Microsoft PowerPoint - MSIM Overview for the Analyst ...

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Microsoft PowerPoint - MSIM Overview for the Analyst ...

  1. 1. Morgan Stanley Investment Management Asset Management Overview July 2006 This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 1 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  2. 2. The information provided herein may include certain non-GAAP financial measures. The reconciliation of such measures to the comparable GAAP figures are included in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on 8-K, including any amendments thereto, which are available at www.morganstanley.com. This presentation may contain forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s current estimates, projections, expectations or beliefs and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of risks and uncertainties that may affect the future results of the Company, please see “Forward-Looking Statements” immediately preceding Part I, Item 1, “Competition” and “Regulation” in Part I, Item 1, “Risk Factors” in Part I, Item 1A and “Certain Factors Affecting Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2005, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Quarterly Reports on Form 10- Q for the quarterly periods ended February 28, 2006 and May 31, 2006 and other items throughout the Form 10-K, Form 10-Qs and the Company’s 2006 Current Reports on Form 8-K. This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 2 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  3. 3. Table of contents Section 1 Strengths of MSIM Today Section 2 MSIM Growth Strategy This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 3 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  4. 4. Section 1 Strengths of MSIM Today This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 4 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  5. 5. STRENGTHS OF MSIM TODAY MSIM Is a Key Business of Morgan Stanley Morgan Stanley Net revenues Profit before taxes Fiscal year 2005=$26,778 million Fiscal year 2005=$7,361 million 19% 8% Asset Asset Management Management 11% 14% 12% 13% 65% 58% Institutional Securities Global Wealth Management Asset Management Discover Asset Management Profit before taxes Pre-tax profit margin Return on average $ million common equity 1,007 35% 36% 30% 29% 28% 827 26% 25% 24% 23% 22% 21% 482 17% 462 396 (1) (1) FY 2003 FY 2004 FY 2005 1st Half FY 2003 FY 2004 FY 2005 1st Half 2006 FY 2005 1st Half 2006 (1) 2006 MSIM MSIM excl. Private Equity MSIM Morgan Stanley 1. Six months ended May 31 This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 5 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  6. 6. STRENGTHS OF MSIM TODAY MSIM Key Strengths • Strong brand recognition – Morgan Stanley – Van Kampen • Global footprint • Scale • Breadth of products • Multiple channels of distribution • Community of boutiques • Full firm commitment and resources This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 6 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  7. 7. STRENGTHS OF MSIM TODAY MSIM Has a Global Footprint Products and Distribution Amsterdam Stockholm New York Boston London Frankfurt Paris Luxembourg Oakbrook Terrace San Francisco Menlo Park Jersey City Milan Tokyo Houston West Conshohocken Madrid Hong Kong Mumbai Singapore Melbourne MSIM Office Present MSIM Distribution Coverage This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 7 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  8. 8. STRENGTHS OF MSIM TODAY MSIM Has The Scale to Succeed Top 20 money managers Pensions and Investments, June 2006 Ranking Assets ($ billion) 1 Barclays Global 1 3 ,51 • In June 2006, Pensions and 2 State Street Global 1,439 Investments ranked Morgan 3 Fidelity Investments 1,422 Stanley #11 by worldwide 4 Vanguard Group 958 assets 5 Legg Mason 864 6 Capital Research 858 • MSIM’s strength is in 7 JPMorgan Asset Mgmt. 842 traditional, actively managed 8 Mellon Financial 781 investments 9 Deutsche Asset Mgmt. 633 10 Northern Trust Global 618 11 Morgan Stanley 599 12 PIMCO 594 13 UBS Global Asset Mgmt. 581 14 AllianceBernstein Inst'l 579 15 AIG Global Investment 572 16 Merrill Lynch 537 17 Prudential Financial 531 18 ING 523 19 Wellington Mgmt. 521 20 Goldman Sachs Asset 496 0 250 500 750 1,000 1,250 1,500 1,750 Investment type: T ra dit io na l A lt e rna t iv e s Inde x Source: Total assets are from June 2006 Pensions and Investments, using year end 2005 data. Morgan Stanley assets reflect Morgan Stanley consolidated assets at fiscal year end 2005. Investment types, which are derived from June 2006 Pension and Investments and July 2006 Institutional Investors, are for comparison purposes This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 8 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  9. 