MORGAN STANLEY - FORM 8-K - EX-99.2 - EXHIBIT 99.2

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EX-99.1 - EXHIBIT 99.1 - MORGAN STANLEY	a51541678ex99_1.htm
8-K - MORGAN STANLEY 8-K - MORGAN STANLEY	a51541678.htm

Exhibit 99.2

Quarterly Financial Supplement - 1Q 2017

		Page #

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

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



	Quarter Ended									Percentage Change From:
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016			Dec 31, 2016			Mar 31, 2016
Net revenues
Institutional Securities	$	5,152		$	4,614		$	3,714			12	%		39	%
Wealth Management		4,058			3,990			3,668			2	%		11	%
Investment Management		609			500			477			22	%		28	%
Intersegment Eliminations		(74	)		(83	)		(67	)		11	%		(10	%)
Net revenues	$	9,745		$	9,021		$	7,792			8	%		25	%

Income (loss) from continuing operations before tax
Institutional Securities	$	1,730		$	1,326		$	908			30	%		91	%
Wealth Management		973			891			786			9	%		24	%
Investment Management		103			28			44			*			134	%
Intersegment Eliminations		2			1			0			100	%		*
Income (loss) from continuing operations before tax	$	2,808		$	2,246		$	1,738			25	%		62	%

Net Income (loss) applicable to Morgan Stanley
Institutional Securities	$	1,214		$	1,104		$	591			10	%		105	%
Wealth Management		647			531			493			22	%		31	%
Investment Management		67			30			50			123	%		34	%
Intersegment Eliminations		2			1			0			100	%		*
Net Income (loss) applicable to Morgan Stanley	$	1,930		$	1,666		$	1,134			16	%		70	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	1,840		$	1,509		$	1,055			22	%		74	%

Financial Metrics:

Earnings per basic share	$	1.02		$	0.84		$	0.56			21	%		82	%
Earnings per diluted share	$	1.00		$	0.81		$	0.55			23	%		82	%

Return on average common equity		10.7	%		8.7	%		6.2	%
Return on average common equity excluding DVA		10.6	%		8.7	%		6.2	%

Book value per common share	$	37.48		$	36.99		$	35.34
Tangible book value per common share	$	32.49		$	31.98		$	30.44

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Consolidated Income Statement Information
(unaudited, dollars in millions)



	Quarter Ended									Percentage Change From:
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016			Dec 31, 2016			Mar 31, 2016
Revenues:
Investment banking	$	1,545		$	1,377		$	1,107			12	%		40	%
Trading		3,235			2,789			2,065			16	%		57	%
Investments		165			(19	)		(34	)		*			*
Commissions and fees		1,033			1,043			1,055			(1	%)		(2	%)
Asset management, distribution and admin. fees		2,767			2,754			2,620			--			6	%
Other		229			194			80			18	%		186	%
Total non-interest revenues		8,974			8,138			6,893			10	%		30	%

Interest income		1,965			1,868			1,747			5	%		12	%
Interest expense		1,194			985			848			21	%		41	%
Net interest		771			883			899			(13	%)		(14	%)
Net revenues		9,745			9,021			7,792			8	%		25	%
Non-interest expenses:
Compensation and benefits		4,466			4,083			3,683			9	%		21	%

Non-compensation expenses:
Occupancy and equipment		327			311			329			5	%		(1	%)
Brokerage, clearing and exchange fees		509			480			465			6	%		9	%
Information processing and communications		428			460			442			(7	%)		(3	%)
Marketing and business development		136			169			134			(20	%)		1	%
Professional services		527			578			514			(9	%)		3	%
Other		544			694			487			(22	%)		12	%
Total non-compensation expenses		2,471			2,692			2,371			(8	%)		4	%

