8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 20, 2016

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 July 20, 2016, Morgan Stanley (the "Registrant") released financial information with respect to its quarter ended June 30, 2016. A copy of the press release containing this information is annexed as Exhibit 99.1 to this Report and by this reference incorporated herein and made a part hereof. In addition, a copy of the Registrant's Financial Data Supplement for its quarter ended June 30, 2016 is annexed as Exhibit 99.2 to this Report and by this reference incorporated herein and made a part hereof.

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

Item 9.01. Financial Statements and Exhibits

99.1	Press release of the Registrant, dated July 20, 2016, containing financial information for the quarter ended June 30, 2016.
99.2	Financial Data Supplement of the Registrant for the quarter ended June 30, 2016.

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

Dated:  July 20, 2016

EX-99.1

Exhibit 99.1

Media Relations:  Michele Davis   212-761-9621 Investor Relations:  Sharon Yeshaya   212-761-1632          

Morgan Stanley Reports Second Quarter 2016:

· Net Revenues of $8.9 Billion and Earnings per Diluted Share of $0.75

· Strong Performance in Sales & Trading; Investment Banking Ranked #2 in Global Announced and Completed M&A, Global Equity and Global IPOs¹

· Wealth Management Pre-Tax Margin of 22.5%^2,3

· Quarterly Dividend Increased 33% to $0.20 per Share; Announced Share Repurchase of up to $3.5 Billion through 2Q17⁴

NEW YORK, July 20, 2016 – Morgan Stanley (NYSE: MS) today reported net revenues of $8.9 billion for the second quarter ended June 30, 2016 compared with $9.7 billion a year ago.⁵  For the current quarter, net income applicable to Morgan Stanley was $1.6 billion, or $0.75 per diluted share,⁶ compared with income of $1.8 billion, or $0.85 per diluted share,⁶ for the same period a year ago.⁵

The prior year quarter included DVA revenue of $182 million.  Excluding DVA in the prior year quarter, net income applicable to Morgan Stanley was $1.7 billion, or $0.79 per diluted share.⁷

Compensation expense of $4.0 billion decreased from $4.4 billion a year ago partially driven by lower revenues.  Non-compensation expenses of $2.4 billion decreased from $2.6 billion a year ago.  Results reflect execution of the Firm’s disciplined expense management strategy.

The annualized return on average common equity was 8.3 percent in the current quarter.⁸

Business Overview

· Institutional Securities net revenues were $4.6 billion reflecting continued strength in Equity sales and trading and solid performance in Fixed Income sales and trading, partly offset by lower underwriting results.

· Wealth Management net revenues were $3.8 billion and pre-tax margin was 22.5%.³  Fee based asset flows for the quarter were $12.0 billion.

· Investment Management reported net revenues of $583 million with assets under management or supervision of $406 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “Our results this quarter reflect solid performance in an improved but still fragile environment.  In the midst of market uncertainty, we maintained our leadership positions across our core franchises and continued our focus on prudent risk management and judicious expense control.  We remain committed to executing for our clients and delivering on our strategic priorities for our shareholders.”

1

Summary of Institutional Securities Results
(dollars in millions)
	As Reported		Excluding DVA 9
	Net	Pre-Tax	Net	Pre-Tax
	Revenue	Income	Revenue	Income
2Q 2016 (a)	$4,578	$1,506	$4,578	$1,506
1Q 2016 (a)	$3,714	$908	$3,714	$908
2Q 2015	$5,172	$1,622	$4,990	$1,440

a) Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires changes in DVA to be presented in other comprehensive income as opposed to net revenues. Results for 2015 were not restated pursuant to this guidance, and as such, 2Q 2015 is the only period where net revenues and pre-tax income are adjusted for the impact of DVA.⁵

INSTITUTIONAL SECURITIES

Institutional Securities reported pre-tax income from continuing operations of $1.5 billion compared with pre-tax incomeof $1.6 billion a year ago, or $1.4 billion excluding DVA.^5,9  Net revenues for the current quarter were $4.6 billion compared with $5.2 billion a year ago, or $5.0 billion excluding DVA.^5,9  The following discussion for sales and trading excludes DVA from the prior year period.

· Advisory revenues of $497 million increased from $423 million a year ago on higher levels of completed M&A.  Equity underwriting revenues of $266 million decreased from $489 million in the prior year quarter reflecting significantly lower market volumes.  Fixed income underwriting revenues of $345 million decreased from $528 million in the prior year quarter primarily reflecting lower bond and loan fees.

· Equity sales and trading net revenues of $2.1 billion decreased from $2.3 billion a year ago reflecting reduced volumes and levels of activity in Asia, partially offset by better performance in Europe and the U.S.^5,10

· Fixed Income & Commodities sales and trading net revenues of $1.3 billion were consistent with the prior year period, despite the sale of the Oil Merchanting business in the fourth quarter of 2015.^5,10

· Investment revenues of $76 million increased from $16 million a year ago driven by mark-to-market gains on business related investments.

· Other revenues of $138 million decreased from $212 million a year ago reflecting mark-to-market losses on held for sale loans and lower results in our Japanese joint venture Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

· Compensation expenses of $1.6 billion decreased from $1.9 billion a year ago on lower revenues and continued expense discipline.  Non-compensation expenses of $1.4 billion for the current quarter decreased from $1.7 billion a year ago primarily reflecting lower volume driven expenses and broad based expense discipline.

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $46 million for the current quarter, unchanged from the first quarter of 2016 and compared with $54 million in the second quarter of the prior year.¹¹

2

Summary of Wealth Management Results
(dollars in millions)
	Net		Pre-Tax
	Revenues		Income
2Q 2016		$3,811		$859
1Q 2016		$3,668		$786
2Q 2015		$3,875		$885

WEALTH MANAGEMENT

Wealth Management reported pre-tax income from continuing operations of $859 million compared with $885 million in the second quarter of last year.  The quarter’s pre-tax margin was 22.5%.³  Net revenues for the current quarter were $3.8 billion compared with $3.9 billion a year ago.

· Asset management fee revenues of $2.1 billion decreased from $2.2 billion a year ago reflecting lower average fee rates related to fee-based accounts and lower market levels, partially offset by positive flows.

· Transactional revenues¹² of $798 million decreased from $872 million a year ago primarily reflecting lower commission revenues and lower levels of new issue activity.

· Net interest income of $829 million increased from $737 million a year ago on higher deposit and loan balances.  Wealth Management client liabilities were $69 billion at quarter end, an increase of $11 billion compared with the prior year quarter.¹³

· Compensation expense of $2.2 billion and non-compensation expenses of $800 million for the current quarter were relatively unchanged from a year ago.

· Total client assets were $2.0 trillion and client assets in fee based accounts were $820 billion at quarter end.  Fee based asset flows for the quarter were $12.0 billion.

· Wealth Management representatives of 15,909 produced average annualized revenue per representative of $959,000 in the current quarter.

3

Summary of Investment Management Results
(dollars in millions)
	Net		Pre-Tax
	Revenues		Income
2Q 2016		$583		$118
1Q 2016		$477		$44
2Q 2015		$751		$220

INVESTMENT MANAGEMENT

Investment Management reported pre-tax income from continuing operations of $118 million compared with pre-tax income of $220 million in the second quarter of last year.

· Net revenues of $583 million decreased from $751 million in the prior year primarily reflecting lower investment gains and carried interest in infrastructure and private equity investments.  Asset management fees were relatively unchanged from a year ago. 

· Compensation expense for the current quarter of $238 million decreased from $308 million a year ago, principally due to a decrease in deferred compensation associated with carried interest.  Non-compensation expenses of $227 million were relatively unchanged from a year ago.

· Assets under management or supervision at June 30, 2016 were $406 billion.  The business recorded net outflows of $1.7 billion in the current quarter.

