The Infrastructure Opportunity Jan09

8/8/2019 The Infrastructure Opportunity Jan09

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Ifocus

Investment management

FOR InstItutIOnal InVEstOR usE OnlY and MaY nOt BE usEd wIth thE GEnERal PuBlIC.

1Booz all Hilo, Lih! Wr! moio!, 2007.

February 2009

Mike Nolan

Mgig direcor

Morg sey Iveme Mgeme

212 296 7266

[email protected]

Justin Simpson

Mgig direcor

Morg sey Iveme Mgeme

44 20 7425 5059

[email protected]

T Irrucur Opporuiy: Rpir,

Build d siul

Executive SummaryIrrucur i h oudio o ociy cooy d drii cor i

i biliy o cop i chi world. I dlopd couri, i irrucur

i orly i d o rplc, uprd or rpir. I ri rk, dd

i rr or w irrucur dlop, couri k o cop i

icrily loblizd rkplc, o cili h irio ro rurl o urb

li d o ipro doic lii drd. tody, id wo prc o

lobl ro doic produc i p ully o irrucur i d

ich quil o pproxily $1 rillio. By 2030, i i id

h cuuli $41 rillio i dd o build d rpir irrucur loblly o

xpdi dd, ui h h curr pc o pdi y h o b

icrd i h coi dcd.

1

a cooic lowdow d rcio prd cro h lob, or pdi

o irrucur h bco hdli w. a h Uid s did wih Frkli

D. Rool nw Dl public work pl duri h gr Dprio, couri r

looki oc i o irrucur pdi o iul cooic rowh. I l

2008, h Uid s, Chi, aurli d Brzil, o ohr, oucd bold

pl o icr irrucur xpdiur o kick r hir cooi. Howr, or

h lor r, or will d o rly o h pri cor o ply or

ipor rol hir ow bilii o ri h orou ou o cpil rquird o

ud uch projc r rchd hi.

acclrd pdi i h hor rcobid wih h culr dd or

irrucur dlop d rpir or h lo ruppor h i

opporuiy i irrucur, ihr hrouh pri quiy or publicly rdd copi.

gor r pui orwrd lr ou o irrucur pdi o hlp

lobl cooic rcory; w bli hi pdi will o o o h hdwid

xpricd i 2008, wh h diculy i cci udi ld o lld d

cclld projc. Furhror, irrucur pdi will d o ri prioriy

or h lor r h dd or w d odrizd irrucur coiu

o xpd o lobl cl. Irrucur ock hror y r ipor

ourc o rik-djud rur o dirid porolio.


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T Irrucur Opporuiy: Rpir, Build d siul

2 |

2aric sociy o Ciil eir3mor sly Rrch: em Irrucur Ju gi srd. mrch 2008.

Infrastructure Defined

Irrucur copri h phyicl h hlp uppor rydy li d llow coury o opr cily, row d propr.

I iclud ll h l o coury phyicl oudio: rod, rilwy, brid, irpor, wrwy, uilii d il ric,

uch wr, lcriciy, w dipol d ry or; couicio work o owr d wir h cili wird d wirl

couicio; d public uirii, hopil d ohr ocil ric cilii.

Irrucur hr cri coo ribu: Ty r rlly xpi o coruc d o ii, d hy o ucio oopoli bcu brrir o copii ry r hih. Irrucur d o opr udr h juridicio o or

rulor d, oc up d rui, d o b rhr iu o orl bui cycl ic dd or hir ric i ilic. Tu,

dirc i i irrucur d o r prdicbl, bl ch fow. I ddiio, h uiqu chrcriic y b h

public copi d i irrucur projc.

Display 1 how h dir yp udr h irrucur ubrll.