Total non-interest expenses		6,937			6,775			6,054			2	%		15	%

Income (loss) from continuing operations before taxes		2,808			2,246			1,738			25	%		62	%
Income tax provision / (benefit) from continuing operations ^{(1) (2)}		815			566			578			44	%		41	%
Income (loss) from continuing operations		1,993			1,680			1,160			19	%		72	%
Gain (loss) from discontinued operations after tax		(22	)		0			(3	)		*			*
Net income (loss)	$	1,971		$	1,680		$	1,157			17	%		70	%
Net income applicable to nonredeemable noncontrolling interests		41			14			23			193	%		78	%
Net income (loss) applicable to Morgan Stanley		1,930			1,666			1,134			16	%		70	%
Preferred stock dividend / Other		90			157			79			(43	%)		14	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	1,840		$	1,509		$	1,055			22	%		74	%

Pre-tax profit margin		29	%		25	%		22	%
Compensation and benefits as a % of net revenues		46	%		45	%		47	%
Non-compensation expenses as a % of net revenues		25	%		30	%		30	%
Effective tax rate from continuing operations^{(1) (2)}		29.0	%		25.2	%		33.3	%

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Consolidated Financial Information and Statistical Data
(unaudited, dollars in millions)



	Quarter Ended									Percentage Change From:
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016			Dec 31, 2016			Mar 31, 2016

Regional revenues
Americas	$	7,088		$	6,573		$	5,752			8	%		23	%
EMEA (Europe, Middle East, Africa)		1,489			1,317			1,129			13	%		32	%
Asia		1,168			1,131			911			3	%		28	%
Consolidated net revenues	$	9,745		$	9,021		$	7,792			8	%		25	%

Firm Expense Efficiency Ratio		71	%		75	%		78	%

Balance sheet
Deposits	$	152,109		$	155,863		$	157,591			(2	%)		(3	%)
Total Assets	$	832,391		$	814,949		$	807,497			2	%		3	%
Global liquidity reserve	$	197,647		$	202,297		$	211,069			(2	%)		(6	%)
Long-term debt outstanding	$	172,688		$	164,775		$	162,804			5	%		6	%
Maturities of long-term debt outstanding (next 12 months)	$	23,239		$	26,127		$	26,071			(11	%)		(11	%)

Common equity	$	69,404		$	68,530		$	68,490			1	%		1	%
Less: Goodwill and intangible assets		(9,229	)		(9,296	)		(9,491	)		(1	%)		(3	%)
Tangible common equity	$	60,175		$	59,234		$	58,999			2	%		2	%

Preferred equity	$	8,520		$	7,520		$	7,520			13	%		13	%
Junior subordinated debt issued to capital trusts ⁽¹⁾	$	-		$	-		$	2,849			--			*


Period end common shares outstanding (millions)		1,852			1,852			1,938			--			(4	%)
Average common shares outstanding (millions)
Basic		1,801			1,806			1,883			--			(4	%)
Diluted		1,842			1,853			1,915			(1	%)		(4	%)

Worldwide employees		55,607			55,311			54,779			1	%		2	%

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Consolidated Return on Average Common Equity and Regulatory Capital Information
(unaudited)



	Quarter Ended
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016
Average Common Equity (billions)
Institutional Securities	$	40.2		$	43.2		$	43.2
Wealth Management		17.2			15.3			15.3
Investment Management		2.4			2.8			2.8
Parent		9.2			7.8			6.9
Firm	$	69.0		$	69.1		$	68.2

Return on average Common Equity
Institutional Securities		11	%		9	%		5	%
Wealth Management		15	%		13	%		13	%
Investment Management		11	%		4	%		7	%
Firm		11	%		9	%		6	%


Regulatory Capital (millions)

Common Equity Tier 1 capital (Transitional)	$	60,457		$	60,398		$	58,514
Tier 1 capital (Transitional)	$	69,150		$	68,097		$	65,198

Standardized Approach (Transitional)
Risk-weighted assets	$	346,897		$	340,191		$	359,179
Common Equity Tier 1 capital ratio		17.4	%		17.8	%		16.3	%
Tier 1 capital ratio		19.9	%		20.0	%		18.2	%
Tier 1 leverage ratio		8.5	%		8.4	%		8.2	%