CAPITAL

As of June 30, 2016, the Firm’s Common Equity Tier 1 and Tier 1 risk-based capital ratios under U.S. Basel III Advanced Approach transitional provisions were approximately 16.9% and 18.8%, respectively.¹⁴

As of June 30, 2016, the Firm estimates its pro forma fully phased-in Common Equity Tier 1 risk-based capital ratio (under U.S. Basel III Advanced Approach) and pro forma fully phased-in Supplementary Leverage Ratio to be approximately 15.8% and 6.1%, respectively.^14,15,16

At June 30, 2016, book value and tangible book value per common share were $36.29 and $31.39,¹⁷ respectively, based on approximately 1.9 billion shares outstanding.

OTHER MATTERS

The effective tax rate from continuing operations for the current quarter was 33.5%.

During the quarter ended June 30, 2016, the Firm repurchased approximately $625 million of its common stock or approximately 23 million shares.  The Firm announced a share repurchase of up to $3.5 billion of common stock beginning in the third quarter of 2016 through the end of second quarter of 2017.⁴

The Board of Directors declared a $0.20 quarterly dividend per share, payable on August 15, 2016 to common shareholders of record on July 29, 2016.⁴

In addition, the Firm announced on July 19, 2016 the redemption of all its issued and outstanding Trust Preferred securities.

4

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services.  With offices in more than 43 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals.  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)

NOTICE:

The information provided herein may include certain non-GAAP financial measures.  The definition of such measures or reconciliation of such metrics to the comparable U.S. GAAP figures are included in this earnings release and the Financial Supplement, both of which are available on www.morganstanley.com.

This earnings release 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 Firm, 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 in the Firm’s Annual Report on Form 10-K for the year ended December 31, 2015 and other items throughout the Form 10-K, the Firm’s Quarterly Reports on Form 10-Q  and the Firm’s Current Reports on Form 8-K, including any amendments thereto.

5

¹ Source: Thomson Reuters – for the period of January 1, 2016 to June 30, 2016 as of July 1, 2016.

² The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”).  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.  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 U.S. GAAP.  Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to investors and analysts in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition, operating results, or prospective regulatory capital requirements.  These measures are not in accordance with, or a substitute for U.S. 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 define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.

³ Pre-tax margin is a non-GAAP financial measure that the Firm considers useful for investors and analysts to assess operating performance. Pre-tax margin represents income (loss) from continuing operations before taxes divided by net revenues, two U.S. GAAP reported amounts without adjustment.

⁴On June 29, 2016, the Firm announced that it received no objection from the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) to the Firm’s 2016 capital plan (“Capital Plan”).  The Capital Plan includes the repurchase of up to $3.5 billion of outstanding common stock for the four quarters beginning in the third quarter of 2016 through the end of the second quarter of 2017, an increase from $2.5 billion for the comparable four quarter period in the 2015 Capital Plan, as well as an increase in the Firm’s quarterly common stock dividend to $0.20 per share from the current $0.15 per share, beginning with the common stock dividend declared in the third quarter of 2016.  The Federal Reserve Board also asked the Firm to submit an additional capital plan by December 29, 2016 addressing weaknesses identified in the Firm’s capital planning process.  Share repurchases under the Firm’s existing program authorized by the Board of Directors will be exercised from time to time through June 30, 2017, at prices the Firm deems appropriate subject to various factors, including the Firm’s capital position and market conditions.

⁵ Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires unrealized gains and losses from Morgan Stanley’s debt-related credit spreads and other credit factors (Debt Valuation Adjustments, or DVA) to be presented in Other comprehensive income as opposed to net revenues and net income.  Results for 2015 are not restated pursuant to that guidance.

⁶ Includes preferred dividends and other adjustments related to the calculation of earnings per share for the second quarter of 2016 and 2015 of approximately $157 million and $142 million, respectively.  Refer to page 13 of Morgan Stanley’s Financial Supplement accompanying this release for the calculation of earnings per share.

6

⁷ Excluding DVA from net income applicable to Morgan Stanley and earnings (loss) per diluted share amounts are non-GAAP financial measures that the Firm considers useful for investors and analysts to allow better comparability of period-to-period operating performance.  The reconciliation of net income (loss) applicable to Morgan Stanley, earnings (loss) per diluted share applicable to Morgan Stanley common shareholders from a GAAP to non-GAAP basis is as follows (Net income (loss) reconciliation and average diluted shares are presented in millions):

	2Q 2015
Net income (loss) applicable to MS - GAAP		$1,807
DVA impact		$119
Net income (loss) applicable to MS - Non-GAAP		$1,688
Earnings (loss) per diluted share - GAAP		$0.85
DVA impact		$0.06
Earnings (loss) per diluted share - Non-GAAP		$0.79
Average diluted shares - GAAP		1,960

⁸ Annualized return on average common equity (ROE) is a non-GAAP financial measure that the Firm considers useful for investors and analysts to allow better comparability of period-to-period operating performance.  The calculation of ROE uses net income applicable to Morgan Stanley less preferred dividends as a percentage of average common equity.

⁹ Institutional Securities net revenues and pre-tax income (loss), excluding DVA, is a non-GAAP financial measure that the Firm considers useful for investors and analysts to allow for better comparability of period-to-period operating performance. The reconciliation of net revenues and pre-tax income (loss) from a GAAP to non-GAAP basis is as follows (amounts are presented in millions - also see footnote 5):

	2Q 2016		1Q 2016		2Q 2015
Net revenues - GAAP		$4,578		$3,714		$5,172
DVA impact		n/a		n/a		$182
Net revenues - Non-GAAP		$4,578		$3,714		$4,990
Pre-tax income (loss) - GAAP		$1,506		$908		$1,622
DVA impact		n/a		n/a		$182
Pre-tax income (loss) - Non-GAAP		$1,506		$908		$1,440

7

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 and analysts 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 GAAP to non-GAAP basis is as follows (amounts are presented in millions – also see footnote 5):

	2Q 2016		2Q 2015
Sales & Trading - GAAP		$3,256		$3,504
DVA impact		n/a		$182
Sales & Trading - Non-GAAP		$3,256		$3,322
FIC Sales & Trading - GAAP		$1,297		$1,377
DVA impact		n/a		$110
FIC Sales & Trading - Non-GAAP		$1,297		$1,267
Equity Sales & Trading - GAAP		$2,145		$2,342
DVA impact		n/a		$72
Equity Sales & Trading - Non-GAAP		$2,145		$2,270

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 is disclosed in Part II, Item 7A “Quantitative and Qualitative Disclosures about Market Risk” included in the 2015 Form 10-K.  Refer to page 6 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR disclosure.

¹² Transactional revenues include investment banking, trading, and commissions and fee revenues.

¹³Wealth Management client liabilities reflect U.S. Bank lending and broker dealer margin activity.

¹⁴ The Firm’s binding risk-based capital ratios for regulatory purposes under U.S. Basel III are the lower of the capital ratios computed under the (i) standardized approaches for calculating credit risk risk-weighted assets (RWAs) and market risk RWAs (the “Standardized Approach”); and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). At June 30, 2016, the binding ratio is based on the Advanced Approach transitional rules.For information on the calculation of regulatory capital and ratios for prior periods, please refer to Part II, Item 7 “Liquidity and Capital Resources - Regulatory Requirements” in the Firm’s 2015 10-K and Part I, Item 2 “Liquidity and Capital Resources – Regulatory Requirements” in the Firm’s 10-Q for the quarter ended March 31, 2016.

¹⁵ The pro forma fully phased-in Common Equity Tier 1 risk-based capital ratio (Common Equity Tier 1) and pro forma fully phased-in Supplementary Leverage Ratio (SLR) are non-GAAP financial measures that the Firm considers to be useful measures for investors and analysts to evaluate compliance with new regulatory capital requirements that have not yet become effective.