Display 1: Infrastructure encompasses many different types of investment possibilities

Eergy Oil and gas transportation Alternative energy

trporio Toll roads, tunnels, bridges

Railroads, mass transit

Parking facilities

Ports

Airports

uiiie Electricity

Water

Gas

teecommicio Wireless networks Cable systems

Oer Health-care facilities Education facilities

sorce: Morg sey Iveme Mgeme

a riy o copi r iold i irrucur projc dir o i li cycl: ci, corucio, xcuio d

oprio. Tr r ryi dr o rik ocid wih ch , wih iic rik h ou o projc du o h iriic

cpil iiy. Pio ud, i ud d bk pricip i h ci cycl. Corucio, iri, ril d

hy quip copi pricip i h pli d xcuio o h projc. Filly, copi h pciliz i oprio dic bco iold oc h projc i copld.

Secular Demand for Global Infrastructure Investment

T pri d o ddr ili irrucur i h Uid s, europ d ohr rio o h dlopd world d o build irrucur

i ri rk couri, uch Chi, Idi d Li aric, will dd ubil i or h x 20 yr.

I h dlopd world, irrucur i i dir d o rpir d odrizio. I h o kp pc wih h d o uprd

xii irrucur. a id 28% o brid i h Uid s r dd i poor codiio.2 I 2006, Lodo xpricd h wor

drouh i cury cud by h Ciy old, lki pip. T yr, lcricl blckou prlyzd h popl o Qu, borouh o

nw York Ciy. Irrucur i h ky o iii copii, ki h d o build d uprd irrucur il.

I ri rk couri, crowdd rodwy, or-uilizd rporio y, idqu wr d iio ric, d lcko ordbl houi i rii cooi popl o o cii o d opporuiy. approxily 1.6 billio popl qurr o h

world populiori wihou lcriciy d or ho who do h cc, upply i o irrulr d xpi. a id 1.1

billio popl do o h cc o driki wr, whil 2.6 billio lck bic iio, ccordi o h World Bk.3 T ri h

urb irrucur y r currly xprici i o oi wy y i oo. I c, Uid nio i how h h

lobl urb populio h ri ro 730 illio i 1950 o or h 2.3 billio popl i 1990. I i l projcio, h Un xpc

urhr 1.5 billio popl o li i cii by 2015, or ol urb populio o 3.8 billio. a Display 2illur, h joriy o

h rowi urb populio will b i h ri world.


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| 3

globlizio i lo ipor cor drii h rowi dd or irrucur dlop. a rk bco or lobl, iprod

rilwy, por, irpor d ohr rporio ric r dd or bui d rd.

T cor rl io h d or ubil iid $41 rillio d hih $65 rillioi irrucur

xpdiur loblly or h x 20 yr.4Display 3 dor h lobl iud o irrucur i d by rio

d cor. a or p o o prolod rcio, hy h oucd pl o cclr hi pdi hrouh

orhcoi iulu pck.

T ollowi cio o hi ppr ouli h pl by looki h irrucur codiio o pcic couri.

Display 2: Emerging markets will account for nearly three quarters of the worlds urban population by 2015

Breakdown of global urban population 19502015

01950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

20

40

60

80

41%

59%

43%

57%

45%

55%

47%

53%49% 51%

52%48%

55%

45%

59%

41%

62%

38%

65%

35%

67%

33%

70%

30%

71%

29%

73%

27%

Emerging Developed

Percent(%)

Source: United Nations World Population Prospects 2005 Revision and Morgan Stanley Research

Display 3: The $41 trillion infrastructure challengeprojected infrastructure spending (20052030)

North America Europe Asia/Oceania

3.62

1.530.94

0.43

Latin/South America

4.97

1.461.01

0.08

Africa

0.23

0.54

0.31

0.02

Middle East

0.230.18

0.31

0.14

4.82

1.08

3.12

0.43

9.04

4.23

2.110.51

Water ($22.61 trillion) Power ($9.00 trillion) Road and rail ($7.80 trillion) Air/seaport ($1.59 trillion)

Source: Booz Allen Hamilton, Global Infrastructure Partners, World Energy Outlook, Organisation for Economic Co-operation and Development (OECD),

Boeing, Drewry Shipping Consultants, U.S. Department of Transportation

All forecasts are subject to change at any time and may not come to pass due to changes in market or economic conditions.

