Media Relations: Michele Davis 212-761-9621

Investor Relations: Celeste Mellet Brown 212-761-3896

Subsequent to the release of Morgan Stanley's fourth quarter earnings on
January 17, 2014, the Firm reported updated results in the Firm's Annual
Report on Form 10-K for the year ended December 31, 2013, filed on
February 25, 2014. For updated information refer to the Firm's 4Q 2013
financial supplement and 2013 Form 10-K.

Morgan Stanley Reports Fourth Quarter and Full Year 2013:


Fourth Quarter Net Revenues of $7.8 Billion and Earnings per Diluted Share from
Continuing Operations of $0.07

Excluding DVA,1 Net Revenues were $8.2 Billion and Earnings per Diluted Sharefrom Continuing Operations of $0.202,3



Earnings per Share Amounts for the Fourth Quarter Included Legal Expenses of$1.2 Billion, or $0.40 per Diluted Share4

Fourth Quarter Results Reflect Strong Investment Banking Performance with Top
Three Rankings in Global Announced and Completed M&A, Global Equity andGlobal IPOs;5 Continued Strength in Equity Sales & Trading and WealthManagement; Strong Performance in Investment Management



Full Year Net Revenues of $32.4 Billion and Earnings per Diluted Share from
Continuing Operations of $1.43; Excluding DVA, Net Revenues were $33.1 Billion
and Earnings per Diluted Share from Continuing Operations of $1.663

NEW YORK, January 17, 2014 – Morgan Stanley (NYSE: MS) today reported net revenues of $7.8 billion for
the fourth quarter ended December 31, 2013 compared with $7.0 billion a year ago. For the current quarter,
income from continuing operations applicable to Morgan Stanley was $192 million, or $0.07 per diluted share,6
compared with income of $661 million, or $0.33 per diluted share,6 for the same period a year ago. Results forthe current quarter included pre-tax legal expenses of $1.2 billion or $0.40 per diluted share.4 The current
quarter also included a discrete tax benefit of $192 million or $0.10 per diluted share.4
Results for the current quarter included negative revenue related to changes in Morgan Stanley’s debt-related
credit spreads and other credit factors (Debt Valuation Adjustment, DVA)1 of $368 million, compared with
$511 million a year ago.
Excluding DVA, net revenues for the current quarter were $8.2 billion compared with $7.5 billion a year ago.
Income from continuing operations applicable to Morgan Stanley was $433 million including elevated legal
expenses, or $0.20 per diluted share, compared with income of $982 million, or $0.49 per diluted share, a year
ago.3,7Compensation expense of $4.0 billion in the fourth quarter increased from $3.6 billion a year ago. Noncompensation expenses of $3.9 billion increased from $2.5 billion in the prior year driven by higher legal
expenses. The current quarter includes $1.2 billion of additions to legal reserves for mortgage-related matters,
specifically litigation and investigations related to residential mortgage-backed securities and the credit crisis.

1

For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $0.07
per diluted share,6 compared with net income of $0.29 per diluted share in the fourth quarter of 2012.6

Summary of Firm Results(dollars in millions)Excluding DVA

As Reported

7

Net
Revenues

MS IncomeCont. Ops.

Net
Revenues

MS IncomeCont. Ops.

4Q 2013$7,830$192$8,198$433

3Q 2013$7,932$890$8,103$1,011

4Q 2012$6,963$661$7,474$982

Fourth Quarter Business Overview
Institutional Securities net revenues excluding DVA8 were $3.7 billion reflecting strong performance inInvestment Banking and Equity sales and trading, partly offset by lower results in Fixed Income &Commodities sales and trading.



Wealth Management net revenues were $3.7 billion and pre-tax margin was 19%, or 20% excluding an
impairment charge.9,10 Fee based asset flows for the quarter were $11.6 billion and total client assets werea record $1.9 trillion at quarter end.



