Morgan Stanley 2009 Annual Report Download - page 10

broker-dealer related functions, such as execution and clearing of brokerage transactions, margin lending and
custody of client assets. For Morgan Stanley, these activities are undertaken through Morgan Stanley’s own
facilities, through memberships in various clearing and settlement organizations, and through agreements with
unaffiliated third parties. Morgan Stanley and Citi provide certain other services and systems to support the
Global Wealth Management Group, including through transition services agreements with MSSB.
Asset Management.
Morgan Stanley’s Asset Management business segment is one of the largest global asset management
organizations of any full-service financial services firm and offers individual and institutional clients a diverse
array of equity, fixed income and alternative investments and merchant banking strategies. Currently, Morgan
Stanley’s asset management activities are principally conducted under the Morgan Stanley and Van Kampen
brands. Portfolio managers located in the U.S., Europe, Japan, Singapore and India manage investment products
ranging from money market funds to equity, taxable and tax-exempt fixed income funds and alternative
investment and merchant banking products in developed and emerging markets. Morgan Stanley offers clients
various investment styles, such as value, growth, core, fixed income and asset allocation; global investments;
active and passive management; and diversified and concentrated portfolios.
Morgan Stanley offers a range of alternative investment and merchant banking products for institutional investors
and high net worth individuals. Morgan Stanley’s alternative investments platform includes hedge funds, funds
of hedge funds, funds of private equity funds and portable alpha strategies, including FrontPoint Partners LLC, a
leading provider of absolute return strategies. Morgan Stanley’s alternative investments platform also includes
minority stakes in Lansdowne Partners, Avenue Capital Group and Traxis Partners LP. Morgan Stanley’s
Merchant Banking Division includes Morgan Stanley’s real estate investing business, private equity funds and
infrastructure investing group. Morgan Stanley typically acts as general partner of, and investment adviser to, its
alternative investment and merchant banking funds and typically commits to invest a minority of the capital of
such funds with subscribing investors contributing the majority.
On October 19, 2009, as part of a restructuring of Morgan Stanley’s Asset Management business segment,
Morgan Stanley entered into a definitive agreement to sell substantially all of its retail asset management
business, including Van Kampen Investments, Inc. (“Van Kampen”), to Invesco Ltd. (“Invesco”). This
transaction allows Morgan Stanley’s Asset Management business segment to focus on its institutional client base.
Under the terms of the definitive agreement, Invesco will purchase substantially all of Morgan Stanley’s retail
asset management business, operating under both the Morgan Stanley and Van Kampen brands, in a stock and
cash transaction. Morgan Stanley will receive a 9.4% minority interest in Invesco. The transaction, which has
been approved by the Boards of Directors of both companies, is expected to close in mid-2010, subject to
customary regulatory, client and fund shareholder approvals.
Institutional Investors.
Morgan Stanley provides asset management products and services to institutional investors worldwide, including
corporations, pension plans, large intermediaries, private funds, non-profit organizations, foundations,
endowments, sovereign wealth funds, governmental agencies, insurance companies and banks. Products and
services are available to institutional investors primarily through separate accounts, U.S. mutual funds and other
pooled vehicles. Morgan Stanley also sub-advises funds for various unaffiliated financial institutions and
intermediaries. A global sales force and a team dedicated to covering the investment consultant industry serve
institutional investors.
Individual Investors.
Morgan Stanley offers open-end and alternative investment funds and separately managed accounts to individual
investors through affiliated and unaffiliated broker-dealers, banks, insurance companies and financial planners.
Closed-end funds managed by Morgan Stanley or Van Kampen are available to individual investors through
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