Morgan Stanley : 2022 Shareholder Letter

Dear Fellow Shareholders:

Morgan Stanley delivered record financial performance in 2021 with strong growth across its businesses and geographies. We have built a sustainable business model with both scale and momentum, and our diversified global franchise is leaning into growth and well positioned for long-term success.

Our record results were achieved in a year marked by the continued global public health crisis related to COVID-19. Despite the development of vaccines, the arrival of new variants prevented a return to normalcy, but our employees and communities exhibited extraordinary resilience in the face of these circumstances.

The acquisitions of E*TRADE and Eaton Vance have advanced our growth strategy, capping a 12-year transformation of Morgan Stanley into a more balanced company, producing higher returns and pivoting to long-term, sustainable growth.

Our future success will be driven by the depth of talent and leadership that exists across our Firm. It is our employees who will drive our business growth and sustain our culture. Our senior management team is strong and experienced, and we have a deep bench of talent in our businesses. We continue to invest in our people and are committed to a diverse environment where all employees can prosper. We also remain committed to using our resources as a financial institution to help ensure an equitable and sustainable future for our communities and society.

James P. Gorman

Chairman and CEO

2021 FINANCIAL PERFORMANCE

Fiscal stimulus and the reopening of many parts of the global economy led to robust economic growth and a favorable market environment in 2021. Amid this backdrop, and with a strong focus on our clients, Morgan Stanley delivered record financial results- our fourth consecutive year of earnings growth. We generated strong returns for our shareholders while meaningfully driving our strategic vision forward.

For the full year, Morgan Stanley reported record revenues of $59.8 billion and record net income of $15.0 billion, producing a return on average tangible common equity (ROTCE) of 19.8%. We delivered strong results across all our businesses while remaining disciplined in our expenses. We continued to invest in our people and in technology, resiliency and cybersecurity while generating meaningful operating leverage.

The integrated investment bank-our Institutional Securities businesses-delivered excellent full-year performance with record revenues of $29.8 billion and expanding margins. Our Investment Banking and

2021 Highlights

Executing Our Strategy

• • Record revenues of $29.8 billion in Institutional Securities-our client-focused integrated investment bank

• • $4.9 trillion in Wealth Management client assets across advisor and self-directed channels

• • $438 billion in net new assets in Wealth Management representing 11% of beginning period client assets

• • Record $1.6 trillion in assets under management in Investment Management

• • $115 billion of total net inflows across public and private markets asset classes in Investment Management

• • $210 billion of investable capital across our diverse alternatives platform

• • Combined assets of U.S. banks increased to $386 billion

• • 67% Firmwide expense efficiency ratio

• • 100% increase in common share dividend and $12.0 billion share repurchase program announced in 2021

Fortified Capital and Enhanced Liquidity

• • Common equity tier 1 capital ratio standardized approach of 16.0% as of December 31, 2021, with $97.7 billion in common equity

• • $356 billion global liquidity resources as of December 31, 2021

Shelley O'Connor, Vice Chairman and Head of External Affairs; Ted Pick, Co-President, Head of Institutional Securities Group and Co-Head of Corporate Strategy; Sharon Yeshaya, Chief Financial Officer; and Keishi Hotsuki, Chief Risk Officer

Winning in the Marketplace

• • No. 1 in managed accounts, with $1,739 billion in assets

• • No. 1 in Barron's Top 100 Financial Advisors, with 45 listings

• • No. 1 in managing retail direct indexing assets through Parametric

• • E*TRADE ranked best in mobile by Barron's, Kiplinger and StockBrokers.com

• • No. 2 in Equity revenue wallet share at 22.5%

• • No. 2 underwriter of global equity and equity-linked offerings

• • No. 3 advisor on global announced and completed mergers and acquisitions

• • 93% of global mutual fund assets under management are in the top half of their Morningstar peer group over a 10-year period

Equity businesses each delivered record revenues on strong client engagement. Fixed Income delivered its second-best annual result in over a decade, following an exceptional prior year.