Investment Management reported net revenues of $842 million with assets under management or
supervision of $373 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “Our fourth quarter results demonstrated theconsistency embedded in our business model, as revenues increased year-over-year in all three of our businesssegments. Importantly, we are continuing to address many of the legal issues from the financial crisis. We lookforward to further progress on our strategic goals as we move into 2014 with strength and momentum.”2

FOURTH QUARTER RESULTS

Summary of Institutional Securities Results(dollars in millions)Excluding DVA

8

As Reported
Net
Pre-Tax
Revenues
IncomeNet
Revenues

Pre-Tax
Income4Q 2013$3,328$(1,113)$3,696$(745)

3Q 2013$3,686$373$3,857$544

4Q 2012$3,084$78$3,595$589

INSTITUTIONAL SECURITIESInstitutional Securities reported a pre-tax loss from continuing operations of $1.1 billion compared with pre-tax
income of $78 million in the fourth quarter of last year. Results for the current quarter include legal expenses of$1.2 billion. Net revenues for the current quarter were $3.3 billion compared with $3.1 billion a year ago. DVA
resulted in negative revenue of $368 million in the current quarter compared with $511 million a year ago.
Excluding DVA, net revenues for the current quarter of $3.7 billion compared with $3.6 billion a year ago.8 The
following discussion for sales and trading excludes DVA.


Advisory revenues of $451 million compared with $454 million a year ago. Equity underwriting revenues
were $416 million, up significantly from $238 million a year ago reflecting an increase in IPO market
volumes. Fixed income underwriting revenues were $495 million compared with $534 million a year ago
reflecting lower investment grade bond issuance volumes.



Equity sales and trading net revenues of $1.5 billion increased from $1.4 billion in the prior year quarterreflecting higher levels of client activity across all regions and strength in prime brokerage.11



Fixed Income & Commodities sales and trading net revenues were $694 million compared with $811 million
a year ago, principally reflecting weakness in interest rate products.11



Other sales and trading net losses of $232 million compared with losses of $34 million a year ago, primarilyreflecting losses on hedges and other costs related to the Firm’s long-term funding.



Other revenues were $192 million compared with $46 million in the fourth quarter of last year due principallyto the equity investment in our Japanese joint venture, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.



Compensation expense for the current quarter of $1.6 billion was unchanged from a year ago. Noncompensation expenses of $2.9 billion compared with $1.4 billion a year ago reflecting higher legal expenses.

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $51
million compared with $52 million in the third quarter of 2013 and $78 million in the fourth quarter of theprior year.12

3

Summary of Wealth Management Results(dollars in millions)
Net
Revenues

Pre-Tax
Income4Q 2013$3,732$709

3Q 2013$3,481$668

4Q 2012$3,325$562

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $709 million compared with $562
million in the fourth quarter of last year. The quarter’s pre-tax margin was 19%, or 20% excluding a $36 million
impairment charge discussed below.9,10 Net revenues for the current quarter were $3.7 billion compared with $3.3
billion a year ago. Results for the current quarter do not include a noncontrolling interest allocation to Citigroup
Inc. (Citi) following the completed acquisition of the Wealth Management Joint Venture, whereas the prior year
quarter included a noncontrolling interest allocation to Citi of $103 million.13


Asset management fee revenues of $2.0 billion increased 7% from last year’s fourth quarter primarilyreflecting an increase in fee based assets and positive flows.

Transactional revenues14 of $1.1 billion increased from $986 million a year ago reflecting higher trading
revenues and increased commissions and fees.

Compensation expense for the current quarter of $2.1 billion increased from $1.9 billion a year ago on higher
revenues.



Non-compensation expenses of $876 million compared with $857 million a year ago. In the current quarter,
the Firm recognized an impairment charge of $36 million related to certain intangibles.10

Total client assets were $1.9 trillion at quarter end. Client assets in fee based accounts of $697 billion
increased 26% compared with the prior year quarter. Fee based asset flows for the quarter were $11.6 billion.



Wealth Management representatives of 16,456 increased from 16,352 as of December 31, 2012. Averageannualized revenue per representative of $905,000 and total client assets per representative of $116 million
increased 11% and 12%, respectively, compared with the prior year quarter.

Summary of Investment Management Results(dollars in millions)
Net
Revenues

Pre-Tax
Income4Q 2013

$842

$337

3Q 2013

$828

$300

4Q 2012

$599

$221

INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing operations of $337 million compared with pre-4

tax income of $221 million in last year’s fourth quarter.15 The quarter’s pre-tax margin was 40%.9 Income after
the noncontrolling interest allocation and before taxes was $291 million.


Net revenues of $842 million increased from $599 million in the prior year primarily driven by gains on
investments in the Merchant Banking business and higher results in the Traditional Asset Managementbusiness.16

Compensation expense for the current quarter of $295 million increased from $168 million a year ago on
higher revenues. Non-compensation expenses of $210 million were unchanged from a year ago.