Advanced Approach (Transitional)
Risk-weighted assets	$	348,258		$	358,141		$	373,925
Common Equity Tier 1 capital ratio		17.4	%		16.9	%		15.6	%
Tier 1 capital ratio		19.9	%		19.0	%		17.4	%
Supplementary Leverage Ratio		6.5	%		6.4	%		6.1	%

Pro-forma Fully Phased-in
Pro-forma Common Equity Tier 1 capital ratio (Standardized Approach)		16.7	%		16.7	%		15.2	%
Pro-forma Common Equity Tier 1 capital ratio (Advanced Approach)		16.6	%		15.9	%		14.6	%
Pro-forma Supplementary Leverage Ratio (Advanced Approach)		6.4	%		6.2	%		6.0	%


Notes:	- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Consolidated Loans and Lending Commitments
(unaudited, dollars in billions)


	Quarter Ended						Percentage Change From:
	Mar 31, 2017		Dec 31, 2016		Mar 31, 2016		Dec 31, 2016			Mar 31, 2016

Institutional Securities

Corporate loans⁽¹⁾	$	14.3	$	13.6	$	16.6		5	%		(14	%)

Corporate lending commitments ⁽²⁾		83.7		86.0		89.3		(3	%)		(6	%)

Corporate Loans and Lending Commitments ⁽³⁾		98.0		99.6		105.9		(2	%)		(7	%)

Other loans		28.3		28.9		30.2		(2	%)		(6	%)

Other lending commitments		5.0		4.2		4.0		19	%		25	%

Other Loans and Lending Commitments ⁽⁴⁾		33.3		33.1		34.2		1	%		(3	%)

Institutional Securities Loans and Lending Commitments⁽⁵⁾	$	131.3	$	132.7	$	140.1		(1	%)		(6	%)


Wealth Management

Loans		61.6		60.4		51.8		2	%		19	%

Lending commitments		8.7		8.3		6.4		5	%		36	%

Wealth Management Loans and Lending Commitments ⁽⁶⁾	$	70.3	$	68.7	$	58.2		2	%		21	%

Consolidated Loans and Lending Commitments ⁽⁷⁾	$	201.6	$	201.4	$	198.3		--			2	%

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Institutional Securities
Income Statement Information
(unaudited, dollars in millions)


	Quarter Ended									Percentage Change From:
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016⁽¹⁾			Dec 31, 2016			Mar 31, 2016
Revenues:
Investment banking	$	1,417		$	1,274		$	990			11	%		43	%
Trading		3,012			2,605			1,891			16	%		59	%
Investments		66			3			32			*			106	%
Commissions and fees		620			602			655			3	%		(5	%)
Asset management, distribution and admin. fees		91			83			73			10	%		25	%
Other		173			150			4			15	%		*
Total non-interest revenues		5,379			4,717			3,645			14	%		48	%

Interest income		1,124			1,006			1,053			12	%		7	%
Interest expense		1,351			1,109			984			22	%		37	%
Net interest		(227	)		(103	)		69			(120	%)		*
Net revenues		5,152			4,614			3,714			12	%		39	%

Compensation and benefits		1,870			1,611			1,382			16	%		35	%
Non-compensation expenses		1,552			1,677			1,424			(7	%)		9	%
Total non-interest expenses		3,422			3,288			2,806			4	%		22	%


Income (loss) from continuing operations before taxes		1,730			1,326			908			30	%		91	%
Income tax provision / (benefit) from continuing operations⁽²⁾		459			209			275			120	%		67	%
Income (loss) from continuing operations		1,271			1,117			633			14	%		101	%
Gain (loss) from discontinued operations after tax		(22	)		(2	)		(3	)		*			*
Net income (loss)		1,249			1,115			630			12	%		98	%
Net income applicable to nonredeemable noncontrolling interests		35			11			39			*			(10	%)
Net income (loss) applicable to Morgan Stanley	$	1,214		$	1,104		$	591			10	%		105	%


Pre-tax profit margin		34	%		29	%		24	%
Compensation and benefits as a % of net revenues		36	%		35	%		37	%

