UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
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Investment Company Act file number | 811-09081 | |||||||
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Morgan Stanley International Fund | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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522 Fifth Avenue, New York, New York |
| 10036 | ||||||
(Address of principal executive offices) |
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Ronald E. Robison | ||||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | 212-296-6990 |
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Date of fiscal year end: | October 31, 2007 |
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Date of reporting period: | October 31, 2007 |
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Item 1 - Report to Shareholders
Welcome, Shareholder:
In this report, you'll learn about how your investment in Morgan Stanley International Fund performed during the annual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Fund's financial statements and a list of Fund investments.
This material must be preceded or accompanied by a prospectus for the fund being offered.
Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the Fund will achieve its investment objective. The Fund is subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.
Fund Report
For the year ended October 31, 2007
Total Return for the 12 Months Ended October 31, 2007 | |||||||||||||||||||||||
Class A | Class B | Class C | Class D | MSCI EAFE Index1 | Lipper International Large-Cap Core Funds Index2 | ||||||||||||||||||
31.03 | % | 29.58 | % | 29.58 | % | 31.33 | % | 24.91 | % | 26.89 | % |
The performance of the Fund's four share classes varies because each has different expenses. The Fund's total returns assume the reinvestment of all distributions but do not reflect the deduction of any applicable sales charges. Such costs would lower performance. See Performance Summary for standardized performance and benchmark information.
Market Conditions
For the 12-month period ended October 31, 2007, international markets as measured by the MSCI EAFE Index returned almost 25 percent. After a strong fourth quarter of 2006 and a positive start to 2007, international equity markets corrected sharply in February. The markets then rallied off these lows until mid-July, when they sold off and broke below the February lows. From there, the markets have been volatile but at the end of October were back within 3 percent of the July highs.
Among developed markets, Asia ex-Japan had the highest return, followed by Europe, but Japan lagged the double-digit returns of the other regions during the 12-month period. The U.S. market was not as strong as Europe and Asia during this time; however, the emerging markets surged with a return of more than 60 percent, outperforming the developed regions. Local currencies, with the exception of the Japanese yen (down modestly), all gained against the U.S. dollar.
On a regional basis, U.S. economic data has been progressively weaker, but the silver lining has been that inflation remained well contained. Weakness was most pervasive in the housing data, with housing starts coming in below expectations and existing homes sales still trending downward. The Institute for Supply Management (ISM) survey data was mixed: the manufacturing survey softened but stayed above the critical 50 level (readings above 50 indicate that the economy is still expanding) at the end of October, while the non-manufacturing (service) survey was more upbeat. One bright spot in October was employment, as non-farm payrolls grew by 166,000, considerably above the 85,000 expected. Core inflation remained well contained despite the indication of pressure in the headline inflation measure.
After surprisingly strong growth in 2006 and in the first half of this year, European economic data has decelerated. There is broad weakness in manufacturing PMIs, and headline inflation remained elevated. Eurozone core inflation was in line with expectations — but at an uncomfortable level for the European Central Bank (ECB). All said, we think the strength of the Euro has curbed some of the need for the ECB to tighten monetary conditions and we believe the ECB will stay on hold until the financial system passes through the worst phase and the economic deceleration subsides.
Outside of continental Europe, U.K. economic data has fallen below expectations. However, inflation remained
2
well contained. We think the Bank of England (BOE) might cut interest rates quickly if need be, given that the U.K. consumer is more leveraged than their U.S. counterparts, housing prices have risen further, and the economy has a high dependency on the financial sector.
Japanese economic data has weakened and reflation remains elusive. Housing starts continued to fall, machine orders were well below expectations, and the jobless rate ticked higher, registering 4 percent in October for the first time since March. Nationwide inflation readings remained in negative territory at the end of October. We are skeptical of Japan until the push for corporate reform strengthens again; therefore we will continue to closely monitor the country's economic situation.
At the end of the period, the issues surrounding structured credit have plagued financial institutions and credit markets in the U.S., Europe, and Japan. Equity markets traded down, as investors began discounting the higher risks of a recession and the stresses on the financial system. However, we believe there are offsets to recessionary pressures. The U.S. Federal Reserve can ease monetary conditions (as can the ECB and BOE), inventories are low, global liquidity is strong and job growth has been resilient to date. Economic growth in the developing world — now comprising about 30 percent of the world economy and an even bigger contributor to marginal growth — is strong. Equity valuations look reasonable, if earnings do not collapse. Bond yields globally continued to fall as central banks injected much needed liquidity to stave off the U.S. housing slowdown and the problems surrounding structured credit. Moreover, as central banks globally have either lowered interest rates or halted their rate hike campaigns, money growth has accelerated. In addition, other liquidity sources such as sovereign wealth funds in Asia and the Middle East continue to grow as their economies boom. Strong liquidity growth should provide some support to the pressures of higher oil prices and structured credit worries. We think there are more shoes to drop in the financial arena, but market sentiment may be edging toward oversold.
Performance Analysis
All share classes of Morgan Stanley International Fund outperformed the MSCI EAFE Index and the Lipper International Large-Cap Core Funds Index for the 12 months ended October 31, 2007, assuming no deduction of applicable sales charges.
For the 12-month period, the Fund's overweights to Hong Kong, Germany, Singapore and the emerging markets were the main contributors to performance relative to the MSCI EAFE Index, due to the strong returns of these areas during the period. Conversely, the overweight to Japan and underweight to Australia were the most significant detractors to relative returns. Japan continued to lag, and its negative return was amplified by an overweight exposure in the Fund's portfolio. Australia performed well, however, and the Fund's underweight position prevented the Fund from fully benefiting from the country's strong return.
There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future.
3
TOP 10 HOLDINGS | |||||||
BP PLC | 1.4 | % | |||||
Nestle S.A. (Registered Shares) | 1.4 | ||||||
Vodafone Group PLC | 1.2 | ||||||
Total S.A. | 1.2 | ||||||
E.ON AG | 1.0 | ||||||
Toyota Industries Corp. | 1.0 | ||||||
Royal Dutch Shell PLC (A Shares) | 1.0 | ||||||
BHP Billiton Ltd. | 1.0 | ||||||
Siemens AG (Registered Shares) | 0.9 | ||||||
StatoilHydro ASA | 0.8 | ||||||
TOP FIVE COUNTRIES | |||||||
Japan | 17.7 | % | |||||
United Kingdom | 16.6 | ||||||
Germany | 9.2 | ||||||
France | 7.4 | ||||||
Switzerland | 5.6 |
Data as of October 31, 2007. Subject to change daily. All percentages for top 10 holdings and top five countries are as a percentage of net assets. These data are provided for informational purposes only and should not be deemed a recommendation to buy or sell the securities mentioned. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services.
Investment Strategy
The Fund will normally invest at least 65 percent of its assets in a diversified portfolio of international common stocks and other equity securities. The Fund's "Investment Adviser," Morgan Stanley Investment Advisors Inc., uses a "top-down" approach that emphasizes country and sector selection and weightings over individual stock selection.
For More Information About Portfolio Holdings
Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley also delivers the semiannual and annual reports to fund shareholders and makes these reports available on its public web site, www.morganstanley.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by access ing the SEC's web site, http://www.sec.gov. You may also review and copy them
4
at the SEC's public reference room in Washington, DC. Information on the operation of the SEC's public reference room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the public reference section of the SEC, Washington, DC 20549-0102.
Proxy Voting Policy and Procedures and Proxy Voting Record
You may obtain a copy of the Fund's Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 869-NEWS or by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. It is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. This information is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov.
Householding Notice
To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling (800) 869-NEWS, 8:00 a.m. to 8:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.
5
Performance Summary
Performance of a $10,000 Investment
6
Average Annual Total Returns—Period Ended October 31, 2007 | |||||||||||||||||||||||||||||||||||
Symbol | Class A Shares* (since 06/28/99) INLAX | Class B Shares** (since 06/28/99) INLBX | Class C Shares† (since 06/28/99) INLCX | Class D Shares†† (since 06/28/99) INLDX | |||||||||||||||||||||||||||||||
1 Year | 31.03% 24.15 | 3 4 | 29.58% 24.58 | 3 4 | 29.58% 28.58 | 3 4 | 31.33% — | 3 | |||||||||||||||||||||||||||
5 Years | 22.10 20.79 | 3 4 | 21.11 20.92 | 3 4 | 21.12 21.12 | 3 4 | 22.40 — | 3 | |||||||||||||||||||||||||||
Since Inception | 8.24 7.55 | 3 4 | 7.41 7.41 | 3 4 | 7.39 7.39 | 3 4 | 8.49 — | 3 |
Performance data quoted represents past performance, which is no guarantee of future results and current performance may be lower or higher than the figures shown. For most recent month-end performance figures, please visit www.morganstanley.com/msim or speak with your Financial Advisor. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class A, Class B, Class C, and Class D shares will vary due to differences in sales charges and expenses.