Assets under management or supervision at December 31, 2013 of $373 billion increased from $338 billion ayear ago primarily reflecting market appreciation and positive flows. The business recorded net flows of $4.2
billion in the current quarter.

FULL YEAR RESULTS
Full year net revenues were $32.4 billion compared with $26.1 billion a year ago. Income from continuing
6
operations applicable to Morgan Stanley for the current year was $3.1 billion, or $1.43 per diluted share,
6compared with income of $138 million, or $0.02 per diluted share, a year ago.
Results for the year included negative revenue related to DVA of $681 million, compared with $4.4 billion ayear ago. Excluding DVA, net revenues for the current year were $33.1 billion compared with $30.5 billion ayear ago and income from continuing operations applicable to Morgan Stanley was $3.5 billion, or $1.66 per
37
diluted share, compared with income of $3.3 billion, or $1.64 per diluted share, a year ago. ,The Firm’s compensation expense of $16.3 billion for the current year increased from $15.6 billion a year ago.
Non-compensation expenses of $11.5 billion increased from $10.0 billion a year ago driven by higher legal
expenses.
For the current year, net income applicable to Morgan Stanley, including discontinued operations, was $1.41 per
diluted share,6 compared with a loss of $0.02 per diluted share a year ago.6

Summary of Firm Results(dollars in millions)Excluding DVA

As Reported

7

Net
Revenues

MS IncomeCont. Ops.

Net
Revenues

MS IncomeCont. Ops.

FY 2013$32,417$3,072$33,098$3,524

FY 2012$26,102$138$30,504$3,2565

Summary of Segments Results(dollars in millions)Excluding DVA

As Reported
Net
Revenues

Pre-Tax
IncomeNet
Revenues

8

Pre-Tax
IncomeFY 2013

FY 2012FY 2013

FY 2012FY 2013

FY 2012FY 2013

FY 2012Institutional Securities$15,443$11,025$1,019$(1,688)$16,124$15,427$1,700$2,714

Wealth Management$14,214$13,034$2,629$1,622$14,214$13,034$2,629$1,622

Investment Management$2,988$2,219$984$590$2,988$2,219$984$590

INSTITUTIONAL SECURITIESInstitutional Securities reported pre-tax income from continuing operations of $1.0 billion compared with a pretax loss of $1.7 billion a year ago. Net revenues for the current year were $15.4 billion compared with $11.0
billion a year ago. DVA resulted in negative revenue of $681 million in the current year compared with negative
revenue of $4.4 billion a year ago. Excluding DVA, net revenues for the current year were $16.1 billion
89
compared with $15.4 billion a year ago. The year’s pre-tax margin was 7% (excluding DVA, 11%). , Income
after the noncontrolling interest allocation and before taxes was $741 million.17 Compensation expense was $6.8
billion compared with $7.0 billion a year ago. Non-compensation expenses of $7.6 billion increased from $5.7
billion a year ago primarily due to increased legal expenses and higher activity based expenses.

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $2.6 billion compared with $1.6
billion a year ago. Net revenues for the current year were $14.2 billion compared with $13.0 billion a year ago.
The year’s pre-tax margin was 18%.9 Income after the noncontrolling interest allocation to Citi and before taxes
was $2.4 billion.13 Compensation expense was $8.3 billion compared with $7.8 billion a year ago on higher
revenues. Non-compensation expenses of $3.3 billion decreased from $3.6 billion a year ago driven primarily by
the absence of integration costs reported in the prior year.18

INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing operations of $984 million compared with$590 million a year ago.15 The year’s pre-tax margin was 33%.9 Income after the noncontrolling interest
allocation and before taxes was $802 million. Net revenues of $3.0 billion increased from $2.2 billion a year ago
primarily driven by gains on investments in the Merchant Banking and Real Estate Investing businesses,
reflecting stronger investment performance, favorable market conditions and the benefit of carried interest.16,19
Compensation expense was $1.2 billion compared with $841 million a year ago on higher revenues. Noncompensation expenses of $821 million compared with $788 million a year ago on higher activity based
expenses.

6

CAPITAL
Morgan Stanley’s Tier 1 capital ratio under Basel I was approximately 15.7% and Tier 1 common ratio wasapproximately 12.8% at December 31, 2013.20
At December 31, 2013, book value and tangible book value per common share were $32.29 and $27.21,21
respectively, based on approximately 1.9 billion shares outstanding.

