| (1) | (1) Amount Previously Paid:
| (2) | (2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
(4) Date Filed:
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
on behalf of its
GLOBAL FRANCHISE INTERNATIONAL MAGNUM PORTFOLIO
c/o Morgan Stanley Investment Management Inc.
1221522 Fifth Avenue of the Americas
New York, New York 1002010036 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE GLOBAL FRANCHISE PORTFOLIOSTOCKHOLDERS To Our Shareholders:Stockholders: Notice is hereby given that a Special Meeting of ShareholdersStockholders of the Global FranchiseInternational Magnum Portfolio (the ‘‘Portfolio’’"Portfolio") of The Universal Institutional Funds, Inc. (the ‘‘Fund’’"Fund") will be held on January 25, 2007 at 10:30 a.m.,Thursday, September 16, 2010, at the offices of Morgan Stanley Investment Management Inc., 1221522 Fifth Avenue, of the Americas, 5th3rd Floor, Conference Room 1-B,3R, New York, New York 10020.10036 at 9:00 a.m., Eastern Time. The Meeting is being held for the following purpose: | | 1. | To change the Portfolio from a diversified fund to a non-diversified fund. |
| | 2. | To consider and act upon any other business as may properly come before the Meeting or any adjournment thereof. |
1. To change the Portfolio's investment objective and to reclassify it as a non-fundamental policy of the Portfolio. 2. To consider and act upon any other business as may properly come before the Meeting or any adjournment thereof. Only holdersstockholders of record of shares of the Portfolio as ofat the close of business on November 8, 2006,June 24, 2010, the record date for the Meeting, are entitled to notice of, and to vote at, the Meeting of the Portfolio or any adjournments thereof. | Mary E. Mullin
Secretary |
MARY E. MULLIN
Secretary Dated: November 20, 2006[July 16], 2010 You can help avoid the necessity and expense of sending follow-up letters to ensure a quorum by promptly returning the enclosed Proxy Card. If you do not expectare unable to attend the Meeting for the Portfolio,be present in person, please fill in, sign and promptly return the enclosed Proxy Card in order that the necessary quorum may be represented at the Meeting. The enclosed self-addressed envelope. In orderenvelope requires no postage if mailed in the United States. Certain Stockholders will be able to avoidvote telephonically by touchtone telephone or electronically on the additional expense to the Portfolio of further solicitation, we ask your cooperation in mailing yourInternet by following instructions contained on their Proxy Card or voting by telephone or Internet by following the instructions on the Portfolio'senclosed Voting Information Card. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 16, 2010: The Proxy Card promptly.Statement for the Special Meeting of Stockholders is available on the Internet at the website address located on the enclosed Proxy Card.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
on behalf of its
GLOBAL FRANCHISE INTERNATIONAL MAGNUM PORTFOLIO
c/o Morgan Stanley Investment Management Inc.
1221522 Fifth Avenue of the Americas
New York, New York 1002010036 PROXY STATEMENT SPECIAL MEETING OF SHAREHOLDERSSpecial Meeting of Stockholders
OF THE GLOBAL FRANCHISE PORTFOLIO
TO BE HELD
JANUARY 25, 2007September 16, 2010
This proxy statement is furnished by the Board of Directors (the ‘‘Board,’’ the directors of which are referred to as the ‘‘Directors’’"Board") of The Universal Institutional Funds, Inc. (the ‘‘Fund’’"Fund") in connection with the solicitation of Proxies by the Board of Directors for use at thea Special Meeting of ShareholdersStockholders of the Global FranchiseInternational Magnum Portfolio (the ‘‘Portfolio’’"Portfolio") of the Fund to be held on January 25, 2007Thursday, September 16, 2010 (the ‘‘Meeting’’"Meeting"), at the principal executive office of the investment adviser for the Fund, Morgan Stanley Investment Management Inc. (hereinafter ‘‘MSIM’’"MSIM" or the ‘‘Adviser’’"Adviser"), 1221522 Fifth Avenue, of the Americas, 3rd Floor, Auditorium,Conference Room 3R, New York, New York 10020.10036. It is expected that the Notice of Special Meeting, Proxy Statement and Proxy Card will first be mailed to holders of stock of the Portfolio (each, a ‘‘Shareholder’’"Stockholder" and collectively, the ‘‘Shareholders’’"Stockholders") on or about November 20, 2006.[July 16], 2010. The purpose of the Meeting, the matters to be acted upon and the commencement time of the Meeting are set forth in the accompanying Notice of Special Meeting of Shareholders of the Portfolio.Stockholders. If the accompanying Proxy Card for the Portfolio is executed properly and returned in time, or is submitted by telephone or Internet, to be voted at the Meeting, shares represented by it will be voted at the Meeting for the Portfolio in accordance with the instructions on the Proxy Card. A Proxy may be revoked at any time prior to the time it is voted by (i) written notice of revocation to the Secretary of the Fund, (ii) execution and delivery of a later dated Proxy to the Secretary of the Fund (whether by mail or, as discussed below, by touchtone telephone or the Internet) (if returned and received in time to be voted) or (iii) by attendance and voting at the Meeting of the Portfolio. All proxies that are properly signedAttendance at the Meeting will not in and