Dear Fellow Shareholders:

It is a privilege to be writing my first annual letter to you as the

Chief Executive of Morgan Stanley, a Firm with a storied 88-year history.

In 1990, I was hired into the Investment Banking analyst program,

and the Firm has been my second home ever since. Morgan Stanley

is the only place I have ever worked. I care deeply about this

institution and its future.

MORGAN STANLEY

|

2024

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2024 SHAREHOLDER LETTER

Ted Pick

Chief Executive Officer

Thanks to James Gorman’s visionary and strategic

leadership, the Morgan Stanley of today is a strong and

balanced financial institution. I join 80,000 colleagues in

thanking James for his extraordinary leadership as Chief

Executive for the last 14 years. With vision, hard work

and steely resolve, James led the Firm’s transformation

and its reclamation of an illustrious franchise.

While there has been a change in leadership, there is no

change in strategy. Our Firm has a clear and consistent

business purpose: to act as a trusted advisor to clients

globally, helping them raise, manage and allocate capital.

This is what we do, we do it well, and our mission is to

do it even better as an Integrated Firm.

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2024 SHAREHOLDER LETTER

MORGAN STANLEY

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2024

FINANCIAL PERFORMANCE AND BUSINESS REVIEW

After fifteen years of financial repression, a period

characterized by low inflation and low interest rates,

the adjustment to a new economic paradigm will likely

take several more years for the markets to absorb.

2023 was marked by geopolitical tensions, higher and

uncertain rate paths, and tighter credit conditions.

This resulted in subdued activity at both the corporate

and investor level. In our industry, we witnessed the

failure of some regional banks. Strong regulatory

intervention and the support of the largest U.S. banks,

including Morgan Stanley, mitigated the impact.

Despite this challenging market backdrop,

Morgan Stanley delivered solid results and produced

a return on average tangible common equity (ROTCE)

of 12.8% for the year. The Firm reported annual net

revenues of $54.1 billion and net income of $9.1 billion.

The combination of our industry-leading Wealth

Management and Investment Management platforms

with our world-class Institutional Securities franchise

provides a “class of one” business model with scale and

durability. We have a global diversified business with a

leading client franchise. I am excited about the growth

opportunities ahead.

Morgan Stanley is home to talented people who

embody our culture and abiding values. Over the past

two decades, we have lived through highs and lows

and we have learned from both. Our senior management

team is unique in its combination of experience across

the Firm and its longstanding client and stakeholder

relationships. Together, we will continue on our path to

deliver consistent long-term results for the benefit of

our shareholders and clients.

The strategic decisions made over the past 15 years have

transformed Morgan Stanley’s business model. Our business mix,

scale, profitability and returns have diversified meaningfully and

improved significantly. Today our strategy is sound and it is working.

“

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2024 SHAREHOLDER LETTER

MORGAN STANLEY

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2024

Wealth Management delivered revenues of $26.3 billion

and a pre-tax margin of 24.9% last year. The shift in

client behavior resulting from the rise in the absolute

level of interest rates impacted revenue mix and

margin. Nevertheless, the business continued to grow

new client relationships and attract client assets. Client

relationships grew by more than 600,000 last year, led

by success in the workplace channel. Net new asset

growth of $282 billion over the course of the year

represented an industry-leading 7% annualized

growth of beginning period assets.

In Wealth Management, Morgan Stanley is the

industry’s leading asset gatherer. We have expanded

our business model across three channels:

advisor-led, self-directed, and workplace. We have

leadership positions in each of these channels,

reflecting the power of combining best-in-class

advice with best-in-class technology. As a result of

organic and inorganic growth, Wealth Management

client assets were $5.1 trillion at year end. While

the pace of gathering assets can vary based on

2023 Highlights

EXECUTING OUR STRATEGY

ƒ Wealth Management revenues of $26.3 billion and pre-tax margin of 24.9%

ƒ $5.1 trillion in Wealth Management client assets across advisor and self-directed channels;

$1.5 trillion in assets under management in Investment Management

ƒ $282.3 billion in net new assets in Wealth Management representing 7% of beginning period client assets

ƒ $13.5 billion of total net inflows across Alternatives and Solutions asset classes in Investment Management

