Morgan Stanley (MS) 8-K Morgan Stanley Reports First Quarter Results

MORGAN STANLEY
Financial Supplement - 1Q 2009 (1)
Table of Contents
Page #
1	…………….	Quarterly Financial Summary
2	…………….	Quarterly Consolidated Income Statement Information
3 - 4	…………….	Quarterly Consolidated Financial Information and Statistical Data
5	…………….	Quarterly Institutional Securities Income Statement Information
6 - 7	…………….	Quarterly Institutional Securities Financial Information and Statistical Data
8	…………….	Quarterly Global Wealth Management Group Income Statement Information
9	…………….	Quarterly Global Wealth Management Group Financial Information and Statistical Data
10	…………….	Quarterly Asset Management Income Statement Information
11 - 12	…………….	Quarterly Asset Management Financial Information and Statistical Data
13	…………….	Quarterly Consolidated Assets Under Management or Supervision
14	…………….	Institutional Securities Subprime Analysis
15	…………….	Institutional Securities Non-Subprime Residential Mortgage Analysis
16	…………….	Institutional Securities CMBS and Commercial Whole Loan Analysis
17	…………….	Real Estate Analysis
18	…………….	Earnings Per Share Appendix
19	…………….	December 2008 Stub Month Income Statement Information
20	…………….	Legal Notice

(1)	1Q 2009 reflects the calendar quarter ended March 31, 2009.  In December 2008, the Board of Directors approved a change
	in the Firm's fiscal year end from November 30th to December 31st of each year.  As a result of this change, the Company
	had a December 2008 fiscal month transition stub period, the results of which are presented separately on page 19 of this
	financial supplement.  The results for this one month transition period are included in the following statements in the results
	for the quarter ended December 31, 2008. The results for all quarters in 2008 have been recasted on a calendar basis.

MORGAN STANLEY
Quarterly Financial Summary
(unaudited, dollars in millions)
	Quarter Ended															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Net revenues
Institutional Securities (1)	$	5,051		$	4,725		$	16,884		$	(13,691	)	$	1,696			(66	%)		112	%
Global Wealth Management Group		2,333			1,695			1,582			1,277			1,299			(44	%)		2	%
Asset Management		574			584			452			(361	)		72			(87	%)		120	%
Intersegment Eliminations		(41	)		(41	)		(63	)		(50	)		(25	)		39	%		50	%
Consolidated net revenues	$	7,917		$	6,963		$	18,855		$	(12,825	)	$	3,042			(62	%)		124	%
Income / (loss) applicable to Morgan Stanley (2)
Institutional Securities	$	890		$	1,103		$	8,348		$	(10,078	)	$	167			(81	%)		102	%
Global Wealth Management Group		593			172			12			(54	)		73			(88	%)		*
Asset Management		(72	)		(135	)		(211	)		(723	)		(418	)		*			42	%
Intersegment Eliminations		2			3			2			2			1			(50	%)		(50	%)
Consolidated income / (loss) applicable to Morgan Stanley	$	1,413		$	1,143		$	8,151		$	(10,853	)	$	(177	)		(113	%)		98	%
Earnings / (loss) applicable to Morgan Stanley common shareholders	$	1,311		$	1,062		$	7,684		$	(11,348	)	$	(578	)		(144	%)		95	%
Earnings per basic share: (3)
Income from continuing operations	$	1.27		$	1.02		$	7.38		$	(11.25	)	$	(0.57	)		(145	%)		95	%
Discontinued operations	$	-		$	-		$	-		$	(0.10	)	$	-			--			*
Earnings per basic share	$	1.27		$	1.02		$	7.38		$	(11.35	)	$	(0.57	)		(145	%)		95	%
Earnings per diluted share: (3)
Income from continuing operations	$	1.26		$	1.02		$	7.38		$	(11.25	)	$	(0.57	)		(145	%)		95	%
Discontinued operations	$	-		$	-		$	-		$	(0.10	)	$	-			--			*
Earnings per diluted share	$	1.26		$	1.02		$	7.38		$	(11.35	)	$	(0.57	)		(145	%)		95	%
Return on average common equity
from continuing operations		17.6	%		13.6	%		*			*			*
Return on average common equity		17.6	%		13.6	%		*			*			*

(1)	Results for the quarters ended Mar 31, 2008, June 30, 2008, Sept 30, 2008, Dec 31, 2008 and Mar 31, 2009 include positive / (negative) revenues of $1.8 billion, $(0.2) billion, $9.0 billion, $(5.7) billion and $(1.5) billion, respectively, related to the movement in Morgan Stanley's credit spreads on certain long term debt.
(2)	Represents consolidated income / (loss) from continuing operations applicable to Morgan Stanley before gain / (loss) from discontinued operations.
(3)	Effective January 1, 2009, the Company adopted FASB Staff Position Emerging Issues Task Force ("FSP EITF 03-6-1"), "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities".  Prior periods earnings per basic and diluted shares have been restated. Earnings per basic share have been reduced by $0.08, $0.07, $0.44 and $0.02 for the quarters ended Mar 31, 2008, June 30, 2008, Sept 30, 2008 and Dec 31, 2008, respectively, and earnings per diluted share have been reduced by $0.06, $0.04, $0.36 and $0.02 for the quarters ended Mar 31, 2008, June 30, 2008, Sept 30, 2008 and Dec 31, 2008, respectively.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