¹⁶ U.S. Basel III requires the Firm to disclose information related to its supplementary leverage ratio beginning on January 1, 2015, which through to the end of 2017 will include the effects of transitional provisions. The supplementary leverage ratio will become effective as a capital standard on January 1, 2018. Specifically, beginning on January 1, 2018, the Firm must maintain a Tier 1 supplementary leverage capital buffer of at least 2% in addition to the 3% minimum supplementary leverage ratio (for a total of at least 5%), in order to avoid limitations on capital distributions, including dividends and stock repurchases, and discretionary bonus payments to executive officers. The Firm’s pro forma Supplementary Leverage Ratio estimate utilizes a fully phased-in U.S. Basel III Tier 1 capital numerator and a denominator of approximately $1.07 trillion. The Firm’s estimates are subject to risks and uncertainties that may cause actual results to differ materially from estimates based on these regulations. Further, these expectations should not be taken as projections of what the Firm’s supplementary leverage ratios or earnings, assets or exposures will actually be at future dates. See “Risk Factors” in Part I, Item 1A in the 2015 Form 10-K for a discussion of risks and uncertainties that may affect the future results of the Firm.

8

¹⁷ 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 for investors and analysts.  Tangible common equity equals common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction.  Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.

9

Consolidated Financial Summary

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

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Net revenues
Institutional Securities	$	4,578		$	3,714		$	5,172			23	%		(11	%)	$	8,292		$	10,630			(22	%)
Wealth Management		3,811			3,668			3,875			4	%		(2	%)		7,479			7,709			(3	%)
Investment Management		583			477			751			22	%		(22	%)		1,060			1,420			(25	%)
Intersegment Eliminations		(63	)		(67	)		(55	)		6	%		(15	%)		(130	)		(109	)		(19	%)
Net revenues	$	8,909		$	7,792		$	9,743			14	%		(9	%)	$	16,701		$	19,650			(15	%)
Income (loss) from continuing operations before tax
Institutional Securities	$	1,506		$	908		$	1,622			66	%		(7	%)	$	2,414		$	3,435			(30	%)
Wealth Management		859			786			885			9	%		(3	%)		1,645			1,740			(5	%)
Investment Management		118			44			220			168	%		(46	%)		162			407			(60	%)
Income (loss) from continuing operations before tax	$	2,483		$	1,738		$	2,727			43	%		(9	%)	$	4,221		$	5,582			(24	%)
Net Income (loss) applicable to Morgan Stanley
Institutional Securities	$	988		$	591		$	1,087			67	%		(9	%)	$	1,579		$	2,837			(44	%)
Wealth Management		516			493			561			5	%		(8	%)		1,009			1,096			(8	%)
Investment Management		78			50			159			56	%		(51	%)		128			268			(52	%)
Net Income (loss) applicable to Morgan Stanley	$	1,582		$	1,134		$	1,807			40	%		(12	%)	$	2,716		$	4,201			(35	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	1,425		$	1,055		$	1,665			35	%		(14	%)	$	2,481		$	3,979			(38	%)
Financial Metrics:
Earnings per diluted share	$	0.75		$	0.55		$	0.85			36	%		(12	%)	$	1.30		$	2.03			(36	%)
Earnings per diluted share excluding DVA	$	0.75		$	0.55		$	0.79			36	%		(5	%)	$	1.30		$	1.93			(33	%)
Return on average common equity		8.3	%		6.2	%		9.9	%								7.2	%		12.0	%
Return on average common equity excluding DVA		8.3	%		6.2	%		9.1	%								7.2	%		11.3	%

Notes:	-	Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires unrealized gains and losses from Morgan Stanley’s debt-related credit spreads and other credit factors (Debt Valuation Adjustments, or DVA) to be presented in other comprehensive income as opposed to net revenues and net income. This change is reflected in the consolidated results and the Institutional Securities segment for 2016. Results for 2015 were not restated pursuant to this guidance.
	-	Refer to End Notes, GAAP to Non-GAAP Measures and Definition of Performance Metrics on pages 14-16 from the Financial Supplement for additional information related to the calculation of the financial metrics.

10

Consolidated Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Revenues:
Investment banking	$	1,224		$	1,107		$	1,614			11	%		(24	%)	$	2,331		$	2,971			(22	%)
Trading		2,746			2,065			2,973			33	%		(8	%)		4,811			6,623			(27	%)
Investments		126			(34	)		261			*			(52	%)		92			527			(83	%)
Commissions and fees		1,020			1,055			1,158			(3	%)		(12	%)		2,075			2,344			(11	%)
Asset management, distribution and admin. fees		2,637			2,620			2,742			1	%		(4	%)		5,257			5,423			(3	%)
Other		243			80			297			*			(18	%)		323			468			(31	%)
Total non-interest revenues		7,996			6,893			9,045			16	%		(12	%)		14,889			18,356			(19	%)
Interest income		1,667			1,747			1,386			(5	%)		20	%		3,414			2,870			19	%
Interest expense		754			848			688			(11	%)		10	%		1,602			1,576			2	%
Net interest		913			899			698			2	%		31	%		1,812			1,294			40	%
Net revenues		8,909			7,792			9,743			14	%		(9	%)		16,701			19,650			(15	%)
Non-interest expenses:
Compensation and benefits		4,015			3,683			4,405			9	%		(9	%)		7,698			8,929			(14	%)
Non-compensation expenses:
Occupancy and equipment		329			329			351			--			(6	%)		658			693			(5	%)
Brokerage, clearing and exchange fees		484			465			487			4	%		(1	%)		949			950			--
Information processing and communications		429			442			438			(3	%)		(2	%)		871			853			2	%
Marketing and business development		154			134			179			15	%		(14	%)		288			329			(12	%)
Professional services		547			514			598			6	%		(9	%)		1,061			1,084			(2	%)
Other		468			487			558			(4	%)		(16	%)		955			1,230			(22	%)
Total non-compensation expenses		2,411			2,371			2,611			2	%		(8	%)		4,782			5,139			(7	%)
Total non-interest expenses		6,426			6,054			7,016			6	%		(8	%)		12,480			14,068			(11	%)
Income (loss) from continuing operations before taxes		2,483			1,738			2,727			43	%		(9	%)		4,221			5,582			(24	%)
Income tax provision / (benefit) from continuing operations		833			578			894			44	%		(7	%)		1,411			1,281			10	%
Income (loss) from continuing operations		1,650			1,160			1,833			42	%		(10	%)		2,810			4,301			(35	%)
Gain (loss) from discontinued operations after tax		(4	)		(3	)		(2	)		(33	%)		(100	%)		(7	)		(7	)		--
Net income (loss)	$	1,646		$	1,157		$	1,831			42	%		(10	%)	$	2,803		$	4,294			(35	%)
Net income applicable to nonredeemable noncontrolling interests		64			23			24			178	%		167	%		87			93			(6	%)
Net income (loss) applicable to Morgan Stanley		1,582			1,134			1,807			40	%		(12	%)		2,716			4,201			(35	%)
Preferred stock dividend / Other		157			79			142			99	%		11	%		235			222			6	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	1,425		$	1,055		$	1,665			35	%		(14	%)	$	2,481		$	3,979			(38	%)
Pre-tax profit margin		28	%		22	%		28	%								25	%		28	%
Compensation and benefits as a % of net revenues		45	%		47	%		45	%								46	%		45	%
Non-compensation expenses as a % of net revenues		27	%		30	%		27	%								29	%		26	%
Effective tax rate from continuing operations		33.5	%		33.3	%		32.8	%								33.4	%		22.9	%

Notes: - Refer to End Notes, GAAP to Non-GAAP Measures and Definition of Performance Metrics on pages 14-16 from the Financial Supplement for additional information.