9. MSIM GROWTH STRATEGY MSIM Organization 2006 John Mack Firm CEO Bob Scully • Investment expertise is Firm Co-President organized around investment Owen Thomas product areas MSIM President, COO • Distribution is organized Investments U.S. & Americas Distribution Non-Americas around clients • Focused on communicating Dennis Shea David Germany Stuart Bohart Michael Kiley Open Michael Green Kenneth Winston Head and CIO, Head and CIO, Head and CIO, Head of Americas Head of Head of MSIM Chief Risk Officer effectively among the groups Global Equity Global Alternatives Retail & U.S. Institutional Non-Americas Fixed Income Intermediary Distribution Distribution • Decentralized, with all Attracting new talent components of the Internal External organization accountable for • Head and CIO Global Equity • CIO London Equity financial results • Head and CIO Alternatives • Two investment teams in Absolute Return Strategies • Head of Operations • Process-Driven team • Two investment teams: • Global Mid-Cap Equity Market Neutral team • Six investment professionals: • Defined Value team, Absolute Return Strategies • European Senior Loans • Structured Products and Derivatives team • Alternative Investment Partners • Pension Asset/Liability expertise • Global Value • Global Infrastructure sector expertise • International Value • Senior U.S. Institutional sales professional • Head of Morgan Stanley Funds Distribution • Senior Middle East sales professional This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 9 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  10. 10. STRENGTHS OF MSIM TODAY MSIM Product and Distribution Balance • MSIM offers a broad array of May 31, 2006 Ending AUM/AUS = $440 billion traditional products and is increasing its offering of alternative products Asset Class Distribution • MSIM utilizes multiple 3% 3% 20% 22% 5% channels of distribution globally leveraging the 17% Morgan Stanley brand and resources where possible 51% 23% 20% 21% 15% Americas Retail-Morgan Stanley Branded Equity Fixed Income Americas Retail-Van Kampen Branded Money Market Americas Intermediary Alternatives U.S. Institutional Real Estate Non-U.S. Unit Investment Trusts This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 10 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  11. 11. STRENGTHS OF MSIM TODAY MSIM Offers Clients a Broad Product Array Key Product Type by Investment Group Global Equity Global Fixed Income Alternatives Dennis Shea, CIO J. David Germany, CIO Stuart Bohart, CIO AUM=$241 billion (1) AUM=$166 billion (1) AUM=$20 billion (1) U.S. Equity • Core/Core Plus • Absolute Return Strategies (Hedge Funds) • U.S. Small-, Mid-, Multi-, and Large-Cap • Long Duration – Quantitative Equity Strategies Value • Mortgage – Fundamental Equity Strategies • U.S. Small-, Mid-, Multi-, and Large-Cap • Corporate – Global Macro Strategies Growth • Targeted Duration • U.S. Large-Cap Core • Intermediate Duration • Alternative Investment Partners • Systematic Active Equity – Fund of Hedge Funds • Global REITs (U.S./European/Asian) • High Yield – Fund of Private Equity Funds • Sector Funds • Short Duration – Insurance Dedicated Fund of Hedge • Enhanced LIBOR Funds Global/International Equity – Portable Alpha • International Value • Customized • International Growth • Global/International • Senior Loans • International Small-Cap • Emerging Markets Debt − Collateralized Loan Obligations • Global Emerging Markets • Global Core • Institutional Liquidity • Structured Products and Derivatives • Global Small- and Large-Cap Value • Enhanced Cash • Global Systematic Active Equity • Retail Money Markets • Managed Futures • European • Japan (Small-Cap, Value, Growth, Core) • Private Equity • Asian (ex. Japan) and Pacific Basin Asset Allocation Unit Trusts • Balanced Funds AUS=$13 billion (1) • Global Tactical Asset Allocation • Unit Investment Trusts – Fully Funded – Global Macro 1. Ending AUM/AUS as of May 31, 2006 This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 11 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  12. 