* The maximum front-end sales charge for Class A is 5.25%.
** The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%. The CDSC declines to 0% after six years. Effective April 2005, Class B shares will generally convert to Class A shares approximately eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.
† The maximum contingent deferred sales charge for Class C is 1.0% for shares redeemed within one year of purchase.
†† Class D has no sales charge.
(1) The Morgan Stanley Capital International (MSCI) EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States & Canada. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI EAFE Index consists of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. "Net dividends" reflects a reduction in dividends after taking into account withholding of taxes by certain foreign count ries represented in the Index. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.
(2) The Lipper International Large-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Large-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. The Fund is in the Lipper International Large-Cap Core Funds classification as of the date of this report.
(3) Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges.
(4) Figure shown assumes reinvestment of all distributions and the deduction of the maximum applicable sales charge. See the Fund's current prospectus for complete details on fees and sales charges.
‡ Ending value assuming a complete redemption on October 31, 2007.
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Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees; and (2) ongoing costs, including advisory fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 05/01/07 – 10/31/07.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs, and will not help you determine the relative total cost of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value | Ending Account Value | Expenses Paid During Period * | |||||||||||||
05/01/07 | 10/31/07 | 05/01/07 – 10/31/07 | |||||||||||||
Class A | |||||||||||||||
Actual (13.91% return) | $ | 1,000.00 | $ | 1,139.10 | $ | 7.06 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,018.60 | $ | 6.67 | |||||||||
Class B | |||||||||||||||
Actual (13.32% return) | $ | 1,000.00 | $ | 1,133.20 | $ | 11.08 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,014.82 | $ | 10.46 | |||||||||
Class C | |||||||||||||||
Actual (13.30% return) | $ | 1,000.00 | $ | 1,133.00 | $ | 11.08 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,014.82 | $ | 10.46 | |||||||||
Class D | |||||||||||||||
Actual (14.29% return) | $ | 1,000.00 | $ | 1,142.90 | $ | 5.73 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,019.86 | $ | 5.40 |
* Expenses are equal to the Fund's annualized expense ratios of 1.31%, 2.06%, 2.06% and 1.06% for Class A, Class B, Class C and Class D shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
8
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007
NUMBER OF SHARES | VALUE | ||||||||||
Common Stocks (91.4%) | |||||||||||
Australia # (4.4%) | |||||||||||
Aluminum | |||||||||||
28,830 | Alumina Ltd. | $ | 181,327 | ||||||||
Beverages: Alcoholic | |||||||||||
28,866 | Foster's Group Ltd. (a) | 172,352 | |||||||||
Beverages: Non-Alcoholic | |||||||||||
7,548 | Coca-Cola Amatil Ltd. | 72,236 | |||||||||
Biotechnology | |||||||||||
4,077 | CSL Ltd. | 138,602 | |||||||||
Building Products | |||||||||||
28,356 | CSR Ltd. (a) ## | 90,555 | |||||||||
Casino/Gaming | |||||||||||
5,726 | TABCORP Holdings Ltd. (a) | 83,343 | |||||||||
Chemicals: Major Diversified | |||||||||||
7,116 | Orica Ltd. | 206,955 | |||||||||
Construction Materials | |||||||||||
14,815 | Boral Ltd. | 94,223 | |||||||||
11,841 | James Hardie Industries NV (CDI) | 72,118 | |||||||||
166,341 | |||||||||||
Containers/Packaging | |||||||||||
22,378 | Amcor Ltd. | 146,946 | |||||||||
Engineering & Construction | |||||||||||
3,397 | Leighton Holdings Ltd. (a) | 200,086 | |||||||||
Financial Conglomerates | |||||||||||
2,956 | Macquarie Bank Ltd. (a) | 234,005 | |||||||||
7,797 | Suncorp-Metway Ltd. | 148,136 | |||||||||
382,141 | |||||||||||
Food Retail | |||||||||||
15,190 | Coles Group Ltd. | 229,729 | |||||||||
14,840 | Woolworths Ltd. | 465,463 | |||||||||
695,192 | |||||||||||
Gas Distributors | |||||||||||
6,568 | AGL Energy Ltd. | 74,220 | |||||||||
83,483 | Origin Energy Ltd. | 716,597 | |||||||||
790,817 |
NUMBER OF SHARES | VALUE | ||||||||||
Hospital/Nursing Management | |||||||||||
13,440 | Symbion Health Ltd. (a) | $ | 50,921 | ||||||||
Industrial Conglomerates | |||||||||||
2,777 | Ansell Ltd. | 32,183 | |||||||||
5,443 | Wesfarmers Ltd. (a) | 224,758 | |||||||||
256,941 | |||||||||||
Investment Managers | |||||||||||
18,805 | AMP Ltd. | 179,503 | |||||||||
Investment Trusts/Mutual Funds | |||||||||||
32,909 | Macquarie Infrastructure Group (Stapled Securities)** | 97,665 | |||||||||
Major Banks | |||||||||||
20,480 | Australia and New Zealand Banking Group Ltd. | 578,116 | |||||||||
16,927 | Commonwealth Bank of Australia | 976,787 | |||||||||
22,665 | National Australia Bank Ltd. | 917,168 | |||||||||
23,934 | Westpac Banking Corp. | 686,107 | |||||||||
3,158,178 | |||||||||||
Major Telecommunications | |||||||||||
30,491 | Telstra Corp., Ltd. | 133,653 | |||||||||
Medical/Nursing Services | |||||||||||
2,044 | Sonic Healthcare Ltd. | 32,985 | |||||||||
Miscellaneous Commercial Services | |||||||||||
13,997 | Brambles Ltd. (a) | 186,424 | |||||||||
Multi-Line Insurance | |||||||||||
24,017 | Insurance Australia Group Ltd. (a) | 105,643 | |||||||||
Oil & Gas Production | |||||||||||
61,311 | Santos Ltd. | 812,196 | |||||||||
34,283 | Woodside Petroleum Ltd. | 1,676,416 | |||||||||
2,488,612 | |||||||||||
Oil Refining/Marketing | |||||||||||
11,640 | Caltex Australia Ltd. (a) | 234,425 | |||||||||
Other Metals/Minerals | |||||||||||
78,088 | BHP Billiton Ltd. | 3,398,900 | |||||||||
7,155 | Rio Tinto Ltd. (a) | 743,131 | |||||||||
4,142,031 |
See Notes to Financial Statements
9
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Other Transportation | |||||||||||
5,327 | Asciano Group (Stapled Securities)*** (a) | $ | 41,942 | ||||||||
11,411 | Transurban Group (Stapled Securities)** (a) | 77,778 | |||||||||
119,720 | |||||||||||
Precious Metals | |||||||||||