4Booz all Hilo, Lih! Wr! moio!, 2007 d OeCD Irrucur o 2030 Rpor, Jury 2008.


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4 |

5aric sociy o Ciil eir6nw aric Foudio, Rdri aric Public Irrucur Dci, tioy bor h Hou Coi o trporio d Irrucur, Ju 19, 2008.

United States

I o h U.s. s Coi o Fic o July 10, 2008, h Coriol Bud Oc rpord h h Uid s

currly i $400 billio pr yr o irrucurpproxily 2.4% o gDP. Whil hi i iic ur, i h pro idqu

o curr d. Icrd coio wihi h io rporio work chll cooic produciiy by lhi

cou d dlyi h hip o ood. For xpl, id $15 billio o produciiy i lo ully du o fih dly, whil

rod coio co $78 billio yr i lo i d wd ul. Filur wihi ky y, uch h wkd ly y i nw

Orl, or h dr pod by rucurlly drou or obol rucur, uch h I-35W mipoli brid or h miiippi, rxpl o how udri i irrucur h bco iu o iol y.

I 2005, h Uid s rcid D rd ro h aric sociy o Ciil eir i h curr codiio o iio, brid

wrwy d ohr bic ric (Display 4). spdi d o icr o $1.6 rillio ully or h x yr iply o rpir

xii irrucur.5 Ti i i criicl o rh ur y, bolr lo-r copii d o ur cooic rowh.

a cooic dowur i h Uid s h cclrd pl or xpdiur o rbuild iol irrucur h h b lcd

or dcd. I Dcbr 2008, h Prid-elc Ob oucd coprhi irrucur pl o hlp pur cooic rowh

i h Uid sh lr iol i i irrucur ic h 1950. T pl cll or bw $600 billio d

$1 rillio i pdi wih lr pr pld or brod cori: rporio d rdiiol irrucur, chool corucio,

ry cicy, brodbd ir cc d hlh-cr iorio choloy.

Public pdi o irrucur i rcoizd o o h o ci wy o cour cooic lowdow bcu i h h do dircly cri or job d ri hlhy uliplir c hrouhou h cooy by cri dd or ril d ric.

T U.s. Dpr o trporio i h ry dollr i drl hihwy i cr $6.20 i cooic ciiy. By

coprio, $1 x cu i id o produc oly 67 c. T curr propod dor r xpcd o cr or h wo illio

job d iul pproxily $35 billio pr yr i w cooic ciiy.6

Prid Ob pl lo iclud h crio o niol Irrucur Ri Bk o xpd d hc xii drl

rporio i. T bk will rci iuio o drl oy$60 billio or 10 yro c rporio

irrucur projc cro h coury.

Whil iulu pdi would proid o idi rli or irrucur d, i do o ully ddr h lo-r d pod

by h io populio d rc rowh. spdi will d o ri prioriy wll byod h or iulu pl.

Display 4: U.S. infrastructure needs upgrading

U.S. infrastructure grades

secor 2005 grade*

aviio d+

Bridges C

dm d

Drinking Water D-

Energy (national power grid) d

Navigable waterways d

Ri d

Roads d

tri d+

Wastewater d

U.S.s Infrastructure G.P.A. D

Source: American Society of Civil Engineers (ASCE); http://www.asce.org/reportcard/2005/index.cfm

*The ASCE has released the 2009 overall grade for U.S. infrastructure, and it has remained a D. A full updated breakdown of sectors, however, will not be available unti

Mrc 2009.


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| 5

7Irrucur 2008: a Copii ad. Urb Ld Iiu d er &You. 2007.8hp://c.urop.u/w/cooy/081127_1_.h9hp://irourc.worldbk.or/InteaPInFRastRUC/Rourc/855084-1137106254308/RourcRquir.pd10mor sly Rrch, Dcbr 2008.