OTHER MATTERS
In the current quarter the Firm reported an overall tax benefit of $348 million which reflected a change in thegeographic mix of earnings and includes a discrete tax benefit of approximately $192 million, consisting of $100
million related to the remeasurement of reserves and related interest and $92 million related to the establishmentof a deferred tax asset associated with the reorganization of certain non-U.S. legal entities. The effective tax ratefrom continuing operations for the full year was 19.0%.22
During the quarter ended December 31, 2013, the Firm repurchased approximately $228 million of its common
stock or approximately 7.6 million shares, and $350 million of its common stock or approximately 12.2 million
shares for the full year ended December 31, 2013.
The Firm declared a $0.05 quarterly dividend per common share, payable on February 14, 2014 to commonshareholders of record on January 31, 2014.

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 clientsworldwide 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 andthe Financial Supplement are available online in the Investor Relations section at www.morganstanley.com.

###(See Attached Schedules)
This earnings release contains forward-looking statements. Readers are cautioned not to place undue relianceon 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 anduncertainties that may cause actual results to differ materially. For a discussion of additional risks anduncertainties 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 andAnalysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative andQualitative Disclosures about Market Risk” in Part II, Item 7A in the Company's Annual Report on Form 10K for the year ended December 31, 2012 and other items throughout the Form 10-K, the Company’s
Quarterly Reports on Form 10-Q, and the Company’s Current Reports on Form 8-K, including any
amendments thereto.

7

1

Represents the change in the fair value of certain of Morgan Stanley’s long-term and short-term borrowings resulting fromfluctuations 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 flowsthat is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measurecalculated and presented in accordance with GAAP. Non-GAAP financial measures disclosed by Morgan Stanley areprovided 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 asubstitute 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 nonGAAP financial measure we reference and such comparable GAAP financial measure.
3

Earnings (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 todifferentiate 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 earnings (loss)
per diluted share from continuing operations applicable to Morgan Stanley common shareholders and average diluted sharesfrom a non-GAAP to GAAP basis is as follows (shares and DVA are presented in millions):

Earnings (loss) per diluted share from cont. ops. – Non-GAAP
DVA impact
Earnings (loss) per diluted share from cont. ops. – GAAP
Average diluted shares – Non-GAAP
DVA impact
Average diluted shares – GAAP

4Q 2013$0.20$(0.13)$0.07

4Q 2012$0.49$(0.16)$0.33

FY 2013$1.66$(0.23)$1.43

FY 2012$1.64$(1.62)
$0.02

1,970
0
1,970

1,937
0
1,937

1,957
0
1,957

1,919
0
1,919

4

The impact to earnings per diluted share from continuing operations is calculated by dividing the after-tax legal expenses
and discrete tax benefit, respectively, by the average number of diluted shares outstanding.
5

Source: Thomson Reuters – for the period of January 1, 2013 to December 31, 2013 as of January 14, 2014.

6

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the fourth quarter of2013 and 2012 of approximately $48 million and $26 million, respectively. Includes preferred dividends and otheradjustments related to the calculation of earnings per share for the year ended 2013 and 2012 of approximately $277 million
and $98 million, respectively. The current year includes a negative adjustment of $151 million related to the purchase of theremaining 35% interest in Morgan Stanley Smith Barney Joint Venture. Refer to page 3 of Morgan Stanley’s Financial
Supplement accompanying this release for the calculation of earnings per share.

8

7

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

Firm net revenues – Non-GAAP
DVA impact
Firm net revenues – GAAP
Income (loss) applicable to MS – Non-GAAP
DVA after-tax impact
Income (loss) applicable to MS – GAAP

4Q 2013$8,198$(368)$7,830

3Q 2013$8,103$(171)$7,932

4Q 2012$7,474$(511)$6,963

FY 2013$33,098$(681)$32,417

FY 2012$30,504$(4,402)$26,102$433$(241)$192$1,011$(121)$890$982$(321)$661$3,524$(452)$3,072$3,256$(3,118)$138

8

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

Net revenues – Non-GAAP
DVA impact
Net revenues – GAAP

4Q 2013$3,696$(368)$3,328

3Q 2013$3,857$(171)$3,686

4Q 2012$3,595$(511)$3,084

FY 2013$16,124$(681)$15,443

FY 2012$15,427$(4,402)$11,025

Pre-tax income (loss) – Non-GAAP
DVA impact
Pre-tax income (loss) – GAAP$(745)$(368)$(1,113)$544$(171)$373$589$(511)$78$1,700$(681)$1,019$2,714$(4,402)$(1,688)

9Pre-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

In the current quarter, the Firm recorded an impairment charge related to certain intangibles (i.e. management contracts)
associated with alternative investment funds (reported in the Wealth Management business segment).

