Morgan Stanley (MS) 8-K Results of Operations and Financial Condition

Exhibit 99.2

MORGAN STANLEY

Financial Supplement - 3Q 2012

Table of Contents

Page #
1	…………….	Quarterly Financial Summary
2	…………….	Quarterly Consolidated Income Statement Information
3	…………….	Quarterly Earnings Per Share Summary
4 - 5	…………….	Quarterly Consolidated Financial Information and Statistical Data
6	…………….	Quarterly Institutional Securities Income Statement Information
7 - 9	…………….	Quarterly Institutional Securities Financial Information and Statistical Data
10	…………….	Quarterly Global Wealth Management Group Income Statement Information
11	…………….	Quarterly Global Wealth Management Group Financial Information and Statistical Data
12	…………….	Quarterly Asset Management Income Statement Information
13	…………….	Quarterly Asset Management Financial Information and Statistical Data
14	…………….	Country Risk Exposure - European Peripherals and France Appendix I
15	…………….	Earnings Per Share Appendix II
16 - 17	…………….	End Notes
18	…………….	Legal Notice

MORGAN STANLEY

Quarterly Financial Summary

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011			Sept 30, 2012			Sept 30, 2011			Change
Net revenues
Institutional Securities	$	1,376		$	3,234		$	6,410			(57	%)		(79	%)	$	7,633		$	15,137			(50	%)
Global Wealth Management Group		3,336			3,305			3,226			1	%		3	%		10,055			10,070			--
Asset Management		631			456			205			38	%		*			1,620			1,463			11	%
Intersegment Eliminations		(54	)		(42	)		(31	)		(29	%)		(74	%)		(131	)		(79	)		(66	%)
Consolidated net revenues	$	5,289		$	6,953		$	9,810			(24	%)		(46	%)	$	19,177		$	26,591			(28	%)
Income (loss) from continuing operations before tax
Institutional Securities	$	(1,917	)	$	508		$	3,447			*			*		$	(1,721	)	$	5,364			*
Global Wealth Management Group		239			393			356			(39	%)		(33	%)		1,019			1,017			--
Asset Management		198			43			(118	)		*			*			369			175			111	%
Intersegment Eliminations		0			(4	)		0			*			--			(4	)		0			*
Consolidated income (loss) from continuing operations before tax	$	(1,480	)	$	940		$	3,685			*			*		$	(337	)	$	6,556			*
Income (loss) applicable to Morgan Stanley
Institutional Securities	$	(1,268	)	$	381		$	2,072			*			*		$	(1,183	)	$	3,827			*
Global Wealth Management Group		157			172			167			(9	%)		(6	%)		522			527			(1	%)
Asset Management		104			14			(61	)		*			*			143			29			*
Intersegment Eliminations		0			(4	)		0			*			--			(4	)		0			*
Consolidated income (loss) applicable to Morgan Stanley	$	(1,007	)	$	563		$	2,178			*			*		$	(522	)	$	4,383			*
Financial Metrics:
Return on average common equity
from continuing operations		*			3.5	%		14.6	%								*			6.1	%
Return on average common equity		*			3.7	%		14.7	%								*			6.0	%
Tier 1 common capital ratio		13.7	%		13.6	%		11.6	%
Tier 1 capital ratio		16.7	%		17.2	%		14.9	%
Book value per common share	$	30.53		$	31.02		$	31.29
Tangible book value per common share	$	26.65		$	27.70		$	27.79

Notes:	-	Results for the quarters ended September 30, 2012, June 30, 2012 and September 30, 2011, include positive (negative) revenue of $(2,262) million, $350 million and $3,410 million, respectively, related to the movement in Morgan Stanley's credit spreads and other credit factors on certain long-term and short-term debt (Debt Valuation Adjustment, DVA).
	-	Income (loss) applicable to Morgan Stanley represents income (loss) from continuing operations, adjusted for the portion of net income (loss) applicable to noncontrolling interests related to continuing operations.  For the quarters ended September 30, 2012, June 30, 2012, and September 30, 2011 net income (loss) applicable to noncontrolling interests include $16 million, $8 million, and $2 million respectively, reported as a gain in discontinued operations.
	-	The return on average common equity and tangible book value per common share are non-GAAP measures that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance and capital adequacy.
	-	Tier 1 common capital ratio equals Tier 1 common equity divided by Risk Weighted Assets (RWA).
	-	Tier 1 capital ratio equals Tier 1 capital divided by RWA.
	-	Book value per common share equals common equity divided by period end common shares outstanding.
	-	Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
	-	See page 4 of the financial supplement for additional information related to the calculation of the financial metrics.
	-	Refer to Legal Notice on page 18.

1

MORGAN STANLEY

Quarterly Consolidated Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011			Sept 30, 2012			Sept 30, 2011			Change
Revenues:
Investment banking	$	1,152		$	1,104		$	1,031			4	%		12	%	$	3,319		$	3,940			(16	%)
Principal transactions:
Trading		607			2,469			4,960			(75	%)		(88	%)		5,483			11,421			(52	%)
Investments		290			63			(298	)		*			*			438			433			1	%
Commissions and fees		988			1,040			1,476			(5	%)		(33	%)		3,205			4,198			(24	%)
Asset management, distribution and admin. fees		2,257			2,268			2,149			--			5	%		6,677			6,406			4	%
Other		152			170			347			(11	%)		(56	%)		432			110			*
Total non-interest revenues		5,446			7,114			9,665			(23	%)		(44	%)		19,554			26,508			(26	%)
Interest income		1,379			1,323			1,753			4	%		(21	%)		4,244			5,573			(24	%)
Interest expense		1,536			1,484			1,608			4	%		(4	%)		4,621			5,490			(16	%)
Net interest		(157	)		(161	)		145			2	%		*			(377	)		83			*
Net revenues		5,289			6,953			9,810			(24	%)		(46	%)		19,177			26,591			(28	%)
Non-interest expenses:
Compensation and benefits		3,929			3,633			3,638			8	%		8	%		11,993			12,545			(4	%)
Non-compensation expenses:
Occupancy and equipment		388			380			382			2	%		2	%		1,160			1,174			(1	%)
Brokerage, clearing and exchange fees		359			405			443			(11	%)		(19	%)		1,167			1,254			(7	%)
Information processing and communications		493			487			456			1	%		8	%		1,439			1,340			7	%
Marketing and business development		138			156			143			(12	%)		(3	%)		440			436			1	%
Professional services		477			478			440			--			8	%		1,367			1,310			4	%
Other		985			474			623			108	%		58	%		1,948			1,976			(1	%)
Total non-compensation expenses		2,840			2,380			2,487			19	%		14	%		7,521			7,490			--
Total non-interest expenses		6,769			6,013			6,125			13	%		11	%		19,514			20,035			(3	%)
Income (loss) from continuing operations before taxes		(1,480	)		940			3,685			*			*			(337	)		6,556			*
Income tax provision / (benefit) from continuing operations		(524	)		226			1,415			*			*			(244	)		1,709			*
Income (loss) from continuing operations		(956	)		714			2,270			*			*			(93	)		4,847			*
Gain (loss) from discontinued operations after tax		0			36			23			*			*			21			(18	)		*
Net income (loss)	$	(956	)	$	750		$	2,293			*			*		$	(72	)	$	4,829			*
Net income applicable to redeemable noncontrolling interests		8			0			0			*			*			8			0			*
Net income applicable to nonredeemable noncontrolling interests		59			159			94			(63	%)		(37	%)		446			469			(5	%)
Net income (loss) applicable to Morgan Stanley		(1,023	)		591			2,199			*			*			(526	)		4,360			*
Preferred stock dividend / Other		24			27			46			(11	%)		(48	%)		73			2,025			(96	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	(1,047	)	$	564		$	2,153			*			*		$	(599	)	$	2,335			*
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		(1,007	)		563			2,178			*			*			(522	)		4,383			*
Gain (loss) from discontinued operations after tax		(16	)		28			21			*			*			(4	)		(23	)		83	%
Net income (loss) applicable to Morgan Stanley	$	(1,023	)	$	591		$	2,199			*			*		$	(526	)	$	4,360			*
Pre-tax profit margin		*			14	%		38	%								*			25	%
Compensation and benefits as a % of net revenues		74	%		52	%		37	%								63	%		47	%
Non-compensation expenses as a % of net revenues		54	%		34	%		25	%								39	%		28	%
Effective tax rate from continuing operations		35.4	%		24.0	%		38.4	%								72.4	%		26.1	%