Europe

Lik h Uid s, europ couri u ocu o h ic o hir xii irrucur. Howr, i ordr o cop

uccully i h lobl rkplc, hy lo d o uppor w dlop or. T europ Uio (eU) h coid o

hci i cooic cicy by prooi ri o irrucur projc did o or cohio d rowh. to hi d, i i

lloci or h $900 billio o rporio projc, which iclud ril corridor o coc por, irpor d jor cii, d lo

o iroduc hih-pd ri bw jor cii d il europ lli-rcki rih ril y. By 2020, h eU xpc o h

cro-coil ril, rod d wrwy work wih proporiol icr i h ubr o por d irpor i h rio. 7

ery-rld irrucur i lo xpcd o rr iic i i europ. I priculr, irol lilio i gry,

Drk, spi d h nhrld h iuld i i rwbl ry.

T cooic rcory pl i europ id prly irrucur, r choloy d ry cicy i cobi iol

cio wih eU policy. I nobr 2008, h europ Coiio propod iulu pck oli 200 billio h would b

ourcd boh ro iol d eU bud o bolr rowh d ploy wihi i 27 br couri. my eU couri uch

h UK, gry d Frc h lrdy oucd coury pcic ur.8

China

I Chi, irrucur dd h b dri by urbizio, h dlop o rk cooy d h d or or cpciy o

rpor xpor. Chi ri irrucur pdirowi by 20% ullyh b did o ccoplih i wo dcd

wh h U.s. ccoplihd i hl cury. Ti ry h pro uccul i iuli i xploi rowh r, ki Chi oo h world -rowi cooy. Chi i xpcd o ccou or pproxily 80% o ol irrucur pdi i h e

ai rio ro 2006 o 2010, which rl io pproxily i prc o i gDPor rly $350 billio ully.9

spdi o ry will ccou or iic porio o irrucur xpdiur. alo wih Idi, Chi i xpcd o ccou or 50%

o h world icr i ry dd or h x wo dcd. accordi o h World ery Oulook 2007, publihd by h Iriol

ery aociio, Chi u ill or powr-ri cpciy or h x 20 yr h i currly illd i h Uid s.

Howr, Chi h o b iu o h lobl lowdow. I nobr, Chi uild $586 billio iulu pck h would

boh hlp ui i lo rcord o cooic xpio d rii propriy d dri irrucur dlop o w hih. much o

h pdi will b rld o rporio, oi owrd buildi hihwy, rilrod d irpor.

accordi o mor sly Rrch, rilwy irrucur i i xpcd o ur 88% yr-or-yr, whil ol hihwy i

will ri 25%. tol wrwy i i xpcd o ri 8.9% yr-or-yr (Display 5).10

Chi or h pldd o rp irilwy work d ly w li bw Biji d shhi, wll ir-ciy rilwy.

Display 5: China investments in infrastructure expected to surge

China infrastructure investment

2006 2007 2008E 2009E

(Rmbbn)

Hydropower

Investment

Highway

Investment

Waterway

Investment

Railway

Investment

YoY (RA)0

500

1,000

1,500

2,000

0

30

20

15

10

5

35

25

40

45

Percent(%)

Source: MoC and MoR and Morgan Stanley Research; E denotes Morgan Stanley estimate

All forecasts are subject to change at any time and may not come to pass due to changes in market or economic conditions.


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6 |

11Irrucur 2008: a Copii ad. Urb Ld Iiu d er &You. 2007.12Ibid.13Ibid.14Li aric ecooic Oulook 2008. Oriio or ecooic Co-oprio d Dlop. 2007.15er & You, Ii i globl Irrucur: a eri a Cl.