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Institutional Securities
Financial Information and Statistical Data
(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016			Dec 31, 2016			Mar 31, 2016
Investment Banking
Advisory revenues	$	496		$	628		$	591			(21	%)		(16	%)
Underwriting revenues
Equity		390			225			160			73	%		144	%
Fixed income		531			421			239			26	%		122	%
Total underwriting revenues		921			646			399			43	%		131	%

Total investment banking revenues	$	1,417		$	1,274		$	990			11	%		43	%

Sales & Trading
Equity	$	2,016		$	1,953		$	2,056			3	%		(2	%)
Fixed Income		1,714			1,468			873			17	%		96	%
Other		(234	)		(234	)		(241	)		--			3	%

Total sales & trading net revenues	$	3,496		$	3,187		$	2,688			10	%		30	%

Investments & Other
Investments	$	66		$	3		$	32			*			106	%
Other		173			150			4			15	%		*
Total investments & other revenues	$	239		$	153		$	36			56	%		*

Institutional Securities net revenues	$	5,152		$	4,614		$	3,714			12	%		39	%


Average Daily 95% / One-Day Value-at-Risk ("VaR")
Primary Market Risk Category ($ millions, pre-tax)
Interest rate and credit spread	$	30		$	25		$	33
Equity price	$	15		$	14		$	18
Foreign exchange rate	$	11		$	9		$	7
Commodity price	$	8		$	8		$	11

Aggregation of Primary Risk Categories	$	39		$	32		$	42

Credit Portfolio VaR	$	15		$	17		$	16

Trading VaR	$	44		$	39		$	46

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Wealth Management
Income Statement Information
(unaudited, dollars in millions)


	Quarter Ended									Percentage Change From:
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016⁽¹⁾			Dec 31, 2016			Mar 31, 2016
Revenues:
Investment banking	$	145		$	111		$	121			31	%		20	%
Trading		238			186			194			28	%		23	%
Investments		1			2			(2	)		(50	%)		*
Commissions and fees		440			477			412			(8	%)		7	%
Asset management, distribution and admin. fees		2,184			2,185			2,054			--			6	%
Other		56			45			58			24	%		(3	%)
Total non-interest revenues		3,064			3,006			2,837			2	%		8	%

Interest income		1,079			1,075			914			--			18	%
Interest expense		85			91			83			(7	%)		2	%
Net interest		994			984			831			1	%		20	%
Net revenues		4,058			3,990			3,668			2	%		11	%

Compensation and benefits		2,317			2,223			2,088			4	%		11	%
Non-compensation expenses		768			876			794			(12	%)		(3	%)
Total non-interest expenses		3,085			3,099			2,882			--			7	%

Income (loss) from continuing operations before taxes		973			891			786			9	%		24	%
Income tax provision / (benefit) from continuing operations		326			360			293			(9	%)		11	%
Income (loss) from continuing operations		647			531			493			22	%		31	%
Gain (loss) from discontinued operations after tax		0			0			0			--			--
Net income (loss)		647			531			493			22	%		31	%
Net income applicable to nonredeemable noncontrolling interests		-			-			-			--			--
Net income (loss) applicable to Morgan Stanley	$	647		$	531		$	493			22	%		31	%

Pre-tax profit margin		24	%		22	%		21	%
Compensation and benefits as a % of net revenues		57	%		56	%		57	%

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Wealth Management
Financial Information and Statistical Data
(unaudited)


	Quarter Ended									Percentage Change From:
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016			Dec 31, 2016			Mar 31, 2016


Bank deposit program (billions)	$	149		$	153		$	152			(3	%)		(2	%)

Wealth Management Metrics

Wealth Management representatives		15,777			15,763			15,888			--			(1	%)

Annualized revenue per representative (000's)	$	1,029		$	1,010		$	923			2	%		11	%

Client assets (billions)	$	2,187		$	2,103		$	1,999			4	%		9	%
Client assets per representative (millions)	$	139		$	133		$	126			5	%		10	%
Client liabilities (billions)	$	74		$	73		$	66			1	%		12	%