1 

MORGAN STANLEY
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Revenues:
Investment banking	$	971		$	1,288		$	1,025		$	648		$	886			(9	%)		37	%
Principal transactions:
Trading		2,793			2,094			13,180			(15,401	)		1,091			(61	%)		107	%
Investments		(516	)		(308	)		(733	)		(2,851	)		(1,272	)		(147	%)		55	%
Commissions		1,265			1,116			1,107			858			772			(39	%)		(10	%)
Asset management, distribution and admin. fees		1,473			1,473			1,379			1,129			984			(33	%)		(13	%)
Other		1,015			1,173			2,132			1,908			432			(57	%)		(77	%)
Total non-interest revenues		7,001			6,836			18,090			(13,709	)		2,893			(59	%)		121	%
Interest and dividends		12,712			9,200			9,627			4,769			2,769			(78	%)		(42	%)
Interest expense		11,796			9,073			8,862			3,885			2,620			(78	%)		(33	%)
Net interest		916			127			765			884			149			(84	%)		(83	%)
Net revenues		7,917			6,963			18,855			(12,825	)		3,042			(62	%)		124	%
Non-interest expenses:
Compensation and benefits		3,843			3,155			5,103			(635	)		2,082			(46	%)		*
Non-compensation expenses:
Occupancy and equipment		292			331			323			440			342			17	%		(22	%)
Brokerage, clearing and exchange fees		470			421			394			353			269			(43	%)		(24	%)
Information processing and communications		311			307			305			320			296			(5	%)		(8	%)
Marketing and business development		197			197			168			195			118			(40	%)		(39	%)
Professional services		369			506			421			523			326			(12	%)		(38	%)
Other		397			398			705			1,706			494			24	%		(71	%)
Total non-compensation expenses		2,036			2,160			2,316			3,537			1,845			(9	%)		(48	%)
Total non-interest expenses		5,879			5,315			7,419			2,902			3,927			(33	%)		35	%
Income / (loss) from continuing operations before taxes		2,038			1,648			11,436			(15,727	)		(885	)		(143	%)		94	%
Income tax provision / (benefit) from continuing operations		606			489			3,265			(4,889	)		(695	)		*			86	%
Income / (loss) from continuing operations		1,432			1,159			8,171			(10,838	)		(190	)		(113	%)		98	%
Gain / (loss) from discontinued operations after tax		0			0			0			(100	)		0			--			*
Net income / (loss)	$	1,432		$	1,159		$	8,171		$	(10,938	)	$	(190	)		(113	%)		98	%
Net income / (loss) applicable to non-controlling interests (1)		19			16			20			15			(13	)		(168	%)		(187	%)
Net income / (loss) applicable to Morgan Stanley		1,413			1,143			8,151			(10,953	)		(177	)		(113	%)		98	%
Earnings / (loss) applicable to Morgan Stanley common shareholders	$	1,311		$	1,062		$	7,684		$	(11,348	)	$	(578	)		(144	%)		95	%
Amounts applicable to Morgan Stanley:
Income / (loss) from continuing operations		1,413			1,143			8,151			(10,853	)		(177	)		(113	%)		98	%
Gain / (loss) from discontinued operations after tax		0			0			0			(100	)		0			--			*
Net income / (loss) applicable to Morgan Stanley	$	1,413		$	1,143		$	8,151		$	(10,953	)	$	(177	)		(113	%)		98	%
Pre-tax profit margin		26	%		24	%		61	%		*			*
Compensation and benefits as a % of net revenues		49	%		45	%		27	%		*			68	%
Non-compensation expenses as a % of net revenues		26	%		31	%		12	%		*			61	%
Effective tax rate (2)		29.7	%		29.7	%		28.6	%		31.1	%		78.5	%

(1)	Effective January 1, 2009, the Company adopted SFAS No. 160, "Non-controlling Interests in Consolidated Financial Statements" which requires retrospective application to prior periods.
(2)	The effective tax rate for the quarter ended Mar 31, 2009 includes an additional tax benefit resulting from the anticipated repatriation of non-U.S. earnings at lower than previously estimated tax rates. Excluding this benefit, the effective tax rate is 41.1%.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

2 

MORGAN STANLEY
Quarterly Consolidated Financial Information and Statistical Data (1)
(unaudited)
		Quarter Ended															Percentage Change From:
		Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Morgan Stanley
Regional revenue (2)
Americas		$	2,561		$	4,661		$	9,203		$	(5,617	)	$	2,722			6	%		148	%
EMEA (Europe, Middle East, Africa)			4,137			1,367			8,414			(5,936	)		70			(98	%)		101	%
Asia			1,219			935			1,238			(1,272	)		250			(79	%)		120	%
Consolidated net revenues		$	7,917		$	6,963		$	18,855		$	(12,825	)	$	3,042			(62	%)		124	%
Worldwide employees			46,768			46,844			47,102			46,430			44,241			(5	%)		(5	%)
Total assets		$	1,131,649		$	1,097,770		$	943,026		$	676,764		$	626,264			(45	%)		(7	%)
Firmwide Deposits			35,881			35,274			34,380			51,355			59,922			67	%		17	%
Common equity			32,877			34,153			40,492			29,585			29,552			(10	%)		--
Preferred equity			1,100			1,100			1,100			19,168			19,208			*			--
Morgan Stanley shareholders' equity			33,977			35,253			41,592			48,753			48,760			44	%		--
Junior subordinated debt issued to capital trusts			10,491			10,389			9,753			10,312			10,436			(1	%)		1	%
Less: Goodwill and intangible assets (3)			(3,665	)		(3,571	)		(3,738	)		(2,978	)		(2,915	)		20	%		2	%
Tangible Morgan Stanley shareholders' equity (4)		$	40,803		$	42,071		$	47,607		$	56,087		$	56,281			38	%		--
Tangible common equity (5)		$	29,212		$	30,582		$	36,754		$	26,607		$	26,637			(9	%)		--
Leverage Ratio (6)			27.7	x		26.1	x		19.8	x		12.1	x		11.1	x
Tangible common equity / Tangible assets (7)			2.6	%		2.8	%		3.9	%		3.9	%		4.3	%
Aggregate trading and non-trading Value-at-Risk (pre-tax) (8)		$	105		$	116		$	126		$	129		$	142
Average common shares outstanding
	Basic		1,034,342,428			1,041,178,821			1,040,887,906			1,000,194,024			1,011,741,210
	Diluted		1,039,026,879			1,044,720,912			1,041,677,018			1,000,194,024			1,011,741,210
Period end common shares outstanding			1,107,158,003			1,109,013,816			1,061,983,111			1,074,497,565			1,081,607,788
Book value per common share (9)		$	29.70		$	30.80		$	38.13		$	27.53		$	27.32			(8	%)		(1	%)
Tangible Book value per common share (10)		$	26.39		$	27.58		$	34.61		$	24.76		$	24.63			(7	%)		(1	%)

