Morgan Stanley 2009 Annual Report Download - page 39

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Introduction.
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. The Company, through its subsidiaries and affiliates, provides a
wide variety of products and services to a large and diversified group of clients and customers, including
corporations, governments, financial institutions and individuals. A summary of the activities of each of the
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 MSSB (see Note 3 to
the consolidated financial statements), 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 (see “Discontinued Operations—Retail Asset Management Business”
herein). Asset Management also engages in investment activities.
Change in Fiscal Year-End.
On December 16, 2008, the Board 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.
The Company’s results of operations for the 12 months ended December 31, 2009 (“2009”), November 30, 2008
(“fiscal 2008”), November 30, 2007 (“fiscal 2007”) and the one month ended December 31, 2008 are discussed
below.
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 Retail Asset
Management, including Van Kampen Investments, Inc. (“Van Kampen”) to 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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