Notes:	-	Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance.  Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	During the quarter ended September 30, 2012, Morgan Stanley completed the purchase of an additional 14% stake in Morgan Stanley Smith Barney (Joint Venture) from Citigroup Inc. (Citi), increasing the Firm’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related to its 49% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests. Due to the terms of the revised agreement with Citi, subsequent to the purchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income (loss) applicable to redeemable noncontrolling interests.
	-	The quarter ended September 30, 2012 includes an out of period net income tax provision of approximately $82 million, primarily related to the overstatement of tax benefits associated with repatriated earnings of a foreign subsidiary in 2010.
	-	For the quarter ended June 30, 2012, discontinued operations included operating results related to Saxon (reported in Institutional Securities segment) and a pre-tax gain of $108 million ($73 million after-tax) and other operating income related to the sale of Quilter & Co. Ltd. (Quilter) (reported in the Global Wealth Management business segment).
	-	Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs).

2

MORGAN STANLEY

Quarterly Earnings Per Share

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

	Quarter Ended							Percentage Change From:						Nine Months Ended						Percentage
	Sept 30, 2012			June 30, 2012		Sept 30, 2011		June 30, 2012			Sept 30, 2011			Sept 30, 2012			Sept 30, 2011			Change
Income (loss) from continuing operations	$	(956	)	$	714	$	2,270		*			*		$	(93	)	$	4,847			*
Net income applicable to redeemable noncontrolling interests		8			0		0		*			*			8			0			*
Net income applicable to nonredeemable noncontrolling interests		43			151		92		(72	%)		(53	%)		421			464			(9	%)
Net income (loss) from continuing operations applicable to noncontrolling interest		51			151		92		(66	%)		(45	%)		429			464			(8	%)
Income (loss) from continuing operations applicable to Morgan Stanley		(1,007	)		563		2,178		*			*			(522	)		4,383			*
Less: Preferred Dividends		24			24		24		--			--			72			268			(73	%)
Less: MUFG preferred stock conversion		-			-		-		--			--			-			1,726			*
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income to Participating Restricted Stock Units		(1,031	)		539		2,154		*			*			(594	)		2,389			*
Basic EPS Adjustments:
Less: Allocation of earnings to Participating Restricted Stock Units		0			3		22		*			*			1			31			(97	%)
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(1,031	)	$	536	$	2,132		*			*		$	(595	)	$	2,358			*
Gain (loss) from discontinued operations after tax		0			36		23		*			*			21			(18	)		*
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests		16			8		2		100	%		*			25			5			*
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley		(16	)		28		21		*	��		*			(4	)		(23	)		83	%
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		(16	)		28		21		*			*			(4	)		(23	)		83	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	(1,047	)	$	564	$	2,153		*			*		$	(599	)	$	2,335			*
Average basic common shares outstanding (millions)		1,889			1,885		1,848		--			2	%		1,884			1,590			19	%
Earnings per basic share:
Income from continuing operations	$	(0.55	)	$	0.28	$	1.15		*			*		$	(0.32	)	$	1.48			*
Discontinued operations	$	-		$	0.02	$	0.01		*			*		$	-		$	(0.01	)		*
Earnings per basic share	$	(0.55	)	$	0.30	$	1.16		*			*		$	(0.32	)	$	1.47			*
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(1,031	)	$	536	$	2,132		*			*		$	(595	)	$	2,358			*
Diluted EPS Adjustments:
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders	$	(1,031	)	$	536	$	2,132		*			*		$	(595	)	$	2,358			*
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders		(16	)		28		21		*			*			(4	)		(23	)		83	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	(1,047	)	$	564	$	2,153		*			*		$	(599	)	$	2,335			*
Average diluted common shares outstanding and common stock equivalents (millions)		1,889			1,912		1,869		(1	%)		1	%		1,884			1,608			17	%
Earnings per diluted share:
Income from continuing operations	$	(0.55	)	$	0.28	$	1.14		*			*		$	(0.32	)	$	1.47			*
Discontinued operations	$	-		$	0.01	$	0.01		*			*		$	-		$	(0.02	)		*
Earnings per diluted share	$	(0.55	)	$	0.29	$	1.15		*			*		$	(0.32	)	$	1.45			*

Notes:	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	The Firm calculates earnings per share using the two-class method as described under the accounting guidance for earnings per share.  For further discussion of the Firm's earnings per share calculations, see page 15 of the financial supplement and Note 2 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2011.
	-	Refer to Legal Notice on page 18.

