Morgan Stanley 2009 Annual Report Download - page 65

Activity in Asset Management’s assets under management or supervision during 2009, fiscal 2008, fiscal 2007
and the one month ended December 31, 2008 was as follows:
2009
Fiscal
2008(1)
Fiscal
2007(1)
One Month
Ended
December 31,
2008(1)
(dollars in billions)
Balance at beginning of period ................................. $290 $ 400 $314 $287
Net flows by asset class:
Core asset management:
Equity .................................................. (8) (9) (9) —
Fixed income—long term ................................... (6) (14) 5 (3)
Money market ............................................ (22) (19) 10 —
Alternatives(2) ........................................... (3) 6 11 —
Total core asset management ........................ (39) (36) 17 (3)
Merchant banking:
Private equity ............................................ — 1 1 —
Infrastructure ............................................ — 1 2 —
Real estate ............................................... (2) 1 11 —
Total merchant banking ............................ (2) 3 14 —
Total net flows ................................... (41) (33) 31 (3)
Net market appreciation/(depreciation) ............................ 16 (80) 46 6
Total net (decrease)/increase .................................... (25) (113) 77 3
Acquisitions ................................................. — 1 6 —
Net increase/(decrease) in share of non-controlling interest assets(3) ..... 1 (1) 3 —
Balance at end of period ...................................... $266 $ 287 $400 $290
(1) Prior-period information has been reclassified to conform to the current period’s presentation.
(2) The alternatives asset class includes a range of investment products such as hedge funds, funds of hedge funds and funds of private
equity funds.
(3) Amounts represent Asset Management’s proportional share of assets managed by entities in which it owns a non-controlling interest.
2009 Compared with Fiscal 2008
Investment Banking. Asset Management generates investment banking revenues primarily from the placement
of investments in real estate funds. Investment banking revenues decreased 62% in 2009 from fiscal 2008,
primarily reflecting lower revenues from real estate products.
Principal Transactions—Trading. In 2009, the Company recognized losses of $68 million compared with
losses of $331 million in fiscal 2008. Trading results in 2009 included mark-to-market losses related to a lending
facility to a real estate fund sponsored by the Company and losses from hedges on certain investments and long-
term debt. Losses in 2009 were partially offset by net gains of $164 million related to securities issued by SIVs
compared with losses of $470 million in fiscal 2008.
Principal Transactions—Investments. Real estate and private equity investments generally are held for long-
term appreciation and generally are subject to significant sales restrictions. Estimates of the fair value of the
investments involve significant judgment and may fluctuate significantly over time in light of business, market,
economic and financial conditions generally or in relation to specific transactions.
Principal transactions net investment losses of $182 million were recognized in 2009 compared with losses of
$1,393 million in fiscal 2008. The results in 2009 were primarily related to net investment losses associated with
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