ƒ No. 1 in managed accounts, with $1,856.8 billion in assets

ƒ No. 1 in managing retail direct indexing through Parametric

ƒ No. 2 in Equity Sales & Trading revenue wallet share at 20.4%

ƒ No. 2 advisor on global announced mergers and acquisitions

ƒ Wealth Management deposits of $346.1 billion

ƒ Returned more than $10 billion in capital through dividends and stock repurchases

FORTIFIED CAPITAL AND ENHANCED LIQUIDITY

ƒ Common equity tier 1 capital ratio standardized approach of 15.2% as of December 31, 2023, with $90.3 billion in common equity

ƒ $314.5 billion average global liquidity resources as of December 31, 2023

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2024 SHAREHOLDER LETTER

MORGAN STANLEY

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2024

seasonality or market dynamics, we are confident

in our ability to grow and deepen our more than 18

million client relationships with the breadth of our

wealth management offering. Over time, this ability to

attract, retain and deepen client relationships, coupled

with our differentiated platform, will drive revenue

growth and operating leverage, enabling 30% pre-tax

profit margins.

In 2023, Investment Management reported revenues

of $5.4 billion and increased total assets under

management to $1.5 trillion at year end. These results

demonstrated the diversification of the business,

with the majority of revenues from durable asset

management fees. We have added expanded

private market offerings and enhanced structuring

capabilities to our strong public market alpha engines.

This business is well-positioned in areas where we

see secular growth, including customization, private

markets and value-add credit. In this respect, Investment

Management complements our Wealth Management

platform. Together, these businesses generate tailwinds to

increasing our durable asset management fee revenues.

At a holistic level, the Wealth Management and

Investment Management businesses have achieved

the kind of scale which enables us to invest in serving

clients and to take further market share through business

cycles. Client assets across both businesses were $6.6

trillion at the end of 2023. Our goal is to grow these

assets to more than $10 trillion. The combination of scale

and diversification in these businesses positions us well

strategically for long-term growth.

Institutional Securities — our “integrated investment

bank” — delivered revenues of $23.1 billion last year.

Our Equity and Fixed Income businesses delivered solid

revenues overall while navigating markets and supporting

our clients; however, Investment Banking activity continued

to be constrained in the face of market uncertainty about

the direction of interest rates. Strategic announcements

Client assets across our Wealth Management and Investment

Management businesses were $6.6 trillion at the end of 2023.

Our goal is to grow these assets to more than $10 trillion.

The combination of scale and diversification in these businesses

positions us well strategically for long-term growth.

“

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2024 SHAREHOLDER LETTER

MORGAN STANLEY

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2024

Resilient and Balanced Business

Model Across Businesses

WEALTH MANAGEMENT & INVESTMENT MANAGEMENT

INSTITUTIONAL SECURITIES GROUP

Net Revenues ($Bn)

Client Assets ($Tn)

#1 Industry Leader

>$6 Trillion in

Total Client Assets

Strategy for Leading

Wallet Share Across the

Integrated Investment Bank

~20%

EQUITY

~15%

INVESTMENT

BANKING

1.9

2.8

6.6

2010

2018

2023

~10%

FIXED

INCOME

15

2010

20

2018

32

2023

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MORGAN STANLEY

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2024

began to pick up in the back half of 2023, and the overall

pace of corporate finance activity has accelerated,

supporting our optimism for a sustained capital markets

rebound as 2024 unfolds.

Institutional Securities is a preeminent franchise with

an extensive global client footprint and capability

set. Our teams across geographies, businesses and

client segments put us at the center of global capital

allocation and formation. We are a trusted advisor

to the most important corporations, asset managers

and asset owners around the world. Today there are

few competitors able to provide the full suite of global

capabilities and insights to clients. We expect the next

economic and financial cycle to be led by corporate

finance activity — across industries and regions — which

will drive Investment Banking growth. As one of the

few truly global investment banks, we expect to benefit

disproportionately from growth in the next cycle.

We are also focused on the state of our financial capital

and diligently managing resources to realize operating

leverage. Given the deliberate growth in our durable

earnings over the last several years, our capital position is

strong, providing us with flexibility as regulators evaluate

Basel III End Game. At the end of 2023, our CET1 ratio was

15.2%. We returned more than $10 billion in capital last

year through dividends and stock repurchases.

While we toggle among opportunities to support our

clients, grow our businesses and repurchase our stock,

the core strengths and strategic decisions made over the

years are reflected in our quarterly dividend, which we

have grown from 5 cents in 2009 to 85 cents per share

today. The durability of our business model will drive

the continued stability and growth of our dividend.