(1)	All data presented in millions except ratios, sharecount, book values and number of employees.
(2)	Reflects the regional view of the Company'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.
(3)	Goodwill and intangibles exclude mortgage servicing rights balances for quarters ended Mar 31, 2008, June 30, 2008, Sept 30, 2008, Dec 31, 2008 and Mar 31, 2009 of $373 million, $330 million, $261 million, $184 million and $160 million, respectively.
(4)	Excludes non-controlling interests.
(5)	Tangible common equity equals common equity less goodwill and intangible assets excluding mortgage servicing rights.
(6)	Leverage ratio equals total assets divided by tangible Morgan Stanley shareholders' equity.
(7)	Tangible common equity / Tangible assets equals tangible common equity divided by tangible assets. Tangible assets are equal to total assets less goodwill and intangibles, excluding mortgage servicing rights.
(8)	Represents average daily 95% / one day value-at-risk ("VaR"). Includes non-trading VaR for the quarters ended Mar 31, 2008, June 30, 2008, Sept 30, 2008, Dec 31, 2008 and Mar 31, 2009 of $36 million, $53 million, $76 million, $66 million and $83 million, respectively. See page 6 for trading VaR.
(9)	Book value per common share equals common equity divided by period end common shares outstanding.
(10)	Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

3 

MORGAN STANLEY
Quarterly Consolidated Financial Information and Statistical Data
(unaudited)
	Quarter Ended
	Mar 31, 2009
	Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity
Institutional Securities	$	23.7	$	21.1		2%
Global Wealth Management Group		1.7		1.3		20%
Asset Management		3.4		3.2		*
Unallocated capital		19.2		4.1
Firm	$	48.0	$	29.7		*
	Quarter Ended
	Mar 31, 2008						June 30, 2008						Sept 30, 2008						Dec 31, 2008
	Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity		Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity		Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity		Average tier 1 equity (billions) (1)		Average common equity (billions) (1)		Return on average common equity
Institutional Securities	$	27.8	$	24.3		14%	$	26.0	$	22.7		19%	$	24.3	$	23.0		*	$	23.8	$	22.3		*
Global Wealth Management Group		1.6		1.5		*		1.7		1.4		48%		1.8		1.5		3%		1.9		1.4		*
Asset Management		3.2		3.6		*		3.5		3.7		*		4.2		4.2		*		3.8		3.8		*
Unallocated capital		2.5		2.5				5.5		5.5				7.4		7.4				18.4		6.7
Firm	$	35.1	$	31.9		18%	$	36.7	$	33.3		14%	$	37.7	$	36.1		*	$	47.9	$	34.2		*

(1)	The Company’s economic capital framework estimates the amount of equity capital required to support the businesses over a wide range of market environments while simultaneously satisfying regulatory, rating agency and investor requirements. Economic capital is assigned to each segment based on a regulatory capital framework plus additional capital for stress losses. Economic capital requirements are met by regulatory Tier 1 equity (including common shareholders' equity, certain preferred stock, eligible hybrid capital instruments and deductions of certain goodwill, intangible assets, net deferred tax assets and debt valuation adjustments), subject to regulatory limits. The framework will evolve over time in response to changes in the business and regulatory environment and to incorporate improvements in modeling techniques.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

4 

MORGAN STANLEY
Quarterly Institutional Securities Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended (1)															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Revenues:
Investment banking	$	842		$	1,096		$	936		$	611		$	812			(4	%)		33	%
Principal transactions:
Trading		2,668			2,005			12,973			(15,280	)		846			(68	%)		106	%
Investments		(272	)		(145	)		(390	)		(1,853	)		(791	)		(191	%)		57	%
Commissions		916			772			785			540			512			(44	%)		(5	%)
Asset management, distribution and admin. fees		35			34			34			44			26			(26	%)		(41	%)
Other		160			1,051			1,928			1,552			286			79	%		(82	%)
Total non-interest revenues		4,349			4,813			16,266			(14,386	)		1,691			(61	%)		112	%
Interest and dividends		12,423			8,873			9,261			4,427			2,540			(80	%)		(43	%)
Interest expense		11,721			8,961			8,643			3,732			2,535			(78	%)		(32	%)
Net interest		702			(88	)		618			695			5			(99	%)		(99	%)
Net revenues		5,051			4,725			16,884			(13,691	)		1,696			(66	%)		112	%
Total non-interest expenses		3,873			3,137			5,157			811			2,130			(45	%)		163	%
Income / (loss) from continuing operations before taxes (2)		1,178			1,588			11,727			(14,502	)		(434	)		(137	%)		97	%
Income tax provision / (benefit) from continuing operations		288			485			3,379			(4,424	)		(601	)		*			86	%
Income / (loss) from continuing operations applicable to Morgan Stanley	$	890		$	1,103		$	8,348		$	(10,078	)	$	167			(81	%)		102	%
Return on average common equity (3)		14	%		19	%		*			*			2	%
Pre-tax profit margin (4)		23	%		34	%		70	%		*			*

(1)	Principal transactions investments revenue reflects net gain / (loss) on investments marked at fair value.  The related investment asset balance for the quarters ended Mar 31, 2008, June 30, 2008, Sept 30, 2008, Dec 31, 2008 and Mar 31, 2009 are $10.4 billion, $10.1 billion, $9.5 billion, $6.5 billion and $6.3 billion, respectively.
(2)	Includes income / (loss) applicable to non-controlling interests for the quarters ended Mar 31, 2008, June 30, 2008, Sept 30, 2008, Dec 31, 2008 and Mar 31, 2009 of $19 million, $16 million, $20 million, $15 million and $(13) million, respectively.
(3)	Refer to page 4 for the allocation of average common equity.
(4)	Income / (loss) from continuing operations before taxes, as a % of net revenues.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

5 

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Institutional Securities
(unaudited, dollars in millions)
	Quarter Ended															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Investment Banking
Advisory revenue	$	401		$	380		$	500		$	367		$	411			2	%		12	%
Underwriting revenue
Equity		191			460			193			136			155			(19	%)		14	%
Fixed income		250			256			243			108			246			(2	%)		128	%
Total underwriting revenue	$	441		$	716		$	436		$	244		$	401			(9	%)		64	%
Total investment banking revenue	$	842		$	1,096		$	936		$	611		$	812			(4	% )		33	%
Sales & Trading (1)
Equity	$	3,414		$	2,228		$	6,031		$	(2,648	)	$	877			(74	%)		133	%
Fixed income		2,422			678			8,847			(9,910	)		1,294			(47	% )		113	%
Other		(1,550	)		(217	)		(502	)		(1,487	)		(808	)		48	%		46	%
Total sales & trading net revenue	$	4,286		$	2,689		$	14,376		$	(14,045	)	$	1,363			(68	%)		110	%
Average Daily 95%/One-Day Value-at-Risk ("VaR") (2)
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread	$	65		$	64		$	71		$	95		$	107
Equity price	$	36		$	41		$	35		$	23		$	19
Foreign exchange rate	$	29		$	25		$	23		$	17		$	12
Commodity price	$	39		$	38		$	33		$	27		$	26
Trading VaR	$	99		$	100		$	96		$	105		$	115