3

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited)

	Quarter Ended									Percentage Change From:						Nine Months Ended				Percentage
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011			Sept 30, 2012		Sept 30, 2011		Change
Regional revenues (1)
Americas	$	4,753		$	5,114		$	6,544			(7	%)		(27	%)	$	14,657	$	18,609		(21	%)
EMEA (Europe, Middle East, Africa)		296			978			2,199			(70	%)		(87	%)		2,428		5,393		(55	%)
Asia		240			861			1,067			(72	%)		(78	%)		2,092		2,589		(19	%)
Consolidated net revenues	$	5,289		$	6,953		$	9,810			(24	%)		(46	%)	$	19,177	$	26,591		(28	%)
Worldwide employees		57,726			58,627			62,245			(2	%)		(7	%)
Firmwide deposits	$	70,757		$	68,252		$	66,184			4	%		7	%
Total assets	$	764,985		$	748,517		$	794,939			2	%		(4	%)
Risk weighted assets (2)	$	319,202		$	314,583		$	346,460			1	%		(8	%)
Global Liquidity Reserve (Billions) (3)	$	170		$	173		$	180			(2	%)		(6	%)
Long-Term Debt Outstanding	$	168,444		$	167,828		$	189,093			--			(11	%)
Maturities of Long-Term Debt Outstanding (next 12 months)	$	20,214		$	25,356		$	38,731			(20	%)		(48	%)
Common equity		60,291			61,333			60,320			(2	%)		--
Preferred equity		1,508			1,508			1,508			--			--
Morgan Stanley shareholders' equity		61,799			62,841			61,828			(2	%)		--
Junior subordinated debt issued to capital trusts		4,833			4,851			4,836			--			--
Less: Goodwill and intangible assets (4)		(7,655	)		(6,568	)		(6,761	)		(17	%)		(13	%)
Tangible Morgan Stanley shareholders' equity	$	58,977		$	61,124		$	59,903			(4	%)		(2	%)
Tangible common equity	$	52,636		$	54,765		$	53,559			(4	%)		(2	%)
Leverage ratio		13.0	x		12.2	x		13.3	x
Tier 1 common capital (5)	$	43,729		$	42,765		$	40,326			2	%		8	%
Tier 1 capital (6)	$	53,353		$	54,245		$	51,613			(2	%)		3	%
Tier 1 common capital ratio		13.7	%		13.6	%		11.6	%
Tier 1 capital ratio		16.7	%		17.2	%		14.9	%
Tier 1 leverage ratio		7.2	%		7.1	%		6.3	%
Period end common shares outstanding (000's)		1,975,040			1,977,403			1,927,540			--			2	%
Book value per common share	$	30.53		$	31.02		$	31.29
Tangible book value per common share	$	26.65		$	27.70		$	27.79

Notes:	-	All data presented in millions except number of employees, liquidity, ratios and book values.
	-	The number of worldwide employees for all periods has been restated to exclude employees of Quilter.
	-	Tangible common equity and tangible book value per common share are non-GAAP financial measures that the Firm considers to be useful measures of capital adequacy. Tangible common equity equals common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction and includes only the Firm’s share of the Joint Venture’s goodwill and intangible assets. Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
	-	Leverage ratio equals total assets divided by tangible Morgan Stanley shareholders' equity.
	-	Tier 1 leverage ratio equals Tier 1 capital divided by adjusted average total assets (which reflects adjustments for disallowed goodwill, certain intangible assets, deferred tax assets and financial and non-financial equity investments).
	-	Refer to End Notes on pages 16-17 and Legal Notice on page 18.

4

MORGAN STANLEY

Quarterly Consolidated Financial Information and Statistical Data

(unaudited, dollars in billions)

	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011			Sept 30, 2012			Sept 30, 2011			Change:
Average Tier 1 Common Capital (1)
Institutional Securities	$	22.0		$	22.3		$	25.9			(1	%)		(15	%)	$	22.2		$	26.5			(16	%)
Global Wealth Management Group		3.8			3.8			3.5			--			9	%		3.7			3.3			12	%
Asset Management		1.3			1.3			1.5			--			(13	%)		1.3			1.5			(13	%)
Parent capital		16.3			15.1			9.4			8	%		73	%		15.1			3.1			*
Total - continuing operations		43.4			42.5			40.3			2	%		8	%		42.3			34.4			23	%
Discontinued operations		0.0			0.0			0.0			--			--			0.0			0.0			--
Firm	$	43.4		$	42.5		$	40.3			2	%		8	%	$	42.3		$	34.4			23	%
Average Common Equity (1)
Institutional Securities	$	28.6		$	29.3		$	32.7			(2	%)		(13	%)	$	29.2		$	33.2			(12	%)
Global Wealth Management Group		13.2			13.3			13.5			(1	%)		(2	%)		13.3			13.3			--
Asset Management		2.4			2.5			2.7			(4	%)		(11	%)		2.4			2.7			(11	%)
Parent capital		16.8			16.3			10.2			3	%		65	%		16.1			3.1			*
Total - continuing operations		61.0			61.4			59.1			(1	%)		3	%		61.0			52.3			17	%
Discontinued operations		0.0			0.0			0.0			--			--			0.0			0.0			--
Firm	$	61.0		$	61.4		$	59.1			(1	%)		3	%	$	61.0		$	52.3			17	%
Return on average Tier 1 common capital
Institutional Securities		*			6	%		32	%								*			10	%
Global Wealth Management Group		16	%		18	%		19	%								18	%		12	%
Asset Management		32	%		4	%		*									14	%		*
Total - continuing operations		*			5	%		21	%								*			9	%
Firm		*			5	%		22	%								*			9	%
Return on average common equity
Institutional Securities		*			5	%		25	%								*			8	%
Global Wealth Management Group		5	%		5	%		5	%								5	%		3	%
Asset Management		17	%		2	%		*									8	%		*
Total - continuing operations		*			4	%		15	%								*			6	%
Firm		*			4	%		15	%								*			6	%

Notes:	-	Beginning in the quarter ended March 31, 2012, Firm and segment required Capital is met by Tier 1 common capital. Prior to the quarter ended March 31, 2012, the Firm's required Capital was met by regulatory Tier 1 capital or Tier 1 common equity. Segment capital for prior quarters has been recast under this framework.  Tier 1 common capital is defined as Tier 1 capital less non-common elements in Tier 1 capital, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust preferred securities and mandatory convertible preferred securities.
	-	The return on average common equity and average Tier 1 common capital are non-GAAP measures that the Firm considers to be useful measures that the Firm and investors use to assess operating performance.
	-	For the nine months ended September 30, 2011, the negative adjustment of $1.7 billion related to the MUFG conversion was allocated to the business segments and included in the numerator for the purpose of calculating the return on average common equity as follows: Institutional Securities $1.4 billion, Global Wealth Management $0.2 billion and Asset Management $0.1 billion. Excluding this negative adjustment, the return on average common equity would have been: Firm: 10%, Institutional Securities: 14%, Global Wealth Management: 5% and Asset Management: 1%, for the nine months ended September 30, 2011.
	-	Refer to End Notes on pages 16-17 and Legal Notice on page 18.

