 31, 2011 of $6 million,
	$6 million and $120 million, respectively.
(5)	In accordance with the Federal Reserve Board's formalized definition as of December 30, 2011, Tier 1 common capital is defined as Tier 1
	capital less non-common elements in Tier 1 capital, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust
	preferred securities and mandatory convertible preferred securities. Prior periods have been recast to conform to this definition. This computation
	is a preliminary estimate as of January 18, 2013 (the date of this release) and could be subject to revision in Morgan Stanley’s Annual Report on
	Form 10-K for the year ended December 31, 2012.
(6)	Tier 1 capital consists predominately of common shareholders' equity as well as qualifying preferred stock and qualifying restricted core capital
	elements (trust preferred securities and noncontrolling interests) less goodwill, non-servicing intangible assets (excluding allowable mortgage
	servicing rights), net deferred tax assets (recoverable in excess of one year), an after-tax debt valuation adjustment and certain other deductions,
	including equity investments. This computation is a preliminary estimate as of January 18, 2013 (the date of this release) and could be subject to
	revision in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2012.
Page 5:
(1)	The Firm’s capital estimation is based on the Required Capital framework, an internal capital adequacy measure which considers a risk-based
	going concern capital after absorbing potential losses from extreme stress events at a point in time. Beginning in the quarter ended March 31,
	2012, the Firm's Required Capital is met by Tier 1 common capital.  Tier 1 common capital and common equity attribution to business segment is
	based on capital usage calculated by the framework.  The difference between the Firm's Tier 1 common capital and aggregate Required Capital is
	the Firm's Parent capital. The Firm generally holds parent capital for prospective regulatory requirements, including Basel III, organic growth,
	acquisitions and other capital needs.  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.
Page 12:
(1)	The quarters ended December 31, 2012, September 30, 2012 and December 31, 2011 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.
Page 13:
(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 December 31, 2012, September 30, 2012 and December 31, 2011 are $50 million, $51 million and $45 million, respectively.
(2)	Net Flows by region [inflow / (outflow)] for the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011 are:
	North America: $(2.2) billion, $9.1 billion and $8.6 billion
	International: $3.4 billion, $1.7 billion and $5.9 billion
(3)	Assets under management or supervision by region for the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011 are:
	North America: $213 billion, $212 billion and $187 billion
	International: $125 billion, $119 billion and $100 billion

17

MORGAN STANLEY

End Notes

Page 15:
(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 December 31, 2012 prior to allocations to participating RSUs.
(4)	Distributed earnings represent the dividends declared on common shares and participating RSUs for the quarter ended December 31, 2012.
	The amount of dividends declared is based upon the number of common shares outstanding as of the dividend record date. During
	the quarter ended December 31, 2012, 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 allocated 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.
Page 16:
(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 year ended December 31, 2012 prior to allocations to participating RSUs.
(4)	Distributed earnings represent the dividends declared on common shares and participating RSUs for the year ended December 31, 2012.
	The amount of dividends declared is based upon the number of common shares outstanding as of the dividend record date.  During the
	twelve months ended December 31, 2012, a total of $0.20 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
	on what they would be entitled to based on the 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.

18

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 fourth quarter earnings press release issued January 18, 2013.

19

EX-99.3

Exhibit 99.3

Strategic Update James P. Gorman, Chairman and Chief Executive Officer January 18, 2013

Notice This presentation may contain forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s current plans, 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 risks and uncertainties that may affect the future results of the Company, please see the Company’s Annual Report on Form 10-K, the Company’s Quarterly Reports on Form 10-Q and the Company’s Current Reports on Form 8-K. This presentation is not an offer to buy or sell any security. The information provided herein include certain non-GAAP financial measures. The reconciliation of such measures to the comparable GAAP figures are included in this presentation and in the Company’s Annual Report on 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, which are available on www.morganstanley.com. These slides are part of a presentation by Morgan Stanley and are intended to be viewed as part of that presentation. Morgan Stanley does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of forward-looking statements. Please note this presentation is available at www.morganstanley.com.

Strategic Plan to Drive Higher Returns Acquire 100% of Wealth Management joint venture Achieve Global Wealth Management Group margin goals through expense management; exceed through revenue growth Significantly reduce RWAs in Fixed Income and Commodities Drive expenses lower in 2013, 2014, and beyond Grow earnings through Morgan Stanley specific opportunities Achieve returns that meet and exceed cost of capital

Acquire 100% of the Wealth Management Joint Venture in 2013 Acquisition of final 35% stake of wealth management JV in 2013, subject to regulatory approval Incremental Benefits of 100% Ownership Year 1 incremental earnings  comparable to capital required to acquire remaining 35%, driven by NCI capture and contractual upside: Greater order flow capture Increased deposit funding (partial benefit in Year 1) Elimination of JV structures, operational complexity, agreements and expenses Unique syndication/distribution capabilities More significant loan book growth opportunity Based on Company projections of NCI elimination, contractual upside and other actions for first twelve months of full ownership. Subject to regulatory approval. Joint venture formed in May 2009. Includes no premium for deposit acquisition. Incremental capital in 2012 and 2013 reflects difference between the carrying value and the fixed purchase price of the minority stake in the joint venture.