(1)	Includes principal transactions trading, commissions and net interest revenue.  Other sales and trading net revenue primarily includes net losses from the mark-to-market of loans and closed and pipeline commitments and related hedges, and results related to Investment Banking and other activities.
(2)	Represents the loss amount that one would not expect to exceed, on average, more than five times every one hundred trading days in the Company's trading positions if the portfolio were held constant for a one day period. For a further discussion of the calculation of VaR and the limitations of the Company's VaR methodology, see Part II, Item 7A "Quantitative and Qualitative Disclosures about Market Risk" in the Company's Form 10-K for fiscal 2008.
	See page 3 for Aggregate and Non-Trading VaR.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

6 

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Institutional Securities - Corporate Lending (1)
(unaudited, dollars in billions)
	Quarter Ended															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Corporate funded loans
Investment grade	$	14.7		$	10.6		$	9.2		$	7.4		$	7.1			(52	%)		(4	%)
Non-investment grade		10.2			8.4			11.2			9.4			9.7			(5	%)		3	%
Total corporate funded loans	$	24.9		$	19.0		$	20.4		$	16.8		$	16.8			(33	%)		--
Corporate lending commitments
Investment grade	$	43.4		$	41.6		$	37.3		$	36.9		$	34.9			(20	%)		(5	%)
Non-investment grade		14.9			13.3			8.0			7.0			5.9			(60	%)		(16	%)
Total corporate lending commitments	$	58.3		$	54.9		$	45.3		$	43.9		$	40.8			(30	%)		(7	%)
Corporate funded loans plus lending commitments
Investment grade	$	58.1		$	52.2		$	46.5		$	44.3		$	42.0			(28	%)		(5	%)
Non-investment grade (2)	$	25.1		$	21.7		$	19.2		$	16.4		$	15.6			(38	%)		(5	%)
% investment grade		70	%		71	%		71	%		73	%		73	%
% non-investment grade		30	%		29	%		29	%		27	%		27	%
Total corporate funded loans and lending commitments	$	83.2		$	73.9		$	65.7		$	60.7		$	57.6			(31	%)		(5	%)
Hedges (3)	$	33.3		$	29.3		$	31.5		$	35.7		$	34.1			2	%		(4	%)

(1)	In connection with certain of its Institutional Securities business activities, the Company provides loans or lending commitments to select clients related to its leveraged acquisition finance or relationship lending activities. For a further discussion of this activity, see the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2008.
(2)	For the quarters ended Mar 31, 2008, June 30, 2008, Sept 30, 2008, Dec 31, 2008, and Mar 31, 2009, the leveraged acquisition finance portfolio of pipeline commitments and closed deals were $14.8 billion, $11.6 billion, $6.9 billion, $5.0 billion and $4.2 billion, respectively.
(3)	Includes the notional amount of both internal and external hedges utilized by the lending business.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

7 

MORGAN STANLEY
Quarterly Global Wealth Management Group Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Revenues:
Investment banking	$	110		$	159		$	82		$	67		$	61			(45	%)		(9	%)
Principal transactions:
Trading		189			195			186			47			246			30	%		*
Investments		(5	)		(1	)		(16	)		(36	)		(14	)		(180	%)		61	%
Commissions		355			348			342			334			262			(26	%)		(22	%)
Asset management, distribution and admin. fees		691			684			690			586			511			(26	%)		(13	%)
Other		775			67			34			93			46			(94	%)		(51	%)
Total non-interest revenues		2,115			1,452			1,318			1,091			1,112			(47	%)		2	%
Interest and dividends		294			321			343			237			226			(23	%)		(5	%)
Interest expense		76			78			79			51			39			(49	%)		(24	%)
Net interest		218			243			264			186			187			(14	%)		1	%
Net revenues		2,333			1,695			1,582			1,277			1,299			(44	%)		2	%
Total non-interest expenses		1,384			1,423			1,583			1,328			1,180			(15	%)		(11	%)
Income / (loss) from continuing operations before taxes		949			272			(1	)		(51	)		119			(87	%)		*
Income tax provision / (benefit) from continuing operations		356			100			(13	)		3			46			(87	%)		*
Income / (loss) from continuing operations applicable
to Morgan Stanley	$	593		$	172		$	12		$	(54	)	$	73			(88	%)		*
Return on average common equity (1)		*			48	%		3	%		*			20	%
Pre-tax profit margin (2)		41	%		16	%		*			*			9	%

(1)	Refer to page 4 for the allocation of average common equity.
(2)	Income / (loss) from continuing operations before taxes, as a % of net revenues.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

8 

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Global Wealth Management Group
(unaudited)
	Quarter Ended															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Global representatives		8,271			8,343			8,588			8,356			8,148			(1	%)		(2	%)
Annualized revenue per global
representative (thousands) (1)	$	772		$	809		$	750		$	603		$	630			(18	%)		4	%
Assets by client segment (billions)
$10m or more		223			221			192			155			148			(34	%)		(5	%)
$1m - $10m		258			262			238			196			187			(28	%)		(5	%)
Subtotal - > $1m		481			483			430			351			335			(30	%)		(5	%)
$100k - $1m		173			172			167			155			147			(15	%)		(5	%)
< $100k		22			22			22			22			21			(5	%)		(5	%)
Client assets excluding corporate / other		676			677			619			528			503			(26	%)		(5	%)
Corporate / other		30			30			28			22			22			(27	%)		--
Total client assets (billions)	$	706		$	707		$	647		$	550		$	525			(26	%)		(5	%)
% of assets by client segment > $1m (2)		71	%		71	%		69	%		66	%		67	%
Fee-based client account assets (billions) (3)	$	184		$	187		$	169		$	138		$	124			(33	%)		(10	%)
Fee-based assets as a % of client assets		26	%		26	%		26	%		25	%		24	%
Bank deposit program (millions)	$	33,418		$	34,467		$	33,791		$	38,771		$	46,796			40	%		21	%
Client assets per global
representative (millions) (4)	$	85		$	85		$	75		$	66		$	64			(25	%)		(3	%)
Domestic retail net new assets (billions) (5)	$	8.4		$	16.2		$	8.3		$	(7.4	)	$	3.0			(64	%)		141	%
Domestic retail locations		449			460			462			464			465			4	%		--