5

MORGAN STANLEY

Quarterly Institutional Securities Income Statement Information

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011			Sept 30, 2012			Sept 30, 2011			Change
Revenues:
Investment banking	$	969		$	884		$	864			10	%		12	%	$	2,704		$	3,345			(19	%)
Principal transactions:
Trading		314			2,254			4,781			(86	%)		(93	%)		4,612			10,636			(57	%)
Investments		74			46			(119	)		61	%		*			71			174			(59	%)
Commissions and fees		468			509			814			(8	%)		(43	%)		1,525			2,088			(27	%)
Asset management, distribution and admin. fees		41			33			30			24	%		37	%		106			95			12	%
Other		73			51			259			43	%		(72	%)		182			(251	)		*
Total non-interest revenues		1,939			3,777			6,629			(49	%)		(71	%)		9,200			16,087			(43	%)
Interest income		986			931			1,374			6	%		(28	%)		3,062			4,439			(31	%)
Interest expense		1,549			1,474			1,593			5	%		(3	%)		4,629			5,389			(14	%)
Net interest		(563	)		(543	)		(219	)		(4	%)		(157	%)		(1,567	)		(950	)		(65	%)
Net revenues		1,376			3,234			6,410			(57	%)		(79	%)		7,633			15,137			(50	%)
Compensation and benefits		1,638			1,425			1,520			15	%		8	%		5,171			5,653			(9	%)
Non-compensation expenses		1,655			1,301			1,443			27	%		15	%		4,183			4,120			2	%
Total non-interest expenses		3,293			2,726			2,963			21	%		11	%		9,354			9,773			(4	%)
Income (loss) from continuing operations before taxes		(1,917	)		508			3,447			*			*			(1,721	)		5,364			*
Income tax provision / (benefit) from continuing operations		(661	)		72			1,315			*			*			(694	)		1,299			*
Income (loss) from continuing operations		(1,256	)		436			2,132			*			*			(1,027	)		4,065			*
Gain (loss) from discontinued operations after tax		(17	)		(29	)		(11	)		41	%		(55	%)		(63	)		(64	)		2	%
Net income (loss)		(1,273	)		407			2,121			*			*			(1,090	)		4,001			*
Net income applicable to redeemable noncontrolling interests		-			-			-			--			--			-			-			--
Net income applicable to nonredeemable noncontrolling interests		12			55			60			(78	%)		(80	%)		156			238			(34	%)
Net income (loss) applicable to Morgan Stanley	$	(1,285	)	$	352		$	2,061			*			*		$	(1,246	)	$	3,763			*
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		(1,268	)		381			2,072			*			*			(1,183	)		3,827			*
Gain (loss) from discontinued operations after tax		(17	)		(29	)		(11	)		41	%		(55	%)		(63	)		(64	)		2	%
Net income (loss) applicable to Morgan Stanley	$	(1,285	)	$	352		$	2,061			*			*		$	(1,246	)	$	3,763			*
Return on average common equity
from continuing operations		*			5	%		25	%								*			8	%
Pre-tax profit margin		*			16	%		54	%								*			35	%
Compensation and benefits as a % of net revenues		119	%		44	%		24	%								68	%		37	%

Notes:	-	Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	The quarter ended September 30, 2012 includes an out of period net income tax provision of approximately $82 million, primarily related to the overstatement of tax benefits associated with repatriated earnings of a foreign subsidiary in 2010.
	-	The negative adjustment related to the MUFG conversion was included in the numerator in the calculation of the return on average common equity. Excluding this negative adjustment, the return on average common equity for Institutional Securities would have been 14% for the nine months ended September 30, 2011.
	-	For the quarter ended June 30, 2012, discontinued operations included operating results related to Saxon.
	-	Refer to Legal Notice on page 18.

6

MORGAN STANLEY

Quarterly Financial Information and Statistical Data

Institutional Securities

(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011			Sept 30, 2012			Sept 30, 2011			Change
Investment Banking
Advisory revenues	$	339		$	263		$	413			29	%		(18	%)	$	915		$	1,331			(31	%)
Underwriting revenues
Equity		199			283			239			(30	%)		(17	%)		654			943			(31	%)
Fixed income		431			338			212			28	%		103	%		1,135			1,071			6	%
Total underwriting revenues		630			621			451			1	%		40	%		1,789			2,014			(11	%)
Total investment banking revenues	$	969		$	884		$	864			10	%		12	%	$	2,704		$	3,345			(19	%)
Sales & Trading
Equity	$	587		$	1,218		$	1,961			(52	%)		(70	%)	$	3,257		$	5,516			(41	%)
Fixed Income & Commodities		(163	)		1,046			3,889			*			*			1,880			7,764			(76	%)
Other		(164	)		(11	)		(444	)		*			63	%		(461	)		(1,411	)		67	%
Total sales & trading net revenues	$	260		$	2,253		$	5,406			(88	%)		(95	%)	$	4,676		$	11,869			(61	%)
Investments & Other
Investments	$	74		$	46		$	(119	)		61	%		*		$	71		$	174			(59	%)
Other		73			51			259			43	%		(72	%)		182			(251	)		*
Total investments & other revenues	$	147		$	97		$	140			52	%		5	%	$	253		$	(77	)		*
Total Institutional Securities net revenues	$	1,376		$	3,234		$	6,410			(57	%)		(79	%)	$	7,633		$	15,137			(50	%)

Notes:	-	For the periods noted below, sales and trading net revenues included positive (negative) revenue related to DVA as follows:
		September 30, 2012: Total QTD: $(2,262) million; Fixed Income & Commodities: $(1,621) million; Equity: $(641) million
		June 30, 2012: Total QTD: $350 million; Fixed Income & Commodities: $276 million; Equity: $74 million
		September 30, 2011: Total QTD: $3,410 million; Fixed Income & Commodities: $2,790 million; Equity: $620 million
		September 30, 2012: Total YTD: $(3,891) million; Fixed Income & Commodities: $(2,942) million; Equity: $(949) million
		September 30, 2011: Total YTD: $3,465 million; Fixed Income & Commodities: $2,823 million; Equity: $642 million
	-	Refer to Legal Notice on page 18.