12. STRENGTHS OF MSIM TODAY MSIM Utilizes a Multi-Channel Distribution Approach Core Distribution Americas Retail- Americas Retail- Americas Intermediary U.S. Institutional Non-U.S. Channels Morgan Stanley Branded Van Kampen Branded Customer Tiers Morgan Stanley Global • Broker Dealers • Banks • Consultants • Consultants Wealth Management • Corporations • Investment Advisors • Intermediaries • Corporations • Public Plans • Financial Advisors • Banks • Foundations • Public Plans • Private Wealth /Endowments • Financial Planners • Private Banks Management • Insurance General Investment Accounts/ Financial • Intermediaries Representatives Institutions Core Investment Morgan Stanley Brand Van Kampen Brand Van Kampen Brand • Separate Accounts • Separate Accounts Vehicles/Products • Mutual Funds • Mutual Funds • Mutual Funds • Pooled Trust • Liquidity Products • Institutional Funds • Variable Annuities • Platform Business • Liquidity Products • Société d'investissement à • Affiliated Separately • Unit Investment Trusts • External Separately • Alternative Capital Variable Managed Accounts Managed Accounts Investments • Alternative (SICAV) Funds • Variable Annuities Investments • Variable Annuities • Institutional Funds • Alternative • Alternative • Unit Investment Trusts Investments Investments Morgan Stanley Brand • Investment Trust Management • Institutional Funds Company (ITM) Funds • Liquidity Products • Société d'investissement à Capital Variable (SICAV) Funds Sub-Advised • Mutual Funds Ending AUM/AUS $96 billion $90 billion $67 billion $98 billion $89 billion As of May 31, 2006 This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 12 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  13. 13. STRENGTHS OF MSIM TODAY • Performance is key to driving growth MSIM Investment Performance • On February 22nd, 2006, Barron’s U.S. Mutual Funds Performance annual ranking placed MSIM % Long-Term Fund Assets Above Lipper Median – 30th out of 65 fund families for 1- 76% 76% year performance 71% 71% 71% 67% – 24th out of 56 for 5-year 61% 60% 59% 61% 63% performance 48% – 4th out of 40 for 10-year performance – The 1-year rankings placed MSIM outpacing Vanguard, Franklin Templeton, JPMorgan and Putnam • On July 5th, 2006, Wall Street Journal named seven MSIM funds as "Category 1 Year 3 Year 5 Year Kings": Aug'05 Nov'05 Feb'06 May'06 Large-Cap Growth – Morgan Stanley Institutional Focus % Rated Assets with Morningstar 4/5-Star Rating Equity – Morgan Stanley Institutional U.S. 47% 45% Large Cap Growth 39% 39% – Morgan Stanley Growth Multicap Growth – Morgan Stanley Capital Opportunities – Morgan Stanley Aggressive Equity Pacific Region – Morgan Stanley Pacific Growth Real Estate Aug'05 Nov'05 Feb'06 May'06 – Morgan Stanley Institutional This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information International Real Estate generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 13 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  14. 14. Section 2 MSIM Growth Strategy This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 14 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  15. 15. MSIM GROWTH STRATEGY Growth Strategy Our Strategy for Growth Critical Initiatives • Increase value of Morgan Stanley’s Asset • Build alternatives capability Management business • Create new traditional products using existing — PBT growth capabilities and through lift-outs / acquisitions — Multiple (P/E) expansion by • Expand non-U.S. footprint: distribution and demonstrating net sales and AUM growth products • Focus on revenue growth and diversification • Invest in Van Kampen - Intermediary and Unit by investing in the business Investment Trusts growth — People • Stem outflows of Morgan Stanley retail mutual — Acquisitions funds — Infrastructure • Rebuild institutional reputation and business, particularly in the U.S. • Leverage Morgan Stanley franchise and MSIM scale and positioning • Enhance traditional product strength and build Alternatives • Performance, performance, performance This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 15 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  16. 