receivedof itself revoke a Proxy. In order to revoke a Proxy in time and not revoked will be voted as marked.person, Stockholders must submit a subsequent Proxy. If no instructions are specified, shares will be voted FOR Proposal 1.the Proposal. The Board has fixed the close of business on November 8, 2006June 24, 2010 as the record date for the determination of ShareholdersStockholders entitled to notice of, and to vote at, the Meeting and at any adjournment thereof. Each full share will beadjournments thereof (the "Record Date"). Shares of the Portfolio are entitled to one vote each at the Meeting and each fraction of a share will be entitled to the fraction of a vote equal to the proportion of a full share represented by the fractional share. Thus, it is essential that Stockholders complete, date, sign and return the enclosed Proxy Card. As of the record date,Record Date, the Portfolio hadshares outstanding and entitled to vote. The expense of solicitation, consisting primarily of printing and mailing, is estimated at $69,000 and will be borne by the Adviser and will include reimbursement to brokerage firms and others for reasonable expenses in forwarding proxy solicitation materials to beneficial owners. The solicitation of Proxy Cards will be largely by mail, but may include, without cost to the Portfolio, telephonic, telegraphic, online or oral communications by regular employees of certain affiliates of the Fund, including MSIM (which conducts business under the name Van Kampen), having as its principal office 1221 Avenue of the Americas, New York, New York 10020, who will receive no extra compensation for their services.
Shareholders will be able to vote their shares by touchtone telephone or by Internet by following the instructions on the proxy card accompanying this Proxy Statement. To vote by touchtone telephone or by
Internet, Shareholders can access the website or call the toll-free number listed on the proxy card. To vote by touchtone telephone or by Internet, Shareholders will need the number that appears on the proxy card in the shaded box.
The Fund will furnish, without charge, a copy of its annual report for the fiscal year ended December 31, 2005 and its semi-annual report for the fiscal period ended June 30, 2006 to any Shareholder of the Portfolio requesting such reports. Requests for the Fund's annual report and semi-annual report should be made in writing to the Fund, c/o J.P. Morgan Investor Services Co., P.O. Box 2798, Boston, Massachusetts 02208-2798, by calling 1-800-221-6726 or by visiting the Adviser's internet website at www.morganstanley.com/im or by contacting your insurance company.
The Board of Directors of the Fund recommend that you vote ‘‘FOR’’ Proposal No. 1.
TO CHANGE THE PORTFOLIO FROM A DIVERSIFIED FUND TO
A NON-DIVERSIFIED FUND
(Proposal No. 1)
The Board of Directors, including all the Independent Directors, has approved, and recommends that Shareholders of the Portfolio approve, changing the Portfolio from a diversified fund to a non-diversified fund.
A ‘‘diversified fund,’’ pursuant to Section 5(b)(1) of the Investment Company Act of 1940, as amended (the ‘‘1940 Act’’), must have 75% of its total assets represented by cash and cash items (including receivables), Government securities, securities of other investment companies, and other securities limited in respect of any one issuer to an amount not greater than 5% of the fund's total assets and not more than 10% of any class of the outstanding voting securities of such issuer. Conversely, the 1940 Act defines a ‘‘non-diversified fund’’ as a fund other than a diversified fund, and therefore places no limits on a non-diversified fund pursuant to this classification. A fund's designation as non-diversified connotes greater risk because it may invest in a limited number of issuers. A non-diversified portfolio has potential for an increase in volatility since the portfolio's performance may be closely tied to the market value of a single issuer. Investing a larger percentage of its assets in a single issuer increases the Portfolio's exposure to credit risk and other risks associated with that issuer's financial condition and business operations. The 1940 Act diversification requirements are similar to, but, are separate and apart from the diversification requirements that the Portfolio complies with in order to qualify for special tax treatment as set forth in Subchapter M of the Internal Revenue Code. This Proposal does not in any way affect the Portfolio's ability to comply with Subchapter M.
The Portfolio was initially registered with the Securities and Exchange Commission (the ‘‘SEC’’) as a non-diversified fund. The SEC staff has taken the position that a non-diversified fund that operates for three consecutive years as a diversified fund will become, by operation of law, a diversified fund. As an investment policy, the Portfolio generally concentrates its holdings in a relatively small number of companies and may invest up to 25% of its assets in a single issuer. The Portfolio has been managed within these policies while inadvertently meeting the diversification requirements. However, the Adviser believes that a non-diversified classification is an essential tool in managing the Portfolio over time given the likelihood that the Portfolio may be invested in a limited number of issuers.
