Morgan Stanley Reports Fourth Quarter and Full Year 2012:

  Morgan Stanley Reports Fourth Quarter and Full Year 2012:

  *Fourth Quarter Net Revenues of $7.0 Billion Included the Negative Impact
    of $511 Million from the Tightening of Morgan Stanley’s Debt-Related
    Credit Spreads (DVA);^1 Income from Continuing Operations of $0.28 per
    Diluted Share
  *Excluding DVA, Fourth Quarter Net Revenues were $7.5 Billion and Income
    from Continuing Operations was $0.45 per Diluted Share^2, 3
  *Fourth Quarter Global Wealth Management Pre-Tax Margin of 17%, Highest
    Since the Inception of the Joint Venture; Investment Banking Ranked #1 in
    Global IPOs and #2 in Global Announced M&A and Global Equity;^4 Solid
    Results in Equity Sales and Trading
  *Full Year Net Revenues of $26.1 Billion Included the Negative Impact of
    $4.4 Billion from DVA; Loss from Continuing Operations of $0.03 per
    Diluted Share; Excluding DVA, Net Revenues were $30.5 Billion and Income
    from Continuing Operations was $1.59 per Diluted Share^2, 3

Business Wire

NEW YORK -- January 18, 2013

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

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

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

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

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

                                                                           
Summary of Firm Results

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

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

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

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

Fourth Quarter Business Overview

  *Global Wealth Management Group net revenues were $3.5 billion and pre-tax
    margin was 17%.^9 Average annualized revenue per global representative was
    $824,000, highest since the inception of the Joint Venture.
  *Institutional Securities net revenues excluding DVA were $3.5 billion
    reflecting strong performance in Investment Banking, solid results in
    Equity sales and trading and a decline in Fixed Income & Commodities sales
    and trading.
  *Asset Management reported net revenues of $599 million with assets under
    management or supervision of $338 billion.

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

FOURTH QUARTER RESULTS

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

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

INSTITUTIONAL SECURITIES

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

  *Advisory revenues were $454 million compared with $406 million a year ago
    reflecting higher levels of market activity. Equity underwriting revenues
    were $237 million compared with $189 million a year ago reflecting higher
    market volume. Fixed income underwriting revenues were $534 million, our
    highest reported quarter, compared with $288 million a year ago.
  *Fixed Income & Commodities sales and trading net revenues were $811
    million compared with losses of $493 million a year ago. Fixed Income,
    after considering the impact of MBIA, reflected a decline in rates, partly
    offset by relative improvement in credit products. Commodities results
    declined meaningfully in a challenging market.^10
  *Equity sales and trading net revenues of $1.3 billion were essentially
    unchanged from the prior year quarter, although stronger performances were
    noted in the derivatives and prime brokerage businesses.^10
  *Compensation expense for the current quarter was $1.5 billion compared
    with $1.6 billion in the prior year quarter. Non-compensation expenses of
    $1.4 billion increased from $1.3 billion a year ago.
  *Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95%
    confidence level was $78 million compared with $63 million in the third
    quarter of 2012 and $105 million in the fourth quarter of the prior
    year.^11

                                              
Summary of Global Wealth Management Group Results

(dollars in millions)
                                       
                   Net            Pre-Tax
                  Revenues    Income ^(1) 
   4Q 2012        $3,461         $581
   3Q 2012        $3,336         $239
   4Q 2011     $3,219      $238         
                                                

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

GLOBAL WEALTH MANAGEMENT GROUP

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

  *Asset management fee revenues of $1.9 billion increased 16% from last
    year’s fourth quarter primarily reflecting an increase in fee based assets
    and positive flows.
  *Transactional revenues^13 of $1.1 billion decreased 3% from a year ago
    reflecting reduced commissions and fees and a decrease in principal
    trading revenues driven by lower gains from investments associated with
    the Firm’s deferred compensation and co-investment plans, offset by higher
    investment banking revenues.
  *Compensation expense for the current quarter was $2.0 billion compared
    with $2.1 billion a year ago. Non-compensation expenses were $901 million
    compared with $922 million a year ago.
  *Total client assets were $1.8 trillion at quarter end. Client assets in
    fee based accounts were $573 billion, or 32% of total client assets.
    Global fee based asset flows for the quarter were $3.7 billion.
  *Global representatives of 16,780 were relatively unchanged from the prior
    quarter. Average annualized revenue per global representative of $824,000
    and total client assets per global representative of $106 million
    increased 13% and 14%, respectively, compared with the prior year quarter.