8,257 | Newcrest Mining Ltd. | 251,230 | |||||||||
Property - Casualty Insurers | |||||||||||
9,826 | QBE Insurance Group Ltd. | 299,690 | |||||||||
Publishing: Newspapers | |||||||||||
14,003 | Fairfax Media Ltd. | 62,201 | |||||||||
Pulp & Paper | |||||||||||
12,093 | PaperlinX Ltd. | 31,336 | |||||||||
Real Estate Development | |||||||||||
5,980 | Lend Lease Corp., Ltd. | 112,143 | |||||||||
Real Estate Investment Trusts | |||||||||||
1,340 | Stockland (Stapled Securities)** | 11,251 | |||||||||
Steel | |||||||||||
19,879 | BlueScope Steel Ltd. (a) | 197,979 | |||||||||
14,054 | OneSteel Ltd. | 91,213 | |||||||||
289,192 | |||||||||||
Trucking | |||||||||||
5,389 | Toll Holdings Ltd. | 67,385 | |||||||||
Total Australia | 15,638,022 | ||||||||||
Austria # (1.1%) | |||||||||||
Building Products | |||||||||||
3,590 | Wienerberger AG | 224,710 | |||||||||
Containers/Packaging | |||||||||||
510 | Mayr-Melnhof Karton AG | 60,915 | |||||||||
Electric Utilities | |||||||||||
4,550 | Oesterreichische Elektrizitaetswirtschafts AG (Verbund) (Class A) | 301,213 | |||||||||
Industrial Machinery | |||||||||||
1,664 | Andritz AG | 123,547 |
NUMBER OF SHARES | VALUE | ||||||||||
Major Banks | |||||||||||
2,608 | Erste Bank der oesterreichischen Sparkassen AG | $ | 212,862 | ||||||||
1,708 | Raiffeisen International Bank - Holding AG | 283,914 | |||||||||
496,776 | |||||||||||
Major Telecommunications | |||||||||||
22,968 | Telekom Austria AG (Bearer Shares) | 660,340 | |||||||||
Multi-Line Insurance | |||||||||||
1,167 | Wiener Staedtische Versicherung AG | 86,266 | |||||||||
Oil Refining/Marketing | |||||||||||
11,693 | OMV AG | 877,387 | |||||||||
Other Transportation | |||||||||||
625 | Flughafen Wien AG | 74,181 | |||||||||
Real Estate Development | |||||||||||
14,753 | Immofinanz Immobilien Anlagen AG | 175,903 | |||||||||
4,841 | Meinl European Land Ltd. (Certificate)* | 68,203 | |||||||||
244,106 | |||||||||||
Steel | |||||||||||
2,136 | Boehler-Uddeholm AG | 227,179 | |||||||||
4,336 | voestalpine AG | 391,568 | |||||||||
618,747 | |||||||||||
Total Austria | 3,768,188 | ||||||||||
Belgium # (0.6%) | |||||||||||
Beverages: Alcoholic | |||||||||||
1,868 | InBev NV | 176,594 | |||||||||
Chemicals: Specialty | |||||||||||
1,069 | Solvay S.A. | 162,856 | |||||||||
Electronic Equipment/ Instruments | |||||||||||
1,249 | Agfa Gevaert NV | 17,442 | |||||||||
Financial Conglomerates | |||||||||||
15,473 | Fortis | 496,529 |
See Notes to Financial Statements
10
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Major Banks | |||||||||||
15,583 | Dexia S.A. | $ | 501,746 | ||||||||
2,143 | KBC Groep NV | 301,138 | |||||||||
802,884 | |||||||||||
Major Telecommunications | |||||||||||
2,310 | Belgacom S.A. | 110,686 | |||||||||
Metal Fabrications | |||||||||||
131 | Bekaert NV | 18,062 | |||||||||
Other Metals/Minerals | |||||||||||
454 | Umicore | 113,561 | |||||||||
Pharmaceuticals: Other | |||||||||||
1,779 | UCB S.A. | 104,475 | |||||||||
Total Belgium | 2,003,089 | ||||||||||
Bermuda # (0.2%) | |||||||||||
Apparel/Footwear | |||||||||||
7,000 | Yue Yuen Industrial (Holdings) Ltd. | 21,765 | |||||||||
Construction Materials | |||||||||||
7,000 | Cheung Kong Infrastructure Holdings Ltd. (a) | 27,528 | |||||||||
Electronic Equipment/ Instruments | |||||||||||
550,921 | China Water Affairs Group Ltd.* | 399,173 | |||||||||
Investment Banks/Brokers | |||||||||||
269,063 | REXCAPITAL Financial Holdings Ltd.* | 56,215 | |||||||||
Marine Shipping | |||||||||||
43,506 | NWS Holdings Ltd. | 165,832 | |||||||||
Specialty Stores | |||||||||||
17,346 | Chow Sang Sang Holdings International Ltd. | 23,965 | |||||||||
Total Bermuda | 694,478 | ||||||||||
Brazil (0.2%) | |||||||||||
Aerospace & Defense | |||||||||||
9,322 | Empresa Brasileira de Aeronautica S.A. | 113,169 |
NUMBER OF SHARES | VALUE | ||||||||||
Beverages: Alcoholic | |||||||||||
393 | Companhia de Bebidas das Americas | $ | 31,494 | ||||||||
Department Stores | |||||||||||
9,000 | Lojas Renner S.A. | 221,015 | |||||||||
Real Estate Development | |||||||||||
13,200 | Cyrela Brazil Realty S.A. | 226,299 | |||||||||
2,640 | Cyrela Commercial Properties S.A.* | 20,517 | |||||||||
246,816 | |||||||||||
Steel | |||||||||||
1,304 | Companhia Siderurgica Nacional S.A. | 104,318 | |||||||||
Tobacco | |||||||||||
2,500 | Souza Cruz S.A. | 71,519 | |||||||||
Total Brazil | 788,331 | ||||||||||
Cayman Islands # (0.2%) | |||||||||||
Industrial Specialties | |||||||||||
8,000 | Kingboard Chemical Holdings Ltd. | 52,925 | |||||||||
Major Telecommunications | |||||||||||
16,000 | Hutchison Telecommunications International Ltd.* (a) | 22,835 | |||||||||
Other Transportation | |||||||||||
109,000 | Hopewell Highway Infrastructure Ltd. | 103,082 | |||||||||
Real Estate Development | |||||||||||
87,843 | Agile Property Holdings Ltd. | 213,555 | |||||||||
Trucks/Construction/ Farm Machinery | |||||||||||
71,000 | China Infrastructure Machinery Holdings Ltd. (a) | 158,776 | |||||||||
Total Cayman Islands | 551,173 | ||||||||||
China # (1.8%) | |||||||||||
Airlines | |||||||||||
72,000 | Air China Ltd. (H Shares) | 112,352 |
See Notes to Financial Statements
11
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Aluminum | |||||||||||
72,000 | Aluminum Corp. of China Ltd. (H Shares) (a) | $ | 209,684 | ||||||||
Chemicals: Specialty | |||||||||||
14,000 | Sinopec Shanghai Petrochemical Co. Ltd. (H Shares) | 11,798 | |||||||||
Coal | |||||||||||
59,000 | China Shenhua Energy Company Ltd. (H Shares) | 387,812 | |||||||||
38,000 | Yanzhou Coal Mining Co., Ltd. (H Shares) | 82,706 | |||||||||
470,518 | |||||||||||
Construction Materials | |||||||||||
2,000 | Anhui Conch Cement Company Ltd. (H Shares) | 20,190 | |||||||||
Electric Utilities | |||||||||||
66,000 | Datang International Power Generation Co., Ltd. (H Shares) (a) | 77,076 | |||||||||
72,000 | Huaneng Power International, Inc. (H Shares) | 86,150 | |||||||||
163,226 | |||||||||||
Engineering & Construction | |||||||||||
101,000 | China Communications Construction Co., Ltd. (H Shares) | 320,535 | |||||||||
Industrial Machinery | |||||||||||
18,000 | Shanghai Electric Group Company Ltd. (H Shares) | 18,029 | |||||||||
Integrated Oil | |||||||||||
294,000 | China Petroleum & Chemical Corp. (Singopec) (H Shares) | 447,266 | |||||||||