Although a non-diversified fund may be reclassified as a diversified fund solely by operation of law, pursuant to Section 13(a) of the 1940 Act, a fund cannot change from diversified to non-diversified without shareholder approval. Therefore, Shareholders are being asked to approve changing the Portfolio from a diversified fund to a non-diversified fund to enable the Adviser to manage the Portfolio consistent within its current investment policy.
If Shareholders approve this proposal, the Portfolio may operate as a non-diversified fund or, in the Adviser's discretion, it may not, subject to the beneficial needs of Shareholders. The Adviser will reserve freedom of action to operate the Portfolio in a non-diversified manner only if, and when, it would be in Shareholders' best interests to do so, provided that the Adviser does not operate the Portfolio in a diversified manner within three consecutive years following shareholder approval. 1940 Act rules will require the Portfolio to again seek shareholder approval to reserve freedom of action to operate the Portfolio as non-diversified, in the event the Portfolio is subsequently reclassified, by operation of law, as a diversified fund.
At a meeting held on October 31, 2006, the Board unanimously approved the submission of this Proposal to Shareholders for their approval.
Vote Required and Board Recommendation
Approval of this Proposal requires the affirmative vote of the holders of a majority of the outstanding10,790,046 shares of the Portfolio entitled to vote thereon. Under the 1940 Act, this means the affirmative vote of the lesser of (a) 67% or more of the voting shares present at the meeting or represented by proxy if the holders of more than 50% of the outstanding voting shares are present or represented by proxy or (b) more than 50% of the outstanding voting shares of the Portfolio. The Board of Directors of the Fund recommends that you vote ‘‘FOR’’ Proposal 1.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of November 8, 2006, the following Shareholders were known by the Fund to own of record and beneficially 5% or more of the Portfolio's outstanding shares.
| | | | | | | Name and Address of
Beneficial Owner of Class I Shares | | | Amount of Beneficial
Ownership of Class I Shares | | | Percent of Class I Shares |
| | | | | | | |
| | | | | | | Name and Address of
Beneficial Owner of Class II Shares | | | Amount of Beneficial
Ownership of Class II Shares | | | Percent of Class II Shares |
| | | | | | | |
As of November 8, 2006, to the knowledge of the Adviser, the Directors and executive officers of the Fund, individually and as a group, beneficially owned less than 1% of the outstanding shares of the Portfolio.
ADDITIONAL INFORMATION
General
The presence at any Shareholders' meeting, in person or by proxy, of the holders of one-third of the Portfolio's shares issued and outstanding and entitled to be cast shall be necessary and sufficient to constitute a quorum for the transaction of business. For this purpose, abstentions and broker ‘‘non-votes’’ will be counted in determining whether a quorum is present at the Meeting, but will not be counted as votes cast at the Meeting.common stock.
The shares of the Portfolio are currently held only by insurance companies (the ‘‘Insurance Companies’’"Insurance Companies") for allocation to certain of their separate accounts (each an ‘‘Account’’"Account") established to fund the benefits under certain flexible premium deferred variable annuity contracts and certain flexible premium variable life insurance policies they issue (collectively, the variable annuity contracts and the variable life policies are hereafter referred to as the ‘‘Contracts’’"Contracts").
In accordance with their view of currently applicable law, the Insurance Companies will vote the shares of the Portfolio held in the applicable Account based on instructions received from the owners of Contracts (‘‘("Contract Owners’’Owners") having the voting interest in the corresponding sub-accounts of the Account. In connection with the solicitation of such instructions from such Contract Owners, it is understood and expected that the Insurance Companies will furnish a copy of this Proxy Statement to Contract Owners and that the Insurance Companies will furnish to Contract Owners one or more instruction cards by which the Contract Owners may provide their instructions to the Insurance Companies. Shares for which no instructions are received in time to be voted will be voted by the Insurance Companies in the same proportion as shares for which instructions have been received in time to be voted.