11

Earnings Per Share Summary

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

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Income (loss) from continuing operations	$	1,650		$	1,160		$	1,833			42	%		(10	%)	$	2,810		$	4,301			(35	%)
Net income applicable to nonredeemable noncontrolling interests		64			23			24			178	%		167	%		87			93			(6	%)
Income (loss) from continuing operations applicable to Morgan Stanley		1,586			1,137			1,809			39	%		(12	%)		2,723			4,208			(35	%)
Less: Preferred Dividends and allocation of earnings to Participating Restricted Stock Units		157			79			142			99	%		11	%		235			222			6	%
Income (loss) from continuing operations applicable to Morgan Stanley		1,429			1,058			1,667			35	%		(14	%)		2,488			3,986			(38	%)
Gain (loss) from discontinued operations after tax		(4	)		(3	)		(2	)		(33	%)		(100	%)		(7	)		(7	)		--
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests		0			0			0			--			--			0			0			--
Less: Allocation of earnings to Participating Restricted Stock Units		0			0			0			--			--			0			0			--
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		(4	)		(3	)		(2	)		(33	%)		(100	%)		(7	)		(7	)		--
Earnings (loss) applicable to Morgan Stanley common shareholders	$	1,425		$	1,055		$	1,665			35	%		(14	%)	$	2,481		$	3,979			(38	%)
Average basic common shares outstanding (millions)		1,866			1,883			1,919			(1	%)		(3	%)		1,875			1,922			(2	%)
Earnings per basic share:
Income from continuing operations	$	0.77		$	0.56		$	0.87			38	%		(11	%)	$	1.33		$	2.07			(36	%)
Discontinued operations	$	(0.01	)	$	-		$	-			*			*		$	(0.01	)	$	-			*
Earnings per basic share	$	0.76		$	0.56		$	0.87			36	%		(13	%)	$	1.32		$	2.07			(36	%)
Average diluted common shares outstanding and common stock equivalents (millions)		1,899			1,915			1,960			(1	%)		(3	%)		1,907			1,962			(3	%)
Earnings per diluted share:
Income from continuing operations	$	0.75		$	0.55		$	0.85			36	%		(12	%)	$	1.30		$	2.03			(36	%)
Discontinued operations	$	-		$	-		$	-			--			--		$	-		$	-			--
Earnings per diluted share	$	0.75		$	0.55		$	0.85			36	%		(12	%)	$	1.30		$	2.03			(36	%)
Notes: - Refer to End Notes, GAAP to Non-GAAP Measures and Definition of Performance Metrics on pages 14-16 from the Financial Supplement for additional information.

12

EX-99.2

Exhibit 99.2

Quarterly Financial Supplement - 2Q 2016

	Page #
Consolidated Financial Summary	1
Consolidated Income Statement Information	2
Consolidated Financial Information and Statistical Data	3
Consolidated Loans and Lending Commitments	4
Institutional Securities Income Statement Information	5
Institutional Securities Financial Information and Statistical Data	6
Wealth Management Income Statement Information	7
Wealth Management Financial Information and Statistical Data	8
Investment Management Income Statement Information	9
Investment Management Financial Information and Statistical Data	10
U.S. Bank Supplemental Financial Information	11
Consolidated Return on Average Common Equity Financial Information	12
Earnings Per Share Summary	13
End Notes	14
Definition of GAAP to Non-GAAP Measures and Performance Metrics	15 - 16
Legal Notice	17

Consolidated Financial Summary

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

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Net revenues
Institutional Securities	$	4,578		$	3,714		$	5,172			23	%		(11	%)	$	8,292		$	10,630			(22	%)
Wealth Management		3,811			3,668			3,875			4	%		(2	%)		7,479			7,709			(3	%)
Investment Management		583			477			751			22	%		(22	%)		1,060			1,420			(25	%)
Intersegment Eliminations		(63	)		(67	)		(55	)		6	%		(15	%)		(130	)		(109	)		(19	%)
Net revenues	$	8,909		$	7,792		$	9,743			14	%		(9	%)	$	16,701		$	19,650			(15	%)
Income (loss) from continuing operations before tax
Institutional Securities	$	1,506		$	908		$	1,622			66	%		(7	%)	$	2,414		$	3,435			(30	%)
Wealth Management		859			786			885			9	%		(3	%)		1,645			1,740			(5	%)
Investment Management		118			44			220			168	%		(46	%)		162			407			(60	%)
Income (loss) from continuing operations before tax	$	2,483		$	1,738		$	2,727			43	%		(9	%)	$	4,221		$	5,582			(24	%)
Net Income (loss) applicable to Morgan Stanley
Institutional Securities	$	988		$	591		$	1,087			67	%		(9	%)	$	1,579		$	2,837			(44	%)
Wealth Management		516			493			561			5	%		(8	%)		1,009			1,096			(8	%)
Investment Management		78			50			159			56	%		(51	%)		128			268			(52	%)
Net Income (loss) applicable to Morgan Stanley	$	1,582		$	1,134		$	1,807			40	%		(12	%)	$	2,716		$	4,201			(35	%)
Financial Metrics:
Earnings per diluted share	$	0.75		$	0.55		$	0.85			36	%		(12	%)	$	1.30		$	2.03			(36	%)
Earnings per diluted share excluding DVA	$	0.75		$	0.55		$	0.79			36	%		(5	%)	$	1.30		$	1.93			(33	%)
Return on average common equity		8.3	%		6.2	%		9.9	%								7.2	%		12.0	%
Return on average common equity excluding DVA		8.3	%		6.2	%		9.1	%								7.2	%		11.3	%

Notes:	-	Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires unrealized gains and losses from Morgan Stanley’s debt-related credit spreads and other credit factors (Debt Valuation Adjustments, or DVA) to be presented in other comprehensive income as opposed to net revenues and net income. This change is reflected in the consolidated results and the Institutional Securities segment for 2016. Results for 2015 were not restated pursuant to this guidance.
	-	Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

1

Consolidated Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Revenues:
Investment banking	$	1,224		$	1,107		$	1,614			11	%		(24	%)	$	2,331		$	2,971			(22	%)
Trading		2,746			2,065			2,973			33	%		(8	%)		4,811			6,623			(27	%)
Investments		126			(34	)		261			*			(52	%)		92			527			(83	%)
Commissions and fees		1,020			1,055			1,158			(3	%)		(12	%)		2,075			2,344			(11	%)
Asset management, distribution and admin. fees		2,637			2,620			2,742			1	%		(4	%)		5,257			5,423			(3	%)
Other		243			80			297			*			(18	%)		323			468			(31	%)
Total non-interest revenues		7,996			6,893			9,045			16	%		(12	%)		14,889			18,356			(19	%)
Interest income		1,667			1,747			1,386			(5	%)		20	%		3,414			2,870			19	%
Interest expense		754			848			688			(11	%)		10	%		1,602			1,576			2	%
Net interest		913			899			698			2	%		31	%		1,812			1,294			40	%
Net revenues		8,909			7,792			9,743			14	%		(9	%)		16,701			19,650			(15	%)
Non-interest expenses:
Compensation and benefits		4,015			3,683			4,405			9	%		(9	%)		7,698			8,929			(14	%)
Non-compensation expenses:
Occupancy and equipment		329			329			351			--			(6	%)		658			693			(5	%)
Brokerage, clearing and exchange fees		484			465			487			4	%		(1	%)		949			950			--
Information processing and communications		429			442			438			(3	%)		(2	%)		871			853			2	%
Marketing and business development		154			134			179			15	%		(14	%)		288			329			(12	%)
Professional services		547			514			598			6	%		(9	%)		1,061			1,084			(2	%)
Other		468			487			558			(4	%)		(16	%)		955			1,230			(22	%)
Total non-compensation expenses		2,411			2,371			2,611			2	%		(8	%)		4,782			5,139			(7	%)
Total non-interest expenses		6,426			6,054			7,016			6	%		(8	%)		12,480			14,068			(11	%)
Income (loss) from continuing operations before taxes		2,483			1,738			2,727			43	%		(9	%)		4,221			5,582			(24	%)
Income tax provision / (benefit) from continuing operations		833			578			894			44	%		(7	%)		1,411			1,281			10	%
Income (loss) from continuing operations		1,650			1,160			1,833			42	%		(10	%)		2,810			4,301			(35	%)
Gain (loss) from discontinued operations after tax		(4	)		(3	)		(2	)		(33	%)		(100	%)		(7	)		(7	)		--
Net income (loss)	$	1,646		$	1,157		$	1,831			42	%		(10	%)	$	2,803		$	4,294			(35	%)
Net income applicable to nonredeemable noncontrolling interests		64			23			24			178	%		167	%		87			93			(6	%)
Net income (loss) applicable to Morgan Stanley		1,582			1,134			1,807			40	%		(12	%)		2,716			4,201			(35	%)
Preferred stock dividend / Other		157			79			142			99	%		11	%		235			222			6	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	1,425		$	1,055		$	1,665			35	%		(14	%)	$	2,481		$	3,979			(38	%)
Pre-tax profit margin		28	%		22	%		28	%								25	%		28	%
Compensation and benefits as a % of net revenues		45	%		47	%		45	%								46	%		45	%
Non-compensation expenses as a % of net revenues		27	%		30	%		27	%								29	%		26	%
Effective tax rate from continuing operations		33.5	%		33.3	%		32.8	%								33.4	%		22.9	%