India

Filur o pd dquly o irrucur ipro could joprdiz Idi lo-r propc. ar yr o i prc

cooic rowh, rly o pr wih Chi, Idi work o hihwy d powr pl r orwhld. Dily rc j d powr

blckou h hur boh cour d corporio. approxily 45% o Idi houhold r wihou powr, d y locl wr

y ri urlibl. Idi Fic miir i h lck o irrucur pdi h b dr o cooic rowh o

o o wo prc poi ully. Idi pli coiio i h coury will d o i $500 billio ro 2008 o

2012, up ro h $21 billio currly p ully.11

to k r wor, Idi w pcilly hrd hi by h crdi crii pri i w xpcd o ud roud hl o h projc

pld o ipro h io irrucur. to hlp prop up i cooy d puh orwrd uch dd irrucur projc h Idi

or oucd, i Dcbr 2008, pl o pd icrl $3 billio o irrucur projc icludi rod, por d

powr pl.

Latin America

Li aric populio i rowi r h i r o irrucur dlop. I couri r buildi ro h roud up i

p o propl cooi d ipro produciiy.

I 2008, mxico budd $2.7 billio o build ou i rod y. e hi ubil iuio would l or h hl o i

213,000-il rod y upd. to ddr hi dcicy, mxico oucd pl o i $250 billio or h x yr i

rporio irrucur projc, pciclly or rod d ril y uprd.12

Brzil h hioriclly udrid i irrucur. to ri copii, i ow c h chll o boh rpiri d xpdi xii

irrucur. I Brzil, oly 12% o rod r pd.13 Y, h rod y i o Brzil priry irrucur cocr: Por k prioriy

bcu o hir dirc c o h coury xpor rk. For Brzil d ohr col couri i Li aric, 40% o rpor co

r rld o h quliy o doic irrucur. I Brzil icrd h cicy o i por o h drd o ho o europ io,

rpor co r id o dcr by 15%.14 I Dcbr 2008, Brzil oucd pl o icr irrucur pdi by 34%.

Ohr couri i Li aric, lo ipcd by h lobl cooic lowdow, h oucd pl o icr irrucur i.

For xpl, ari oucd xpdd public work pl d pproxily $31 billio h b budd, or rcord 5% o ro

doic produc.

Sources of Funding

trdiiolly, or h houldrd h ir rpoibiliy or ii, buildi d iii irrucur projc. Howr, d h xpdd, co h icrd d bud h corcd, or h urd o h pri cor or udi ihr

hrouh dirc owrhip o irrucur or hrouh public-pri prrhip (PPP), which r rucurd o llow or lo-r

pri ci d oprio o publicly-owd . Pri ior y or lubl diiri d opriol kill, d y

ipro projc cicy du o h url ici o corol co d xiiz lu wh pri ud r rik.

Iriolly, pri cpil h b ployd or public ric or dcd. tody, id 10% o 15% o ol ul

pdi o irrucur projc worldwid co ro pri ior, d or h 100 couri h uilizd priizio or

irrucur dlop.15

T Uid s h b lowr o dop h id o priizio. I nw Jry, h lilur rcly urd dow propol o ll h

grd s Prkwy d h nw Jry turpik, wo jor oll rod. Howr, h PPP odl h rcly id ccpc i Chico

wih h rc l o opr h Chico skywy toll Rod, dowow prki r d h midwy airpor. I ddiio, Idi

uccdd i priizi h oprio o oll rod, d h s Dio souh By exprwy w h r rod i Cliori o b buil PPP

Priizio hould coiu o ply lrr rol i irrucur pdi d i bridi h irrucur-i p. Howr, 2008

prod dicul yr irrucur projc cd hdwid ro ihr ci, which icrd h ubr o cclld projc.

gor i boh dlopd d ri rk h oucd billio o dollr i irrucur pdi o hlp brid h p d

o iul rowh i chlli cooic iro.


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| 7

16Wll sr Jourl, auu, 2008.