276,000 | PetroChina Co., Ltd. (H Shares) | 716,954 | |||||||||
1,164,220 |
NUMBER OF SHARES | VALUE | ||||||||||
Life/Health Insurance | |||||||||||
125,000 | China Life Insurance Co., Ltd. (H Shares) | $ | 842,169 | ||||||||
Major Banks | |||||||||||
382,000 | Bank of China Ltd. (H Shares) | 256,148 | |||||||||
251,000 | Bank of Communications Ltd. (H Shares) | 466,382 | |||||||||
722,530 | |||||||||||
Major Telecommunications | |||||||||||
280,000 | China Telecom Corp. Ltd. (H Shares) | 248,003 | |||||||||
Marine Shipping | |||||||||||
64,025 | China COSCO Holdings Company Ltd. (H Shares) | 288,348 | |||||||||
28,963 | China Shipping Development Co., Ltd. (H Shares) | 99,958 | |||||||||
388,306 | |||||||||||
Motor Vehicles | |||||||||||
44,073 | Dongfeng Motor Group Co., Ltd. (H Shares) | 40,637 | |||||||||
Multi-Line Insurance | |||||||||||
23,000 | Ping An Insurance (Group) Co. of China, Ltd. (H Shares) | 321,803 | |||||||||
Other Metals/Minerals | |||||||||||
26,000 | Jiangxi Copper Co., Ltd. (H Shares) (a) | 93,632 | |||||||||
Other Transportation | |||||||||||
116,940 | Anhui Expressway Co., Ltd. (H Shares) | 96,020 | |||||||||
10,000 | Zhejiang Expressway Co., Ltd. (H Shares) | 14,423 | |||||||||
110,443 | |||||||||||
Precious Metals | |||||||||||
68,000 | Zijin Mining Group Co., Ltd. (H Shares) (a) | 121,893 |
See Notes to Financial Statements
12
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Real Estate Development | |||||||||||
18,000 | Guangzhou R&F Properties Co. Ltd. (H Shares) (a) | $ | 95,024 | ||||||||
Regional Banks | |||||||||||
780,703 | China Construction Bank Corp. (H Shares) | 887,210 | |||||||||
Steel | |||||||||||
4,000 | Angang Steel Co., Ltd. (H Shares) | 14,965 | |||||||||
Total China | 6,377,167 | ||||||||||
Denmark # (0.6%) | |||||||||||
Biotechnology | |||||||||||
1,350 | Novozymes A/S (B Shares) | 147,407 | |||||||||
Electrical Products | |||||||||||
1,700 | Vestas Wind Systems A/S* | 153,127 | |||||||||
Major Banks | |||||||||||
16,444 | Danske Bank A/S | 727,152 | |||||||||
Marine Shipping | |||||||||||
41 | A P Moller - Maersk A/S (B Shares) | 569,432 | |||||||||
Pharmaceuticals: Major | |||||||||||
3,800 | Novo Nordisk A/S (B Shares) | 473,247 | |||||||||
Telecommunication Equipment | |||||||||||
4,500 | GN Store Nord A/S* | 48,096 | |||||||||
Trucking | |||||||||||
2,250 | DSV A/S | 59,988 | |||||||||
Total Denmark | 2,178,449 | ||||||||||
Finland # (1.2%) | |||||||||||
Building Products | |||||||||||
448 | Uponor Oyj (a) | 11,761 | |||||||||
Electric Utilities | |||||||||||
5,307 | Fortum Oyj | 230,660 | |||||||||
Engineering & Construction | |||||||||||
1,309 | Kone Oyj (B Shares) | 109,091 |
NUMBER OF SHARES | VALUE | ||||||||||
Food Retail | |||||||||||
5,010 | Kesko Oyj (B Shares) | $ | 300,770 | ||||||||
Industrial Machinery | |||||||||||
3,588 | Metso Oyj (a) | 219,944 | |||||||||
Information Technology Services | |||||||||||
2,540 | TietoEnator Oyj (a) | 62,510 | |||||||||
Marine Shipping | |||||||||||
649 | Cargotec Corp. (B Shares) (a) | 40,253 | |||||||||
Multi-Line Insurance | |||||||||||
5,010 | Sampo Oyj (A Shares) | 157,508 | |||||||||
Oil Refining/Marketing | |||||||||||
2,037 | Neste Oil Oyj (a) | 73,310 | |||||||||
Other Metals/Minerals | |||||||||||
3,278 | Outokumpu Oyj (a) | 122,947 | |||||||||
Pulp & Paper | |||||||||||
9,956 | Stora Enso Oyj (Registered Shares) (a) | 183,285 | |||||||||
8,623 | UPM-Kymmene Oyj | 193,583 | |||||||||
376,868 | |||||||||||
Steel | |||||||||||
1,512 | Rautaruukki Oyj | 87,116 | |||||||||
Telecommunication Equipment | |||||||||||
60,368 | Nokia Oyj | 2,397,654 | |||||||||
Trucks/Construction/ Farm Machinery | |||||||||||
818 | Wartsila Oyj (B Shares) | 67,046 | |||||||||
Total Finland | 4,257,438 | ||||||||||
France # (7.4%) | |||||||||||
Advertising/Marketing Services | |||||||||||
1,483 | Publicis Groupe (a) | 60,411 | |||||||||
Aerospace & Defense | |||||||||||
2,437 | Thales S.A. | 152,236 | |||||||||
290 | Zodiac S.A. (a) | 20,141 | |||||||||
172,377 |
See Notes to Financial Statements
13
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Apparel/Footwear | |||||||||||
1,204 | Hermes International | $ | 158,755 | ||||||||
6,894 | LVMH Moet Hennessy Louis Vuitton S.A. | 890,217 | |||||||||
1,048,972 | |||||||||||
Auto Parts: O.E.M. | |||||||||||
1,777 | Valeo S.A. | 97,574 | |||||||||
Automotive Aftermarket | |||||||||||
1,604 | Compagnie Generale des Etablissements Michelin (B Shares) | 215,801 | |||||||||
Broadcasting | |||||||||||
1,826 | Societe Television Francaise 1 | 50,681 | |||||||||
Building Products | |||||||||||
6,103 | Compagnie de Saint-Gobain | 659,367 | |||||||||
Chemicals: Major Diversified | |||||||||||
1,055 | Arkema* | 72,002 | |||||||||
Chemicals: Specialty | |||||||||||
4,334 | Air Liquide S.A. (a) | 598,415 | |||||||||
Construction Materials | |||||||||||
687 | Imerys S.A. | 66,916 | |||||||||
4,781 | Lafarge S.A. (a) | 780,691 | |||||||||
847,607 | |||||||||||
Data Processing Services | |||||||||||
474 | Atos Origin S.A.* | 28,900 | |||||||||
Department Stores | |||||||||||
951 | PPR | 189,019 | |||||||||
Electric Utilities | |||||||||||
2,172 | Suez S.A. (Brussels Exchange) | 141,717 | |||||||||
13,482 | Suez S.A. (Paris Exchange) (a) | 879,758 | |||||||||
1,021,475 | |||||||||||
Electrical Products | |||||||||||
4,238 | Schneider Electric S.A. (a) | 585,522 | |||||||||
Electronics/Appliances | |||||||||||
3,682 | Thomson | 64,415 |
NUMBER OF SHARES | VALUE | ||||||||||
Engineering & Construction | |||||||||||
6,141 | Bouygues S.A. | $ | 591,996 | ||||||||
5,588 | Vinci S.A. | 460,063 | |||||||||
1,052,059 | |||||||||||
Food Distributors | |||||||||||
2,570 | Sodexho Alliance S.A. | 186,592 | |||||||||
Food Retail | |||||||||||
8,710 | Carrefour S.A. | 628,739 | |||||||||
1,148 | Casino Guichard - Perrachon S.A. | 128,519 | |||||||||
757,258 | |||||||||||
Food: Major Diversified | |||||||||||
7,536 | Groupe DANONE (a) | 647,347 | |||||||||
Hotels/Resorts/Cruiselines | |||||||||||
4,992 | Accor S.A. | 478,033 | |||||||||
Household/Personal Care | |||||||||||
1,352 | L'Oreal S.A. | 177,947 | |||||||||
Industrial Conglomerates | |||||||||||
4,597 | Alstom | 1,094,920 | |||||||||
Information Technology Services | |||||||||||
2,833 | Cap Gemini S.A. | 181,397 | |||||||||