Notes: - Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

2

Consolidated Financial Information and Statistical Data

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended				Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016		June 30, 2015		Change
Regional revenues
Americas	$	6,538		$	5,752		$	6,777			14	%		(4	%)	$	12,290	$	13,707		(10	%)
EMEA (Europe, Middle East, Africa)		1,312			1,129			1,436			16	%		(9	%)		2,441		3,198		(24	%)
Asia		1,059			911			1,530			16	%		(31	%)		1,970		2,745		(28	%)
Consolidated net revenues	$	8,909		$	7,792		$	9,743			14	%		(9	%)	$	16,701	$	19,650		(15	%)
Worldwide employees		54,529			54,779			55,795			--			(2	%)
Deposits	$	152,693		$	157,591		$	139,203			(3	%)		10	%
Assets	$	828,873		$	807,497		$	825,755			3	%		--
Risk-weighted assets	$	354,390		$	373,925		$	417,707			(5	%)		(15	%)
Global liquidity reserve	$	207,455		$	211,069		$	188,214			(2	%)		10	%
Long-term debt outstanding	$	163,492		$	162,804		$	158,089			--			3	%
Maturities of long-term debt outstanding (next 12 months)	$	24,244		$	26,071		$	27,221			(7	%)		(11	%)
Common equity	$	69,596		$	68,490		$	67,518			2	%		3	%
Less: Goodwill and intangible assets		(9,411	)		(9,491	)		(9,740	)		1	%		3	%
Tangible common equity	$	60,185		$	58,999		$	57,778			2	%		4	%
Preferred equity	$	7,520		$	7,520		$	7,520			--			--
Junior subordinated debt issued to capital trusts	$	2,853		$	2,849		$	2,863			--			--
Period end common shares outstanding (millions)		1,918			1,938			1,956			(1	%)		(2	%)
Book value per common share	$	36.29		$	35.34		$	34.52
Tangible book value per common share	$	31.39		$	30.44		$	29.54
Common Equity Tier 1 capital Advanced (Transitional)	$	59,785		$	58,514		$	58,666			2	%		2	%
Tier 1 capital Advanced (Transitional)	$	66,756		$	65,198		$	65,770			2	%		1	%
Common Equity Tier 1 capital ratio Advanced (Transitional)		16.9	%		15.6	%		14.0	%
Pro-forma Common Equity Tier 1 capital ratio Advanced (Fully Phased-in)		15.8	%		14.6	%		12.5	%
Tier 1 capital ratio Advanced (Transitional)		18.8	%		17.4	%		15.7	%
Tier 1 leverage ratio (Transitional)		8.3	%		8.2	%		7.9	%
Supplementary Leverage Ratio (Transitional)		6.2	%		6.1	%		5.6	%
Pro-forma Supplementary Leverage Ratio (Fully Phased-in)		6.1	%		6.0	%		5.3	%

Notes: - Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

3

Consolidated Loans and Lending Commitments

(unaudited, dollars in billions)

	Quarter Ended						Percentage Change From:
	June 30, 2016		Mar 31, 2016		June 30, 2015		Mar 31, 2016			June 30, 2015
Institutional Securities
Corporate loans (1)	$	19.9	$	16.6	$	15.7		20	%		27	%
Corporate lending commitments (2)	$	83.8	$	89.3	$	85.8		(6	%)		(2	%)
Corporate Loans and Lending Commitments (3)	$	103.7	$	105.9	$	101.5		(2	%)		2	%
Other loans	$	28.3	$	30.2	$	28.5		(6	%)		(1	%)
Other lending commitments	$	4.2	$	4.0	$	6.7		5	%		(37	%)
Other Loans and Lending Commitments (4)	$	32.5	$	34.2	$	35.2		(5	%)		(8	%)
Institutional Securities Loans and Lending Commitments (5)	$	136.2	$	140.1	$	136.7		(3	%)		--
Wealth Management
Loans	$	54.3	$	51.8	$	43.8		5	%		24	%
Lending commitments	$	7.0	$	6.4	$	5.6		9	%		25	%
Wealth Management Loans and Lending Commitments (6)	$	61.3	$	58.2	$	49.4		5	%		24	%
Consolidated Loans and Lending Commitments	$	197.5	$	198.3	$	186.1		--			6	%

Notes: - Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

4

Institutional Securities

Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Revenues:
Investment banking	$	1,108		$	990		$	1,440			12	%		(23	%)	$	2,098		$	2,613			(20	%)
Trading		2,498			1,891			2,785			32	%		(10	%)		4,389			6,207			(29	%)
Investments		76			32			16			138	%		*			108			128			(16	%)
Commissions and fees		607			655			683			(7	%)		(11	%)		1,262			1,356			(7	%)
Asset management, distribution and admin. fees		69			73			69			(5	%)		--			142			145			(2	%)
Other		138			4			212			*			(35	%)		142			302			(53	%)
Total non-interest revenues		4,496			3,645			5,205			23	%		(14	%)		8,141			10,751			(24	%)
Interest income		966			1,053			723			(8	%)		34	%		2,019			1,593			27	%
Interest expense		884			984			756			(10	%)		17	%		1,868			1,714			9	%
Net interest		82			69			(33	)		19	%		*			151			(121	)		*
Net revenues		4,578			3,714			5,172			23	%		(11	%)		8,292			10,630			(22	%)
Compensation and benefits		1,625			1,382			1,897			18	%		(14	%)		3,007			3,923			(23	%)
Non-compensation expenses		1,447			1,424			1,653			2	%		(12	%)		2,871			3,272			(12	%)
Total non-interest expenses		3,072			2,806			3,550			9	%		(13	%)		5,878			7,195			(18	%)
Income (loss) from continuing operations before taxes		1,506			908			1,622			66	%		(7	%)		2,414			3,435			(30	%)
Income tax provision / (benefit) from continuing operations		453			275			511			65	%		(11	%)		728			517			41	%
Income (loss) from continuing operations		1,053			633			1,111			66	%		(5	%)		1,686			2,918			(42	%)
Gain (loss) from discontinued operations after tax		(4	)		(3	)		(2	)		(33	%)		(100	%)		(7	)		(7	)		--
Net income (loss)		1,049			630			1,109			67	%		(5	%)		1,679			2,911			(42	%)
Net income applicable to nonredeemable noncontrolling interests		61			39			22			56	%		177	%		100			74			35	%
Net income (loss) applicable to Morgan Stanley	$	988		$	591		$	1,087			67	%		(9	%)	$	1,579		$	2,837			(44	%)
Pre-tax profit margin		33	%		24	%		31	%								29	%		32	%
Compensation and benefits as a % of net revenues		35	%		37	%		37	%								36	%		37	%

Notes:	- Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires unrealized gains and losses from Morgan Stanley’s debt-related credit spreads and other credit factors
	DVA to be presented in other comprehensive income as opposed to net revenues and net income.  Results for 2015 were not restated pursuant to this guidance.
	- Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