9

11

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 comparabilityof period-to-period operating performance. The reconciliation of sales and trading, including FIC and Equity sales andtrading net revenues from a non-GAAP to GAAP basis is as follows (amounts are presented in millions):
4Q 2013

4Q 2012FY 2013

FY 2012

Sales & Trading – Non-GAAP
DVA impact
Sales & Trading – GAAP

$1,965$(368)$1,597$2,175$(511)$1,664$10,432$(681)$9,751$11,075$(4,402)$6,673

FIC Sales & Trading – Non-GAAP
DVA impact
FIC Sales & Trading – GAAP

$694$(285)$409$811$(330)$481$4,197$(603)$3,594$5,631$(3,273)$2,358Equity Sales & Trading – Non-GAAP
DVA impact
Equity Sales & Trading – GAAP

$1,503$(83)$1,420$1,398$(181)$1,217$6,607$(78)$6,529$5,941$(1,130)$4,811

12

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 thecalculation of VaR and the limitations of the Firm’s VaR methodology is disclosed in Part II, Item 7A “Quantitative andQualitative 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 7 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR
disclosure.
13

On June 28, 2013, the Firm completed the purchase of the remaining 35% interest in the Morgan Stanley Smith Barney
Joint Venture from Citi, increasing the Firm’s interest from 65% to 100%. During the quarter ended September 30, 2012,
Morgan Stanley completed the purchase of an additional 14% stake in the Morgan Stanley Smith Barney 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 8 of Morgan Stanley’s
Financial Supplement accompanying this release.

14

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

15

Results for the fourth quarter of 2013 and 2012 included pre-tax income of $46 million and $49 million, respectively,
related to investments held by certain consolidated real estate funds. Results for the full year ended 2013 and 2012 included
pre-tax income of $181 million and $185 million, respectively, related to investments held by certain consolidated real estate
funds. The limited partnership interests in these funds are reported in net income (loss) applicable to noncontrolling interestson page 10 of Morgan Stanley’s Financial Supplement accompanying this release.

16

Results for the current quarter included gains of $48 million compared with gains of $50 million in the prior year fourth
quarter related to investments held by certain consolidated real estate funds. Results for the current year included gains of$188 million compared with gains of $192 million in the prior year related to investments held by certain consolidated realestate funds.

17

Noncontrolling interests reported in the Institutional Securities business segment primarily represents the allocation to
Mitsubishi UFJ Financial Group (MUFG) of Morgan Stanley MUFG Securities Co., Ltd., which the Firm consolidates.

10

18

In the third quarter of 2012, Wealth Management non-compensation expenses reflected approximately $176 million of
non-recurring costs associated with the Morgan Stanley Wealth Management integration and the purchase of the additional
14% stake in the Joint Venture.

19

Carried interest represents an additional allocation of fund income to the Firm, as general partner upon exceeding
cumulative fund performance thresholds.

20

The Firm calculates its Tier 1 capital, Tier 1 capital ratios and risk-weighted assets (“RWAs”) in accordance with thecapital 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. On January 1, 2013, the U.S. banking regulators’ rules to implement the BaselCommittee’s market risk capital framework, commonly referred to as “Basel 2.5”, became effective, which increases capitalrequirements for securitizations and correlation trading within the Firm’s trading book, as well as incorporating add-ons forstressed VaR and incremental risk requirement. The Firm’s Tier 1 capital, Tier 1 capital ratios and RWAs for the quarters
ended December 31, 2013 and September 30, 2013 were calculated under this revised framework. The Firm’s Tier 1 capital,
Tier 1 capital ratios and RWAs for prior quarters have not been recalculated under this revised framework. In accordancewith the Federal Reserve Board’s definition, Tier 1 common capital is defined as Tier 1 capital less non-common elements inTier 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 17,
2014 (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, 2013.

21

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 andintangible assets net of allowable mortgage servicing rights deduction. Tangible book value per common share equals
tangible common equity divided by period end common shares outstanding.