Integrated Oil | |||||||||||
50,901 | Total S.A. (a) | 4,107,926 | |||||||||
Internet Software/Services | |||||||||||
1,116 | Business Objects S.A.* | 66,847 | |||||||||
Life/Health Insurance | |||||||||||
1,638 | CNP Assurances | 209,230 | |||||||||
Major Banks | |||||||||||
20,668 | BNP Paribas | 2,289,385 | |||||||||
8,151 | Societe Generale (a) | 1,374,029 | |||||||||
3,663,414 | |||||||||||
Major Telecommunications | |||||||||||
32,095 | France Telecom S.A. | 1,187,137 | |||||||||
Media Conglomerates | |||||||||||
13,317 | Vivendi | 601,240 | |||||||||
Medical Specialties | |||||||||||
1,624 | Essilor International S.A. CIE Generale D' Optique | 103,905 |
See Notes to Financial Statements
14
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Motor Vehicles | |||||||||||
1,825 | PSA Peugeot Citroen (a) | $ | 169,702 | ||||||||
1,879 | Renault S.A. | 316,936 | |||||||||
486,638 | |||||||||||
Multi-Line Insurance | |||||||||||
39,283 | Axa | 1,763,696 | |||||||||
Office Equipment/Supplies | |||||||||||
968 | Neopost S.A. (a) | 112,470 | |||||||||
Oilfield Services/Equipment | |||||||||||
635 | Technip S.A. | 57,132 | |||||||||
Other Consumer Specialties | |||||||||||
302 | Societe BIC S.A. | 23,503 | |||||||||
Packaged Software | |||||||||||
1,040 | Dassault Systemes S.A. | 64,542 | |||||||||
Pharmaceuticals: Major | |||||||||||
15,681 | Sanofi-Aventis (a) | 1,379,665 | |||||||||
Publishing: Books/Magazines | |||||||||||
2,131 | Lagardere S.C.A. (a) | 180,574 | |||||||||
Real Estate Development | |||||||||||
1,998 | Klepierre | 108,763 | |||||||||
664 | Unibail - Rodamco (Paris Exchange) | 165,703 | |||||||||
817 | Unibail - Rodamco (Netherlands Exchange) (a) | 202,982 | |||||||||
477,448 | |||||||||||
Real Estate Investment Trusts | |||||||||||
789 | Gecina S.A. | 135,264 | |||||||||
Regional Banks | |||||||||||
9,449 | Credit Agricole S.A. (a) | 374,867 | |||||||||
Telecommunication Equipment | |||||||||||
34,466 | Alcatel - Lucent (a) | 333,824 | |||||||||
1,681 | Safran S.A. | 42,755 | |||||||||
376,579 | |||||||||||
Water Utilities | |||||||||||
5,374 | Veolia Environnement (a) | 480,943 | |||||||||
Total France | 26,141,111 |
NUMBER OF SHARES | VALUE | ||||||||||
Germany # (8.8%) | |||||||||||
Air Freight/Couriers | |||||||||||
21,469 | Deutsche Post AG (Registered Shares) | $ | 651,726 | ||||||||
Airlines | |||||||||||
6,763 | Deutsche Lufthansa AG (Registered Shares) | 200,061 | |||||||||
Apparel/Footwear | |||||||||||
7,795 | Adidas AG (a) | 521,444 | |||||||||
378 | Puma AG | 162,430 | |||||||||
683,874 | |||||||||||
Auto Parts: O.E.M. | |||||||||||
3,885 | Continental AG | 588,573 | |||||||||
Chemicals: Major Diversified | |||||||||||
13,890 | BASF AG | 1,923,006 | |||||||||
12,920 | Bayer AG (a) | 1,081,745 | |||||||||
3,004,751 | |||||||||||
Chemicals: Specialty | |||||||||||
1,993 | Linde AG (a) | 252,299 | |||||||||
Department Stores | |||||||||||
2,866 | Arcandor AG* | 92,217 | |||||||||
4,268 | Metro AG (a) | 387,459 | |||||||||
479,676 | |||||||||||
Electric Utilities | |||||||||||
18,528 | E.ON AG | 3,622,698 | |||||||||
12,401 | RWE AG | 1,696,159 | |||||||||
5,318,857 | |||||||||||
Engineering & Construction | |||||||||||
1,724 | Hochtief AG | 239,658 | |||||||||
Financial Conglomerates | |||||||||||
6,454 | Hypo Real Estate Holding AG (a) | 385,483 | |||||||||
Food: Specialty/Candy | |||||||||||
3,010 | Suedzucker AG | 68,447 | |||||||||
Hotels/Resorts/Cruiselines | |||||||||||
5,809 | TUI AG* (a) | 172,193 |
See Notes to Financial Statements
15
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Household/Personal Care | |||||||||||
1,612 | Beiersdorf AG (a) | $ | 128,072 | ||||||||
Industrial Conglomerates | |||||||||||
4,644 | MAN AG | 834,165 | |||||||||
24,086 | Siemens AG (Registered Shares) (a) | 3,281,702 | |||||||||
10,889 | ThyssenKrupp AG | 728,531 | |||||||||
4,844,398 | |||||||||||
Industrial Machinery | |||||||||||
1,825 | Heidelberger Druckmaschinen AG | 74,846 | |||||||||
Investment Banks/Brokers | |||||||||||
3,523 | Deutsche Boerse AG (a) | 559,015 | |||||||||
Major Banks | |||||||||||
18,147 | Commerzbank AG | 773,398 | |||||||||
5,690 | Deutsche Bank AG (Registered Shares) | 762,290 | |||||||||
1,672 | Deutsche Postbank AG | 122,545 | |||||||||
1,658,233 | |||||||||||
Major Telecommunications | |||||||||||
99,218 | Deutsche Telekom AG (Registered Shares) | 2,037,201 | |||||||||
Medical Distributors | |||||||||||
2,487 | Celesio AG (a) | 141,107 | |||||||||
Medical/Nursing Services | |||||||||||
5,724 | Fresenius Medical Care AG & Co. KGaA | 302,805 | |||||||||
Motor Vehicles | |||||||||||
24,345 | Daimler AG (Registered Shares) | 2,691,654 | |||||||||
4,718 | Volkswagen AG | 1,354,966 | |||||||||
4,046,620 | |||||||||||
Multi-Line Insurance | |||||||||||
10,243 | Allianz SE (Registered Shares) | 2,310,800 | |||||||||
5,143 | Muenchener Rueckversicherungs- Gesellschaft AG (Registered Shares) | 989,395 | |||||||||
3,300,195 |
NUMBER OF SHARES | VALUE | ||||||||||
Packaged Software | |||||||||||
26,669 | SAP AG | $ | 1,446,558 | ||||||||
Pharmaceuticals: Major | |||||||||||
1,255 | Merck KGaA | 157,453 | |||||||||
Pharmaceuticals: Other | |||||||||||
2,418 | Altana AG | 58,721 | |||||||||
Semiconductors | |||||||||||
13,829 | Infineon Technologies AG* (a) | 203,605 | |||||||||
Total Germany | 31,004,427 | ||||||||||
Greece # (0.9%) | |||||||||||
Casino/Gaming | |||||||||||
6,990 | Greek Organisation of Football Prognostics S.A. | 285,783 | |||||||||
Construction Materials | |||||||||||
1,850 | Titan Cement Co. S. A. | 90,322 | |||||||||
Major Banks | |||||||||||
7,800 | Bank of Cyprus Public Co., Ltd. | 152,881 | |||||||||
16,300 | National Bank of Greece S.A. | 1,138,206 | |||||||||
1,291,087 | |||||||||||
Regional Banks | |||||||||||
14,721 | Alpha Bank A.E. | 545,802 | |||||||||
7,518 | EFG Eurobank Ergasias | 293,459 | |||||||||
14,400 | Piraeus Bank S.A. | 579,779 | |||||||||
1,419,040 | |||||||||||
Total Greece | 3,086,232 | ||||||||||
Hong Kong # (1.9%) | |||||||||||
Agricultural Commodities/Milling | |||||||||||
52,000 | Chaoda Modern Agriculture (Holdings) Ltd. | 47,368 | |||||||||
Airlines | |||||||||||
12,000 | Cathay Pacific Airways Ltd. | 36,072 | |||||||||
Apparel/Footwear | |||||||||||
28,000 | Li Ning Co. Ltd. | 105,650 | |||||||||
