Morgan Stanley 2010 Annual Report Download - page 50

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Introduction.
Morgan Stanley, 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. Unless the context otherwise requires, the terms “Morgan Stanley” and the
“Company” mean Morgan Stanley and its consolidated subsidiaries.
A summary of the activities of each of the Company’s business segments is as follows:
Institutional Securities provides 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”), 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 and engages in
fixed income principal trading, which primarily facilitates clients’ trading or investments in such securities.
Asset Management provides a broad array of investment strategies that span the risk/return spectrum across
geographies, asset classes and public and private markets to a diverse group of clients across the
institutional and intermediary channels as well as high net worth clients.
See Note 1 to the consolidated financial statements for a discussion of the Company’s discontinued operations.
The results of operations in the past have been, and in the future may continue to be, materially affected by many
factors, including the effect of political and economic conditions and geopolitical events; the effect of market
conditions, particularly in the global equity, fixed income and credit markets, including corporate and mortgage
(commercial and residential) lending and commercial real estate investments; the impact of current, pending and
future legislation (including the Dodd-Frank Act), regulation (including capital requirements), and legal actions
in the United States of America (“U.S.”) and worldwide; the level and volatility of equity, fixed income, and
commodity prices and interest rates, currency values and other market indices; the availability and cost of both
credit and capital as well as the credit ratings assigned to the Company’s unsecured short-term and long-term
debt; investor sentiment and confidence in the financial markets; the performance of the Company’s acquisitions,
joint ventures, strategic alliances or other strategic arrangements (including MSSB and with Mitsubishi UFJ
Financial Group, Inc. (“MUFG”)); the Company’s reputation; inflation, natural disasters, and acts of war or
terrorism; the actions and initiatives of current and potential competitors and technological changes; or a
combination of these or other factors. In addition, legislative, legal and regulatory developments related to the
Company’s businesses are likely to increase costs, thereby affecting results of operations. These factors also may
have an impact on the Company’s ability to achieve its strategic objectives. For a further discussion of these and
other important factors that could affect the Company’s business, see “Competition” and “Supervision and
Regulation” in Part I, Item 1, and “Risk Factors” in Part I, Item 1A.
Change in Fiscal Year-End.
On December 16, 2008, the Board of Directors of the Company (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, 2010 (“2010”), December 31, 2009
(“2009”), November 30, 2008 (“fiscal 2008”) and the one month ended December 31, 2008 are discussed below.
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