Display 6: Large Fiscal Stimulus Plans Announced in 2008

Size of Stimulus Package

United States $600 billion$1 trillion

Ci $589 billion

Erope $268 billion

Brzi $254 billion

Jp $250 billion

ari $27.2 billion

so Kore $11 billion

India $3 billion

Investing in InfrastructurePrivate Equity vs. Publicly-Traded Securities

Tr r wo priry wy or ior o i xpour o irrucur i hir porolio: hrouh pri quiy ud or h public

quiy rk.

Private Equity

Ulid quiy holdi, uully ccd hrouh pri quiy ud, h hioriclly b h prrrd hicl or irrucur

i. Ulid or pri irrucur ud i dircly i or opri copi, ori hihr rik-djud rur

du o lowr oliliy. Lik ohr pri quiy ud, pri irrucur ud rquir lr iiu i d iol lock-

up priod o rl yr, rduci liquidiy. accordi o Pri equiy Illic, ulid irrucur ud rid $34.9 billio

i 2007, up 429% ic 2005.

Pri irrucur i h bco icrily populr o iiuiol ior. For xpl, Cliori Public

eploy Rir sy rrkd $7 billio or irrucur i hrouh 2010, d Whio s i

bord h llocd 5% o i ud o irrucur i.16

Publicly-Traded Securities

Publicly-rdd irrucur copi worldwid or h lr i opporuiy i irrucur d, bcu o hir

widr cop, rpr copi h b rrdl o whhr pdi i iiid by h public or pri cor. Lid

irrucur iclud oll rod d brid opror, irpor d por opror, uiliy copi, d copi iold i

url or prolu rporio.

a icr i h ubr o irrucur idic i o h lid irrucur buroi populriy. T irrucur-

orid idic h ypiclly ouprord h brodr quiy rk. T rk cpilizio o h s&P globl Irrucur

Idx, which i pproxily $1.7 rillio ( o Dcbr 2008), illur h iud o h opporuiy.


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8 |

Display 7: Private and public infrastructure investing have distinguishing characteristics

Private Equity Fund Publicly listed Companies

acce Invest in private equity fund with other investments Invest in traded equities

Investor Eligibility Qualied investors and institutional investors only Available for purchase on open exchanges

Diversication Low hig

time o Ive Over ree yer Immediate

Liquidity Ten-year lock-up period diy

Miimm Iveme hig Low

Potential advantages Illiquidity return premium

Smooth return prole

Ownership of assets

Ey cce

Full diversication

Daily liquidity

Potential disadvantage High specic investment risk

Low transparency

Illiquidity

Correlation to listed equity markets

sorce: Morg sey Iveme Mgeme

Infrastructure and Its Role in a Diversified Portfolio

Bcu publicly rdd copi or liquidiy, low cpil rquir d rpori rprcy, hy r y wy or ior

o i cc o h rowi i opporuiy i irrucur. I c, lid irrucur c b ipor rowh

orid copo i wll-dirid porolio. Copi h proid corucio, iri, buildi ril d ci or

irrucur projc d o b ro h cry worldwid ur i pdi.

Lid irrucur, rprd by h s&P globl Irrucur Idx, i dirid uir o irrucur copi h cor

ulipl cor d boh dlopd d ri rk. T s&P globl Irrucur Idx, how i Display 8, h proidd

rr rur h brodr quiy rk wih iilr oliliy ll, ruli i rr rik-djud rur.

alhouh irrucur ock r ubjc o h orll rik o quii cl, hy po uiqu chrcriic h proid

diricio b. T s&P globl Irrucur Idx h b o 0.79 o h s&P 500 whil iriol, lobl d rirk idic ll h b o rr h 1.00 o h s&P 500 (Display 8).

a rul, s&P globl Irrucur ock y or o oly poil or rci rik-djud rur, bu lo y proid diricio

b o h quiy copo o porolio.

Corrpodily, porolio cicy ri wh irrucur i ddd o h quiy porio o porolio diidd 60/40 bw ock

d bod ( dord i Display 9), rii h rur pr ui o rik k, or shrp rio. I c, or h p 7 yr, holdi

5%-20% o lid irrucur ock i porolio hlpd o h shrp rio io poii rriory.