(1)	Annualized revenue divided by average global representative headcount.
(2)	Excludes corporate / other assets.
(3)	Represents the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
(4)	Total client assets divided by period end global representative headcount.
(5)	Represents net new assets in the U.S. broad-based branch system.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

9 

MORGAN STANLEY
Quarterly Asset Management Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended (1)															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Revenues:
Investment banking	$	26		$	39		$	17		$	(24	)	$	13			(50	%)		154	%
Principal transactions:
Trading		(62	)		(104	)		23			(165	)		(1	)		98	%		99	%
Investments		(239	)		(162	)		(327	)		(962	)		(467	)		(95	%)		51	%
Commissions		4			4			3			3			2			(50	%)		(33	%)
Asset management, distribution and admin. fees		790			796			699			537			487			(38	%)		(9	%)
Other		74			55			171			265			101			36	%		(62	%)
Total non-interest revenues		593			628			586			(346	)		135			(77	%)		139	%
Interest and dividends		6			17			35			111			9			50	%		(92	%)
Interest expense		25			61			169			126			72			188	%		(43	%)
Net interest		(19	)		(44	)		(134	)		(15	)		(63	)		*			*
Net revenues		574			584			452			(361	)		72			(87	%)		120	%
Total non-interest expenses		686			816			765			831			631			(8	%)		(24	%)
Income / (loss) from continuing operations before taxes		(112	)		(232	)		(313	)		(1,192	)		(559	)		*			53	%
Income tax provision / (benefit) from continuing operations		(40	)		(97	)		(102	)		(469	)		(141	)		*			70	%
Income / (loss) from continuing operations applicable to Morgan Stanley	$	(72	)	$	(135	)	$	(211	)	$	(723	)	$	(418	)		*			42	%
Return on average common equity (2)		*			*			*			*			*
Pre-tax profit margin (3)		*			*			*			*			*

(1)	Principal transactions investments revenue reflects net gain / (loss) on investments marked at fair value including real estate funds, private equity funds and seed capital investments.  The related investment asset balance for the quarters ended Mar 31, 2008, June 30, 2008, Sept 30, 2008, Dec 31, 2008 and Mar 31, 2009 are $4.5 billion, $5.3 billion, $4.8 billion, $3.6 billion and $3.0 billion, respectively.
(2)	Refer to page 4 for the allocation of average common equity.
(3)	Income / (loss) from continuing operations before taxes, as a % of net revenues.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

10 

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Asset Management
(unaudited, dollars in billions)
	Quarter Ended															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Assets under management or supervision
Net flows by distribution channel
Morgan Stanley Retail & Intermediary	$	-		$	(1.5	)	$	(3.3	)	$	(7.3	)	$	(2.3	)		*			68	%
Van Kampen Retail & Intermediary		(2.6	)		(1.9	)		(4.9	)		(4.7	)		(2.1	)		19	%		55	%
Retail money markets		2.7			0.4			(5.0	)		(1.7	)		(4.3	)		*			*
Total Americas Retail		0.1			(3.0	)		(13.2	)		(13.7	)		(8.7	)		*			36	%
U.S. Institutional		1.8			(0.5	)		(3.9	)		(6.6	)		(3.7	)		*			44	%
Institutional money markets		8.9			12.4			(33.7	)		(1.7	)		(5.1	)		*			*
Non-U.S.		0.1			1.0			0.0			(2.9	)		(3.0	)		*			(3	%)
Total net flows	$	10.9		$	9.9		$	(50.8	)	$	(24.9	)	$	(20.5	)		*			18	%
Assets under management or supervision by distribution channel
Morgan Stanley Retail & Intermediary	$	74		$	72		$	61		$	45		$	41			(45	%)		(9	%)
Van Kampen Retail & Intermediary		133			127			112			85			77			(42	%)		(9	%)
Retail money markets		35			35			31			29			25			(29	%)		(14	%)
Total Americas Retail		242			234			204			159			143			(41	%)		(10	%)
U.S. Institutional		123			123			107			89			74			(40	%)		(17	%)
Institutional money markets		77			89			55			53			47			(39	%)		(11	%)
Non-U.S.		126			125			110			97			87			(31	%)		(10	%)
Total assets under management or supervision	$	568		$	571		$	476		$	398		$	351			(38	%)		(12	%)
Share of minority interest assets (1)		7			8			7			6			5			(29	%)		(17	%)
Total	$	575		$	579		$	483		$	404		$	356			(38	%)		(12	%)

(1)	Amount represents Asset Management's proportional share of assets managed by entities in which it owns a minority interest.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