Achieve GWMG Margin Goals through Expense Management; Exceed through Revenue Growth Consistent improvement in wealth management margin through expense management Margin upside with revenue growth GWMG Revenues ($Bn) GWMG Pre-Tax Margin Pre-MSSB Transaction JV Integration Period Post-Integration Revenues and pre-tax margin for 2006-2008 represent results for fiscal years ending November 30th.  Revenues for 2009-2012 represent results for fiscal years ending December 31st. Pre-tax margin is a non-GAAP financial measure that the Company considers useful for investors to assess operating performance. Pre-tax margin represents income (loss) from continuing operations before taxes, divided by net revenues.Pre-tax margin for 2012 excludes $193 million of non-recurring costs in 3Q12 associated with the Morgan Stanley Wealth Management integration and the purchase of an additional 14% stake in the joint venture.$5.5 2006 $6.6 2007 $7.0 2008 $9.3 2009 $12.5 2010 $13.3 2011 $13.5 2012 $3.5 4Q12 9% 17% 16% 6% 9% 13%

We Will Continue to Reduce Our Fixed Income RWAs Ahead of targets laid out in 3Q12 2016 figures represent expected “end-state” risk-weighted assets (RWAs) Can achieve RWA reduction without impairing revenue or client franchise Fixed Income and Commodities Basel III Risk-Weighted Assets Previous Guidance Current Position & Revised Guidance  Required Basel 3 Tier 1 Common Capital $35Bn $29Bn $25Bn ~$23Bn ~$21Bn <$18Bn The Company estimates its risk-weighted assets based on a preliminary analysis of the Basel III guidelines published to date and other factors. This is a preliminary estimate and may change. Assumes 9% Basel 3 Tier 1 Common Capital ratio. The Basel 3 Tier 1 Common Capital ratio is a non-GAAP financial measure that the Company considers to be a useful measure to the Company and investors to gauge future regulatory capital requirements.

We Will Continue to Reduce Our Fixed Income RWAs Ahead of targets laid out in 3Q12 2016 figures represent near “end-state” risk-weighted assets (RWAs) Can achieve RWA reduction without impairing revenue or client franchise Fixed Income and Commodities Basel III Risk-Weighted Assets Includes 4Q11 MBIA Settlement The Company estimates its risk-weighted assets based on a preliminary analysis of the Basel III guidelines published to date and other factors. This is a preliminary estimate and may change. Assumes reductions in some areas, partially offset by growth in others.

Driving Cost Reductions: Expenses to Decline ~$1.6Bn with Flat Revenue on Top of 2012 Reductions of $500MM Expenses declined $500MM in 2012, reflecting cost reductions, partially offset by investments Assuming flat revenue environment, expenses could decline by ~$1.6Bn between 2012 and 2014 Expense reductions reflect Office of Re-engineering, ISG and GWMG expense initiatives, and headcount management, partially offset by re-investment in certain areas Headcount down over 6,000 since year-end 2011 following January 2013 reduction in force Total Expenses ($Bn) Firm Headcount % Change from YE 2011 61,546 YE 2012 57,078 (7%) YE 2013 55,417 (10%) Based on current expectations; changes in litigation results or regulation could materially impact expenses. Assumes no changes in compensation deferral programs. Assumes similar revenue mix. Firm headcount for all periods has been restated to exclude employees of Quilter. Assumes only impact from January 2013 reduction. Constant headcount assumed after January 18, 2013.

Driving Cost Reductions: Improvements & Restructuring in 2013 Below actions are reflected in the net savings of ~$1.6Bn between 2012 and 2014 Cost Improvements and Restructuring: 2013 Announced January 2013 headcount reduction of ~1,700 Reducing and re-sizing Institutional Securities geographic footprint, enhancing importance of key regional centers, including NYC, London and Hong Kong Russia & Middle East: Downsizing local sales & trading presence, deploying certain resources to regional centers Certain other countries: Streamlining footprint, deferring expansion plans, and/or exiting some businesses Continue to serve clients from key regional centers, using centralized trading platforms, execution teams, infrastructure and support Pursue strategic alternatives for Private Wealth Management Europe; integrate other international platforms into institutional business