98,900 | Prime Success International Group Ltd. | 73,595 | |||||||||
179,245 |
See Notes to Financial Statements
16
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Apparel/Footwear Retail | |||||||||||
11,100 | Esprit Holdings Ltd. | $ | 188,753 | ||||||||
Broadcasting | |||||||||||
4,000 | Television Broadcasts Ltd. | 25,915 | |||||||||
Electric Utilities | |||||||||||
19,804 | CLP Holdings Ltd. | 133,687 | |||||||||
16,000 | Hongkong Electric Holdings Ltd. | 82,379 | |||||||||
216,066 | |||||||||||
Engineering & Construction | |||||||||||
8,000 | Hopewell Holdings Ltd. | 41,402 | |||||||||
28,465 | New World Development Co., Ltd. (a) | 102,102 | |||||||||
143,504 | |||||||||||
Financial Conglomerates | |||||||||||
15,020 | Wharf (Holdings) Ltd. (The) | 90,930 | |||||||||
Gas Distributors | |||||||||||
48,944 | Hong Kong & China Gas Co., Ltd. | 131,677 | |||||||||
Hotels/Resorts/Cruiselines | |||||||||||
12,713 | Shangri-La Asia Ltd. | 40,691 | |||||||||
Industrial Conglomerates | |||||||||||
32,000 | China Resources Enterprise Ltd. | 140,789 | |||||||||
464,000 | Guangdong Investment Ltd. | 318,334 | |||||||||
24,926 | Hutchison Whampoa Ltd. | 314,133 | |||||||||
10,500 | Swire Pacific Ltd. (Class A) | 150,362 | |||||||||
923,618 | |||||||||||
Investment Banks/Brokers | |||||||||||
12,000 | Hong Kong Exchanges & Clearing Ltd. | 400,441 | |||||||||
Major Banks | |||||||||||
18,802 | Bank of East Asia, Ltd. (The) | 127,503 | |||||||||
43,000 | BOC Hong Kong (Holdings) Ltd. | 123,209 | |||||||||
8,400 | Hang Seng Bank Ltd. | 174,127 | |||||||||
424,839 |
NUMBER OF SHARES | VALUE | ||||||||||
Major Telecommunications | |||||||||||
43,637 | PCCW Ltd. (a) | $ | 28,261 | ||||||||
Miscellaneous Manufacturing | |||||||||||
18,523 | Johnson Electric Holdings Ltd. (a) | 10,396 | |||||||||
Other Consumer Services | |||||||||||
234,000 | China Travel International Investment Hong Kong Ltd. | 188,044 | |||||||||
Other Transportation | |||||||||||
48,000 | Cosco Pacific Ltd. | 149,100 | |||||||||
Railroads | |||||||||||
17,212 | MTR Corp., Ltd. | 59,584 | |||||||||
Real Estate Development | |||||||||||
18,000 | Cheung Kong (Holdings) Ltd. | 353,629 | |||||||||
44,000 | China Resources Land Ltd. | 111,348 | |||||||||
66,500 | Hang Lung Properties Ltd. | 326,839 | |||||||||
8,000 | Henderson Land Development Co., Ltd. | 71,721 | |||||||||
7,503 | Hysan Development Co., Ltd. | 22,674 | |||||||||
5,249 | Kerry Properties Ltd. | 45,679 | |||||||||
82,000 | New World China Land Ltd. (a) | 96,364 | |||||||||
14,887 | Sino Land Co., Ltd. | 46,676 | |||||||||
24,000 | Sun Hung Kai Properties Ltd. | 458,687 | |||||||||
1,533,617 | |||||||||||
Real Estate Investment Trusts | |||||||||||
19,895 | Link REIT (The) | 45,219 | |||||||||
Tools/Hardware | |||||||||||
11,000 | Techtronic Industries Co., Ltd. | 11,896 | |||||||||
Wholesale Distributors | |||||||||||
69,220 | Li & Fung Ltd. | 327,747 | |||||||||
Wireless Telecommunications | |||||||||||
65,000 | China Mobile Ltd. | 1,356,767 | |||||||||
Total Hong Kong | 6,559,750 |
See Notes to Financial Statements
17
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
India # (1.9%) | |||||||||||
Aluminum | |||||||||||
9,700 | Hindalco Industries Ltd. | $ | 49,048 | ||||||||
Broadcasting | |||||||||||
1,090 | Zee News Ltd.* | 1,729 | |||||||||
Cable/Satellite TV | |||||||||||
1,386 | Dish TV India Ltd.* | 2,147 | |||||||||
1,205 | Wire and Wireless India Ltd.* | 1,148 | |||||||||
3,295 | |||||||||||
Construction Materials | |||||||||||
345 | ACC Limited | 9,532 | |||||||||
9,100 | Ambuja Cements Ltd. | 33,549 | |||||||||
827 | Grasim Industries Ltd. | 79,532 | |||||||||
122,613 | |||||||||||
Electric Utilities | |||||||||||
524 | Reliance Energy Ltd. | 25,190 | |||||||||
Electrical Products | |||||||||||
1,685 | Asea Brown Boveri India Ltd. | 68,321 | |||||||||
9,881 | Bharat Heavy Electricals Ltd. | 661,033 | |||||||||
729,354 | |||||||||||
Engineering & Construction | |||||||||||
23,500 | IVRCL Infrastructures and Projects Ltd. | 307,923 | |||||||||
54,353 | Unitech Ltd. | 533,713 | |||||||||
841,636 | |||||||||||
Finance/Rental/Leasing | |||||||||||
3,929 | Housing Development Finance Corp., Ltd. | 278,728 | |||||||||
Financial Publishing/Services | |||||||||||
441 | I-Flex Solutions Ltd.* | 18,132 | |||||||||
Gas Distributors | |||||||||||
4,667 | Gail India Ltd. | 49,208 | |||||||||
Household/Personal Care | |||||||||||
17,686 | Hindustan Unilever Ltd. | 93,548 | |||||||||
Information Technology Services | |||||||||||
8,480 | Infosys Technologies Ltd. | 400,531 | |||||||||
9,956 | Satyam Computer Service Ltd. | 121,623 | |||||||||
2,755 | Tata Consultancy Services Ltd. | 73,265 | |||||||||
4,299 | Wipro Ltd. | 55,811 | |||||||||
651,230 |
NUMBER OF SHARES | VALUE | ||||||||||
Major Telecommunications | |||||||||||
19,455 | Bharti Airtel Limited* | $ | 506,737 | ||||||||
26,000 | Reliance Communications Ltd. | 518,905 | |||||||||
1,025,642 | |||||||||||
Metal Fabrications | |||||||||||
2,413 | Bharat Forge Ltd. | 23,353 | |||||||||
Motor Vehicles | |||||||||||
559 | Bajaj Auto Ltd | 35,436 | |||||||||
1,483 | Hero Honda Motors Ltd. | 27,498 | |||||||||
1,865 | Mahindra & Mahindra Ltd. | 36,083 | |||||||||
1,264 | Maruti Suzuki India Ltd. | 34,904 | |||||||||
133,921 | |||||||||||
Movies/Entertainment | |||||||||||
3,722 | Zee Entertainment Enterprises Ltd. | 31,586 | |||||||||
Oil & Gas Production | |||||||||||
5,213 | Oil & Natural Gas Co., Ltd. | 167,352 | |||||||||
Oil Refining/Marketing | |||||||||||
13,840 | Reliance Industries Ltd. | 982,342 | |||||||||
Pharmaceuticals: Generic Drugs | |||||||||||
1,831 | Dr. Reddy's Laboratories Ltd. | 29,058 | |||||||||
Pharmaceuticals: Major | |||||||||||
552 | Sun Pharma Advanced Research Company Ltd.* | 1,234 | |||||||||
852 | Sun Pharmaceutical Industries Ltd. | 23,106 | |||||||||
24,340 | |||||||||||
Pharmaceuticals: Other | |||||||||||
3,330 | Cipla Ltd. | 15,214 | |||||||||
220 | Glaxosmithkline Pharmaceuticals Ltd. | 6,147 | |||||||||
2,211 | Glenmark Pharmaceuticals Ltd. | 27,869 | |||||||||
2,703 | Ranbaxy Laboratories Ltd. | 29,457 | |||||||||
78,687 | |||||||||||
Regional Banks | |||||||||||
2,000 | Axis Bank Limited | 47,131 | |||||||||
6,388 | HDFC Bank Ltd. | 272,488 |
See Notes to Financial Statements
18
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