The expense of solicitation, consisting primarily of printing and mailing, is estimated at $22,000 and will be borne by the Portfolio and will include reimbursement to brokerage firms and others for reasonable expenses in forwarding proxy solicitation materials to beneficial owners. The solicitation of Proxy Cards will be largely by mail, but may include, without cost to the Fund, telephonic, telegraphic, online or oral communications by regular employees of certain affiliates of the Fund, including MSIM, who will receive no extra compensation for its services. In addition, the Fund may employ Computershare Fund Services, Inc. ("Computershare") to make telephone calls to Stockholders to remind them to vote. The Fund may also employ Computershare as proxy solicitor if it appears that the required number of votes to achieve a quorum will not be received. The transfer agent services for the Fund are currently provided by Computershare Trust Company, N.A. (the "Transfer Agent"). Stockholders may be able to vote their Shares by touchtone telephone or by Internet by following the instructions on the Proxy Card accompanying this Proxy Statement. The Internet procedures are designed to authenticate a Shareholder's identity to allow Stockholders to vote their Shares and confirm that their instructions have been properly recorded. To vote by Internet or by touchtone telephone, Stockholders can access the website or call the toll-free number listed on the Proxy Card. To vote by touchtone telephone or by Internet, Stockholders will need the number that appears on the Proxy Card or Voting Information Card in the shaded box. In certain instances, Computershare may call Stockholders to ask if they would be willing to have their votes recorded by telephone. The telephone voting procedure is designed to authenticate Stockholders' identities, to allow Stockholders to authorize the voting of their Shares in accordance with their instructions and to confirm that their instructions have been recorded properly. No recommendation will be made as to how a Shareholder should vote on any Proposal other than to refer to the recommendations of the Board. The Fund has been advised by counsel that these procedures are consistent with the requirements of applicable law. Stockholders voting by telephone in this manner will be asked for identifying information and will be given an opportunity to authorize proxies to vote their Shares in accordance with their instructions. To ensure that the Stockholders' instructions have been recorded correctly, they will receive a confirmation of their instructions in the mail. A special toll-free number set forth in the confirmation will be available in case the information contained in the confirmation is incorrect. Although a Shareholder's vote may be taken by telephone, each Shareholder will receive a copy of this Proxy Statement and may vote by mail using the enclosed Proxy Card or by Internet or touchtone telephone as set forth above. The last proxy vote received in time to be voted, whether by Internet, mailed Proxy Card or touchtone telephone, will be the vote that is counted and will revoke all previous votes by the Shareholder. In the event that Computershare is retained as proxy solicitor, Computershare will be paid a project management fee as well as telephone solicitation expenses incurred for reminder calls, outbound telephone voting, confirmation of telephone votes, inbound telephone contact, obtaining
Stockholders' telephone numbers and providing additional materials upon Shareholder request, at an estimated cost of $[2,000], which would be borne by the necessary quorumPortfolio. The Fund will furnish, without charge, a copy of its most recent annual report for its fiscal year ended December 31, 2009 to transact business orany Stockholder requesting such report. Requests for the vote requiredannual report should be made in writing to approveThe Universal Institutional Funds, Inc., c/o Morgan Stanley Client Relations, Harborside Financial Center, Plaza II, 3rd Floor, Jersey City, NJ 07311, by calling toll free (800) 281-2715, attn: Universal Funds, by visiting the Proposal is not obtainedAdviser's Internet website at the Meeting, the Proxies may propose one or more adjournments of the Meeting in accordance with applicable law to permit further solicitation of proxy votes. Any such adjournment will require the affirmative vote of the holders of a majority of the Portfolio's shares present in personwww.morganstanley.com/im or by proxy at the Meeting. The persons named as proxies will vote in favor of such adjournment those proxies which have voted ‘‘for’’ the Proposal and will vote against such adjournment those proxies which have voted ‘‘against’’ the Proposal. Abstentions and broker ‘‘non-votes’’ will be disregarded in connection with any such vote for adjournment. Distributor and Administratorcontacting your insurance company.
Morgan Stanley Investment Management Inc. also serves as the Fund’sFund's administrator (the ‘‘Administrator’’"Administrator"). Morgan Stanley Distribution Inc. serves as the Fund’sFund's distributor (the ‘‘Distributor’’"Distributor"). The business address of the Administrator and the Distributor is 1221522 Fifth Avenue, of the Americas, New York, New York 10020. 10036. Under the Fund's By-Laws, the presence in person or by proxy of Stockholders entitled to cast one-third of the votes entitled to be cast thereat shall constitute a Sub-Administration Agreement betweenquorum. For this purpose, abstentions will be counted in determining whether a quorum is present at the AdministratorMeeting, but will not be counted as votes cast at the Meeting. Only one Proxy Statement will be delivered to multiple Stockholders sharing an address, unless the Fund has received contrary instructions. The Fund will furnish, upon written or oral request, a separate copy of the Proxy Statement to a Shareholder at a shared address to which a single Proxy Statement was delivered. Requests for a separate Proxy Statement, and J.P. Morgan Investor Services Co. (‘‘J.P. Morgan’’), a corporate affiliate of J.P. Morgan Chase Bank, J.P. Morgan provides certain administrative servicesnotifications to the Fund. J.P. Morgan'sFund that a Shareholder wishes to receive separate copies in the future, should be made in writing to the Fund, c/o Morgan Stanley Client Relations, Harborside Financial Center, Plaza II, 3rd Floor, Jersey City, New Jersey 07311, or by calling toll free (800) 281-2715, attn: Universal Funds. Multiple Stockholders who are sharing an address and currently receiving multiple copies of periodic reports and proxy statements may request to receive only one copy of such reports and proxy statements by calling toll free (800) 281-2715, attn: Universal Funds. At a meeting held on June 17-18, 2010, the Board of the Fund determined that it was in the best interest of the Fund to approve the Proposal. After careful consideration, the Board approved the submission of the Proposal to Stockholders for their approval. The Board of the Fund unanimously recommends that you cast your vote "For" the Proposal to change the Portfolio's investment objective and to reclassify it as a non-fundamental policy of the Portfolio as set forth in this Proxy Statement. Your vote is important. Please return your Proxy Card promptly no matter how many shares you own.
