Morgan Stanley 2009 Annual Report Download - page 44

(9) Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
(10) Tangible common equity to risk-weighted assets (“RWAs”) ratio equals tangible common equity divided by total RWAs of $305,000
million at December 31, 2009.
(11) The effective tax rate for 2009 includes a tax benefit of $331 million, or $0.28 per diluted share, resulting from the cost of anticipated
repatriation of non-U.S. earnings at lower than previously estimated tax rates. Excluding this benefit, the annual effective tax rate for
2009 would have been a benefit of 1%.
(12) Worldwide employees as of December 31, 2009 include additional worldwide employees of businesses contributed by Citi related to
MSSB.
(13) For a discussion of average liquidity, see “Liquidity and Capital Resources—Liquidity Management Policies—Liquidity Reserves”
herein.
(14) For a discussion of total capital ratio, Tier 1 capital ratio and Tier 1 leverage ratio, see “Liquidity and Capital Resources—Regulatory
Requirements” herein. For a discussion of Tier 1 common ratio, see “Liquidity and Capital Resources—The Balance Sheet” herein.
(15) Amount excludes certain asset management businesses following the decision to sell the Retail Asset Management business to Invesco.
(16) Equity and fixed income amounts include assets under management or supervision associated with the Asset Management and Global
Wealth Management Group business segments. Other amounts include assets under management or supervision associated with the
Global Wealth Management Group business segment.
(17) Amounts reported for Alternatives reflect the Company’s invested equity in those funds and include a range of alternative investment
products such as hedge funds, funds of hedge funds and funds of private equity funds.
(18) Revenues and expenses associated with these assets are included in the Company’s Asset Management and Global Wealth Management
Group business segments.
(19) Amounts include Asset Management’s proportional share of assets managed by entities in which it owns a non-controlling interest.
(20) Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
(21) Global representatives as of December 31, 2009 include additional global representatives of businesses contributed by Citi related to
MSSB.
(22) Annualized net revenue per global representative for 2009, fiscal 2008, fiscal 2007 and the one month ended December 31, 2008 equals
Global Wealth Management Group’s net revenues (excluding the sale of Morgan Stanley Wealth Management S.V., S.A.U. (“MSWM
S.V.”) for fiscal 2008) divided by the quarterly weighted average global representative headcount for 2009, fiscal 2008, fiscal 2007 and
the one month ended December 31, 2008, respectively.
(23) Beginning in 2009, amounts for Corporate and other accounts are presented in the appropriate client segment.
(24) Client assets per global representative equal total period-end client assets divided by period-end global representative headcount.
(25) Approximately $54 billion of the bank deposit balances as of December 31, 2009 are held at Company-affiliated depositories with the
remainder held at Citi-affiliated depositories. These deposit balances are held at certain of the Company’s Federal Deposit Insurance
Corporation (the “FDIC”) insured depository institutions for the benefit of retail clients through their accounts.
(26) Source: Lipper, one-year performance excluding money market funds as of December 31, 2009, November 30, 2008, November 30,
2007 and December 31, 2008, respectively, excluding Retail Asset Management.
Global Market and Economic Conditions in 2009.
During 2009, global market and economic conditions improved, and global capital markets recovered from the
severe downturn that occurred during the Fall of 2008.
In the U.S., economic conditions improved, liquidity began to return to the fixed income markets, the initial
public offering market reopened and the securitization market began to reopen, while the real estate markets
continued to be adversely impacted. Major U.S. equity market indices ended 2009 higher as compared with the
beginning of the year, primarily due to better than expected corporate earnings and investor confidence in an
economic recovery. Government spending increased, while consumer spending, household balance sheets and
business spending remained challenged. The unemployment rate increased to 10.0% at December 31, 2009 from
7.4% at December 31, 2008. The Federal Open Market Committee (“FOMC”) kept its interest rates at
historically low levels, and at December 31, 2009, the federal funds target rate was between zero and 0.25%, and
the discount rate was 0.50%. During 2009, the interest rate on required reserve balances and on excess balances
(balances held to satisfy reserve requirements and balances held in excess of required reserve requirements) was
0.25%. During 2009, the FOMC pursued a quantitative easing policy in which the FOMC purchased securities
with the objective of improving conditions within the credit markets by increasing the money supply. In February
2010, the FOMC raised the discount rate by 0.25% to 0.75%.
In Europe, major European equity market indices ended 2009 higher as compared with the beginning of the year.
Economic conditions, however, continued to be challenged by adverse economic developments that began in the
Fall of 2008. The euro area unemployment rate increased to 10.0% at December 31, 2009 from 8.2% at
December 2008. During the first half of 2009, the European Central Bank (“ECB”) lowered its benchmark
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