Fee-based asset flows (billions)	$	18.8		$	17.1		$	5.9			10	%		*
Fee-based client account assets (billions)	$	927		$	877		$	798			6	%		16	%
Fee-based assets as a % of client assets		42	%		42	%		40	%

Retail locations		599			601			604			--			(1	%)

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Investment Management
Income Statement Information
(unaudited, dollars in millions)


	Quarter Ended									Percentage Change From:
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016			Dec 31, 2016			Mar 31, 2016
Revenues:
Investment banking	$	-		$	1		$	1			*			*
Trading		(11	)		6			(10	)		*			(10	%)
Investments⁽¹⁾		98			(24	)		(64	)		*			*
Commissions and fees		0			0			3			--			*
Asset management, distribution and admin. fees		517			512			526			1	%		(2	%)
Other		4			3			22			33	%		(82	%)
Total non-interest revenues		608			498			478			22	%		27	%

Interest income		1			0			1			*			--
Interest expense		0			(2	)		2			*			*
Net interest		1			2			(1	)		(50	%)		*
Net revenues		609			500			477			22	%		28	%

Compensation and benefits		279			249			213			12	%		31	%
Non-compensation expenses		227			223			220			2	%		3	%
Total non-interest expenses		506			472			433			7	%		17	%

Income (loss) from continuing operations before taxes		103			28			44			*			134	%
Income tax provision / (benefit) from continuing operations		30			(3	)		10			*			200	%
Income (loss) from continuing operations		73			31			34			135	%		115	%
Gain (loss) from discontinued operations after tax		0			2			0			*			--
Net income (loss)		73			33			34			121	%		115	%
Net income applicable to nonredeemable noncontrolling interests		6			3			(16	)		100	%		*
Net income (loss) applicable to Morgan Stanley	$	67		$	30		$	50			123	%		34	%

Pre-tax profit margin		17	%		6	%		9	%
Compensation and benefits as a % of net revenues		46	%		50	%		45	%

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

Investment Management
Financial Information and Statistical Data
(unaudited)


	Quarter Ended									Percentage Change From:
	Mar 31, 2017			Dec 31, 2016			Mar 31, 2016			Dec 31, 2016			Mar 31, 2016

Assets under management or supervision (billions)

Net flows by asset class ⁽¹⁾
Equity	$	-		$	(1.0	)	$	(0.7	)		*			*
Fixed Income		-			0.6			(0.8	)		*			*
Liquidity		(10.0	)		9.2			(2.4	)		*			*
Alternative / Other products		1.8			(0.5	)		0.3			*			*

Total net flows	$	(8.2	)	$	8.3		$	(3.6	)		*			(128	%)

Assets under management or supervision by asset class⁽²⁾
Equity	$	87		$	79		$	81			10	%		7	%
Fixed Income		62			60			62			3	%		--
Liquidity		153			163			146			(6	%)		5	%
Alternative / Other products		119			115			116			3	%		3	%

Total Assets Under Management or Supervision	$	421		$	417		$	405			1	%		4	%
Share of minority stake assets	$	7		$	8		$	8			(13	%)		(13	%)

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

U.S. Bank Supplemental Financial Information
(unaudited, dollars in billions)


	Quarter Ended						Percentage Change From:
	Mar 31, 2017		Dec 31, 2016		Mar 31, 2016		Dec 31, 2016			Mar 31, 2016


U.S. Bank assets	$	179.4	$	180.7	$	177.0		(1	%)		1	%

U.S. Bank investment securities portfolio ⁽¹⁾	$	62.6	$	63.9	$	61.8		(2	%)		1	%


Wealth Management U.S. Bank Data
Securities-based lending and other loans	$	36.6	$	36.0	$	29.9		2	%		22	%
Residential real estate loans		25.0		24.4		21.8		2	%		15	%
Total Securities-based and residential loans	$	61.6	$	60.4	$	51.7		2	%		19	%


Institutional Securities U.S. Bank Data
Corporate Lending	$	6.1	$	6.4	$	9.8		(5	%)		(38	%)
Other Lending:
Corporate loans		13.1		13.9		14.1		(6	%)		(7	%)
Wholesale real estate and other loans		10.3		9.9		8.3		4	%		24	%
Total other loans	$	23.4	$	23.8	$	22.4		(2	%)		4	%
Total corporate and other loans	$	29.5	$	30.2	$	32.2		(2	%)		(8	%)

Notes:

- Refer to End Notes, U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Legal Notice on pages 13 - 16.