  11

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Asset Management
(unaudited, dollars in billions)
	Quarter Ended															Percentage Change From:
	Mar 31, 2008			June 30, 2008			Sept 30, 2008			Dec 31, 2008			Mar 31, 2009			1Q09 vs. 1Q08			1Q09 vs. 4Q08
Assets under management or supervision
Net flows by asset class
Core Asset Management
Equity	$	(8.4	)	$	(5.2	)	$	(6.2	)	$	(4.3	)	$	(1.9	)		77	%		56	%
Fixed income		11.8			12.0			(44.0	)		(16.0	)		(14.0	)		*			13	%
Alternatives (1)		6.7			2.0			(0.4	)		(4.5	)		(4.3	)		*			4	%
Unit trusts		0.0			0.0			(0.6	)		(0.8	)		0.4			*			*
Total Core Asset Management		10.1			8.8			(51.2	)		(25.6	)		(19.8	)		*			23	%
Merchant Banking
Private Equity		0.0			(0.1	)		(0.1	)		1.0			(0.3	)		*			(130	%)
Infrastructure		0.6			0.9			0.0			0.0			0.0			*			--
Real Estate		0.2			0.3			0.5			(0.3	)		(0.4	)		*			(33	%)
Total Merchant Banking		0.8			1.1			0.4			0.7			(0.7	)		*			*
Total net flows	$	10.9		$	9.9		$	(50.8	)	$	(24.9	)	$	(20.5	)		*			18	%
Assets under management or supervision by asset class
Core Asset Management
Equity	$	226		$	216		$	181		$	139		$	125			(45	%)		(10	%)
Fixed income		213			225			175			158			144			(32	%)		(9	%)
Alternatives (1)		72			72			67			50			42			(42	%)		(16	%)
Unit trusts		14			13			11			9			8			(43	%)		(11	%)
Total Core Asset Management		525			526			434			356			319			(39	%)		(10	%)
Merchant Banking
Private Equity		3			3			3			4			4			33	%		--
Infrastructure		3			4			4			4			4			33	%		--
Real Estate		37			38			35			34			24			(35	%)		(29	%)
Total Merchant Banking		43			45			42			42			32			(26	%)		(24	%)
Total Assets Under Management/Supervision	$	568		$	571		$	476		$	398		$	351			(38	%)		(12	%)
Share of minority interest assets (2)		7			8			7			6			5			(29	%)		(17	%)
Total	$	575		$	579		$	483		$	404		$	356			(38	%)		(12	%)

(1)	Includes a range of alternative investment products such as hedge funds, funds of hedge funds and funds of private equity funds.
(2)	Amount represents Asset Management's proportional share of assets managed by entities in which it owns a minority interest.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

12

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Consolidated Assets Under Management or Supervision
(unaudited, dollars in billions)
	Quarter Ended										Percentage Change From:
	Mar 31, 2008		June 30, 2008		Sept 30, 2008		Dec 31, 2008		Mar 31, 2009		1Q09 vs. 1Q08			1Q09 vs. 4Q08
Assets under management or supervision by distribution channel
Morgan Stanley Retail & Intermediary	$	74	$	72	$	61	$	45	$	41		(45	%)		(9	%)
Van Kampen Retail & Intermediary		133		127		112		85		77		(42	%)		(9	%)
Retail money markets		35		35		31		29		25		(29	%)		(14	%)
Total Americas Retail	$	242	$	234	$	204	$	159	$	143		(41	%)		(10	%)
U.S. Institutional		123		123		107		89		74		(40	%)		(17	%)
Institutional money markets		77		89		55		53		47		(39	%)		(11	%)
Non-U.S.		126		125		110		97		87		(31	%)		(10	%)
Sub-total assets under management or supervision	$	568	$	571	$	476	$	398	$	351		(38	%)		(12	%)
Global Wealth Management Group		164		168		154		129		119		(27	%)		(8	%)
Total assets under management or supervision	$	732	$	739	$	630	$	527	$	470		(36	%)		(11	%)
Share of minority interest assets (1)		7		8		7		6		5		(29	%)		(17	%)
Total	$	739	$	747	$	637	$	533	$	475		(36	%)		(11	%)
Consolidated assets under management or supervision by asset class
Equity	$	307	$	300	$	254	$	197	$	177		(42	%)		(10	%)
Fixed income		244		258		208		189		175		(28	%)		(7	%)
Alternatives (2)		72		72		67		50		42		(42	%)		(16	%)
Private Equity		3		3		3		4		4		33	%		--
Infrastructure		3		4		4		4		4		33	%		--
Real Estate		37		38		35		34		24		(35	%)		(29	%)
Sub-total		666		675		571		478		426		(36	%)		(11	%)
Unit trusts		14		13		11		9		8		(43	%)		(11	%)
Other (3)		52		51		48		40		36		(31	%)		(10	%)
Total assets under management or supervision	$	732	$	739	$	630	$	527	$	470		(36	%)		(11	%)
Share of minority interest assets (1)		7		8		7		6		5		(29	%)		(17	%)
Total	$	739	$	747	$	637	$	533	$	475		(36	%)		(11	%)

(1)	Amount represents Asset Management's proportional share of assets managed by entities in which it owns a minority interest.
(2)	Includes a range of alternative investment products such as hedge funds, funds of hedge funds and funds of private equity funds.
(3)	Includes assets under management or supervision associated with the Global Wealth Management Group.
Note:	Prior periods have been recasted on a calendar basis. See note (1) on Table of Contents page.
	Refer to Legal Notice page 20.

13 

This page represents an addendum to the 1Q 2009 Financial Supplement.
MORGAN STANLEY
Institutional Securities - U.S. Subprime Analysis
(unaudited, dollars in billions)
							Profit / (Loss)
	Statement of Financial Condition (2)						Twelve Months Ended			Three Months Ended			Net Exposure (1)
	Dec 31, 2008			Mar 31, 2009			Dec 31, 2008			Mar 31, 2009			Dec 31, 2008			Mar 31, 2009
ABS CDO Super Senior Mezzanine	$	(3.4	)	$	(0.9	)	$	(1.7	)	$	(0.1	)	$	(0.1	)	$	0.0
ABS Bonds (3)		3.4			2.4			(2.5	)		(0.2	)		3.4			2.4
ABS Loans		0.2			0.1			(0.2	)		0.0			0.2			0.1
ABS Swaps (4)		11.3			8.9			3.4			0.0			(1.6	)		(1.4	)
Total ABS Subprime Exposure	$	11.5		$	10.5		$	(1.0	)	$	(0.3	)	$	1.9		$	1.1

(1)	Net Exposure is defined as potential loss to the Firm in an event of 100% default, assuming zero recovery, over a period of time.  The value of these positions remains subject to mark-to-market volatility. Positive amounts indicate potential loss (long position) in a default scenario.  Negative amounts indicate potential gain (short position) in a default scenario.
(2)	Statement of financial condition total is presented on a net basis.  These balances are presented on a gross basis in the Company's statement of financial condition.
(3)	Includes subprime securities held by the investment portfolios of Morgan Stanley Bank N.A. and Morgan Stanley Trust FSB (collectively, the "Subsidiary Banks"). The securities in the Subsidiary Banks' portfolios are part of the Company's overall Treasury liquidity management portfolio. The market value of the Subsidiary Banks' subprime-related securities, most of which are investment grade-rated residential mortgage-backed securities, was $1.8 billion at March 31, 2009 and $2.5 billion at December 31, 2008. For the three months ended March 31, 2009, these positions incurred losses of $0.3 billion. For the twelve months ended December 31, 2008, these positions incurred losses of $0.8 billion.
(4)	Represents both hedges and directional positioning. At March 31, 2009, these positions include ABS and ABS CDO credit default swaps.
Note:	Refer to Legal Notice page 20.