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10/12

mor sly I m PublicioFollowing are recent thought-leadership papers covering a range o investment issues.

Portfolio Choices for Oil Based Sovereign

Wealth Funds

Jury 2009Ficil o rourc rd by

oil l h id ou rcly i lih o h rowidow o oil-rich couri ori wlh ud (sWF).

Ti ppr ouli rwork ior c u o ddr

o o h iu, propoi h h opil llocio

or sWF hould k io coidrio boh pculi d

hdi dd.

Portfolio Liquidity

Jury 2009T driorio i lu duri 2008

uild ho o w liquidiy probl or y dirid

porolio. Porolio r d ch-lik o ulll

idi udi rquir, y hy u lo ii low

cocrio o illiquid i hir porolio, ui rur,d prr b iiiy. I hi ppr, w orh bic

rwork or ddri h hihly coplx liquidiy probl.

Global Recovery Post Bubble

Jury 2009Whil h wor o h lobl dowur y ru

i cour by l 2009, h rik i h y rboud i 2010 will

b ic d ril. I hi ricl, sph Roch, Chir o

mor sly ai, hr hi iw o h riki yry o

cooic orc ldi up o lobl rblci.

An Opportunistic Approach to Hedge Fund Investing

In the New Market LandscapeJury 2009I hi ppr, w xi o o h priry

cu o h idury rc udrprorc or hd ud

r. W lo look likly coquc o h rowi

prur o r coolidio h will pu priu

o lr, dirid hd ud proidr wih iiuiol-

quliy oprio. Wihi hi cox, w idiy rl rk

dilocio d dird prici opporuii h w bli

hd ud r wll poiiod o xploi.

Private Equity Outlook: Evaluating Opportunities and

Allocations amid the Credit Crunch

Jury 2009Whil pri quiy i o ipriou o h

oliliy ihr i h cooic d bui cycl, w icip

h coplli i opporuii will coiu o urc.

Our rrch how h h opporuii will b chrcrizd

by rci luio d cori lr, d il h

cquiiio o bui h c b hcd hrouh opriol/

ric ch d opr i ich rk. I h curriro, w bli h h iddl rk i or likly o

or propc o hi ur h h lrd-buyou r.

An Analytical View of President-Elect Obamas Policies

nobr 2008 sor Brck Ob lcorl icory,

copl wih xpdd jorii i h Hou d s, i h

Docr corol or h lili d diiri proc

or h r i ic 1994. I hi ricl, h mor sly

gor Rlio lyz h iic ricio o

h lcio rul or h w adiirio polici o dl wih

h cooic crii, wll doic priorii o x, hlh cr,

ry, h iro, lbor rlio d rd.

The 111th Congress

nobr 2008I hi ricl, h mor sly gor

Rlio riw h copoiio o h w Us Cor,

d lyz how h l lcio pord iic policy

ch or 2009 d byod.

Public Fund CIO Survey: Optimizing Resources to

Meet Evolving Demands

nobr 2008mor sly I m

Public Fud CIO sury proid dild look io h o

pri chll ci chi i ocr i ouprcdd rk oliliy d oli i opio

T ury rul how h CIO r ddri h chll

by ki xrl proidr or i dic, purui

ric prrhip, hii llocio o lri d

hci rik .

Bullish on Equities, with a Focus on the U.S.

Ocobr 2008T i rc lobl quiy-rk llo h

l y ior wodri wh o do xhould o y

h cour, d kp o quiy xpour; or hould o jup o

h idli d hord ch? accordi o abhiji Chkrbori,

hd o U.s. equiy Rrch mor sly, h quiy

rkpcilly r h rc corrciopr rci

opporuii, priculrly i h Uid s.

For a copy o any o these papers, please contact your relationship manager or e-mail us at [email protected].