7

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Institutional Securities
(unaudited, dollars in millions)
	Current VaR Methodology						Prior VaR Methodology
	Quarter Ended						Quarter Ended
	Sept 30, 2012		June 30, 2012		Sept 30, 2011		Sept 30, 2012		June 30, 2012		Sept 30, 2011
Average Daily 95% / One-Day Value-at-Risk ("VaR")
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread	$	53	$	63	$	58	$	76	$	75	$	77
Equity price		26		29		30		32		36		35
Foreign exchange rate		12		13		18		17		16		19
Commodity price		22		27		30		27		34		32
Aggregation of Primary Risk Categories		58		68		75		79		81		93
Credit Portfolio VaR		23		26		69		28		33		104
Trading VaR	$	63	$	76	$	99	$	82	$	91	$	130

Notes:	-	VaR represents the loss amount that one would not expect to exceed, on average, more than five times every one hundred trading days in the Firm's trading positions if the portfolio were held constant for a one-day period. The Firm has modified its VaR model to make it more responsive to recent market conditions. The change has been approved by Firm’s regulators for use in the Firm's regulatory capital calculations. Further discussion of the calculation of VaR and the limitations of the Firm's 2012 VaR methodology, will be disclosed in Part I, Item 3 "Quantitative and Qualitative Disclosures about Market Risk" included in the Firm's 10-Q for the quarter ended September 30, 2012.
	-	Refer to Legal Notice on page 18.

8

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Institutional Securities - Corporate Loans and Commitments
(unaudited, dollars in billions)
	Quarter Ended									Percentage Change From:
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011
Loans and commitments at fair value
Corporate funded loans:
Investment grade	$	4.2		$	5.2		$	5.6			(19	%)		(25	%)
Non-investment grade		5.6			5.9			7.5			(5	%)		(25	%)
Total corporate funded loans	$	9.8		$	11.1		$	13.1			(12	%)		(25	%)
Corporate lending commitments:
Investment grade	$	24.2		$	29.5		$	52.6			(18	%)		(54	%)
Non-investment grade		8.2			9.0			17.1			(9	%)		(52	%)
Total corporate lending commitments	$	32.4		$	38.5		$	69.7			(16	%)		(54	%)
Corporate funded loans plus lending commitments:
Investment grade	$	28.4		$	34.7		$	58.2			(18	%)		(51	%)
Non-investment grade		13.8			14.9			24.6			(7	%)		(44	%)
Total loans and commitments at fair value	$	42.2		$	49.6		$	82.8			(15	%)		(49	%)
% investment grade		67	%		70	%		70	%
% non-investment grade		33	%		30	%		30	%
Held for investment (HFI) portfolio	$	40.5		$	32.9		$	4.0			23	%		*
Held for sale (HFS) portfolio	$	9.7		$	8.4		$	-			15	%		*
Total Corporate Lending Exposure	$	92.4		$	90.9		$	86.8			2	%		6	%
Hedges	$	19.6		$	24.4		$	41.4			(20	%)		(53	%)

Notes:	-	In connection with certain of its Institutional Securities business activities, the Firm provides loans or lending commitments to select clients related to its event driven or relationship lending activities.  For a further discussion of this activity, see the Firm's Annual Report on Form 10-K for the year ended December 31, 2011.
	-	Total Corporate Lending exposure represents the Firm's potential loss assuming the market price of funded loans and lending commitments was zero.
	-	On September 30, 2012, June 30, 2012 and September 30, 2011, the "event-driven" portfolio of pipeline commitments and closed deals to non-investment grade borrowers were $6.5 billion, $4.8 billion and $7.0 billion, respectively.
	-	On September 30, 2012, June 30, 2012 and September 30, 2011, the HFI portfolio allowance for loan losses for funded loans was $85 million, $58 million and $2 million, respectively, and the HFI portfolio allowance for credit losses for loan commitments was $60 million, $27 million and $10 million, respectively.
	-	Held for sale portfolio reflects loans and commitments carried at the lower of cost or fair market value.
	-	The hedge balance reflects the notional amount utilized by the corporate lending business.
	-	Refer to Legal Notice on page 18.

9

MORGAN STANLEY
Quarterly Global Wealth Management Group Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011			Sept 30, 2012			Sept 30, 2011			Change
Revenues:
Investment banking	$	199		$	223		$	162			(11	%)		23	%	$	627		$	585			7	%
Principal transactions:
Trading		312			222			184			41	%		70	%		905			806			12	%
Investments		4			1			(3	)		*			*			7			6			17	%
Commissions and fees		521			531			662			(2	%)		(21	%)		1,682			2,111			(20	%)
Asset management, distribution and admin. fees		1,810			1,857			1,753			(3	%)		3	%		5,406			5,170			5	%
Other		80			80			95			--			(16	%)		217			332			(35	%)
Total non-interest revenues		2,926			2,914			2,853			--			3	%		8,844			9,010			(2	%)
Interest income		507			489			466			4	%		9	%		1,486			1,383			7	%
Interest expense		97			98			93			(1	%)		4	%		275			323			(15	%)
Net interest		410			391			373			5	%		10	%		1,211			1,060			14	%
Net revenues		3,336			3,305			3,226			1	%		3	%		10,055			10,070			--
Compensation and benefits		2,050			1,994			1,986			3	%		3	%		6,149			6,227			(1	%)
Non-compensation expenses		1,047			918			884			14	%		18	%		2,887			2,826			2	%
Total non-interest expenses		3,097			2,912			2,870			6	%		8	%		9,036			9,053			--
Income (loss) from continuing operations before taxes		239			393			356			(39	%)		(33	%)		1,019			1,017			--
Income tax provision / (benefit) from continuing operations		93			148			139			(37	%)		(33	%)		362			365			(1	%)
Income (loss) from continuing operations		146			245			217			(40	%)		(33	%)		657			652			1	%
Gain (loss) from discontinued operations after tax		5			61			4			(92	%)		25	%		67			10			*
Net income (loss)		151			306			221			(51	%)		(32	%)		724			662			9	%
Net income applicable to redeemable noncontrolling interests		8			0			0			*			*			8			0			*
Net income applicable to nonredeemable noncontrolling interests		(3	)		81			52			*			*			152			130			17	%
Net income (loss) applicable to Morgan Stanley	$	146		$	225		$	169			(35	%)		(14	%)	$	564		$	532			6	%
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		157			172			167			(9	%)		(6	%)		522			527			(1	%)
Gain (loss) from discontinued operations after tax		(11	)		53			2			*			*			42			5			*
Net income (loss) applicable to Morgan Stanley	$	146		$	225		$	169			(35	%)		(14	%)	$	564		$	532			6	%
Return on average common equity
from continuing operations		5	%		5	%		5	%								5	%		3	%
Pre-tax profit margin		7	%		12	%		11	%								10	%		10	%
Compensation and benefits as a % of net revenues		61	%		60	%		62	%								61	%		62	%

Notes:	-	Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	The quarter and nine months ended September 30, 2012, include non-recurring costs of $193 million related to the MSWM integration and the purchase of an additional 14% stake in the Joint Venture.
	-	During the quarter ended September 30, 2012, Morgan Stanley completed the purchase of an additional 14% stake in the Joint Venture from Citi, increasing the Firm’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related to its 49% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests. Due to the terms of the revised agreement with Citi, subsequent to the purchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income (loss) applicable to redeemable noncontrolling interests.
	-	The negative adjustment related to the MUFG conversion was included in the numerator in the calculation of the return on average common equity. Excluding this negative adjustment,
		the return on average common equity for Global Wealth Management would have been 5% for the nine months ended September 30, 2011.
	-	For the quarter ended June 30, 2012, discontinued operations included a pre-tax gain of $108 million ($73 million after-tax) and other operating income related to the sale of Quilter.
	-	Refer to Legal Notice on page 18.