14

This page represents an addendum to the 1Q 2009 Financial Supplement.
MORGAN STANLEY
Institutional Securities - Non-Subprime Residential Mortgage Analysis
(unaudited, dollars in billions)
					Profit / (Loss)
	Statement of Financial Condition (5)				Twelve Months Ended			Three Months Ended			Net Exposure (1) (6)
	Dec 31, 2008		Mar 31, 2009		Dec 31, 2008			Mar 31, 2009			Dec 31, 2008			Mar 31, 2009
Residential Loans (2)	$	3.2	$	3.0	$	(0.1	)	$	(0.1	)	$	3.2		$	3.0
RMBS Bonds (2)		2.0		1.4		(2.2	)		0.0			2.0			1.4
RMBS Backed Warehouse Lines		0.1		0.1		0.0			0.0			0.1			0.1
RMBS Swaps (3)		0.0		0.3		(0.2	)		(0.1	)		(0.4	)		(0.5	)
Other Secured Financings (4)		2.7		2.6		0.0			0.0			0.0			0.0
Total Residential Non-Subprime	$	8.0	$	7.4	$	(2.5	)	$	(0.2	)	$	4.9		$	4.0

(1)	Net Exposure is defined as potential loss to the Firm in an event of 100% default, assuming zero recovery, over a period of time.  The value of these positions remains subject to mark-to-market volatility.  Positive amounts indicate potential loss (long position) in a default scenario.  Negative amounts indicate potential gain (short position) in a default scenario.
(2)	Gross and Net Exposure on Residential Loans and RMBS Bonds was split 50% Alt-A/Near prime and 50% prime underlying collateral at March 31, 2009.
	Gross and Net Exposure of U.S. Alt-A Residential Loans and Bonds was $1.2 billion at March 31, 2009.
(3)	Represents both hedges and directional positioning.  At March 31, 2009, these positions include credit default and super senior CDO swaps.
(4)	Represents assets recorded under certain provisions of SFAS 140 and FASB Interpretation 46R that function as collateral for an offsetting amount of non-recourse debt to third parties.  Any retained interests in these transactions are reflected in RMBS Bonds.
(5)	Statement of financial condition total is presented on a net basis.  These balances are presented on a gross basis in the Company's statement of financial condition.
(6)	Regional distribution of Net Exposure was 52% U.S., 35% Europe and 13% Asia at March 31, 2009.

Note: Refer to Legal Notice page 20.

15

This page represents an addendum to the 1Q 2009 Financial Supplement.
MORGAN STANLEY
Institutional Securities - CMBS and Commercial Whole Loan Analysis
(unaudited, dollars in billions)
					Profit / (Loss)
	Statement of Financial Condition  (6)				Twelve Months Ended			Three Months Ended			Net Exposure (1)
	Dec 31, 2008		Mar 31, 2009		Dec 31, 2008			Mar 31, 2009			Dec 31, 2008			Mar 31, 2009
CMBS Bonds	$	4.5	$	3.9	$	(1.6	)	$	(0.5	)	$	4.5		$	3.9
CMBS Backed Warehouse Lines (2)		1.1		0.8		0.0			(0.1	)		1.6			1.2
Commercial Loans (2) (3)		3.3		2.9		(0.4	)		(0.3	)		3.6			3.1
CMBS Swaps (4)		4.7		7.1		2.6			1.5			(6.3	)		(4.2	)
Other Secured Financing (5)		3.3		2.5		0.0			0.0			0.0			0.0
Total CMBS / Commercial Whole Loan Net Exposure  (7)	$	16.9	$	17.2	$	0.6		$	0.6		$	3.4		$	4.0

(1)	Net Exposure is defined as potential loss to the Firm in an event of 100% default, assuming zero recovery, over a period of time.  The value of these positions remains subject to mark-to-market volatility.  Positive amounts indicate potential loss (long position) in a default scenario.  Negative amounts indicate potential gain (short position) in a default scenario.
(2)	Includes unfunded loan commitments.
(3)	Composition of Commercial Loans was 68% Senior and 32% Mezzanine at March 31, 2009.
(4)	Represents both hedges and directional positioning.  At March 31, 2009, these positions include credit default, super senior CDO, index, and total rate-of-return swaps.
(5)	Represents assets recorded under certain provisions of SFAS 140 and FASB Interpretation 46R that function as collateral for an offsetting amount of non-recourse debt to third parties.  Any retained interests in these transactions are reflected in CMBS Bonds.
(6)	Statement of financial condition total is presented on a net basis.  These balances are presented on a gross basis in the Company's statement of financial condition.
(7)	Regional distribution of the long positions (i.e. CMBS Bonds, Commercial Loans and Warehouse Lines) Net Exposure was 56% U.S., 20% Europe and 24% Asia at March 31, 2009.

Note: Refer to Legal Notice page 20.