PROPOSAL TO CHANGE THE PORTFOLIO'S INVESTMENT OBJECTIVE AND
RECLASSIFY IT AS A NON-FUNDAMENTAL POLICY OF THE PORTFOLIO The Board of the Fund, at a Meeting held on June 17-18, 2010, approved changes to the Portfolio's portfolio management team and its investment objective and strategies. The Portfolio's new portfolio management team will consist of members of the Global Macro and Asset Allocation team of the Adviser and the "Sub-Advisers," Morgan Stanley Investment Management Limited and Morgan Stanley Investment Management Company. The Global Macro and Asset Allocation team is led by Henry McVey. The Global Macro and Asset Allocation team analyzes investment opportunities from a broad global macro perspective, focusing on global thematic allocations based on asset class, regional, country, currency and sector considerations. In connection with the new portfolio management team's focus on global macro issues, the Board of the Fund approved various other changes to the Portfolio, including (i) changing the Portfolio's name to the Global Tactical Asset Allocation Portfolio (ii) changing the Portfolio's investment objective, (iii) changing the Portfolio's principal investment strategies, and corresponding risks as appropriate, and (iv) changing the Portfolio's primary benchmark, each as described below. Because a change to the Portfolio's investment objective requires stockholder approval, the Board approved all the changes set forth above contingent upon receiving Stockholder approval of the change in investment objective. The Investment Company Act of 1940, as amended (the "Investment Company Act"), requires a registered investment company, including the Fund and its Portfolios, to have certain specific investment policies that can be changed only with stockholder approval. Investment companies may also elect to designate other policies that may be changed only with a stockholder vote. Both types of policies are often referred to as "fundamental" policies. In this case, the Portfolio's investment objective has been designated a fundamental policy and any change to the investment objective requires stockholder approval. As a result, the Board of the Fund is asking Stockholders to approve a change in the Portfolio's investment objective to permit the Portfolio to take advantage of the new portfolio management team's global macro focus. This change will be supported by changes to the Portfolio's investment strategies and other changes discussed below. In addition, the Portfolio's investment objective is not required under the Investment Company Act to be among the Portfolio's fundamental policies. The Board believes that it would be beneficial to the Portfolio if Stockholders approved reclassifying the Portfolio's investment objective as a non-fundamental policy of the Portfolio, which would be able to be changed solely by the Board. Changing the Portfolio's investment objective to a non-fundamental policy would enable the Portfolio to avoid the costs and delay associated with a future stockholder meeting, and would permit the Portfolio, if necessary and subject to Board approval, to respond quickly to a changing regulatory or investment environment. Both Management and the Board believe these changes in the Portfolio's investment objective are in the best interest of the Portfolio and its Stockholders. Current investment objective: "The Portfolio seeks long-term capital appreciation by investing primarily in equity securities of non-U.S. issuers domiciled in EAFE countries." Proposed investment objective: "The Portfolio seeks total return."
The change in the Portfolio's investment objective (and accompanying strategy changes) will allow the Portfolio to shift to a broader, global macro mandate from its current European, Australasian and Far East ("EAFE")-focused investment approach. Management believes that the demand for global macro products by clients in the Portfolio's insurance distribution channel is strong, and that these changes will enhance the appeal of the Portfolio in the insurance channel. To support the new portfolio management team and proposed change in the Portfolio's investment objective, Management has proposed and the Board has approved all of the other changes described below. While these other changes do not require stockholder approval, the implementation of these other changes is contingent upon stockholder approval of the change in the Portfolio's investment objective. Portfolio Name Change. The Board has approved changing the Portfolio's name to the Global Tactical Asset Allocation Portfolio to more accurately reflect the broader global macro focus of the Portfolio going forward. Revisions to Investment Strategies and Related Risks. The Board has approved changes to the Portfolio's principal investment strategies. The Portfolio will seek to achieve its new investment objective of total return by investing in a blend of equity securities, fixed-income securities and other asset classes of issuers located in various countries around the world, including the United States. This change in strategy broadens the scope of the Portfolio's current investment focus which is primarily limited to equity securities of issuers in EAFE countries. The Adviser and/or Sub-Advisers will utilize a top-down investment approach that focuses on asset class, sector, region, country, and currency and thematic allocations. The Portfolio's allocations will be based upon the Adviser's and/or Sub-Adviser's evaluations and analyses, taking into account results of its fundamental market research and recommendations generated by the Adviser's and/or Sub-Adviser's quantitative models. Investment decisions will be made without regard to any particular allocation as to geographical location, sector, credit rating, maturity, currency denomination or market capitalization. The Portfolio may invest in any country, including developing or emerging market countries. The Portfolio's investments may be U.S. and non-U.S. dollar denominated. In determining whether to sell a security, the Adviser and/or Sub-Advisers will consider a number of factors, including changes in capital appreciation potential, or the overall assessment of asset class, sector, region, country, and currency and thematic