                                       
Summary of Asset Management Results

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

ASSET MANAGEMENT

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

  *Net revenues of $599 million increased from $424 million in last year’s
    fourth quarter primarily reflecting higher results in the Traditional
    Asset Management business and gains on principal investments in the
    Merchant Banking and Real Estate Investing businesses.^15
  *Compensation expense for the current quarter was $168 million compared
    with $183 million a year ago. Non-compensation expenses of $210 million
    increased from $163 million a year ago on higher brokerage and clearing
    expenses.
  *Assets under management or supervision at December 31, 2012 of $338
    billion increased 18% from the prior year. The increase primarily
    reflected positive net customer flows in Morgan Stanley’s liquidity funds
    and market appreciation.

FULL YEAR RESULTS

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

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

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

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

                                                                           
Summary of Firm Results

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

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

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

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

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

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

INSTITUTIONAL SECURITIES

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

GLOBAL WEALTH MANAGEMENT GROUP

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

ASSET MANAGEMENT

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

CAPITAL

Morgan Stanley’s Tier 1 capital ratio under Basel I was approximately 17.9%
and Tier 1 common ratio was approximately 14.7% at December 31, 2012.^17

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

OTHER MATTERS

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

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

Morgan Stanley is a leading global financial services firm providing a wide
range of investment banking, securities, investment management and wealth
management services. The Firm’s employees serve clients worldwide including
corporations, governments, institutions and individuals from more than 1,200
offices in 43 countries. For further information about Morgan Stanley, please
visit www.morganstanley.com.

A financial summary follows. Financial, statistical and business-related
information, as well as information regarding business and segment trends, is
included in the Financial Supplement. Both the earnings release and the
Financial Supplement are available online in the Investor Relations section at
www.morganstanley.com.

                                    # # #

                           (See Attached Schedules)

The information above contains forward-looking statements. Readers are
cautioned not to place undue reliance on forward-looking statements, which
speak only as of the date on which they are made and which reflect
management's current estimates, projections, expectations or beliefs and which
are subject to risks and uncertainties that may cause actual results to differ
materially. For a discussion of additional risks and uncertainties that may
affect the future results of the Company, please see “Forward-Looking
Statements” immediately preceding Part I, Item 1, “Competition” and
“Supervision and Regulation” in Part I, Item 1, “Risk Factors” in Part I, Item
1A, “Legal Proceedings” in Part I, Item 3, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in Part II, Item 7
and “Quantitative and Qualitative Disclosures about Market Risk” in Part II,
Item 7A, each of the Company's Annual Report on Form 10-K for the year ended
December 31, 2011 and other items throughout the Form 10-K, the Company’s
Quarterly Reports on Form 10-Q, including “Risk Factors” in Part II, Item 1A
therein, and the Company’s Current Reports on Form 8-K, including any
amendments thereto.

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

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

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

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

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

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

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

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

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

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

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

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

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

^11 VaR represents the loss amount that one would not expect to exceed, on
average, more than five times every one hundred trading days in the Firm's
trading positions if the portfolio were held constant for a one-day period.
Further discussion of the calculation of VaR and the limitations of the Firm's
VaR methodology will be disclosed in Part II, Item 7A “Quantitative and
Qualitative Disclosures about Market Risk” included in Morgan Stanley’s Annual
Report on Form 10-K for the year ended December 31, 2012. Refer to page 8 of
Morgan Stanley’s Financial Supplement accompanying this release for the VaR
disclosure.

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

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

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

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

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

^17 The Firm calculates its Tier 1 capital ratio and risk-weighted assets in
accordance with the capital adequacy standards for financial holding companies
adopted by the Federal Reserve Board. These standards are based upon a
framework described in the International Convergence of Capital Measurement
and Capital Standards, July 1988, as amended, also referred to as Basel I. In
accordance with the Federal Reserve Board’s definition, Tier 1 common capital
is defined as Tier 1 capital less non-common elements in Tier 1 capital,
including perpetual preferred stock and related surplus, minority interest in
subsidiaries, trust preferred securities and mandatory convertible preferred
securities. These computations are preliminary estimates as of January 18,
2013 (the date of this release) and could be subject to revision in Morgan
Stanley’s Annual Report on Form 10-K for the year ended December 31, 2012.