End Notes

Page 2:
(1)	Effective January 1, 2017, the Firm adopted new accounting guidance related to employee share-based payments, the transition impact of which was not significant. Beginning in 2017, the income tax consequences related to share-based payments are required to be recognized in Provision for income taxes in the consolidated income statement instead of additional paid-in capital. The impact of the income tax consequences may be either a benefit or a provision. Conversion of employee share-based awards to Firm shares will primarily occur in the first quarter of each year. The impact of recognizing excess tax benefits upon conversion of awards in the first quarter 2017 was a discrete tax benefit of $112 million to Provision for income taxes. Results for 2016 have not been restated pursuant to the guidance.
(2)	For the quarter ended December 31, 2016, income tax provision / (benefit) from continuing operations included a net discrete tax benefit of $135 million primarily related to the remeasurement of reserves and related interest due to new information regarding the status of a multi-year tax authority examination.

Page 3:
(1)	During the quarter ended September 30, 2016, Morgan Stanley redeemed all of its issued and outstanding Capital Securities pursuant to the optional redemption provisions provided in the respective governing documents.

Page 5:
(1)	For the quarters ended March, 31, 2017, December 31, 2016, and March 31, 2016, the percentage of Institutional Securities corporate loans by credit rating was as follows:
	- % investment grade: 31%, 32% and 36%
	- % non-investment grade: 69%, 68% and 64%
(2)	For the quarters ended March 31, 2017, December 31, 2016, and March 31, 2016, the percentage of Institutional Securities corporate lending commitments by credit rating was as follows:
	- % investment grade: 70%, 69% and 76%
	- % non-investment grade: 30%, 31% and 24%
(3)	At March 31, 2017, December 31, 2016 and March 31, 2016, the "event-driven" portfolio of loans and lending commitments to non-investment grade borrowers were $13.9 billion, $15.3 billion and $10.6 billion, respectively.
(4)	The Institutional Securities business segment engages in other lending activity. These activities include originating and/or purchasing corporate loans, commercial and residential mortgage lending, asset-backed lending, financing extended to equities and commodities customers, and loans to municipalities.
(5)	For the quarters ended March 31, 2017, December 31, 2016, and March 31, 2016, Institutional Securities recorded a provision (release) for credit losses of $21 million, $(2) million and $109 million, respectively, related to loans. For the quarters ended March 31, 2017, December 31, 2016, and March 31, 2016, a provision for credit losses of $3 million, $3 million and $15 million was recorded, respectively, related to lending commitments.

(6)	For the quarters ended March 31, 2017, December 31, 2016, and March 31, 2016, Wealth Management recorded a provision for credit losses of $1 million, $3 million and $3 million, respectively, related to loans. For the quarters ended March 31, 2017, December 31, 2016, and March 31, 2016, there was no material provision recorded related to lending commitments.
(7)	For the quarters ended March 31, 2017 and December 31, 2016, Investment Management reflected a loan balance of $24 million and $23 million, respectively, which are not included in the Consolidated Loans and Lending Commitments balance. Investment Management did not record any loans for the quarter ended March 31, 2016.

Page 6:
(1)	Effective July 1, 2016, the Wealth Management and Institutional Securities segments entered into an agreement whereby Institutional Securities assumed management of Wealth Management’s fixed income client-driven trading activities and related employees in an effort to build synergies across the businesses and more efficiently risk manage the Firm’s trading activities. Periods prior to July 1, 2016 have not been recasted.