allocation shifts. In addition, the Portfolio may invest in real estate investment trusts ("REITs") and mortgage-related or mortgage-backed securities, including collateralized mortgage obligations ("CMOs") collateralized by mortgage loans or mortgage pass-through securities (referred to as "Mortgage Assets"). These revisions to the Portfolio's investment strategies will also result in the Portfolio being exposed to additional risks associated with its investments in fixed-income securities, REITs and mortgage-related or mortgage-backed securities. Fixed-income securities are subject to interest rate risk and credit risk. In addition, a portion of the Portfolio's securities may be rated below investment grade, commonly known as "junk bonds," and may have speculative risk characteristics. Like mutual funds, REITs have expenses, including advisory and administration fees, that are paid by their shareholders. As a result, Stockholders will absorb duplicate levels of fees when the Portfolio invests in REITs. A general downturn in real estate values can also hurt REIT performance. In addition, REITs are subject to certain provisions under federal tax law. The failure of a company to qualify as a REIT could have adverse consequences for the Portfolio, including significantly reducing the return to the Portfolio on its investment in such company. The prices of mortgage securities may be particularly sensitive to changes in interest rates because of the risk that borrowers will become more or less likely to refinance their mortgages. Because of prepayment issues, it is not possible to predict the ultimate maturity of mortgage securities. Rates of prepayment faster or
slower than anticipated could result in reduced yields, increased volatility and/or reductions in net asset value. CMOs are comprised of various tranches, the expected cash flows on which have varying degrees of predictability as compared with the underlying Mortgage Assets. The less predictable the cash flow, the higher the yield and the greater the risk. In addition, if the collateral securing CMOs or any third party guarantees are insufficient to make payments, the Portfolio could sustain a loss. Change in Benchmark. To better reflect the Portfolio's new global macro focus, the Board has approved a change to the Portfolio's benchmark index from the MSCI Europe, Australasia and the Far East (EAFE) Index to the MSCI All Country World Index. For the foregoing reasons, the Board, including a majority of the independent Board members, recommends that the Stockholders vote "For" the Proposal to change the Portfolio's investment objective and to reclassify it as a non-fundamental policy of the Portfolio.
REQUIRED VOTE Approval of the Proposal requires the approval of the holders of a "majority of the outstanding voting securities" of the Portfolio which under the Investment Company Act means the affirmative vote of the lesser of (a) 67% or more of the voting securities present at the Meeting or represented by proxy if the holders of more than 50% of the outstanding voting securities of the Portfolio are present or represented by proxy or (b) more than 50% of the outstanding voting securities of the Portfolio. The Board has considered various factors and believes that approval of the Proposal is in the best interest of the Portfolio and its Stockholders. If the Proposal is not approved by the Stockholders, the Portfolio's current investment objective will remain in effect. SECURITY OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS As of June [ ], 2010, the aggregate number of shares of the Portfolio owned by the Fund's officers and Directors as a group was less than one percent of the Portfolio's outstanding shares. For information regarding persons who owned beneficially more than 5% of the Portfolio's outstanding shares as of June [ ], 2010, please see Exhibit A. Except as set forth on Exhibit A, to the knowledge the Fund, as of June [ ], 2010, no person was the beneficial owner of more than 5% of the Portfolio's shares, as of that date. OTHER MATTERS No business addressother than as set forth herein is 73 Tremont Street, Boston, Massachusetts 02108-3919.expected to come before any Meeting, but should any other matter requiring a vote of Stockholders arise, including any question as to an adjournment of the Meeting for the Portfolio, the persons named in the enclosed Proxy Card will vote thereon according to their best judgment in the interests of the Portfolio. Submission of Shareholder ProposalsSHAREHOLDER PROPOSALS
The Fund does not hold regular annual meetings of shareholders.Stockholders. As a general matter, the Fund does not intend to hold future regular annual or special meetings of their shareholdersStockholders unless required by the Investment Company Act. Any shareholder who wishes to submit proposals for consideration at a meeting of shareholdersStockholders of the Fund should send such Proposal to the Fund, c/o Morgan Stanley Investment Management Inc., 1221522 Fifth Avenue, of the Americas,Legal Department—19th Floor, New York, New York 10020.10036. To be considered for presentation at a shareholder meeting, rules promulgated by the SEC require that, among other things, a shareholder’sshareholder's proposal must be received at the offices of the Fund a reasonable time before a solicitation is made. Timely submission of a proposal does not necessarily mean that such proposal will be included. OTHER MATTERS MARY E. MULLIN
Secretary
No matter other than as set forth herein is expected to come before the Meeting, but should any other matter requiring a vote of Shareholders arise, including any question as to an adjournmentDated: [July 16], 2010
Stockholders of the Meeting, the persons named in the enclosed Proxy Card will vote thereon according to their best judgment in the interests of the Fund. ShareholdersPortfolio who do not expect to be present at the meetingMeeting and who wish to have their shares voted are requested to either vote their shares over the Internet, by telephone or Internet by following the instructions on the Proxy Card, or datedating and signsigning the enclosed Proxy Card and returnreturning it in the enclosed envelope. No postage is required if mailed in the United States.