5

Institutional Securities

Financial Information and Statistical Data

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Investment Banking
Advisory revenues	$	497		$	591		$	423			(16	%)		17	%	$	1,088		$	894			22	%
Underwriting revenues
Equity		266			160			489			66	%		(46	%)		426			796			(46	%)
Fixed income		345			239			528			44	%		(35	%)		584			923			(37	%)
Total underwriting revenues		611			399			1,017			53	%		(40	%)		1,010			1,719			(41	%)
Total investment banking revenues	$	1,108		$	990		$	1,440			12	%		(23	%)	$	2,098		$	2,613			(20	%)
Sales & Trading
Equity	$	2,145		$	2,056		$	2,342			4	%		(8	%)	$	4,201		$	4,635			(9	%)
Fixed Income & Commodities		1,297			873			1,377			49	%		(6	%)		2,170			3,380			(36	%)
Other		(186	)		(241	)		(215	)		23	%		13	%		(427	)		(428	)		--
Total sales & trading net revenues	$	3,256		$	2,688		$	3,504			21	%		(7	%)	$	5,944		$	7,587			(22	%)
Investments & Other
Investments	$	76		$	32		$	16			138	%		*		$	108		$	128			(16	%)
Other		138			4			212			*			(35	%)		142			302			(53	%)
Total investments & other revenues	$	214		$	36		$	228			*			(6	%)	$	250		$	430			(42	%)
Institutional Securities net revenues	$	4,578		$	3,714		$	5,172			23	%		(11	%)	$	8,292		$	10,630			(22	%)
Average Daily 95% / One-Day Value-at-Risk ("VaR")
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread	$	32		$	33		$	35
Equity price	$	17		$	18		$	23
Foreign exchange rate	$	7		$	7		$	12
Commodity price	$	10		$	11		$	16
Aggregation of Primary Risk Categories	$	38		$	42		$	50
Credit Portfolio VaR	$	20		$	16		$	12
Trading VaR	$	46		$	46		$	54

Notes:	-	Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires unrealized gains and losses from DVA to be presented in other comprehensive income as opposed to net revenues and net income. Results for 2015 were not restated pursuant to this guidance. Sales and trading net revenues included positive / (negative) revenue related to DVA as follows:
		June 30, 2015: Total QTD: $182 million; Fixed Income & Commodities: $110 million; Equity: $72 million
		June 30, 2015: Total YTD: $307 million; Fixed Income & Commodities: $210 million; Equity: $97 million
	-	Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

6

Wealth Management

Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Revenues:
Investment banking	$	123		$	121		$	186			2	%		(34	%)	$	244		$	378			(35	%)
Trading		252			194			196			30	%		29	%		446			428			4	%
Investments		0			(2	)		13			*			*			(2	)		15			*
Commissions and fees		423			412			490			3	%		(14	%)		835			1,016			(18	%)
Asset management, distribution and admin. fees		2,082			2,054			2,174			1	%		(4	%)		4,136			4,289			(4	%)
Other		102			58			79			76	%		29	%		160			157			2	%
Total non-interest revenues		2,982			2,837			3,138			5	%		(5	%)		5,819			6,283			(7	%)
Interest income		920			914			782			1	%		18	%		1,834			1,519			21	%
Interest expense		91			83			45			10	%		102	%		174			93			87	%
Net interest		829			831			737			--			12	%		1,660			1,426			16	%
Net revenues		3,811			3,668			3,875			4	%		(2	%)		7,479			7,709			(3	%)
Compensation and benefits		2,152			2,088			2,200			3	%		(2	%)		4,240			4,425			(4	%)
Non-compensation expenses		800			794			790			1	%		1	%		1,594			1,544			3	%
Total non-interest expenses		2,952			2,882			2,990			2	%		(1	%)		5,834			5,969			(2	%)
Income (loss) from continuing operations before taxes		859			786			885			9	%		(3	%)		1,645			1,740			(5	%)
Income tax provision / (benefit) from continuing operations		343			293			324			17	%		6	%		636			644			(1	%)
Income (loss) from continuing operations		516			493			561			5	%		(8	%)		1,009			1,096			(8	%)
Gain (loss) from discontinued operations after tax		0			0			0			--			--			0			0			--
Net income (loss)		516			493			561			5	%		(8	%)		1,009			1,096			(8	%)
Net income applicable to nonredeemable noncontrolling interests		-			-			-			--			--			-			-			--
Net income (loss) applicable to Morgan Stanley	$	516		$	493		$	561			5	%		(8	%)	$	1,009		$	1,096			(8	%)
Pre-tax profit margin		23	%		21	%		23	%								22	%		23	%
Compensation and benefits as a % of net revenues		56	%		57	%		57	%								57	%		57	%

Notes: - Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

7

Wealth Management

Financial Information and Statistical Data

(unaudited)

	Quarter Ended									Percentage Change From:
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015
Bank deposit program (billions)	$	150		$	152		$	132			(1	%)		14	%
Wealth Management Metrics
Wealth Management representatives		15,909			15,888			15,771			--			1	%
Annualized revenue per representative (000's)	$	959		$	923		$	978			4	%		(2	%)
Client assets (billions)	$	2,034		$	1,999		$	2,034			2	%		--
Client assets per representative (millions)	$	128		$	126		$	129			2	%		(1	%)
Client liabilities (billions)	$	69		$	66		$	58			5	%		19	%
Fee based asset flows (billions)	$	12.0		$	5.9		$	13.9			103	%		(14	%)
Fee based client account assets (billions)	$	820		$	798		$	813			3	%		1	%
Fee based assets as a % of client assets		40	%		40	%		40	%
Retail locations		609			604			618			1	%		(1	%)

Notes: - Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

8

Investment Management

Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Revenues:
Investment banking	$	-		$	1		$	-			*			--		$	1		$	-			*
Trading		5			(10	)		(6	)		*			*			(5	)		(3	)		(67	%)
Investments (1)		50			(64	)		232			*			(78	%)		(14	)		384			*
Commissions and fees		0			3			0			*			--			3			0			*
Asset management, distribution and admin. fees		517			526			522			(2	%)		(1	%)		1,043			1,036			1	%
Other		9			22			9			(59	%)		--			31			14			121	%
Total non-interest revenues		581			478			757			22	%		(23	%)		1,059			1,431			(26	%)
Interest income		3			1			0			200	%		*			4			1			*
Interest expense		1			2			6			(50	%)		(83	%)		3			12			(75	%)
Net interest		2			(1	)		(6	)		*			*			1			(11	)		*
Net revenues		583			477			751			22	%		(22	%)		1,060			1,420			(25	%)
Compensation and benefits		238			213			308			12	%		(23	%)		451			581			(22	%)
Non-compensation expenses		227			220			223			3	%		2	%		447			432			3	%
Total non-interest expenses		465			433			531			7	%		(12	%)		898			1,013			(11	%)
Income (loss) from continuing operations before taxes		118			44			220			168	%		(46	%)		162			407			(60	%)
Income tax provision / (benefit) from continuing operations		37			10			59			*			(37	%)		47			120			(61	%)
Income (loss) from continuing operations		81			34			161			138	%		(50	%)		115			287			(60	%)
Gain (loss) from discontinued operations after tax		0			0			0			--			--			0			0			--
Net income (loss)		81			34			161			138	%		(50	%)		115			287			(60	%)
Net income applicable to nonredeemable noncontrolling interests		3			(16	)		2			*			50	%		(13	)		19			*
Net income (loss) applicable to Morgan Stanley	$	78		$	50		$	159			56	%		(51	%)	$	128		$	268			(52	%)
Pre-tax profit margin		20	%		9	%		29	%								15	%		29	%
Compensation and benefits as a % of net revenues		41	%		45	%		41	%								43	%		41	%

Notes: - Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

9

Investment Management

Financial Information and Statistical Data

(unaudited)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Assets under management or supervision (billions)
Net flows by asset class (1)
Equity	$	(1.4	)	$	(0.7	)	$	(4.1	)		(100	%)		66	%	$	(2.1	)	$	(7.2	)		71	%
Fixed Income		(1.2	)		(0.8	)		(0.3	)		(50	%)		*			(2.0	)		0.8			*
Liquidity		2.4			(2.4	)		0.7			*			*			0.0			3.5			*
Alternative / Other products		(1.5	)		0.3			(0.3	)		*			*			(1.2	)		0.2			*
Total net flows	$	(1.7	)	$	(3.6	)	$	(4.0	)		53	%		58	%	$	(5.3	)	$	(2.7	)		(96	%)
Assets under management or supervision by asset class (2)
Equity	$	81		$	81		$	96			--			(16	%)
Fixed Income		61			62			64			(2	%)		(5	%)
Liquidity		149			146			132			2	%		13	%
Alternative / Other products		115			116			111			(1	%)		4	%
Total Assets Under Management or Supervision	$	406		$	405		$	403			--			1	%
Share of minority stake assets	$	8		$	8		$	7			--			14	%

Effective in the second quarter of 2016, the Investment Management segment revised the presentation of assets under management or supervision to better align asset classes with its present organizational structure. With this change, the Alternative/Other products asset class now includes products in Fund of Funds, Real Estate, Private Equity and Credit Strategies, as well as Multi-Asset portfolios. All prior period information has been recasted in the new format.