DRIVING THE INTEGRATED FIRM TOWARD

LONG-TERM GROWTH

The strategic decisions made over the past 15 years

have transformed Morgan Stanley’s business model.

Our business mix, scale, profitability and returns have

diversified meaningfully and improved significantly.

Today our strategy is sound and it is working.

Over this period, Wealth Management and Investment

Management have tripled client assets, creating a scaled

and diversified business which caters to individuals and

institutions, managing their assets and wealth. Institutional

Securities has been transformed into an integrated

investment bank consisting of Investment Banking, Equity

and Fixed Income to serve leading institutions around the

world. Taken together, the business portfolio of today has

higher and more stable profitability. The actions taken to

grow our business — both organic and inorganic — were

all within our core strategic footprint. As I stated earlier, our

mission is to act as a trusted advisor to clients, helping

them raise, manage and allocate capital. Our plans

to continue to grow our business will remain consistent

with this strategy.

Combining our Wealth Management and Investment

Management platforms with our leading Institutional

Securities franchise unlocks the unique power of the

Integrated Firm. Our capacity to source new client

opportunities, efficiently facilitate the flow of capital and

deliver Firmwide solutions has never been stronger.

We have three distinct areas of focus.

First, our premier corporate franchise spans every

business segment and region, with clients at the center

of everything we do — from advising the C-Suite on

strategy, to helping them raise capital and hedge risks,

to advising the broader employee base through our

Workplace offering.

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2024 SHAREHOLDER LETTER

MORGAN STANLEY

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2024

Morgan Stanley:

The Integrated Firm

INTEGRATED COVERAGE MODEL

AREAS OF FOCUS

Advising Premier

Corporate Footprint:

Strategy to

Workplace Solutions

Serving Self-Directed

to Ultra-High Net

Worth with Institutional

Capabilities

Delivering Integrated

Client Value Across

Public and Private

Market Ecosystem

Asset

Owners

Asset

Managers

Individuals

Corporates

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2024 SHAREHOLDER LETTER

MORGAN STANLEY

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2024

Second, we have a unique capability to serve individuals

wherever they are in their wealth accumulation journey —

from self-directed up through to the ultra-high net worth

clients as well as small institutions who sit between the

traditional segments. We are able to deliver best-in-class

institutional capabilities paired with sophisticated wealth

management solutions in an integrated service model.

Third, we continue to invest in our ability to deliver

investment and client solutions. Our global Integrated

Firm is core to our ability to originate and structure

customized opportunities across our client base. Our

capabilities are augmented by scaled distribution

channels, extending from the largest institutions

through to individual retail clients.

With this central focus on our clients, we see significant

growth opportunities in delivering the Integrated Firm.

As we drive toward our performance goals, our strategy

and value proposition is compelling.

We have reaffirmed the financial goals for our

diversified global franchise which include reaching

$10 trillion in client assets, achieving a 30% Wealth

Management pre-tax margin and a 70% Firmwide

efficiency ratio, and delivering 20% returns on tangible

common equity through business cycles. Your

management team expects a constructive market

outlook over the next several years. Against this

backdrop, we are intensely focused on achieving our

financial objectives.

The Value Proposition

FIRMWIDE GOALS

Client Assets

$10 Trillion +

WM Pre-Tax Margin

30%

Efficiency Ratio

70%

ROTCE

20%

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2024 SHAREHOLDER LETTER

MORGAN STANLEY

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2024

INVESTING IN OUR PEOPLE AND CULTURE

The future growth and long-term success of the

Integrated Firm will ultimately be driven by the depth

and talent of our human capital, coupled with the strong

values that guide our employees. We will continue

to invest in our people and culture, and we are

committed to a diverse and inclusive environment.

Delivering the Integrated Firm to clients is our highest

priority, and I have the privilege of partnering with

two outstanding executives — Morgan Stanley’s

Co-Presidents Andy Saperstein and Dan Simkowitz.

Having experienced first-hand the Firm’s transformation,

we share a consistent vision of where Morgan Stanley

is headed. Andy, in his expanded role leading both

Wealth Management and Investment Management, is

well-situated to leverage his deep knowledge of retail

distribution and products to drive client opportunities

across the businesses. Dan, having successfully

revitalized Investment Management over the past eight

years, is returning to lead Institutional Securities where

he spent 25 years and will play a critical part in

connecting the Firm around sourcing opportunities,

structuring, financing and distributing capital for our

clients. Both executives have burnished the

Morgan Stanley brand and have successfully

integrated acquisitions.