| Mary E. Mullin
Secretary |
Dated: November 20, 2006
EXHIBIT A SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS To the knowledge of the management of the Fund, as of June [ ], 2010, the following persons were beneficial owners of 5% or more of the outstanding shares of the International Magnum Portfolio (Class I shares).
Exhibit A-1
EVERY SHAREHOLDER'SSTOCKHOLDER’S VOTE IS IMPORTANT | Your Proxy Vote is important!EASY VOTING OPTIONS: |
| And now you can Vote your Proxy
|
| | 
| VOTE ON THE INTERNET Log on to: www.proxy-direct.com Follow the PHONE or the INTERNET. |
| It saves Money! Telephone and Internet voting saves postage costs. Savings which can help minimize fund expenses. |
| It saves Time! Telephone and Internet voting is instantaneous –on-screen instructionsavailable 24 hours a day. |
| It's Easy! Just follow these simple steps:
| |
| 1. Read your proxy statement and have it at hand. |
| 2. VOTE BY TELEPHONE Call toll-free 1-866-241-6192 to
website: https://vote.proxy-direct.com |
| 3. 1-800-337-3503Follow the recorded or on-screen directions.instructions available 24 hours |
| 4. Do | | | not mail
| VOTE BY MAIL Vote, sign and date your Proxy Card when you vote by phone or Internet.and return it in the postage-paid envelope |
YOU MAY RECEIVE MULTIPLE PROXY KITS IN SEPARATE ENVELOPES OR SEVERAL CARDS WITHIN ONE ENVELOPE. IT IS IMPORTANT THAT YOU RECORD A SEPARATE VOTE FOR EACH PROXY CARD. Please detach at perforation before mailing. PROXY | THE UNIVERSAL INSTITUTIONAL FUNDS, INC. | PROXY | | INTERNATIONAL MAGNUM PORTFOLIO NOTICE OF SPECIAL MEETING OF STOCKHOLDERS | | | TO BE HELD ON SEPTEMBER 16, 2010 | |
The undersigned holder of THE UNIVERSAL INSTITUTIONAL FUNDS, INC. PROXY GLOBAL FRANCHISE– INTERNATIONAL MAGNUM PORTFOLIO
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 25, 2007
hereby appoints Stefanie V. Chang Yu, Mary E. Mullin and Randy Takian, and each of them or their respective designees, with full power of substitution and revocation, as proxies to represent the undersigned at the Special Meeting of Stockholders to be held at 522 Fifth Avenue, 3rd Floor, New York, New York 10036 in Conference Room 3R, on September 16, 2010 at 9:00 a.m., Eastern Time and at any and all adjournments thereof. This Proxyproxy is solicited on behalf of the Board of Directors.Directors of The Universal Institutional Funds, Inc. – International Magnum Portfolio. The undersigned hereby constitutes and appoints Ronald E. Robison, Stefanie V. Chang Yu and Barry Fink, and each of them, as proxies for the undersigned, with full power of substitution and resubstitution, and hereby authorizes said proxies, and each of them, to represent and vote, as designated on the reverse side, all stock
If more than one of the above Portfolio held of record by the undersigned on November 8, 2006proxies, or their substitutes, are present at the Special Meeting of Shareholders of the Global Franchise Portfolio to be held on January 25, 2007, and ator any adjournment thereof. The undersigned hereby revokes anythereof, they jointly (or, if only one is present and voting then that one) shall have authority and may exercise all proxies with respect to such stock heretofore given by the undersigned. powers granted hereby. This Proxy, Card when properly executed, will be voted in accordance with the manner directed hereininstructions marked by the undersigned Shareholder,on the reverse side. If no specification is made, this proxy will be voted “FOR” the proposal listed herein and in the discretion of suchthe proxies upon any and allsuch other mattersbusiness as may properly come before the Meeting or any adjournment thereof. If no direction is made, this Proxy Card will be voted for Proposal 1.Meeting. | VOTE VIA THE INTERNET: https://vote.proxy-direct.com
www.proxy-direct.com | | VOTE VIA THE TELEPHONE: 1-866-241-6192TELEPHONE: 1-800-337-3503 |
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| | Note: Please sign exactly as your name appears on this proxy card. All joint owners should sign. When signing as executor, administrator, attorney, trustee or guardian or as custodian for a minor please sign full title as such. If a corporation, please sign in full corporate name and indicate the signer'ssigner’s office. If a partner, sign in the partnership name. |
| Signature |
| Signature (if held jointly) |
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| | Date | MS-UIFIM_21570_062110 | | | | | |
| Date 15349_ERE |
EVERY SHAREHOLDER'S
EVERYSTOCKHOLDER’S VOTE IS IMPORTANT PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on September 16, 2010. The Proxy Statement for this meeting is available at: https://www.proxy-direct.com/mor21570 Please detach at perforation before mailing.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU CAST YOUR VOTE “FOR” THE PROPOSAL AS DESCRIBED IN THE PROXY STATEMENT.