22

For the year ended December 31, 2013, the income tax provision / (benefit) from continuing operations included discrete
tax benefits of $407 million consisting of $161 million related to the remeasurement of reserves and related interest based on
new information regarding the status of certain tax authority examinations, $92 million related to the establishment of adeferred tax asset associated with the reorganization of certain non-U.S. legal entities, $73 million attributable to tax planning
strategies to optimize foreign tax credit utilization in anticipation of the repatriation of earnings from certain non-U.S.
subsidiaries and $81 million resulting from a retroactive change in U.S. tax law.

11

MORGAN STANLEY
Quarterly Financial Summary(unaudited, dollars in millions, except for per share data)

Dec 31, 2013
Net revenues
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated net revenues
Income (loss) from continuing operations before tax
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated income (loss) from continuing operations before tax
Income (loss) applicable to Morgan Stanley
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated income (loss) applicable to Morgan Stanley

$

$

$

$

$

3,328
3,732
842
(72)
7,830

Quarter Ended
Sept 30, 2013$$

(1,113)
709
337
0
(67)

$

$

3,686
3,481
828
(63)
7,932

Dec 31, 2012
$

$

(10%)
7%
2%
(14%)
(1%)

8%
12%
41%
(60%)
12%

78
562
221
0
861

*
6%
12%
-*

*
26%
52%
-*

$

*
11%
36%
-(78%)
(85%)

*
79%
*
-(71%)
(77%)

$

$

$

$
$

325
430
135
0
890
880

$
$

402
266
(7)
0
661
568

$

Twelve Months Ended
Dec 31, 2013
Dec 31, 2012

3,084
3,325
599
(45)
6,963

373
668
300
0
1,341

$

Percentage Change From:
Sept 30, 2013
Dec 31, 2012$$

15,443
14,2142,988(228)
32,417$$

11,025
13,034
2,219(176)
26,102

40%
9%
35%
(30%)
24%

(1,688)
1,622
590
(4)
520

*
62%
67%
*
*

*
85%
*
*
*
*

1,019
2,629
984
0
4,632

$

$

$
$

1,081
1,488
503
0
3,072
2,752

$
$

(797)
803
136
(4)
138
(30)

$

$

Percentage
ChangeEarnings (loss) applicable to Morgan Stanley common shareholders

$
$

(467)
476
183
0
192
133

Earnings per basic share:
Income from continuing operations
Discontinued operations
Earnings per basic share

$
$
$

0.08
(0.01)
0.07

$
$
$

0.45
0.01
0.46

$
$
$

0.34
(0.04)
0.30

(82%)
*
(85%)

(76%)
75%
(77%)

$
$
$

1.47
(0.03)
1.44

$
$
$

0.02
(0.04)(0.02)*
25%*

Earnings per diluted share:
Income from continuing operations
Discontinued operations
Earnings per diluted share

$
$
$

0.07
0.07

$
$
$

0.44
0.01
0.45

$
$
$

0.33
(0.04)
0.29

(84%)
*
(84%)

(79%)
*
(76%)

$
$
$

1.43
(0.02)
1.41

$
$
$

0.02
(0.04)(0.02)*
50%*

Financial Metrics:
Return on average common equityfrom continuing operations
Return on average common equity

0.9%
0.8%

5.6%
5.7%

4.2%
3.8%

4.5%
4.5%

0.1%
*

Return on average common equityfrom continuing operations excluding DVA
Return on average common equity excluding DVA

2.4%
2.3%

6.3%
6.4%

6.3%
5.8%

5.2%
5.1%

5.2%
5.1%

Tier 1 common capital ratio
Tier 1 capital ratio

12.8%
15.7%

12.6%
15.3%

14.6%
17.7%

Book value per common share
Tangible book value per common share

$
$

32.29
27.21

$
$

32.13
26.96

$
$

30.70
26.86

Notes: - Effective January 1, 2013, in accordance with U.S. banking regulators’ rules, the Firm implemented the Basel Committee’s market risk capital framework, commonly referred to as “Basel 2.5”.
- Results for the quarters ended December 31, 2013, September 30, 2013 and December 31, 2012, include positive (negative) revenue of $(368) million, $(171) million and $(511) million, respectively, related to the movement in Morgan
Stanley's credit spreads and other credit factors on certain long-term and short-term debt (Debt Valuation Adjustment, DVA). The twelve months ended December 31, 2013 and December 31, 2012 include positive (negative) revenue of$(681) million and $(4,402) million, respectively, related to the movement in DVA.
- The return on average common equity metrics, return on average common equity excluding DVA metrics and tangible book value per common share are non-GAAP measures that the Firm considers to be useful measures to assess
operating performance and capital adequacy.
- Tier 1 common capital ratio equals Tier 1 common equity divided by risk-weighted assets (RWAs).
- Tier 1 capital ratio equals Tier 1 capital divided by RWAs.
- 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.