13,440 | ICICI Bank Ltd. | $ | 433,620 | ||||||||
1,800 | ICICI Bank Ltd. (Sponsored ADR) ## | 124,992 | |||||||||
878,231 | |||||||||||
Specialty Telecommunications | |||||||||||
2,216 | Mahanagar Telephone Nigam Ltd. | 10,188 | |||||||||
Steel | |||||||||||
2,877 | Tata Steel Ltd. | 68,255 | |||||||||
Tobacco | |||||||||||
23,500 | ITC Ltd. | 107,777 | |||||||||
Trucks/Construction/ Farm Machinery | |||||||||||
2,220 | Larsen & Toubro Ltd. | 243,457 | |||||||||
4,120 | Tata Motors Ltd. | 79,992 | |||||||||
323,449 | |||||||||||
Total India | 6,747,892 | ||||||||||
Indonesia # (0.7%) | |||||||||||
Coal | |||||||||||
564,000 | PT Bumi Resources Tbk | 301,958 | |||||||||
Major Telecommunications | |||||||||||
418,000 | PT Telekomunikasi Indonesia Tbk (B Shares) | 504,244 | |||||||||
Motor Vehicles | |||||||||||
79,500 | PT Astra International Tbk | 225,768 | |||||||||
Regional Banks | |||||||||||
624,000 | PT Bank Central Asia Tbk | 505,570 | |||||||||
270,500 | PT Bank Mandiri | 113,674 | |||||||||
169,500 | PT Bank Rakyat Indonesia | 145,895 | |||||||||
765,139 | |||||||||||
Trucks/Construction/ Farm Machinery | |||||||||||
421,000 | PT United Tractors Tbk | 514,390 | |||||||||
Total Indonesia | 2,311,499 | ||||||||||
Italy # (0.9%) | |||||||||||
Investment Banks/Brokers | |||||||||||
637 | Mediobanca SpA | 15,135 |
NUMBER OF SHARES | VALUE | ||||||||||
Life/Health Insurance | |||||||||||
20,571 | Assicurazioni Generali SpA (a) | $ | 979,985 | ||||||||
Major Banks | |||||||||||
90,363 | Intesa Sanpaolo | 716,909 | |||||||||
159,793 | UniCredito Italiano SpA | 1,374,018 | |||||||||
2,090,927 | |||||||||||
Regional Banks | |||||||||||
5,084 | Unione di Banche Italiane Scpa | 141,407 | |||||||||
Specialty Stores | |||||||||||
7,532 | Bulgari SpA | 118,082 | |||||||||
Total Italy | 3,345,536 | ||||||||||
Japan # (17.7%) | |||||||||||
Advertising/Marketing Services | |||||||||||
1,150 | Asatsu - DK Inc. (a) | 38,415 | |||||||||
Agricultural Commodities/Milling | |||||||||||
6,000 | Nisshin Seifun Group Inc. | 54,213 | |||||||||
Air Freight/Couriers | |||||||||||
21,500 | Nippon Express Co., Ltd. | 107,548 | |||||||||
7,035 | Yamato Holdings Co., Ltd. | 103,248 | |||||||||
210,796 | |||||||||||
Airlines | |||||||||||
24,000 | Japan Airlines Corp.* (a) | 53,974 | |||||||||
Apparel/Footwear | |||||||||||
4,546 | Onward Holdings Co., Ltd. | 46,742 | |||||||||
2,000 | Wacoal Holdings Corp. (a) | 24,307 | |||||||||
71,049 | |||||||||||
Apparel/Footwear Retail | |||||||||||
2,100 | Fast Retailing Co., Ltd. (a) | 120,699 | |||||||||
700 | Shimamura Co., Ltd. (a) | 68,048 | |||||||||
188,747 | |||||||||||
Auto Parts: O.E.M. | |||||||||||
16,400 | Denso Corp. | 662,748 | |||||||||
5,059 | NGK Spark Plug Co., Ltd. (a) | 84,797 | |||||||||
2,100 | Stanley Electric Co., Ltd. (a) | 46,612 | |||||||||
2,300 | Toyota Industries Corp. | 98,245 | |||||||||
892,402 |
See Notes to Financial Statements
19
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Automotive Aftermarket | |||||||||||
22,400 | Bridgestone Corp. | $ | 495,235 | ||||||||
Beverages: Alcoholic | |||||||||||
10,200 | Asahi Breweries, Ltd. (a) | 168,681 | |||||||||
22,051 | Kirin Holdings Co., Ltd. | 308,188 | |||||||||
7,000 | Sapporo Holdings Ltd. (a) | 52,580 | |||||||||
4,000 | Takara Holdings Inc. | 23,462 | |||||||||
552,911 | |||||||||||
Beverages: Non-Alcoholic | |||||||||||
1,500 | ITO EN, Ltd. (a) | 31,631 | |||||||||
Broadcasting | |||||||||||
13 | Fuji Television Network, Inc. | 26,211 | |||||||||
2,600 | Tokyo Broadcasting System, Inc. | 69,333 | |||||||||
95,544 | |||||||||||
Building Products | |||||||||||
6,162 | JS Group Corp. | 99,561 | |||||||||
9,500 | Nippon Sheet Glass Co., Ltd. | 57,641 | |||||||||
12,500 | Toto Ltd. (a) | 90,454 | |||||||||
247,656 | |||||||||||
Chemicals: Agricultural | |||||||||||
4,500 | Nissan Chemical Industries, Ltd. | 61,946 | |||||||||
Chemicals: Major Diversified | |||||||||||
31,000 | Asahi Kasei Corp. (a) | 235,782 | |||||||||
23,000 | Mitsubishi Chemical Holdings Corp. | 189,714 | |||||||||
425,496 | |||||||||||
Chemicals: Specialty | |||||||||||
5,000 | Daicel Chemical Industries, Ltd. (a) | 36,970 | |||||||||
19,588 | Dainippon Ink & Chemicals, Inc. (a) | 93,707 | |||||||||
11,546 | Denki Kagaku Kogyo Kabushiki Kaisha (a) | 67,804 | |||||||||
3,608 | JSR Corp. (a) | 93,378 | |||||||||
7,000 | Kaneka Corp. | 62,040 | |||||||||
9,056 | Kuraray Co., Ltd. | 117,520 |
NUMBER OF SHARES | VALUE | ||||||||||
15,099 | Mitsubishi Rayon Co., Ltd. | $ | 85,478 | ||||||||
12,500 | Mitsui Chemicals, Inc. (a) | 117,014 | |||||||||
9,397 | Shin-Etsu Chemical Co., Ltd. | 601,937 | |||||||||
16,000 | Showa Denko K.K. | 62,391 | |||||||||
4,000 | Sumitomo Bakelite Co., Ltd. | 24,443 | |||||||||
33,000 | Sumitomo Chemical Co., Ltd. (a) | 292,676 | |||||||||
14,000 | Tosoh Corp. | 89,244 | |||||||||
1,744,602 | |||||||||||
Commercial Printing/Forms | |||||||||||
10,500 | Dai Nippon Printing Co., Ltd. | 152,280 | |||||||||
11,000 | Toppan Printing Co., Ltd. (a) | 107,341 | |||||||||
259,621 | |||||||||||
Computer Processing Hardware | |||||||||||
42,000 | Fujitsu Ltd. | 331,106 | |||||||||
Construction Materials | |||||||||||
15,000 | Taiheiyo Cement Corp. (a) | 47,047 | |||||||||
Containers/Packaging | |||||||||||
4,817 | Toyo Seikan Kaisha, Ltd. | 87,161 | |||||||||
Department Stores | |||||||||||
3,000 | H20 Retailing Corp. (a) | 24,983 | |||||||||
5,064 | Isetan Co., Ltd. (a) | 68,304 | |||||||||
9,500 | J. Front Retailing Co., Ltd.* | 85,229 | |||||||||
10,707 | Marui Group Co., Ltd. (a) | 111,107 | |||||||||
12,716 | Mitsukoshi, Ltd. (a) | 58,972 | |||||||||
8,540 | Takashimaya Co., Ltd. (a) | 103,603 | |||||||||
452,198 | |||||||||||
Electric Utilities | |||||||||||
10,900 | Chubu Electric Power Co., Inc. | 279,133 | |||||||||
16,700 | Kansai Electric Power Co., Inc. (The) | 375,867 | |||||||||
6,500 | Kyushu Electric Power Co., Inc. | 158,269 | |||||||||
12,500 | Tohoku Electric Power Co., Inc. | 263,736 | |||||||||
19,600 | Tokyo Electric Power Co., Inc. (The) | 497,239 | |||||||||
1,574,244 |
See Notes to Financial Statements
20
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Electrical Products | |||||||||||
4,000 | Fuji Electric Holdings Co., Ltd. (a) | $ | 15,133 | ||||||||
