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  • Form ADV Program Brochure

    Morgan Stanley Smith Barney LLC

    Institutional Services Program

    January 22, 2015

    2000 Westchester Avenue

    Purchase, NY 10577

    Tel: (914) 225-1000

    Fax: (614) 283-5057

    Hwww.morganstanleyclientserv.com

    This Wrap Fee Program Brochure provides information about the qualifications and business practices of

    Morgan Stanley Smith Barney LLC (“MSSB”). If you have any questions about the contents of this

    Brochure, please contact us at (914) 225-1000. The information in this Brochure has not been approved or

    verified by the United States Securities and Exchange Commission (“SEC”) or by any state securities

    authority.

    Additional information about MSSB also is available on the SEC’s website at Hwww.adviserinfo.sec.govH.

    Registration with the SEC does not imply a certain level of skill or training.

    http://www.morganstanleyclientserv.com/ http://www.adviserinfo.sec.gov/

  • 2

    0BItem 2: Material Changes

    This section identifies and discusses material changes to the

    ADV Brochure since the version of this Brochure dated March

    28, 2013. For more details on any particular matter, please see

    the item in this ADV Brochure referred to in the summary

    below.

    Ownership of MSSB. Prior to June 28, 2013, MSSB was

    owned by a joint venture company which was indirectly

    owned 65% by Morgan Stanley (“Morgan Stanley Parent”)

    and 35% by Citigroup Inc. (“Citi”). On June 28, 2013,

    Morgan Stanley Parent purchased Citi’s 35% interest in

    MSSB. Accordingly, MSSB is now a wholly owned indirect

    subsidiary of Morgan Stanley Parent. (Item 4)

    Discretionary Services for Participant-Directed

    Retirement Plans. MSSB offers discretionary consulting

    services for participant-directed defined contribution plans in

    which MSSB is responsible for the selection of investment

    options and asset allocation models. (Item 4.A)

    Consulting Group Trust Services. MSSB has made

    arrangements with external trust companies to enhance the

    administrative and operational experience of clients who

    appoint such an external trust company while MSSB provides

    investment advisory services. These arrangements could pose

    a conflict of interest. (Item 4.A)

    Fees. We list fees for different services and payment methods

    including those for participant-directed defined contribution

    plan services. (Item 4.A)

    Cash Sweeps. MSSB will, as your custodian, effect “sweep”

    transactions of uninvested cash and allocations to cash, if any,

    in your account into:

     interest-bearing bank deposit accounts established under the Bank Deposit Program (“BDP”) at banks affiliated

    with MSSB (collectively, the “Sweep Banks”) or

     money market mutual funds. These money market funds are managed by Morgan Stanley Investment Management

    Inc. or another MSSB affiliate.

    The Sweep Banks are currently Morgan Stanley Bank, N.A.

    and/or Morgan Stanley Private Bank, National Association.

    If you do not select a Sweep Investment when you open your

    account, your Sweep Investment will be BDP if you are

    eligible. (Item 4.C)

    Due Diligence. We list details on the mutual funds reviewed

    by Graystone Consulting. (Item 6.A)

  • 3

    1BItem 3: Table of Contents Item 1: Cover Page .................................................................................................................................................................................. 1

    Item 2: Material Changes ........................................................................................................................................................................ 2

    Item 3: Table of Contents ........................................................................................................................................................................ 3

    Item 4: Services, Fees and Compensation ............................................................................................................................................... 4

    A. General Description of Programs and Services .................................................................................................................... 4 Institutional Services Program.............................................................................................................................................. 4 General Description of All Programs ................................................................................................................................... 7 Account Opening .................................................................................................................................................................. 7 Restrictions ........................................................................................................................................................................... 7 Trade Confirmations, Account Statements and Performance Reviews ................................................................................ 7 Consulting Group Trust Services ......................................................................................................................................... 7 Risks ..................................................................................................................................................................................... 8 Tax and Legal Considerations .............................................................................................................................................. 9 Fees....................................................................................................................................................................................... 9

    B. Comparing Costs ................................................................................................................................................................ 12 C. Additional Fees ................................................................................................................................................................... 12

    Custody ............................................................................................................................................................................... 14 Cash Sweeps ....................................................................................................................................................................... 14

    D. Compensation to Financial Advisors .................................................................................................................................. 15

    Item 5: Account Requirements and Types of Clients ............................................................................................................................ 16

    Item 6: Portfolio Manager Selection and Evaluation ............................................................................................................................. 16

    A. Selection and Review of Portfolio Managers and Funds for the Programs ........................................................................ 16 Calculating Financial Advisors’ Performance .................................................................................................................... 19

    B. Conflicts of Interest ............................................................................................................................................................ 19 C. Financial Advisors acting as Portfolio Managers ............................................................................................................... 21

    Description of Advisory Services ....................................................................................................................................... 21 Performance-Based Fees .................................................................................................................................................... 21 Methods of Analysis and Investment Strategies ................................................................................................................. 21 Proxy Voting ...................................................................................................................................................................... 21

    Item 7: Client Information Provided to Portfolio Managers .................................................................................................................. 22

    Item 8: Client Contact with Portfolio Managers .................................................................................................................................... 22

    Item 9: Additional Information .............................................................................................................................................................. 22

    Disciplinary Information .................................................................................................................................................... 22 Other Financial Industry Activities and Affiliations .......................................................................................................... 25 Code of E

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