12

MORGAN STANLEY
Quarterly Consolidated Income Statement Information(unaudited, dollars in millions)

Revenues:
Investment banking
Trading
Investments
Commissions and fees
Asset management, distribution and admin. fees
Other
Total non-interest revenues

Dec 31, 2013

Quarter Ended
Sept 30, 2013

Dec 31, 2012

$

$

$

Interest income
Interest expense
Net interest
Net revenues
Non-interest expenses:
Compensation and benefits
Non-compensation expenses:
Occupancy and equipment
Brokerage, clearing and exchange fees
Information processing and communications
Marketing and business development
Professional services
Other
Total non-compensation expenses

Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations
Gain (loss) from discontinued operations after tax
Net income (loss) applicable to Morgan Stanley
Pre-tax profit margin
Compensation and benefits as a % of net revenues
Non-compensation expenses as a % of net revenues
Effective tax rate from continuing operations

Notes:

1,160
2,259
728
1,079
2,389
207
7,822

1,439
1,512
304
1,051
2,332
152
6,790

34%
(33%)
(28%)
8%
5%
40%
(4%)

8%
-72%
11%
7%
90%
11%

Twelve Months Ended
Dec 31, 2013
Dec 31, 2012
$

5,246
9,359
1,777
4,629
9,638
990
31,639$Percentage
Change

4,758
6,990
742
4,253
9,008
556
26,307

10%
34%
139%
9%
7%
78%
20%

1,099
817
282
7,830

1,307
1,197
110
7,932

1,471
1,298
173
6,963

(16%)
(32%)
156%
(1%)

(25%)
(37%)
63%
12%

5,209
4,431
778
32,417

5,692
5,897
(205)
26,102

(8%)
(25%)
*
24%

3,993

3,966

3,631

1%

10%

16,277

15,615

4%

370
411
446
190
548
1,939
3,904

374
416
404
151
448
832
2,625

394
368
475
162
558
514
2,471

(1%)
(1%)
10%
26%
22%
133%
49%

(6%)
12%
(6%)
17%
(2%)
*
58%

1,499
1,711
1,768
638
1,894
3,998
11,508

1,543
1,535
1,912
601
1,922
2,454
9,967

(3%)
11%
(8%)
6%
(1%)
63%
15%

7,897

6,591

6,102

20%

29%

27,78525,582

9%

$

(67)
(348)
281
(11)
270
0
89
181
48
133

$

1,341
339
1,002
16
1,018
0
112
906
26
880

$

861
9
852
(64)
788
116
78
594
26
568

*
*
(72%)
*
(73%)
-(21%)
(80%)
85%
(85%)

*
*
(67%)
83%
(66%)
*
14%
(70%)
85%
(77%)

$

4,632
879
3,753
(43)
3,710
222
459
3,029
277
2,752

$

520
(237)
757
(41)
716
124
524
68
98
(30)

*
*
*
(5%)
*
79%
(12%)
*
183%
*

$

192
(11)
181

$

890
16
906

$

661
(67)
594

(78%)
*
(80%)

(71%)
84%
(70%)

$

3,072
(43)
3,029

$

138
(70)
68

*
39%
*

Total non-interest expenses
Income (loss) from continuing operations before taxes
Income tax provision / (benefit) from continuing operations
Income (loss) from continuing operations
Gain (loss) from discontinued operations after tax
Net income (loss)
Net income applicable to redeemable noncontrolling interests
Net income applicable to nonredeemable noncontrolling interests
Net income (loss) applicable to Morgan Stanley
Preferred stock dividend / Other
Earnings (loss) applicable to Morgan Stanley common shareholders