(2)	For the quarter ended December 31, 2016, income tax provision / (benefit) from continuing operations included a net discrete tax benefit of $137 million primarily related to the remeasurement of reserves and related interest due to new information regarding the status of a multi-year tax authority examination.

Page 8:
(1)	Effective July 1, 2016, the Wealth Management and Institutional Securities segments entered into an agreement whereby Institutional Securities assumed management of Wealth Management’s fixed income client-driven trading activities and related employees in an effort to build synergies across the businesses and more efficiently risk manage the Firm’s trading activities. Periods prior to July 1, 2016 have not been recasted.

Page 10:
(1)	The quarters ended March 31, 2017, December 31, 2016 and March 31, 2016 include investment gains or losses for certain funds included in the Firm's consolidated financial statements for which the limited partnership interests in these gains or losses were reported in net income (loss) applicable to noncontrolling interests.

Page 11:
(1)	Net Flows by region for the quarters ended March 31, 2017, December 31, 2016 and March 31, 2016 were:
	North America: $(16.6) billion, $2.5 billion and $0 billion
	International: $8.4 billion, $5.8 billion and $(3.6) billion
(2)	Assets under management or supervision by region for the quarters ended March 31, 2017, December 31, 2016 and March 31, 2016 were:
	North America: $259 billion, $269 billion and $264 billion
	International: $162 billion, $148 billion and $141 billion

Page 12:
(1)	For the quarters ended March 31, 2017, December 31, 2016 and March 31, 2016, the U.S. Bank investment securities portfolio included held to maturity investment securities of $14.1 billion, $13.5 billion and $7.7 billion, respectively.

Definition of U.S. GAAP to Non-GAAP Measures

(a)	The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States (U.S. GAAP). From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. The Securities and Exchange Commission defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial positions, or cash flows that is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to investors and analysts in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition, operating results, or prospective regulatory capital requirements. These measures are not in accordance with, or a substitute for U.S. GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable U.S. GAAP financial measure. In addition to the following notes, please also refer to the Firm's first quarter earnings release footnotes for such definitions and reconciliations.

(b)	The following are considered non-GAAP financial measures: return on average common equity metrics, return on average common equity excluding DVA metrics, tangible common equity, tangible book value per common share and pre-tax margin. These measures are calculated as follows:
	-	The return on average common equity equals annualized net income for the quarter or full year net income applicable to Morgan Stanley less preferred dividends as a percentage of average common equity. The return on average common equity excluding DVA is adjusted for DVA in the denominator.
	-	Tangible common equity equals common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction.
	-	Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
	-	Pre-tax profit margin percentages represent income from continuing operations before income taxes as percentages of net revenues.

(c)

The fully phased-in Common Equity Tier 1 risk-based capital ratios and fully phased-in Supplementary Leverage Ratio are pro-forma estimates which represent non-GAAP financial measures that the Firm considers to be useful measures for evaluating compliance with new regulatory capital requirements that have not yet become effective. Supplementary leverage ratio equals fully phased-in Tier 1 capital divided by the fully phased-in total supplementary leverage exposure. For information on the calculation of regulatory capital and ratios for prior periods, please refer to Part II, Item 7 "Liquidity and Capital Resources—Regulatory Requirements" in the Firm's Annual Report on Form 10-K for the year ended December 31, 2016.