Our footprint is balanced around the world, putting us in a leading tier of investment banks with globalscale. Our integrated approach combined with this global footprint and balance across business lines distinguishes our model.

Wealth Management demonstrated strong growth in 2021 delivering revenues of $24.2 billion and a pre-tax margin of 26.9%, excluding integration costs. We added nearly $1 trillion in client assets in a single year to reach $4.9 trillion at the end of 2021. Strong asset generation from both existing clients and new clients, driven by our advisor channel, brought in $438 billion in net new assets. Our business continues to benefit from strong client demand across the platform. Scale advantages are propelling our predominantly organic growth, a result of our consistent and focused execution on our integration and expansion initiatives.

Investment Management reported annual revenues of $6.2 billion with a greater contribution from more durable management fee revenues. Total assets under management rose to a record high of $1.6 trillion at the end of 2021, and net flows were a very strong $115 billion during the year. Our results show the diversification of the business and our ability to deliver differentiated client value. With the acquisition of Eaton Vance, our platform has transformed into a premier and growing asset manager.

Our increased earnings power, supported by revenues from more durable sources, and the accumulated significant excess capital from the past several years allowed us to double our annual dividend to $2.80 per common share and execute on a meaningful share repurchase program of up to $12 billion. We were able to reset our capital base consistent with the needs for our transformed business model. This follows from our having consistently increased our capital return over the past decade.

The Firm's performance in 2021 exceeded our expectations. As a result, we were able to achieve all of the two-year objectives we had set out for ourselves at the beginning of the year. We entered 2022 ahead of our plan and with great momentum. Our strong brand and franchise are generating tangible results as we collaborate across our segments with a coordinated, client-focused approach.

Transformed Business Mix and Profitability

2021

$19Bn	$30Bn
$9Bn	$24Bn
$1Bn	$6Bn
8%	20%

Institutional Securities

Combined Wealth and Investment Management

Clare Woodman, Head of Europe, the Middle East and Africa; and Franck Petitgas, Head of International

TRANSFORMED BUSINESS MODEL POSITIONED FOR CONTINUED GROWTH

Over the past 12 years, Morgan Stanley has transformed its business model and is now firmly positioned for growth. Our total revenues have more than doubled since 2009 with each business having grown significantly and contributing to the Firm's enhanced profitability. We have built unique competitive advantages around each of our businesses, and we expect to grow and maintain our leading positions. Our Institutional Securities business has demonstrated increased wallet share overall and individually across business lines since we reset our strategy and restructured some of this business. Share continues to aggregate to the industry leaders, and we expect this trend to persist. Our competitive position is strong, and we are confident in our ability to capitalize on opportunities to hold, if not gain, share across the segment. Scale in our global businesses is not only the foundation for gaining market share, it also drives margin expansion through operating leverage. Furthermore, our businesses are interconnected and integrated, delivering the entire Firm to all of our clients.

Our Wealth and Investment Management businesses together held $6.5 trillion in client assets at the end of 2021. We have significant scale advantages in these

Our Wealth and Investment Management businesses together held $6.5 trillion in client assets at the end of 2021. We have significant scale advantages in these businesses, and they will benefit as rates rise over the next several years. Our longer-term goal is to grow these assets to $10 trillion.

businesses, and they will benefit as rates rise over the next several years. Our longer-term goal is to grow these assets to $10 trillion. The earnings power underlining these businesses will serve as an economic engine for the Firm for decades to come.

With the top advisor-led business in the industry, complemented by leading workplace and self-directed offerings, the wealth franchise we have built is in a category of one. We are a top player in each of the key channels in which individual investors manage their finances. We have nearly 15 million unique relationships across these channels, with the potential to deepen those relationships and consolidate client assets onto our platform. In the workplace channel, for example, we have over $500 billion in unvested assets and expect to retain an increasing proportion of these assets as they vest. We see this channel as a funnel for client and asset