16

This page represents an addendum to the 1Q 2009 Financial Supplement.
MORGAN STANLEY
Real Estate Analysis
(unaudited, dollars in billions)
					Profit / (Loss)
	Statement of Financial Condition				Twelve Months Ended			Three Months Ended
	Dec 31, 2008		Mar 31, 2009		Dec 31, 2008			Mar 31, 2009
Crescent and Other Consolidated Interests (1) (2) (3)	$	3.8	$	3.7	$	(0.8	)	$	(0.3	)
Real Estate Funds		1.0		1.0		(1.6	)		(0.6	)
Real Estate Bridge Financing		0.2		0.1		(0.1	)		(0.1	)
Infrastructure Fund		0.1		0.1		0.0			0.0
Total Real Estate Investments (4)(5)	$	5.1	$	4.9	$	(2.5	)	$	(1.0	)

(1)	Represents gross investment assets of consolidated subsidiaries which are subject to non-recourse debt of $2.5 billion provided by third party lenders.
(2)	Consolidated statement of income amounts directly related to investments held by consolidated subsidiaries are condensed in this presentation and include principal transactions, net operating revenues and expenses and impairment charges.
(3)	At March 31, 2009, certain of the Company's subsidiaries were in default under third party real estate financings that are generally non-recourse (subject to limited guarantees) due to a breach of certain non-monetary covenants. Limited waivers of those covenants have been obtained from the lenders for the period effective March 31, 2009 and continuing through May 31, 2009.
(4)	The Company has contractual capital commitments, guarantees and counterparty arrangements with respect to these investments of $1.9 billion at March 31, 2009.  Additionally, the terms of an unsecured operating capital facility of $0.2 billion is being discussed with one of the Funds.
(5)	These balances exclude investments that benefit certain deferred compensation and employee co-investment plans.

Note: Refer to Legal Notice page 20.

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This page represents an addendum to the 1Q 2009 Financial Supplement, Appendix I

MORGAN STANLEY
Earnings Per Share (1)
(unaudited, in millions, except for per share data)
		Three Months Ended
		Mar 31, 2009
Basic Earnings Per Share
Income from continuing operations applicable to Morgan Stanley	$	(177	)
Gain / (loss) from discontinued operations after tax		0
Net Income / (loss) applicable to Morgan Stanley	$	(177	)
Less: Preferred Dividends (Series A)		(11	)
Less: Preferred Dividends (Series B – Mitsubishi)		(196	)
Less: Preferred Dividends (Series C – Mitsubishi)		(29	)
Less: Preferred Dividends (Series D - Capital Purchase Program)		(125	)
Less: Amortization of Issuance Discount for
Series D Preferred Stock		(40	)
Less: Allocation of Earnings to:
CIC Equity Units (2)		0
Unvested Restricted Stock Units (3)		0
Earnings / (loss) applicable to Morgan Stanley common shareholders	$	(578	)
Weighted average common shares outstanding		1,012
Earnings per basic common share
Income / (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(0.57)
Gain / (loss) on discontinued operations applicable to Morgan Stanley common shareholders	$	-
Earnings per basic common share	$	(0.57)
Diluted Earnings Per Share
Earnings / (loss) applicable to Morgan Stanley common shareholders	$	(578)
Income impact of assumed conversions:
Preferred stock dividends		0
Income / (loss) available to common shareholders plus assumed conversions	$	(578)
Weighted average common shares outstanding		1,012
Effect of dilutive securities:
Stock options		0
Series B Preferred Stock		0
Capital Purchase Program Warrants		0
CIC Equity Units		0
Weighted average common shares outstanding and common stock equivalents		1,012
Earnings per diluted common share
Income / (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(0.57)
Gain / (loss) on discontinued operations applicable to Morgan Stanley common shareholders	$	-
Earnings per diluted common share	$	(0.57)

(1)	The Company calculates earnings per share using the two-class method in accordance with Emerging Issues Task Force (EITF) No. 03-6, "Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share".   For further discussion of the Company's earnings per share calculations see Note 2 to the consolidated financial statements for the fiscal year ended November 30, 2008 in the Company's Annual Report on Form 10-K.
(2)	Undistributed earnings are allocated to the CIC Equity Units in the basic earnings per share calculation using the two-class method which assumes all earnings of the Company are distributed. For purposes of the earnings per share calculation, the CIC Equity Units do not share in any losses of the Company. Therefore, if the Company incurs a loss in any reporting period, losses will not be allocated to the CIC Equity Units in the earnings per share calculation because such an allocation would be antidilutive to common shareholders.
(3)	Effective January 1, 2009, the Company adopted FSP EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities". Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.  All prior period earnings per share data presented have been adjusted retrospectively.  Under this method, net income available to common shareholders is reduced (i) by earnings distributed to the participating security (e.g. as a dividend) and to the extent the Company has income (ii) by an allocation of undistributed earnings based on the security's participation rights. Because there was no dividend declared on common shares in the first quarter of 2009, no earnings were distributed to the unvested Restricted Stock Units, and these unvested Restricted Stock Units are not deemed to participate in the net loss.

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This page is an addendum to the 1Q 2009 Financial Supplement.
MORGAN STANLEY
Segment and Consolidated Income Statement Information
Month Ended December 31, 2008
(unaudited, dollars in millions)
	Institutional Securities			Global Wealth Management			Asset Management			Firm (1)
Revenues:
Investment banking	$	177		$	21		$	3		$	198
Principal transactions:
Trading		(1,685	)		54			(82	)		(1,714	)
Investments		(158	)		(4	)		(43	)		(205	)
Commissions		129			89			1			215
Asset management, distribution and admin. fees		8			183			157			335
Other		123			15			100			238
Total non-interest revenues		(1,406	)		358			136			(933	)
Interest and dividends		786			66			12			862
Interest expense		700			15			27			734
Net interest		86			51			(15	)		128
Net revenues		(1,320	)		409			121			(805	)
Total non-interest expenses		701			291			231			1,204
Income / (loss) from continuing operations before taxes		(2,021	)		118			(110	)		(2,009	)
Income tax provision / (benefit) from continuing operations		(728	)		45			(42	)		(724	)
Net income / (loss)		(1,293	)		73			(68	)		(1,285	)
Net income / (loss) applicable to non-controlling interests		-			-			-			3
Net income / (loss) applicable to Morgan Stanley	$	(1,293	)	$	73		$	(68	)	$	(1,288	)
Earnings / (loss) applicable to Morgan Stanley common shareholders										$	(1,624	)
Earnings per basic share:
Income from continuing operations										$	(1.62	)
Discontinued operations										$	-
Earnings per basic share										$	(1.62	)
Earnings per diluted share:
Income from continuing operations										$	(1.62	)
Discontinued operations										$	-
Earnings per diluted share										$	(1.62	)
Average common shares outstanding
Basic											1,002,058,928
Diluted											1,002,058,928
Period end common shares outstanding											1,074,497,565

(1) Total is shown net of intersegment eliminations, which are not presented.

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MORGAN STANLEY

Legal Notice

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

The information should be read in conjunction with the Company's first quarter earnings press release issued April 22, 2009.

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