Definition of Performance Metrics

(a)	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 Note 16 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2016 (2016 Form 10-K).
(b)	Book value per common share equals common equity divided by period end common shares outstanding.
(c)	Preferred stock dividend / Other includes allocation of earnings to Participating Restricted Stock Units (RSUs).
(d)	Firmwide regional revenues reflect the Firm's consolidated net revenues on a managed basis. Further discussion regarding the geographic methodology for net revenues is disclosed in Note 21 to the consolidated financial statements included in the Firm's 2016 Form 10-K.
(e)	The Firm Expense Efficiency Ratio represents total non-interest expenses as a percentage of net revenues.
(f)	The global liquidity reserve, which is held within the bank and non-bank operating subsidiaries, is comprised of highly liquid and diversified cash and cash equivalents and unencumbered securities. Eligible unencumbered securities include U.S. government securities, U.S. agency securities, U.S. agency mortgage-backed securities, non-U.S. government securities and other highly liquid investment grade securities.
(g)	The Firm's goodwill and intangible balances utilized in the calculation of tangible common equity are net of allowable mortgage servicing rights deduction.
(h)	The Firm’s capital estimation and attribution to the business segments are based on the Required Capital framework, an internal capital adequacy measure. This framework is a risk-based and leverage use-of-capital measure, which is compared with the Firm’s regulatory capital to ensure that the Firm maintains an amount of going concern capital after absorbing potential losses from stress events, where applicable, at a point in time. The Firm defines the difference between its total Average Common Equity and the sum of the Average Common Equity amounts allocated to its business segments as Parent equity. The common equity estimation and attribution to the business segments is based on the Firm’s fully phased-in regulatory capital requirements, including supplementary leverage, and incorporates the Firm’s internal stress tests. The amount of capital allocated to the business segments is set at the beginning of the year, and will remain fixed throughout the year until the next annual reset. The Required Capital framework is expected to evolve over time in response to changes in the business and regulatory environment and to incorporate enhancements in modeling techniques. For further discussion of the framework, refer to Part II, Item 7 “Liquidity and Capital Resources—Regulatory Requirements” in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2016.

(i)	The Firm’s binding risk-based capital ratios for regulatory purposes are the lower of the capital ratios computed under the (i) standardized approaches for calculating credit risk RWAs and market risk RWAs (the “Standardized Approach”); and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). At March 31, 2017, the binding ratio is based on the Advanced Approach transitional rules. For information on the calculation of regulatory capital and ratios for prior periods, please refer to Part II, Item 7 "Liquidity and Capital Resources—Regulatory Requirements" in the Firm's 2016 Form 10-K.
(j)	Institutional Securities net income applicable to noncontrolling interests primarily represents the allocation to Mitsubishi UFJ Financial Group, Inc. of Morgan Stanley MUFG Securities Co., Ltd., which the Firm consolidates.
(k)	Institutional Securities discontinued operations primarily includes after-tax losses related to Saxon, which became a discontinued operation in 2011.
(l)	VaR represents the loss amount that one would not expect to exceed, on average, more than five times every one hundred trading days in the Firm's trading positions if the portfolio were held constant for a one-day period. Further discussion of the calculation of VaR and the limitations of the Firm's VaR methodology, is disclosed in Part II, Item 7A "Quantitative and Qualitative Disclosures about Market Risk" included in the Firm's 2016 Form 10-K.
(m)	Annualized revenue per Wealth Management representative is defined as annualized revenue divided by average representative headcount.
(n)	Client assets per Wealth Management representative represents total client assets divided by period end representative headcount.
(o)	U.S. Bank refers to the Firm’s U.S. Bank operating subsidiaries Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association and excludes balances between Bank subsidiaries.
(p)	Wealth Management client liabilities reflect U.S. Bank lending and broker dealer margin activity.
(q)	Wealth Management fee-based client account assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
(r)	Wealth Management fee-based asset flows include net new fee-based assets, net account transfers, dividends, interest, and client fees and exclude institutional cash management related activity.
(s)	Investment Management Alternative/Other asset class includes products in Fund of Funds, Real Estate, Private Equity and Credit strategies, as well as Multi-Asset portfolios.
(t)	Investment Management net flows include new commitments, investments or reinvestments, net of client redemptions, returns of capital post-fund investment period and dividends not reinvested; and excludes the impact of the transition of funds from their commitment period to the invested capital period.
(u)	The share of minority stake assets represents Investment Management's proportional share of assets managed by entities in which it owns a minority stake.
(v)	The Institutional Securities U.S. Bank other lending data includes activities related to commercial and residential mortgage lending, asset-backed lending, corporate loans purchased in the secondary market, financing extended to equities and commodities customers, and loans to municipalities.

Legal Notice

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

The information should be read in conjunction with the Firm's first quarter earnings press release issued April 19, 2017.

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