TO VOTE, BY MAIL, PLEASE COMPLETE AND RETURN THIS CARD.
YOU ALSO MAY VOTE A PROXY BY TOUCH-TONE PHONEMARK BLOCKS BELOW IN BLUE OR INTERNET (See enclosed Voting Information Card for further instructions). PLEASE MARK VOTESBLACK INK AS IN THIS EXAMPLE:
▪ 15349_ERE
PLEASE MARK,VOTE, SIGN AND DATE THIS PROXY AND RETURN THIS PROXY CARD
IT PROMPTLY USINGIN THE ENCLOSED ENVELOPE. MS-UIFIM_21570_062110
EVERY STOCKHOLDER’S VOTE IS IMPORTANT | EASY VOTING OPTIONS: | |
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| VOTE ON THE INTERNET Log on to: www.proxy-direct.com Follow the on-screen instructions available 24 hours | |
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| VOTE BY TELEPHONE Call 1-866-298-8476 Follow the recorded instructions available 24 hours | | | | | 
| VOTE BY MAIL Vote, sign and date your Voting Instruction Card and return it in the postage-paid envelope |
YOU MAY RECEIVE MULTIPLE PROXY KITS IN SEPARATE ENVELOPES OR SEVERAL CARDS WITHIN ONE ENVELOPE. IT IS IMPORTANT THAT YOU RECORD A SEPARATE VOTE FOR EACH VOTING INSTRUCTION CARD. Please detach at perforation before mailing. VOTING INSTRUCTION CARD | THE UNIVERSAL INSTITUTIONAL FUNDS, INC. INTERNATIONAL MAGNUM PORTFOLIO NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 16, 2010 | VOTING INSTRUCTION CARD |
[INSURANCE COMPANY NAME DROP-IN] This Instruction Card is solicited by the above named insurance company seeking voting instructions with respect to shares of the The Universal Institutional Funds, Inc. – International Magnum Portfolio (the “Portfolio”), for which it is the record or beneficial owner on your behalf. The undersigned contract/policy owner hereby instructs that the votes attributable to the undersigned’s shares with respect to the Portfolio be cast as directed on the reverse side at the Special Meeting of Stockholders to be held at 522 Fifth Avenue, 3rd Floor, New York, New York 10036 in Conference Room 3R, on September 16, 2010 at 9:00 a.m., Eastern Time, and all adjournments thereof (the “Meeting”). The undersigned, by completing this Instruction Card, does hereby authorize the above named insurance company to exercise its discretion in voting upon such other business as may properly come before the Meeting. The Instruction Card, when properly executed, will be voted in the manner directed herein by the undersigned. If no direction is made, the votes attributable to this Instruction Card will be voted FOR the proposal listed on the reverse side. Shares of the Portfolio for which no instructions are received will be voted by in the same proportion as votes for which instructions are received for the Portfolio. | VOTE VIA THE INTERNET: www.proxy-direct.com | | VOTE VIA THE TELEPHONE: 1-866-298-8476 | |
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| | Note: Please sign exactly as your name appears on this proxy card. All joint owners should sign. When signing as executor, administrator, attorney, trustee or guardian or as custodian for a minor please sign full title as such. If a corporation, please sign in full corporate name and indicate the signer’s office. If a partner, sign in the partnership name. | |
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| | Signature | |
| | Signature (if held jointly) | |
| | Date | MS-UIFIM_21570_VI_061810 | | | | | |
EVERY STOCKHOLDER’S VOTE IS IMPORTANT Please detach at perforation before mailing. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU CAST YOUR VOTE “FOR” THE PROPOSAL AS DESCRIBED IN THE PROXY STATEMENT. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS IN THIS EXAMPLE: o To vote in accordance with the Board recommendation mark this box. No other vote is necessary. |
1.Approval to change the investment objective of The Universal Institutional Funds, Inc. – International Magnum Portfolio (the “Portfolio”) and to reclassify it as a non-fundamental policy of the Portfolio. | FOR | AGAINST | ABSTAIN | o | o | o |
PLEASE VOTE, SIGN AND DATE THIS VOTING INSTRUCTION CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. MS-UIFIM_21570_VI_061810
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