Grow Earnings Through Firm-Specific Opportunities: Deeper ISG and GWMG Partnership Opportunities for earnings growth from collaboration between ISG and GWMG, in addition to benefits from owning 100% of wealth management JV ISG and GWMG management formalized a joint effort in September 2012 to deepen partnership Currently over 35 initiatives in various stages of execution Expect initial impact from this effort in 2013, with upside over the next three years Client Experience Cross-offering products and capabilities from one business to clients of another Integrated research view, comprised of top institutional and retail analysts Capturing share in underpenetrated clients from a more segmented service model Launch of fixed income middle markets platform More efficiently and effectively delivering existing products to existing clients Operational Efficiency Eliminating overlapping trade support functions Enhanced risk management Organizational Coordination Integrate Senior Relationship Management to build cross-firm realization of full scope of client relationships Key business partners in GWMG often top clients for ISG

Grow Earnings Through Firm-Specific Opportunities: Bank Strategy Firmwide deposits of $83Bn at 2012 year-end would increase to $142Bn pro-forma with 100% ownership of wealth management JV Pro-forma deposit base represents significant opportunity in both GWMG and ISG to drive growth Global Wealth Management Group Current State: Invested in infrastructure and footprint Network of private bankers to support Fas in branches Management team Systematic build-out of lending product suite with disciplined governance and risk management Home loans and home financing products Securities based lending Tailored lending Further Opportunities: Increased penetration of lending activity ~5% of clients have a Morgan Stanley lending product vs. ~10% average for peers Institutional Securities Group Current State: Realizing funding cost benefits for: Relationship lending Project finance Foreign-exchange derivatives Further Opportunities: Achieve additional funding cost benefits Drive growth through ROE accretive business opportunities: Incremental foreign-exchange derivatives Interest rate derivatives Additional commercial lending products Deposits of $142Bn pro-forma for 100% ownership include values for all combined deposits in the Bank Deposit Program ($131Bn) plus those deposits outside of the joint venture as of December 31, 2012. Subject to regulatory approval.

What Does This Add Up To? Return on Average Common Equity (ROE) excl. DVA ~9% Assumptions No change in market conditions CVA adjustment Actions WM JV buy-in Expense initiatives RWA reductions Growth initiatives ~10% Actions Return excess capital >10% Assumptions Improved operating environment Return on Average Tangible Common Equity (ROTE) excl. DVA 10% 2% 4% 7% ~11% ~12% >12% See slide 13 for additional information related to the calculation of the financial metrics presented on this page.

End Notes These notes refer to the financial metrics presented on Slide 12. (1) Based on current expectations; changes in litigation results or regulation could materially impact expenses. Expense reductions reflect Office of Re-engineering, ISG and GWMG expense initiatives, and headcount management, partially offset by re-investment in certain areas; see slide 8 for additional information. Assumes no changes in compensation deferral programs. (2) The impact from changes in Morgan Stanley’s debt-related credit spreads is referred to as DVA. (3) The Company estimates its risk-weighted assets based on a preliminary analysis of the Basel III guidelines published to date and other factors. This is a preliminary estimate and may change. (4) Tangible common equity, a non-GAAP financial measure, equals common equity less the sum of goodwill, mortgage servicing rights and indefinite-lived assets. Goodwill associated with the wealth management JV is deducted pro-rata from the calculation based on the percent ownership of the Company in the JV. The Company views tangible common equity as a useful measure to investors because it is a commonly utilized metric and reflects the common equity deployed in the Company’s businesses. (5) The return on average common equity, excluding DVA, and return on average tangible common equity, excluding DVA are non-GAAP measures that the Company considers to be a useful measure that the Company and investors use to assess operating performance. The calculation of return on average common equity, excluding DVA uses income from continuing operations applicable to Morgan Stanley less preferred dividends and DVA as a percentage of average common equity. The calculation of return on average tangible common equity, excluding DVA uses income from continuing operations applicable to Morgan Stanley less preferred dividends and DVA as a percentage of average tangible common equity. (6) Return on average common equity , excluding DVA and return on average tangible common equity, excluding DVA for periods in 2012 exclude the pre-tax revenue impact of DVA in the following amounts: ($1,978 million) in 1Q12, $350 million in 2Q12, ($2,262 million) in 3Q12, and ($511 million) in 4Q12. (7) Return on average common equity and return on average tangible common equity for periods in 2012 exclude the average common equity impact of DVA in the following amounts: $1,452 million in 1Q12, $1,175 million in 2Q12, $366 million in 3Q12, and ($685 million) in 4Q12.(8) Capital actions are subject to regulatory approval.

Strategic Update James P. Gorman, Chairman and Chief Executive Officer January 18, 2013