Notes: - Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

10

U.S. Bank Supplemental Financial Information

(unaudited, dollars in billions)

	Quarter Ended						Percentage Change From:
	June 30, 2016		Mar 31, 2016		June 30, 2015		Mar 31, 2016			June 30, 2015
U.S. Bank assets	$	175.1	$	177.0	$	156.2		(1	%)		12	%
U.S. Bank investment securities portfolio (1)	$	64.6	$	61.8	$	52.9		5	%		22	%
Wealth Management U.S. Bank Data
Securities-based lending and other loans	$	31.4	$	29.9	$	25.3		5	%		24	%
Residential real estate loans		22.7		21.8		18.4		4	%		23	%
Total Securities-based and residential loans	$	54.1	$	51.7	$	43.7		5	%		24	%
Institutional Securities U.S. Bank Data
Corporate Lending	$	8.9	$	9.8	$	10.5		(9	%)		(15	%)
Other Lending:
Corporate loans		12.3		14.1		10.8		(13	%)		14	%
Wholesale real estate and other loans		8.9		8.3		9.6		7	%		(7	%)
Total other loans	$	21.2	$	22.4	$	20.4		(5	%)		4	%
Total corporate and other loans	$	30.1	$	32.2	$	30.9		(7	%)		(3	%)

Notes: - Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

11

Consolidated Return on Average Common Equity Financial Information

(unaudited, dollars in billions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Average Common Equity
Institutional Securities	$	43.2		$	43.2		$	35.3			--			22	%	$	43.2		$	36.1			20	%
Wealth Management		15.3			15.3			11.3			--			35	%		15.3			10.9			40	%
Investment Management		2.8			2.8			2.3			--			22	%		2.8			2.3			22	%
Parent		7.7			6.9			18.3			12	%		(58	%)		7.3			17.0			(57	%)
Firm	$	69.0		$	68.2		$	67.2			1	%		3	%	$	68.6		$	66.3			3	%
Return on average Common Equity
Institutional Securities		8	%		5	%		11	%								6	%		15	%
Wealth Management		13	%		13	%		18	%								13	%		18	%
Investment Management		11	%		7	%		28	%								9	%		23	%
Firm		8	%		6	%		10	%								7	%		12	%

Notes:	- Beginning in 2016, the amount of capital allocated to the business segments was set at the beginning of the year, and will remain fixed throughout the
	year until the next annual reset.  Differences between Available and Required Capital will be reflected in Parent equity during the year.  Periods prior to
	2016 have not been recasted under the new methodology.
	- Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

12

Earnings Per Share Summary

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

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	June 30, 2016			Mar 31, 2016			June 30, 2015			Mar 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015			Change
Income (loss) from continuing operations	$	1,650		$	1,160		$	1,833			42	%		(10	%)	$	2,810		$	4,301			(35	%)
Net income applicable to nonredeemable noncontrolling interests		64			23			24			178	%		167	%		87			93			(6	%)
Income (loss) from continuing operations applicable to Morgan Stanley		1,586			1,137			1,809			39	%		(12	%)		2,723			4,208			(35	%)
Less: Preferred Dividends and allocation of earnings to Participating Restricted Stock Units		157			79			142			99	%		11	%		235			222			6	%
Income (loss) from continuing operations applicable to Morgan Stanley		1,429			1,058			1,667			35	%		(14	%)		2,488			3,986			(38	%)
Gain (loss) from discontinued operations after tax		(4	)		(3	)		(2	)		(33	%)		(100	%)		(7	)		(7	)		--
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests		0			0			0			--			--			0			0			--
Less: Allocation of earnings to Participating Restricted Stock Units		0			0			0			--			--			0			0			--
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		(4	)		(3	)		(2	)		(33	%)		(100	%)		(7	)		(7	)		--
Earnings (loss) applicable to Morgan Stanley common shareholders	$	1,425		$	1,055		$	1,665			35	%		(14	%)	$	2,481		$	3,979			(38	%)
Average basic common shares outstanding (millions)		1,866			1,883			1,919			(1	%)		(3	%)		1,875			1,922			(2	%)
Earnings per basic share:
Income from continuing operations	$	0.77		$	0.56		$	0.87			38	%		(11	%)	$	1.33		$	2.07			(36	%)
Discontinued operations	$	(0.01	)	$	-		$	-			*			*		$	(0.01	)	$	-			*
Earnings per basic share	$	0.76		$	0.56		$	0.87			36	%		(13	%)	$	1.32		$	2.07			(36	%)
Average diluted common shares outstanding and common stock equivalents (millions)		1,899			1,915			1,960			(1	%)		(3	%)		1,907			1,962			(3	%)
Earnings per diluted share:
Income from continuing operations	$	0.75		$	0.55		$	0.85			36	%		(12	%)	$	1.30		$	2.03			(36	%)
Discontinued operations	$	-		$	-		$	-			--			--		$	-		$	-			--
Earnings per diluted share	$	0.75		$	0.55		$	0.85			36	%		(12	%)	$	1.30		$	2.03			(36	%)

 Notes:    - Refer to End Notes, GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 14 - 17.

13

End Notes

Page 4:
(1)	For the quarters ended June 30, 2016, March 31, 2016 and June 30, 2015, the percentage of Institutional Securities corporate loans by credit rating was as follows:
	- % investment grade: 30%, 36% and 45%
	- % non-investment grade: 70%, 64% and 55%
(2)	For the quarters ended June 30, 2016, March 31, 2016 and June 30, 2015, the percentage of Institutional Securities corporate lending commitments by credit rating was as follows:
	- % investment grade: 76%, 76% and 70%
	- % non-investment grade: 24%, 24% and 30%
(3)	At June 30, 2016, March 31, 2016 and June 30, 2015, the "event-driven" portfolio of loans and lending commitments to non-investment grade borrowers were $13.0 billion, $10.6 billion and $11.8 billion, respectively.
(4)	The Institutional Securities business segment engages in other lending activity.  These activities include commercial and residential mortgage lending, asset-backed lending, corporate loans purchased in the secondary market, financing extended to equities and commodities customers, and loans to municipalities.
(5)	For the quarters ended June 30, 2016, March 31, 2016 and June 30, 2015, Institutional Securities recorded a provision (release) for credit losses of $17.2 million, $108.7 million and $2.2 million, respectively, related to loans and $(13.6) million, $15.2 million and $(28.7) million, respectively, related to lending commitments.
(6)	For the quarters ended June 30, 2016, March 31, 2016 and June 30, 2015, Wealth Management recorded a provision (release) for credit losses of $(0.8) million, $3.0 million and $1.6 million, respectively, related to loans. For the quarters ended June 30, 2016 and March 31, 2016, a provision of $0.2 million and $0.4 million was recorded, respectively, related to lending commitments, and there was no material provision for June 30, 2015.
Page 9:
(1)	The quarters ended June 30, 2016, March 31, 2016 and June 30, 2015 include investment gains or losses for certain funds included in the Firm's consolidated financial statements for which the limited partnership interests in these gains or losses were reported in net income (loss) applicable to noncontrolling interests.
Page 10:
(1)	Net Flows by region [inflow / (outflow)] for the quarters ended June 30, 2016, March 31, 2016 and June 30, 2015 were:
	North America: $(1.7) billion, $0 billion and $(1.1) billion
	International: $0 billion, $(3.6) billion and $(2.9) billion
(2)	Assets under management or supervision by region for the quarters ended June 30, 2016, March 31, 2016 and June 30, 2015 were:
	North America: $264 billion, $264 billion and $252 billion
	International: $142 billion, $141 billion and $151 billion
Page 11:
(1)	For the quarters ended June 30, 2016, March 31, 2016 and June 30, 2015, the U.S. Bank investment securities portfolio included held to maturity investment securities of $10.4 billion, $7.7 billion and $2.4 billion, respectively.