10

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Global Wealth Management Group
(unaudited)
	Quarter Ended									Percentage Change From:
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011
Global representatives		16,829			16,934			17,661			(1	%)		(5	%)
Annualized revenue per global
representative (000's)	$	790		$	775		$	724			2	%		9	%
Assets by client segment (billions)
$10m or more		572			560			480			2	%		19	%
$1m - $10m		723			704			661			3	%		9	%
Subtotal - > $1m		1,295			1,264			1,141			2	%		13	%
$100k - $1m		426			399			374			7	%		14	%
< $100k		47			44			38			7	%		24	%
Total client assets (billions)	$	1,768		$	1,707		$	1,553			4	%		14	%
% of assets by client segment > $1m		73	%		74	%		73	%
Fee-based client account assets (billions)	$	556		$	526		$	455			6	%		22	%
Fee-based assets as a % of client assets		31	%		31	%		29	%
Bank deposit program (millions)	$	117,552		$	112,418		$	109,049			5	%		8	%
Client assets per global
representative (millions)	$	105		$	101		$	88			4	%		19	%
Global fee based asset flows (billions)	$	7.5		$	4.1		$	9.8			83	%		(23	%)
Global retail locations		727			740			760			(2	%)		(4	%)

Notes:	-	Annualized revenue per global representative is defined as annualized revenue divided by average global representative headcount.
	-	Fee-based client account assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
	-	For the quarters ended September 30, 2012, June 30, 2012 and September 30, 2011, approximately $60 billion, $58 billion and $56 billion, respectively, of the assets in the bank deposit program are attributable to Morgan Stanley.
	-	Global fee based asset flows represent the net asset flows, excluding interest and dividends, in client accounts where the basis of payment for services is a fee calculated on those assets.
	-	Client assets per global representative represents total client assets divided by period end global representative headcount.
	-	Refer to Legal Notice on page 18.

11

MORGAN STANLEY
Quarterly Asset Management Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:					Nine Months Ended						Percentage
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012		Sept 30, 2011			Sept 30, 2012			Sept 30, 2011			Change
Revenues:
Investment banking	$	4		$	1		$	5		*			(20	%)	$	12		$	10			20	%
Principal transactions:
Trading		(17	)		(3	)		(3	)	*			*			(26	)		(15	)		(73	%)
Investments (1)		212			16			(176	)	*			*			360			253			42	%
Commissions and fees		0			0			0		--			--			0			0			--
Asset management, distribution and admin. fees		437			408			392		7	%		11	%		1,256			1,203			4	%
Other		(1	)		43			(4	)	*			75	%		39			39			--
Total non-interest revenues		635			465			214		37	%		197	%		1,641			1,490			10	%
Interest income		2			2			3		--			(33	%)		7			10			(30	%)
Interest expense		6			11			12		(45	%)		(50	%)		28			37			(24	%)
Net interest		(4	)		(9	)		(9	)	56	%		56	%		(21	)		(27	)		22	%
Net revenues		631			456			205		38	%		*			1,620			1,463			11	%
Compensation and benefits		241			214			132		13	%		83	%		673			665			1	%
Non-compensation expenses		192			199			191		(4	%)		1	%		578			623			(7	%)
Total non-interest expenses		433			413			323		5	%		34	%		1,251			1,288			(3	%)
Income (loss) from continuing operations before taxes		198			43			(118	)	*			*			369			175			111	%
Income tax provision / (benefit) from continuing operations		44			6			(39	)	*			*			88			45			96	%
Income (loss) from continuing operations		154			37			(79	)	*			*			281			130			116	%
Gain (loss) from discontinued operations after tax		12			0			30		*			(60	%)		13			36			(64	%)
Net income (loss)		166			37			(49	)	*			*			294			166			77	%
Net income applicable to redeemable noncontrolling interests		0			0			0		--			--			-			-			--
Net income applicable to nonredeemable noncontrolling interests		50			23			(18	)	117	%		*			138			101			37	%
Net income (loss) applicable to Morgan Stanley	$	116		$	14		$	(31	)	*			*		$	156		$	65			140	%
Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations		104			14			(61	)	*			*			143			29			*
Gain (loss) from discontinued operations after tax		12			0			30		*			(60	%)		13			36			(64	%)
Net income (loss) applicable to Morgan Stanley	$	116		$	14		$	(31	)	*			*		$	156		$	65			140	%
Return on average common equity
from continuing operations		17	%		2	%		*								8	%		*
Pre-tax profit margin		31	%		9	%		*								23	%		12	%
Compensation and benefits as a % of net revenues		38	%		47	%		64	%							42	%		46	%

Notes:	-	Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemable noncontrolling interests.
	-	The negative adjustment related to the MUFG conversion was included in the numerator in the calculation of the return on average common equity. Excluding this negative adjustment, the return on average common equity for Asset Management would have been 1% for the nine months ended September 30, 2011.
	-	Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
	-	Refer to End Notes on pages 16-17 and Legal Notice on page 18.

12

MORGAN STANLEY
Quarterly Financial Information and Statistical Data
Asset Management
(unaudited)
	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sept 30, 2012			June 30, 2012			Sept 30, 2011			June 30, 2012			Sept 30, 2011			Sept 30, 2012			Sept 30, 2011			Change
Net Revenues (millions)
Traditional Asset Management	$	372		$	337		$	291			10	%		28	%	$	1,051		$	983			7	%
Real Estate Investing (1)		125			122			52			2	%		140	%		393			331			19	%
Merchant Banking		134			(3	)		(138	)		*			*			176			149			18	%
Total Asset Management	$	631		$	456		$	205			38	%		*		$	1,620		$	1,463			11	%
Assets under management or supervision (billions)
Net flows by asset class (2)
Traditional Asset Management
Equity	$	(1.8	)	$	1.2		$	(0.7	)		*			(157	%)	$	(1.5	)	$	2.7			*
Fixed Income		(3.4	)		(0.4	)		(1.0	)		*			*			(4.5	)		(4.0	)		(13	%)
Liquidity		15.9			11.5			(4.7	)		38	%		*			28.6			13.4			113	%
Alternatives		0.3			0.8			0.0			(63	%)		*			1.0			0.1			*
Total Traditional Asset Management		11.0			13.1			(6.4	)		(16	%)		*			23.6			12.2			93	%
Real Estate Investing		(0.2	)		0.0			0.6			*			*			0.5			0.7			(29	%)
Merchant Banking		0.0			0.0			0.0			--			--			0.0			(1.6	)		*
Total net flows	$	10.8		$	13.1		$	(5.8	)		(18	%)		*		$	24.1		$	11.3			113	%
Assets under management or supervision by asset class (3)
Traditional Asset Management
Equity	$	117		$	113		$	98			4	%		19	%
Fixed Income		57			58			58			(2	%)		(2	%)
Liquidity		102			86			67			19	%		52	%
Alternatives		27			26			18			4	%		50	%
Total Traditional Asset Management		303			283			241			7	%		26	%
Real Estate Investing		19			19			18			--			6	%
Merchant Banking		9			9			9			--			--
Total Assets Under Management or Supervision	$	331		$	311		$	268			6	%		24	%
Share of minority stake assets		5			5			6			--			(17	%)

