Morgan Stanley 2010 Annual Report Download - page 76

Activity in Asset Management’s assets under management or supervision during 2010, 2009, fiscal 2008 and the
one month ended December 31, 2008 was as follows:
2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008
(dollars in billions)
Balance at beginning of period ................................... $266 $290 $ 400 $287
Net flows by asset class:
Core asset management:
Equity ............................................... (1) (8) (9) —
Fixed income—long-term ................................ 1 (6) (14) (3)
Money market ......................................... (6) (22) (19) —
Alternatives(1) ......................................... (2) (3) 6 —
Total core asset management ......................... (8) (39) (36) (3)
Merchant banking:
Private equity .......................................... — — 1 —
Infrastructure .......................................... — — 1 —
Real estate ............................................ 2 (2) 1 —
Total merchant banking .............................. 2 (2) 3 —
Total net flows ..................................... (6) (41) (33) (3)
Net market appreciation (depreciation) .......................... 19 16 (80) 6
Total net increase (decrease) .................................. 13 (25) (113) 3
Acquisitions ............................................... — — 1 —
Net increase (decrease) in share of minority stake assets(2) ......... — 1 (1) —
Balance at end of period ........................................ $279 $266 $ 287 $290
(1) The alternatives asset class includes a range of investment products such as hedge funds, funds of hedge funds, funds of private equity
funds and funds of real estate funds.
(2) Amounts represent Asset Management’s proportional share of assets managed by entities in which it owns a minority stake.
2010 Compared with 2009.
Investment Banking. Asset Management generates investment banking revenues primarily from the placement
of investments in merchant banking funds. Investment banking revenues doubled in 2010 from 2009, primarily
reflecting higher revenues from real estate and infrastructure products.
Principal Transactions—Trading. In 2010, the Company recognized a loss of $49 million compared with a
loss of $68 million in 2009. Trading results in 2010 and 2009 included losses from hedges on certain investments
and long-term debt. Trading results in 2010 also included $25 million related to contributions to money market
funds. Trading results in 2009 also included mark-to-market losses related to a lending facility to a real estate
fund sponsored by the Company, partially offset by gains of $164 million related to SIV positions that were
previously held on the Company’s consolidated statements of financial condition.
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.
The Company recorded principal transactions net investment gains of $996 million in 2010 compared with losses
of $173 million in 2009. The results in 2010 included a gain of $444 million associated with certain consolidated
70