14

Definition of GAAP to Non-GAAP Measures

(a)	The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States ("U.S. GAAP" or "GAAP").  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.  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 U.S. GAAP.  Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to investors and analysts in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition, operating results, or prospective regulatory capital requirements. These measures are not in accordance with, or a substitute for U.S. 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 define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.  In addition to the following notes, please also refer to the Firm's second quarter earnings release footnotes for such definitions and reconciliations.
(b)	The following are considered non-GAAP financial measures: earnings (losses) per diluted share excluding DVA, return on average common equity metrics, return on average common equity excluding DVA metrics, Tangible Common Equity, Tangible book value per common share and pre-tax margin.  These measures are calculated as follows:       - The earnings (losses) per diluted share amounts, excluding DVA for periods prior to January 1, 2016 represent net income (loss) applicable to Morgan Stanley,          adjusted for the positive / (negative) impact of DVA, less preferred dividends divided by the average number of diluted shares outstanding.       - The return on average common equity equals net income applicable to Morgan Stanley less preferred dividends as a percentage of average common equity.       - The return on average common equity excluding DVA for the periods prior to January 1, 2016 is adjusted for DVA in the numerator and denominator.       -  Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires unrealized gains and losses from Morgan Stanley’s          debt-related credit spreads and other credit factors (Debt Valuation Adjustments, or DVA) to be presented in other comprehensive income as opposed to net          revenues and net income.  As a result of this adoption, the Firm has redefined the calculation of return on average common equity excluding DVA to adjust for          DVA only in the denominator.       - Tangible common equity equals common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction.       - Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.       - Pre-tax profit margin percentages represent income from continuing operations before income taxes as percentages of net revenues.
(c)	The fully phased-in Common Equity Tier 1 risk-based capital ratio and fully phased-in Supplementary Leverage Ratio are pro-forma estimates which represent non-GAAP financial measures that the Firm considers to be useful measures for evaluating compliance with new regulatory capital requirements that have not yet become effective.  Supplementary leverage ratio equals Tier 1 capital (calculated under U.S. Basel III transitional rules) divided by the total supplementary leverage exposure.  For information on the calculation of regulatory capital and ratios for prior periods, please refer to Part II, Item 7 "Liquidity and Capital Resources—Regulatory Requirements" in the Firm's 2015 Form 10-K and Part I, Item 2 "Liquidity and Capital Resources—Regulatory Requirements" in the Firm's 10-Q for the quarter ended March 31, 2016.

15

Definition of Performance Metrics

(a)	Book value per common share equals common equity divided by period end common shares outstanding.
(b)	Firmwide regional revenues reflect the Firm's consolidated net revenues on a managed basis. Further discussion regarding the geographic methodology for net revenues is disclosed in Note 21 to the consolidated financial statements included in the Firm's Annual Report on Form 10-K for the year ended December 31, 2015 (2015 Form 10-K).
(c)	The Firm’s binding risk-based capital ratios for regulatory purposes under U.S. Basel III are the lower of the capital ratios computed under the (i) standardized approaches for calculating credit risk RWAs and market risk RWAs (the “Standardized Approach”); and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). At June 30, 2016, the binding ratio is based on the Advanced Approach transitional rules. For information on the calculation of regulatory capital and ratios for prior periods, please refer to Part II, Item 7 "Liquidity and Capital Resources—Regulatory Requirements" in the Firm's 2015 Form 10-K and Part I, Item 2 "Liquidity and Capital Resources—Regulatory Requirements" in the Firm's 10-Q for the quarter ended March 31, 2016.
(d)	The global liquidity reserve, which is held within the bank and non-bank 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, non-U.S. government securities and other highly liquid investment grade securities.
(e)	The Firm's goodwill and intangible balances are net of allowable mortgage servicing rights deduction.
(f)	Institutional Securities net income applicable to noncontrolling interests primarily represents the allocation to Mitsubishi UFJ Financial Group, Inc. of Morgan Stanley MUFG Securities Co., Ltd, which the Firm consolidates.
(g)	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, is disclosed in Part II, Item 7A "Quantitative and Qualitative Disclosures about Market Risk" included in the Firm's 2015 Form 10-K.
(h)	Annualized revenue per Wealth Management representative is defined as annualized revenue divided by average representative headcount.
(i)	Client assets per Wealth Management representative represents total client assets divided by period end representative headcount.
(j)	Wealth Management client liabilities reflect U.S. Bank lending and broker dealer margin activity.
(k)	Wealth Management 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.
(l)	Wealth Management fee based asset flows include net new fee-based assets, net account transfers, dividends, interest, and client fees and exclude cash management related activity.
(m)	Investment Management Alternative/Other asset class includes products in Fund of Funds, Real Estate, Private Equity and Credit strategies, as well as Multi-Asset portfolios.
(n)	Investment Management net flows include new commitments, investments or reinvestments, net of client redemptions, returns of capital post-fund investment period and dividends not reinvested; and excludes the impact of the transition of funds from their commitment period to the invested capital period.
(o)	The share of minority stake assets represents Investment Management's proportional share of assets managed by entities in which it owns a minority stake.
(p)	U.S. Bank refers to the Firm’s U.S. Bank operating subsidiaries Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association and excludes transactions with affiliated entities.
(q)	The Institutional Securities U.S. Bank other lending data includes activities related to commercial and residential mortgage lending, asset-backed lending, corporate loans purchased in the secondary market, financing extended to equities and commodities customers, and loans to municipalities.
(r)	The Firm’s capital estimation and attribution to the business segments are based on the Required Capital framework, an internal capital adequacy measure. This framework is a risk-based and leverage use-of-capital measure, which is compared with the Firm’s regulatory capital to ensure that the Firm maintains an amount of going concern capital after absorbing potential losses from stress events, where applicable, at a point in time.  The Firm defines the difference between its total Average Common Equity and the sum of the Average Common Equity amounts allocated to its business segments as Parent equity.  Effective January 1, 2016 the common equity estimation and attribution to the business segments is based on the Firm’s fully phased-in regulatory capital, including supplementary leverage and stress losses (which results in more capital being attributed to the business segments), whereas prior periods were attributed based on transitional regulatory capital provisions.  Also beginning in 2016, the amount of capital allocated to the business segments was set at the beginning of the year, and will remain fixed throughout the year until the next annual reset. The Required Capital framework will evolve over time in response to changes in the business and regulatory environment and to incorporate enhancements in modeling techniques.  For further discussion of the framework, refer to Part II, Item 7 “Liquidity and Capital Resources—Regulatory Requirements” in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2015 and Part I, Item 2 "Liquidity and Capital Resources—Regulatory Requirements" in Morgan Stanley's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.
(s)	Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs).
(t)	The Firm calculates earnings per share using the two-class method as described under the accounting guidance for earnings per share.  For further discussion of the Firm's earnings per share calculations, see page 13 of the Financial Supplement and Note 15 to the consolidated financial statements in the Firm's 10-Q for the quarter ended March 31, 2016.

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Legal Notice

This Financial Supplement contains financial, statistical and business-related information, as well as business and segment trends.

The information should be read in conjunction with the Firm's second quarter earnings press release issued July 20, 2016.

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