Notes:	-	The alternatives asset class includes a range of investment products such as funds of hedge funds, funds of private equity funds and funds of real estate funds.
	-	The share of minority stake assets represents Asset Management's proportional share of assets managed by entities in which it owns a minority stake.
	-	Refer to End Notes on pages 16-17 and Legal Notice on page 18.

13

This page represents an addendum to the 3Q 2012 Financial Supplement, Appendix I
MORGAN STANLEY
Country Risk Exposure (1) - European Peripherals and France
As of September 30, 2012
(unaudited, dollars in millions)
				Net								Exposure
	Net			Counterparty		Funded		Unfunded		CDS		Before
	Inventory (2)			Exposure (3)		Lending		Commitments		Adjustment (4)		Hedges			Hedges (5)			Net Exposure
Greece
Sovereigns	$	11		$	6	$	-	$	-	$	-	$	17		$	-		$	17
Non-sovereigns		76			4		34		-		-		114			(41	)		73
Sub-total		87			10		34		-		-		131			(41	)		90
Ireland
Sovereigns		24			4		-		-		5		33			7			40
Non-sovereigns		74			75		72		-		17		238			(20	)		218
Sub-total		98			79		72		-		22		271			(13	)		258
Italy
Sovereigns		809			195		-		-		383		1,387			(207	)		1,180
Non-sovereigns		213			541		570		705		210		2,239			(518	)		1,721
Sub-total		1,022			736		570		705		593		3,626			(725	)		2,901
Spain
Sovereigns		(23	)		8		-		-		467		452			(7	)		445
Non-sovereigns		246			311		84		820		189		1,650			(336	)		1,314
Sub-total		223			319		84		820		656		2,102			(343	)		1,759
Portugal
Sovereigns		(147	)		29		-		-		30		(88	)		(86	)		(174	)
Non-sovereigns		(41	)		17		96		-		58		130			(77	)		53
Sub-total		(188	)		46		96		-		88		42			(163	)		(121	)
Total Euro Peripherals (6) (7)
Sovereigns		674			242		-		-		885		1,801			(293	)		1,508
Non-sovereigns		568			948		856		1,525		474		4,371			(992	)		3,379
Sub-total	$	1,242		$	1,190	$	856	$	1,525	$	1,359	$	6,172		$	(1,285	)	$	4,887
France (6) (7)
Sovereigns		(1,998	)		17		-		-		17		(1,964	)		(249	)		(2,213	)
Non-sovereigns		(421	)		2,096		253		1,872		351		4,151			(891	)		3,260
Sub-total	$	(2,419	)	$	2,113	$	253	$	1,872	$	368	$	2,187		$	(1,140	)	$	1,047

(1)	Country risk exposure is measured in accordance with the Firm’s internal risk management standards and includes obligations from sovereign and non-sovereigns, which includes governments, corporations, clearinghouses and financial institutions.
(2)	Net inventory representing exposure to both long and short single name and index positions (i.e., bonds and equities at fair value and CDS based on notional amount assuming zero recovery adjusted for any fair value receivable or payable).
(3)	Net counterparty exposure (i.e., repurchase transactions, securities lending and OTC derivatives) taking into consideration legally enforceable master netting agreements and collateral.
(4)	CDS adjustment represents credit protection purchased from European peripheral banks on European peripheral sovereign and financial institution risk, or French banks on French sovereign and financial institution risk. Based on the CDS notional amount assuming zero recovery adjusted for any fair value receivable or payable.
(5)	Represents CDS hedges on net counterparty exposure and funded lending. Based on the CDS notional amount assuming zero recovery adjusted for any fair value receivable or payable.
(6)	In addition, at September 30, 2012, the Firm had European Peripherals and French exposure for overnight deposits with banks of approximately $149 million and $27 million, respectively.
(7)	At September 30, 2012, the benefit of collateral received against counterparty credit exposure was $4.7 billion in the European Peripherals with 98% of such collateral consisting of cash and German government obligations, and $7.5 billion in France with nearly all collateral consisting of cash and US government obligations. These amounts do not include collateral received on secured financing transactions.
	- Refer to Legal Notice on page 18.

14

This page represents an addendum to the 3Q 2012 Financial Supplement, Appendix II
MORGAN STANLEY
Earnings Per Share Calculation Under Two-Class Method
Three Months Ended September 30, 2012
(unaudited, in millions, except for per share data)
	Allocation of net income from continuing operations
	(A)	(B)	(C)	(D)	(E)	(F)		(G)
						(D)+(E)		(F)/(A)
	Weighted Average # of Shares	% Allocation (2)	Net income from continuing operations applicable to Morgan Stanley (3)	Distributed Earnings (4)	Undistributed Earnings (5)	Total Earnings Allocated		Basic EPS (8)
Basic Common Shares	1,889	100%		$95	($1,126)	($1,031)	(6)	($0.55)
Participating Restricted Stock Units (1)	8	0%		$0	$0	$0	(7)	N/A
	1,897	100%	($1,031)	$95	($1,126)	($1,031)
	Allocation of gain (loss) from discontinued operations
	(A)	(B)	(C)	(D)	(E)	(F)		(G)
						(D)+(E)		(F)/(A)
	Weighted Average # of Shares	% Allocation (2)	Gain (loss) from Discontinued Operations Applicable to Common Shareholders, after Tax (3)	Distributed Earnings (4)	Undistributed Earnings (5)	Total Earnings Allocated		Basic EPS (8)
Basic Common Shares	1,889	100%		$0	($16)	($16)	(6)	$0.00
Participating Restricted Stock Units (1)	8	0%		$0	$0	$0	(7)	N/A
	1,897	100%	($16)	$0	($16)	($16)
	Allocation of net income applicable to common shareholders
	(A)	(B)	(C)	(D)	(E)	(F)		(G)
						(D)+(E)		(F)/(A)
	Weighted Average # of Shares	% Allocation (2)	Net income applicable to Morgan Stanley (3)	Distributed Earnings (4)	Undistributed Earnings (5)	Total Earnings Allocated		Basic EPS (8)
Basic Common Shares	1,889	100%		$95	($1,142)	($1,047)	(6)	($0.55)
Participating Restricted Stock Units (1)	8	0%		$0	$0	$0	(7)	N/A
	1,897	100%	($1,047)	$95	($1,142)	($1,047)

Note: -  Refer to End Notes on pages 16-17 and Legal Notice on page 18.