16. MSIM GROWTH STRATEGY Build a Much Broader Alternatives Capability What We Have What We’ve Done What We’re Doing • The Alternative Investments First Quarter 2006 Absolute Return Strategies group is composed of 4 distinct • Internal transfer of Structured • Continue efforts on lift-out / groups: Products and Derivatives team acquisitions, and minority • Completed lift-out of Process-Driven stakes to build business – Absolute Return Strategies (ARS) Strategies team Alternative Investment Partners • Launched / incubated 6 new • Expand AIP product line and – Alternative Investment alternative investment products introduce new funds Partners (AIP) • Distribution focus on smaller – Senior Loans mid-market and high net worth Second Quarter 2006 – Structured Products and • Hired Stuart Bohart as the head and Senior Loans Derivatives (SP&D) CIO of Alternatives • Growth driven by client focused • Completed Oxhead Capital new products through acquisition introduction of funds, • Internal transfer of Defined Value Collateralized Loan Obligations, team Separately Managed Accounts • Internal transfer of sector expertise Structured Products and to run the global infrastructure Derivatives initiative (initiated June 2006) • Develop custom approaches to • Launched Japanese Equities Market build structured products Neutral product • Introduce Liability Driven • Re-opened Traxis to new investors Investments This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 16 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  17. 17. MSIM GROWTH STRATEGY Enhance Traditional Product Offerings Through both Organic Launches and Bolt-on Acquisitions/Lift-Outs What We Have What We’ve Done What We’re Doing • Many top performing equity First Quarter 2006 Organic launches strategies at or near capacity • Launched / incubated 5 new • Leverage current talent pool to equity products build out strong product • Fixed Income products with pipeline improved performance, and capacity Acquisitions / lift-outs • Targeted acquisitions / lift-outs • Good performing strategies to complement our existing building three year track records product line Second Quarter 2006 • Product gaps in large asset • Launched / incubated 8 new gathering categories products – 7 Equity – 1 Fixed Income This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 17 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  18. 18. MSIM GROWTH STRATEGY Expand Non-U.S. Footprint Distribution and products What We Have What We’ve Done What We’re Doing • $89 billion, or 20% of MSIM First Quarter 2006 Expand the footprint AUM/AUS is sourced from non- • Increased distribution focus on • Asia U.S.(1) Alternatives – Korea • Signed a global agreement with – Australia • MSIM is represented in 13 non- Merrill Lynch Global Private – China U.S. countries Client division to distribute MSIM – India products through Merrill Lynch's • Europe • Outside of the U.S., portfolio International distribution network – Middle East managers are located in: worldwide – Switzerland – Europe Second Quarter 2006 • Fill product gaps – Japan – Singapore Middle East • Hired sales head • Explore new client opportunities: – India central banks and direct • Leveraging Firm’s Dubai office wholesaling China • Evaluate acquisitions in • Dedicated sales hire – Australia • Applied (and gained the approval – China in July 2006) for license to – Brazil manage domestic Chinese equity – Korea products – Taiwan 1. Total MSIM AUM/AUS of $440 billion as of May 31, 2006 This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 18 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  19. 19. MSIM GROWTH STRATEGY Invest in Van Kampen - Intermediary and Unit Investment Trusts Growth What We Have What We’ve Done What We’re Doing • Vibrant $100+ billion fund and Unit First Quarter 2006 • Increase resources for high growth / Investment Trusts complex (1) • Launched Van Kampen margin businesses: – 6th largest 3rd party fund sponsor (2) International Growth Fund and – Defined Contribution: – One of the fastest growing Van Kampen Leaders Fund Doubling field sales force complexes over the last 4 years (2) – Unit Investment Trusts: • Introduced new retirement – 2nd largest Unit Investment 38% increase in field sales force education and support materials Trusts sponsor (3) • Strong brand presence within broker • Added Variable Insurance field • Expand product offering to add community sales professionals diversity • Established leader with distinguished – International & Global capabilities in several key product – Closed End Funds areas: U.S. Large Cap Value / U.S. – Income Oriented products Moderate Allocation / High Yield – Retail Separately Managed Municipals / Senior Loans Second Quarter 2006 Account strategies • Leader in intermediary platform • Launched Van Kampen Equity • Position Van Kampen to take market Premium Income advantage of retirement markets – On 20 of top 25 annuity platforms (4) • Issued 14 new Unit Investment from a product and distribution – On 22 of top 25 Defined Trusts products standpoint Contribution platforms (5) – Attractive blend of run rate and • Introduced new television takeover business flows advertising 1. AUM/AUS as of May 31, 2006 4. Source: VARDS, 4th quarter 2005 2. Source: Strategic Insights, May 2006 5. Source: Pensions and Investments, June 2005 3. Source: ICI, May 2006 This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 19 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  20. 