Morgan Stanley 2009 Annual Report Download - page 125

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Introduction and Basis of Presentation
The Company. Morgan Stanley (or the “Company”), a financial holding company, is a global financial services
firm that maintains significant market positions in each of its business segments—Institutional Securities, Global
Wealth Management Group and Asset Management.
A summary of the activities of each of the Company’s business segments is as follows:
Institutional Securities includes capital raising; financial advisory services, including advice on mergers and
acquisitions, restructurings, real estate and project finance; corporate lending; sales, trading, financing and
market-making activities in equity and fixed income securities and related products, including foreign
exchange and commodities; and investment activities.
Global Wealth Management Group, which includes the Company’s 51% interest in Morgan Stanley Smith
Barney Holdings LLC (“MSSB”) (see Note 3), provides brokerage and investment advisory services to
individual investors and small-to-medium sized businesses and institutions covering various investment
alternatives; financial and wealth planning services; annuity and other insurance products; credit and other
lending products; cash management services; retirement services; and trust and fiduciary services.
Asset Management provides global asset management products and services in equity, fixed income,
alternative investments, which includes hedge funds and funds of funds, and merchant banking, which
includes real estate, private equity and infrastructure, to institutional and retail clients through proprietary
and third-party distribution channels. Asset Management also engages in investment activities.
Change in Fiscal Year-End.
On December 16, 2008, the Board of Directors of the Company approved a change in the Company’s fiscal year-
end from November 30 to December 31 of each year. This change to the calendar year reporting cycle began
January 1, 2009. As a result of the change, the Company had a one-month transition period in December 2008.
Included in this report is the Company’s consolidated statements of financial condition as of December 31, 2009
and December 31, 2008; the consolidated statements of income, comprehensive income, cash flows and changes
in total equity for the 12 months ended December 31, 2009 (“2009”), November 30, 2008 (“fiscal 2008”) and
November 30, 2007 (“fiscal 2007”) and the one month ended December 31, 2008.
Discontinued Operations.
Retail Asset Management Business. On October 19, 2009, as part of a restructuring of its Asset Management
business segment, the Company entered into a definitive agreement to sell substantially all of its retail asset
management business (“Retail Asset Management”), including Van Kampen Investments, Inc., (“Van Kampen”),
to Invesco Ltd. (“Invesco”). This transaction allows the Company’s Asset Management business segment to
focus on its institutional client base, including corporations, pension plans, large intermediaries, foundations and
endowments, sovereign wealth funds and central banks, among others.
Under the terms of the definitive agreement, Invesco will purchase substantially all of Retail Asset Management,
operating under both the Morgan Stanley and Van Kampen brands, in a stock and cash transaction. The Company
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. The results of Retail Asset Management are reported as discontinued operations for all
periods presented.
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