T iw d opiio xprd wihi h publicio r ho o h uhor, r bd o r hy xi o h d o prprio d o

o y uur d, d will o b updd or ohrwi rid o rfc iorio h ubquly bco ilbl or circuc xii, or

ch occurri, r h d hro.


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| 11

Ti ril h b prprd olly or ioriol purpo oly d i o rcodio o buy or ll or or or oliciio

o or o buy or ll y curiy. T iorio coid hri rfc h iw o h uhor h i uch ril wr

prprd d do o rfc h opiio o ll porolio r mor sly I m d y o b rfcd i

h ri d produc h h Fir or.

T uhor iw r ubjc o ch wihou oic o h rcipi o hi docu. Ti ril h b prprd ui ourc o

iorio rlly blid o b rlibl. no rprio c b d o i ccurcy. T orc i hi pic r o crily

ho o mor sly, d y o cully co o p.

Inrastructure Companies. Irrucur bui iclud h rik o h poil or rlizd ru olu o b iicly lowr

h ho projcd d/or co orru; h rik h h ur o h cocio udlly ch duri h li o h projc

(.. h poor lr h r); d crocooic cor uch low gDP rowh or hih oil r rii h r co

o udi, or rulio which y c r chrd o cuor, or budry cori, h ipoiio o pcil

ri d ch i x lw, rulory polici d ccoui drd. Ohr rik iclud irol d du o copy

oprio or ccid, ch i rk i owrd irrucur, d rrori c. Foreign and Emerging Markets. I

i ori d ri rk il pcil rik uch currcy, poliicl, cooic d rk rik. Utilities Industry. Bcu h ud

i i h uilii idury, h ud i ucpibl o cooic, poliicl or rulory (or drulory) rik or ohr occurrc ocidwih h uilii idury.

Defnitions

Standard and Poors 500 Index(s&P 500 Idx) i rlly rpri o h U.s. ock rk. Morgan Stanley Capital International

World Index(msCI World) i rlly ccpd idx h ur prorc ro dir r o lobl ock rk, icludi

curii rpri o h rk rucur o 22 dlopd rk couri i norh aric, europ, d h ai/Pcic rio.

MSCI EAFE Indexi ud idx o coo ock i europ, aurli d h Fr e (iclud diidd o wihholdi

x). eaFe couri iclud Jp, o io i Wr europ, aurli, nw Zld, Ho Ko d sipor. T S&P Global

Inrastructure Indexiclud 75 lr, liquid irrucur ock ro roud h world. Barclays Capital U.S. Aggregate (orrly

Lh U.s. ar) i idx coprid o pproxily 6,000 publicly rdd bod icludi U.s. or, or-bckd

corpor d Yk bod wih r uriy o pproxily 10 yr. MSCI Emerging Markets: T msCI eri mrk

Idx i r fo-djud rk cpilizio idx h i did o ur quiy rk prorc i h lobl ri

rk. Standard deviation i ur o rik h rpr h dr o which i prorc h rid ro i r

prorc or priculr priod. a hihr drd diio idic hihr rik. Betai ur o ud iiiy o rk

o. Sharpe Ratio i ur o h xc rur (or Rik Priu) pr ui o rik i i

Please consider the investment objectives, risks, charges and expenses o the und careully beore investing. Te prospectus

contains this and other inormation about the und. o obtain a prospectus, contact your Financial advisor, or download one at

morganstanley.com/msim. Please read the prospectus careully beore investing.

Morgan Stanley is a ull-service securities frm engaged in a wide range o fnancial services including, or example, securities trading

and brokerage activities, investment banking, research and analysis, fnancing and fnancial advisory services.


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nOt FdIC InsuREd OFFER nO BanK GuaRantEE MaY lOsE ValuE nOt InsuREd BY anY FEdERal GOVERnMEnt aGEnCY nOt a dEPOsIt

2009 mor sly

www.orly.co/i

Documents

The Infrastructure Opportunity Jan09