1,559
1,512
523
1,166
2,499
289
7,548

Percentage Change From:
Sept 30, 2013
Dec 31, 2012

$

*
51%
50%
*

$

17%
50%
33%
25.3%

$

12%
52%
36%
1.0%

$

14%
50%
36%
19.0%

$

2%
60%
38%
*

- Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure to assess operating performance.
- The quarter ended December 31, 2013 includes a discrete tax benefit of approximately $192 million consisting of $100 million related to the remeasurement of reserves and related interest based on
new information regarding the status of certain tax authority examinations and $92 million related to the establishment of a deferred tax asset associated with the reorganization of certain non-U.S. legal entities.
- The quarter ended September 30, 2013 included a discrete net tax benefit of $73 million attributable to tax planning strategies to optimize foreign tax credit utilization in anticipation of the repatriation of earnings
from certain non-U.S. subsidiaries.
- The quarter ended December 31, 2012 included a net tax benefit of approximately $224 million consisting of a discrete benefit of approximately $299 million from remeasurement of reserves and an out-of-period
tax provision of approximately $75 million to adjust previously recorded deferred tax assets.
- Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs). For the twelve months ended December 31, 2013, the Firm included a negative adjustment ofapproximately $151 million related to the purchase of the remaining interest in the Morgan Stanley Smith Barney Joint Venture. This adjustment negatively impacted the calculation of basic and fully diluted
earnings per share.
13

MORGAN STANLEY
Quarterly Earnings Per Share(unaudited, dollars in millions, except for per share data)

Quarter Ended
Sept 30, 2013

Dec 31, 2013

Income (loss) from continuing operations
Net income applicable to redeemable noncontrolling interests
Net income applicable to nonredeemable noncontrolling interests
Net income (loss) from continuing operations applicable to noncontrolling interests
Income (loss) from continuing operations applicable to Morgan Stanley
Less: Preferred Dividends
Less: Morgan Stanley Smith Barney Joint Venture Redemption Adjustment
Income (loss) from continuing operations applicable to Morgan Stanley, prior to allocation of income toParticipating Restricted Stock Units
Basic EPS Adjustments:
Less: Allocation of earnings to Participating Restricted Stock Units
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders

$

281
0
89
89
192
48
144

0
144

$

Gain (loss) from discontinued operations after tax
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley
Less: Allocation of earnings to Participating Restricted Stock Units
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
Earnings (loss) applicable to Morgan Stanley common shareholders

$

$

133

$

866

$

(11)
0
(11)
0
(11)

Average basic common shares outstanding (millions)

1,002
0
112
112
890
24
-

Dec 31, 2012

2
864

$

880

(72%)
-(21%)
(21%)
(78%)
100%
--

(67%)
*
19%
(53%)
(71%)
100%
--

(83%)

(77%)

2
635

*
(83%)

*
(77%)

(64)
3
(67)
0
(67)

*
-*
-*

83%
*
84%
-84%

637

$

16
0
16
0
16

1,905

852
116
75
191
661
24
-

$

1,909

Percentage Change From:
Sept 30, 2013
Dec 31, 2012

568

(85%)

(77%)

1,892

--

1%

Twelve Months Ended
Dec 31, 2013
Dec 31, 2012

$

3,753
222
459
681
3,072
120
151

$

2,801

$

6
2,795

42

$

(43)
0
(43)
0
(43)
$

2,752

$

1,906

Earnings per basic share:
Income from continuing operations
Discontinued operations
Earnings per basic share

$
$
$

0.08
(0.01)
0.07

$
$
$

0.45
0.01
0.46

$
$
$

0.34
(0.04)
0.30

(82%)
*
(85%)

(76%)
75%
(77%)

$
$
$

1.47
(0.03)
1.44$$$

Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders

$

144

$

864

$

635

(83%)

(77%)

$

2,795

$

(67)

*

84%

568

(85%)

(77%)

1,937

--

2%

0.33
(0.04)
0.29

(84%)
*
(84%)

(79%)
*
(76%)

Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
Earnings (loss) applicable to Morgan Stanley common shareholders(11)$

Average diluted common shares outstanding and common stock equivalents (millions)
Earnings per diluted share:
Income from continuing operations
Discontinued operations
Earnings per diluted share

133

16
$

1,970

$
$
$

0.07
0.07

880

$

1,965

$
$
$

0.44
0.01
0.45

$
$
$

(43)
$

2,752

1.43
(0.02)
1.41

Notes: - 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 14 and 15 of the Financial
Supplement and Note 15 to the consolidated financial statements in the Firm's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.

14

$

1,957

$
$
$

757
124
495
619
138
96
-

$
$
$

Percentage
Change

*
79%
(7%)
10%
*
25%
*
*

2
40

200%
*

(41)
29
(70)
0
(70)

(5%)
*
39%
-39%

(30)

*

1,886

1%

0.02
(0.04)(0.02)

*
25%
*

40

*

(70)

39%

(30)

*

1,919

2%

0.02
(0.04)(0.02)*
50%*