Across the Operating and Management Committees,

the team is engaged and the mood is unambiguously

positive. I am impressed by numerous examples with

our people, clients, investors and regulators in which

senior leaders recognize their partners across the

Integrated Firm. We know it will take hard work and

discipline to get to the next level, but the intent is

clear. This is the Morgan Stanley ethos that James

delivered to us and I am focused on delivering

a management team that is unmatched both in

its integrity and in its intensity.

WHAT WE DO

Advise, originate, trade, manage

and distribute capital for governments,

institutions and individuals, and always

do so with a standard of excellence.

HOW WE DO IT

Execute in a way that is consistent

with our values and, whenever possible,

deliver more than one part of the Firm.

WITH WHAT RESULT

Deliver strong returns for our

shareholders, build long-term value

for our clients and offer highly

attractive career opportunities

for our employees.

Our Strategy

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2024 SHAREHOLDER LETTER

MORGAN STANLEY

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2024

DO THE RIGHT THING

Act with integrity. Think like an

owner to create long-term shareholder

value. Value and reward honesty

and character.

PUT CLIENTS FIRST

Keep the client’s interests first.

Work with colleagues to deliver the

best of the Firm to every client.

Listen to what the client’s interests first.

Work with colleagues to deliver the

best of the Firm to every client.

Listen to what the client is

saying and needs.

COMMIT TO DIVERSITY

AND INCLUSION

Value individual and cultural

differences as a defining strength.

Champion an environment where

all employees feel a sense of

belonging — are heard, seen and

respected. Expect everyone to

challenge behavior counter to our

culture of inclusion. Attract, develop

and retain talent reflecting the

full diversity of society.

Since our founding in 1935, Morgan Stanley has

pledged to do first-class business in a first-class way.

Underpinning all that we do are five core values.

GIVE BACK

Serve our communities

generously with our expertise,

time and money. Build a better

Firm for the future by contributing

to our culture. Develop our

talent through mentoring

and sponsorship.

Our Core Values

LEAD WITH

EXCEPTIONAL IDEAS

Win by breaking new ground.

Leverage different perspectives

to gain new insight. Drive innovation.

Be vigilant about what we can

do better.

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2024 SHAREHOLDER LETTER

MORGAN STANLEY

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2024

Our businesses are supported by a world-class

technology and infrastructure organization. We have

strong executive leadership and a deep bench of talent

on both the business and infrastructure sides of the Firm,

and we continue to invest in them and their success.

Long tenure is one element that maintains the strength of

our culture. The Operating and Management Committees

of Morgan Stanley each have an average tenure of more

than 20 years, representing the best of the organization

and culture. Our recent acquisitions and lateral hires

augment and further enhance the depth of experience

and talent across the franchise.

This year we promoted 155 new Managing Directors who

are the next generation of talent. Women made up 37%

of our new Managing Director class, increasing overall

women Managing Director representation to 26%. In

addition, 29% of the U.S. class were ethnically diverse.

Building a workforce that is diverse in all respects is

important so that we can reflect the communities in which

we live and the clients we serve while continuing to attract

the best talent to the Firm. Supporting diversity efforts

in all forms within Morgan Stanley remains core to our

values, and we continue to provide programs and offerings

that foster a community of belonging.

Last year, we combined our reporting on Diversity and

Inclusion with Climate and Sustainability. We have been

reporting annually on these topics so that we can track

our progress and keep ourselves accountable. We think

about sustainability in a holistic way — in addition to

having a resilient and durable business model, we

want to be sustainable in using resources in our own

operations, as well as helping our clients achieve their

own sustainability goals. Across our businesses, our goal

is to mobilize $1 trillion in sustainable finance by 2030.

We will release our next report later in the year where we

will highlight our work helping clients manage and

progress toward their sustainable finance objectives.

Combining our Wealth Management and Investment

Management platforms with our leading Institutional Securities

franchise unlocks the unique power of the Integrated Firm.

Our capacity to source new client opportunities, efficiently

facilitate the flow of capital and deliver Firmwide solutions

has never been stronger.“