20. MSIM GROWTH STRATEGY Stem Outflows of Morgan Stanley Retail Mutual Funds What We Have What We’ve Done What We’re Doing • Morgan Stanley Advisors funds First Quarter 2006 • Preserve favorable market share (excluding Money Market and • Deployed a new client focused in Morgan Stanley GWMG Closed End) represents 7% of field coverage model total MSIM AUM/AUS (1) – Assigned dedicated internal • Actively pursue third party and external wholesalers to distribution of Morgan Stanley • Favorable market share in distributing Morgan Stanley Funds in 401(K), financial Morgan Stanley Global Wealth Funds in Morgan Stanley planner, and Registered Management Group (GWMG) GWMG Investment Advisor communities • Outflows in Morgan Stanley • Develop distinctive Morgan Advisor products Second Quarter 2006 Stanley fund offering • Hired the head of Morgan – Launch distinctive new Stanley Funds Distribution products – A newly created position to – Rationalize existing product focus on the Morgan Stanley- line branded funds 1. Total MSIM AUM/AUS of $440 billion as of May 31, 2006 This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 20 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  21. 21. MSIM GROWTH STRATEGY Rebuild Institutional Reputation and Business, Particularly in the U.S. What We Have What We’ve Done What We’re Doing • $187 billion in AUM, 43% of First Quarter 2006 Client MSIM total (1) • Launched / incubated 9 new • Communicate MSIM story to products within the channel clients and consultants • MSIM covers over 100 consulting • Conducted road shows with • Form Institutional Client firms consultants and clients Solutions Group • Leverage client service • Manages assets for 20 of the top 50 U.S. Pension funds, 56 of the People top 200 U.S. Pension funds (2) Second Quarter 2006 • Hire US Institutional leader • Launched / incubated 9 new • Hire additional salespeople products within the channel • Internal transfer of Pension Asset Product / Liability management expertise • Develop products to address client needs • Senior management meetings • Enhance ability to place and road shows with consultants alternatives and clients • Communicate Fixed Income • Hosted the annual investment turnaround story roundtable of industry thought • Retain clients in International leaders (Lyford Cay Conference) Value Equity products 1. As of May 31, 2006 2. Source: P&I Databook, January 23, 2006. It includes Corporate and Public Funds This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 21 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  22. 22. MSIM GROWTH STRATEGY Summary: Measuring Our Progress First Year Two to Three Years Three to Five Years Three to Five Years Business Investment Gaining Traction Results • New management team • Positive flows • Leader in the asset • Filled leadership gaps • More complete traditional management business with a product offering reputation for excellent • Reorganized business by performance, innovative product and client segment • Improved margin products and superior client • Bottom up business plan • Completion of several service • Seeded new products acquisitions • Built infrastructure • Multiple direct hedge fund strategies • Actively pursued new talent to manage money • Restructured Morgan Stanley Advisor Fund family • Opened lines of communication This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 22 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.
  23. 23. MSIM GROWTH STRATEGY Measuring Our Performance: Key Success Metrics FY 2005 Results (1) Aspiration • Net revenues $2.9 billion Double digit growth • Pre-tax margin 35% (incl. Private Equity) 30%~35% 29% (excl. Private Equity) • Assets Under Management $431 billion $600 billion+ • Net Flows ($19) billion Strong and competitive positive flows • FY New products launched 3 30+ • Retail Product Performance – % of Morningstar rated assets in 4/5 star 45% 50%+ funds 1. Full Year ended November 30, 2005 This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accurate or complete. The Page 23 presentation has been prepared solely for informational purposes, is neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally presented.

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