15

	MORGAN STANLEY
	End Notes
Page 4:
(1)	Reflects the regional view of the Firm's consolidated net revenues, on a managed basis, based on the following methodology: Institutional
	Securities: investment banking - client location, equity capital markets - client location, debt capital markets - revenue recording location,
	sales & trading - trading desk location. Global Wealth Management: financial advisor location. Asset Management: client location except for the
	merchant banking business which is based on asset location.
(2)	Risk weighted assets (RWA) are calculated in accordance with the regulatory capital requirements of the Federal Reserve. RWAs reflect both on
	and off-balance sheet risk of the Firm. Market RWAs reflect capital charges attributable to the risk of loss resulting from adverse changes
	in market prices and other factors. Credit RWAs reflect capital charges attributable to the risk of loss arising from a borrower or counterparty
	failing to meet its financial obligations.
(3)	The Global Liquidity Reserve, which is held within the Parent and operating subsidiaries, is comprised of highly liquid and diversified cash and cash
	equivalents and unencumbered securities. Eligible unencumbered securities include U.S. government securities, U.S. agency securities, U.S.
	agency mortgage-backed securities, FDIC-guaranteed corporate debt and non-U.S. government securities. For a further discussion of the Firm's
	Global Liquidity Reserve, see the Firm's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.
(4)	Goodwill and intangible balances net of allowable mortgage servicing rights deduction for quarters ended September 30, 2012, June 30, 2012
	and September 30, 2011 of $6 million, $7 million and $120 million, respectively.
(5)	In accordance with the Federal Reserve Board's formalized definition as of December 30, 2011, Tier 1 common capital is defined as Tier 1
	capital less non-common elements in Tier 1 capital, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust
	preferred securities and mandatory convertible preferred securities. Prior periods have been recast to conform to this definition. This computation
	is a preliminary estimate as of October 18, 2012 (the date of this release) and could be subject to revision in Morgan Stanley’s Quarterly Report on
	Form 10-Q for the quarter ended September 30, 2012.
(6)	Tier 1 capital consists predominately of common shareholders' equity as well as qualifying preferred stock and qualifying restricted core capital
	elements (trust preferred securities and noncontrolling interests) less goodwill, non-servicing intangible assets (excluding allowable mortgage
	servicing rights), net deferred tax assets (recoverable in excess of one year), an after-tax debt valuation adjustment and certain other deductions,
	including equity investments. This computation is a preliminary estimate as of October 18, 2012 (the date of this release) and could be subject to
	revision in Morgan Stanley’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.
Page 5:
(1)	The Firm’s capital estimation is based on the Required Capital framework, an internal capital adequacy measure which considers a risk-based
	going concern capital after absorbing potential losses from extreme stress events at a point in time. Beginning in the quarter ended March 31,
	2012, the Firm's Required Capital is met by Tier 1 common capital.  Tier 1 common capital and common equity attribution to business segment is
	based on capital usage calculated by the framework.  The difference between the Firm's Tier 1 common capital and aggregate Required Capital is
	the Firm's Parent capital. The Firm generally holds parent capital for prospective regulatory requirements, including Basel III, organic growth,
	acquisitions and other capital needs.  The Required Capital framework will continue to evolve over time in response to changes in the business
	and regulatory environment and to incorporate enhancements in modeling techniques.
Page 12:
(1)	The quarters ended September 30, 2012, June 30, 2012 and September 30, 2011 include investment gains (losses) for certain funds included in
	the Firm's consolidated financial statements.  The limited partnership interests in these gains were reported in net income (loss) applicable to
	noncontrolling interests.
Page 13:
(1)	Real Estate Investing revenues include gains or losses related to principal investments held by certain consolidated real estate funds.
	These gains or losses are offset in the net income (loss) applicable to noncontrolling interest. The investment gains (losses) for the
	quarters ended September 30, 2012, June 30, 2012 and September 30, 2011 are $51 million, $24 million and $(13) million, respectively.
(2)	Net Flows by region [inflow / (outflow)] for the quarters ended September 30, 2012, June 30, 2012 and September 30, 2011 are:
	North America: $9.1 billion, $7.0 billion and $(4.2) billion
	International: $1.7 billion, $6.1 billion and $(1.6) billion
(3)	Assets under management or supervision by region for the quarters ended September 30, 2012, June 30, 2012 and September 30, 2011 are:
	North America: $212 billion, $198 billion and $176 billion
	International: $119 billion, $113 billion and $92 billion

16

MORGAN STANLEY

End Notes

Page 15:
(1)	Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid)
	are participating securities and are included in the computation of EPS pursuant to the two-class method.  Restricted Stock Units ("RSUs")
	that pay dividend equivalents subject to vesting are not deemed participating securities and are included in diluted shares outstanding
	(if dilutive) under the treasury stock method.
(2)	The percentage of weighted basic common shares and participating RSUs to the total weighted average of basic common shares
	and participating RSUs.
(3)	Represents net income from continuing operations, gain (loss) from discontinued operations (after-tax), and net income applicable
	to Morgan Stanley for the quarter ended September 30, 2012 prior to allocations to participating RSUs.
(4)	Distributed earnings represent the dividends declared on common shares and participating RSUs for the quarter ended September 30, 2012.
	The amount of dividends declared is based upon the number of common shares outstanding as of the dividend record date. During
	the quarter ended September 30, 2012, a $0.05 dividend was declared on common shares outstanding and participating RSUs.
(5)	The two-class method assumes all of the earnings for the reporting period are distributed and allocated to the participating RSUs
	what they would be entitled to based on their contractual rights and obligations of the participating security.
(6)	Total income applicable to common shareholders to be allocated to the common shares in calculating basic and diluted EPS for
	common shares.
(7)	Total income applicable to common shareholders to be allocated to the participating RSUs reflected as a deduction to the numerator in
	determining basic and diluted EPS for common shares.
(8)	Basic and diluted EPS data are required to be presented only for classes of common stock, as described under the accounting guidance
	for earnings per share.

17

MORGAN STANLEY

Legal Notice

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

The information should be read in conjunction with the Firm's third quarter earnings press release issued October 18, 2012.

18