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

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

_____________________________________
                Results for the quarters ended December 31, 2012, September
Notes:    -   30, 2012 and December 31, 2011, include positive (negative)
                revenue of $(511) million, $(2,262) million and $216 million,
                respectively, related to the movement in Morgan Stanley's
                credit spreads and other credit factors on certain long-term
                and short-term debt (Debt Valuation Adjustment, DVA). The
                twelve months ended December 31, 2012 and December 31, 2011
                include positive (negative) revenue of $(4,402) million and
                $3,681 million, respectively, related to the movement in DVA.
                Income (loss) applicable to Morgan Stanley represents income
                (loss) from continuing operations, adjusted for the portion of
           -    net income (loss) applicable to noncontrolling interests
                related to continuing operations. For the quarters ended
                December 31, 2012, September 30, 2012 and December 31, 2011
                net income (loss) applicable to noncontrolling interests
                include $3 million, $17 million, and $2 million respectively,
                reported as a gain in discontinued operations. The twelve
                months ended December 31, 2012 and December 31, 2011 net
                income (loss) applicable to noncontrolling interests include
                $29 million and $7 million respectively, reported as a gain in
                discontinued operations.
           -    Tier 1 common capital ratio equals Tier 1 common equity
                divided by Risk Weighted Assets (RWA).
           -    Tier 1 capital ratio equals Tier 1 capital divided by RWA.
           -    Book value per common share equals common equity divided by
                period end common shares outstanding.
           -    Tangible book value per common share equals tangible common
                equity divided by period end common shares outstanding.
                The return on average common equity and tangible book value
           -    per common share are non-GAAP measures that the Firm considers
                to be a useful measure that the Firm and investors use to
                assess operating performance and capital adequacy.
                See page 4 of the financial supplement for additional
           -    information related to the calculation of the financial
                metrics.
                
               11


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

_____________________________________
                Pre-tax profit margin is a non-GAAP financial measure that the
Notes:    -   Firm considers to be a useful measure that the Firm and
                investors use to assess operating performance. Percentages
                represent income from continuing operations before income
                taxes as a percentage of net revenues.
                The quarter and full year ended December 31, 2011, Principal
           -    Transactions - Trading included a loss of $1,742 million
                related to the comprehensive settlement with MBIA Insurance
                Corporation (MBIA).
                Other revenues for the full year ended December 31, 2011,
           -    included a loss of approximately $783 million related to the
                40% stake in a Japanese securities joint venture, Mitsubishi
                UFJ Morgan Stanley Securities Co., Ltd. ("MUMSS") controlled
                and managed by our partner, Mitsubishi UFJ Financial Group
                Inc. (MUFG).
                In the quarter ended December 31, 2012, discontinued
                operations included the provision of $115 million related to a
                settlement with the Federal Reserve Board concerning the
           -    independent foreclosure review related to Saxon. For the full
                year ended December 31, 2012, discontinued operations
                primarily reflected an after-tax gain and other operating
                income related to Quilter Holdings Ltd. (reported in the
                Global Wealth Management business segment), and an after-tax
                loss and operating results related to Saxon (reported in the
                Institutional Securities business segment), which includes the
                provision related to a settlement with the Federal Reserve
                Board concerning Saxon.
                For the quarter ended December 31, 2012, the effective tax
           -    rate from continuing operations was 11.1%. The current quarter
                includes a net tax benefit of approximately $155 million
                consisting of a discrete benefit from remeasurement of
                reserves and an out of period tax provision to adjust
                previously recorded deferred tax assets.
                During the quarter ended September 30, 2012, Morgan Stanley
           -    completed the purchase of an additional 14% stake in Morgan
                Stanley Smith Barney (Joint Venture) from Citigroup Inc.
                (Citi), increasing the Firm’s interest from 51% to 65%. Prior
                to September 17, 2012, Citi’s results related to its 49%
                interest were reported in net income (loss) applicable to
                nonredeemable noncontrolling interests. Due to the terms of
                the revised agreement with Citi, subsequent to the purchase of
                the additional 14% stake, Citi’s results related to the 35%
                interest are reported in net income (loss) applicable to
                redeemable noncontrolling interests.
                The portion of net income attributable to noncontrolling
           -    interests for consolidated entities is presented as either net
                income (loss) applicable to redeemable noncontrolling
                interests or net income (loss) applicable to nonredeemable
                noncontrolling interests.
                The full year ended December 31, 2011, preferred stock
           -    dividend/other included a one-time negative adjustment of
                approximately $1.7 billion related to the conversion of Series
                B Non-Cumulative Non-Voting Perpetual Convertible Preferred
                Stock held by MUFG, into Morgan Stanley common stock (MUFG
                conversion).
           -    Preferred stock dividend / other includes allocation of
                earnings to Participating Restricted Stock Units (RSUs).
                
               12


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

_____________________________________
               The portion of net income attributable to noncontrolling
               interests for consolidated entities is presented as either net
Notes:   -   income (loss) applicable to redeemable noncontrolling interests
               or net income (loss) applicable to nonredeemable noncontrolling
               interests.
               The Firm calculates earnings per share using the two-class
          -    method as described under the accounting guidance for earnings
               per share. For further discussion of the Firm's earnings per
               share calculations, see pages 15 and 16 of the financial
               supplement and Note 2 to the consolidated financial statements
               in the Firm's Annual Report on Form 10-K for the year ended
               December 31, 2011.
               
               13

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or
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