6,000 | Fujikura Ltd. (a) | 38,573 | |||||||||
17,500 | Furukawa Electric Co., Ltd. (The) (a) | 83,900 | |||||||||
700 | Mabuchi Motor Co., Ltd. | 47,145 | |||||||||
7,500 | Matsushita Electric Works, Ltd. | 82,785 | |||||||||
9,060 | NGK Insulators, Ltd. | 320,388 | |||||||||
2,404 | Nidec Corp. (a) | 181,019 | |||||||||
16,700 | Sumitomo Electric Industries, Ltd. (a) | 268,902 | |||||||||
1,100 | Ushio Inc. (a) | 22,624 | |||||||||
1,060,469 | |||||||||||
Electronic Components | |||||||||||
4,200 | Alps Electric Co., Ltd. | 52,525 | |||||||||
7,750 | Citizen Holdings Co., Ltd. (a) | 83,516 | |||||||||
700 | Hirose Electric Co., Ltd. (a) | 83,703 | |||||||||
9,400 | Hoya Corp. (a) | 341,637 | |||||||||
2,800 | Ibiden Co., Ltd. | 237,938 | |||||||||
4,600 | Murata Manufacturing Co., Ltd. | 278,796 | |||||||||
6,500 | Nippon Electric Glass Co., Ltd. (a) | 110,139 | |||||||||
3,000 | Taiyo Yuden Co., Ltd. (a) | 49,723 | |||||||||
2,952 | TDK Corp. | 242,493 | |||||||||
1,480,470 | |||||||||||
Electronic Equipment/ Instruments | |||||||||||
23,304 | Canon Inc. | 1,177,504 | |||||||||
747 | Keyence Corp. | 172,018 | |||||||||
10,530 | Konica Minolta Holdings, Inc. | 185,681 | |||||||||
3,700 | Kyocera Corp. | 313,321 | |||||||||
48,500 | Matsushita Electric Industrial Co., Ltd. | 926,948 | |||||||||
52,552 | Mitsubishi Electric Corp. | 637,418 | |||||||||
45,500 | NEC Corp. | 226,156 | |||||||||
13,000 | Oki Electric Industry Co., Ltd.* (a) | 22,080 |
NUMBER OF SHARES | VALUE | ||||||||||
5,004 | OMRON Corp. (a) | $ | 122,508 | ||||||||
14,432 | Ricoh Co., Ltd. | 284,518 | |||||||||
2,600 | Seiko Epson Corp. | 61,861 | |||||||||
78,026 | Toshiba Corp. (a) | 657,930 | |||||||||
4,950 | Yokogawa Electric Corp. (a) | 62,449 | |||||||||
4,850,392 | |||||||||||
Electronic Production Equipment | |||||||||||
5,150 | Advantest Corp. (a) | 148,010 | |||||||||
5,700 | Tokyo Electron Ltd. (a) | 333,632 | |||||||||
481,642 | |||||||||||
Electronics/Appliance Stores | |||||||||||
2,770 | Yamada Denki Co., Ltd. (a) | 285,110 | |||||||||
Electronics/Appliances | |||||||||||
9,150 | Casio Computer Co., Ltd. (a) | 86,076 | |||||||||
10,400 | FUJIFILM Holdings Corp. | 496,938 | |||||||||
7,000 | Nikon Corp. (a) | 223,327 | |||||||||
4,504 | Pioneer Corp. (a) | 50,106 | |||||||||
45,000 | Sanyo Electric Co., Ltd.* (a) | 74,214 | |||||||||
19,500 | Sharp Corp. (a) | 307,002 | |||||||||
17,196 | Sony Corp. | 849,589 | |||||||||
2,087,252 | |||||||||||
Engineering & Construction | |||||||||||
5,000 | Chiyoda Corp. (a) | 92,618 | |||||||||
4,000 | Comsys Holdings Corp. (a) | 39,117 | |||||||||
7,546 | JGC Corp. | 151,248 | |||||||||
32,000 | Kajima Corp. (a) | 113,240 | |||||||||
21,571 | Obayashi Corp. | 108,585 | |||||||||
7,000 | Okumura Corp. | 36,999 | |||||||||
21,000 | Shimizu Corp. (a) | 109,595 | |||||||||
31,000 | Taisei Corp. (a) | 93,116 | |||||||||
744,518 | |||||||||||
Finance/Rental/Leasing | |||||||||||
640 | Acom Co., Ltd. (a) | 15,286 | |||||||||
500 | Aeon Credit Service Co., Ltd. (a) | 7,686 | |||||||||
600 | Aiful Corp. (a) | 14,158 | |||||||||
1,300 | Credit Saison Co., Ltd. (a) | 41,239 | |||||||||
850 | Promise Co., Ltd. (a) | 25,516 | |||||||||
1,040 | Takefuji Corp. (a) | 26,577 | |||||||||
130,462 |
See Notes to Financial Statements
21
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Financial Conglomerates | |||||||||||
236 | Mizuho Financial Group, Inc. | $ | 1,326,330 | ||||||||
Food Retail | |||||||||||
11,103 | Aeon Co., Ltd. | 174,015 | |||||||||
1,852 | FamilyMart Co., Ltd. (a) | 54,014 | |||||||||
1,603 | Lawson, Inc. (a) | 55,432 | |||||||||
18,100 | Seven & I Holdings Co., Ltd. (a) | 466,005 | |||||||||
749,466 | |||||||||||
Food: Meat/Fish/Dairy | |||||||||||
7,000 | Meiji Dairies Corp. (a) | 37,023 | |||||||||
6,000 | Nippon Meat Packers, Inc. | 60,549 | |||||||||
3,200 | Yakult Honsha Co., Ltd. | 74,078 | |||||||||
171,650 | |||||||||||
Food: Specialty/Candy | |||||||||||
17,000 | Ajinomoto Co., Inc. | 190,978 | |||||||||
4,500 | Kikkoman Corp. | 57,102 | |||||||||
7,000 | Meiji Seika Kaisha, Ltd. (a) | 30,834 | |||||||||
2,100 | Nissin Food Products Co., Ltd. (a) | 65,926 | |||||||||
4,000 | Yamazaki Baking Co., Ltd. | 34,989 | |||||||||
379,829 | |||||||||||
Gas Distributors | |||||||||||
34,000 | Osaka Gas Co., Ltd. | 132,170 | |||||||||
39,000 | Tokyo Gas Co., Ltd. | 174,311 | |||||||||
306,481 | |||||||||||
Home Building | |||||||||||
3,956 | Daito Trust Construction Co., Ltd. (a) | 183,244 | |||||||||
21,000 | Daiwa House Industry Co., Ltd. (a) | 299,080 | |||||||||
13,072 | Sekisui Chemical Co., Ltd. | 89,269 | |||||||||
24,046 | Sekisui House, Ltd. (a) | 307,416 | |||||||||
879,009 | |||||||||||
Household/Personal Care | |||||||||||
14,500 | Kao Corp. | 415,921 | |||||||||
8,500 | Shiseido Co., Ltd. | 204,900 | |||||||||
1,200 | UniCharm Corp. (a) | 71,469 | |||||||||
692,290 |
NUMBER OF SHARES | VALUE | ||||||||||
Industrial Conglomerates | |||||||||||
75,000 | Hitachi, Ltd. | $ | 508,902 | ||||||||
28,500 | Kawasaki Heavy Industries, Ltd. | 103,720 | |||||||||
612,622 | |||||||||||
Industrial Machinery | |||||||||||
7,553 | Amada Co., Ltd. (a) | 76,560 | |||||||||
4,500 | Daikin Industries, Ltd. | 225,950 | |||||||||
4,750 | Fanuc Ltd. | 519,906 | |||||||||
25,530 | IHI Corp. (a) | 61,020 | |||||||||
89,550 | Mitsubishi Heavy Industries, Ltd. | 522,516 | |||||||||
1,705 | SMC Corp. (a) | 228,388 | |||||||||
10,000 | Sumitomo Heavy Industries, Ltd. | 132,223 | |||||||||
1,300 | THK Co., Ltd. | 28,591 | |||||||||
1,795,154 | |||||||||||
Industrial Specialties | |||||||||||
30,500 | Asahi Glass Co., Ltd. (a) | 419,210 | |||||||||
4,800 | Nitto Denko Corp. | 234,132 | |||||||||
653,342 | |||||||||||
Information Technology Services | |||||||||||
1,900 | CSK Holdings Corp. | 74,585 | |||||||||
900 | ITOCHU Techno-Solutions Corp. | 31,992 | |||||||||
18 | Net One Systems Co., Ltd. (a) | 21,915 | |||||||||
3,050 | Nomura Research Institute, Ltd. | 107,290 | |||||||||
33 | NTT Data Corp. (a) | 149,855 | |||||||||
240 | OBIC Co., Ltd. (a) | 48,138 | |||||||||
21,300 | SOFTBANK Corp. | 496,590 | |||||||||
1,100 | TIS Inc. | 19,341 | |||||||||
949,706 | |||||||||||
Internet Software/Services | |||||||||||
30 | Index Holdings (a) | 12,547 | |||||||||
393 | Yahoo! Japan Corp. | 174,346 | |||||||||
186,893 | |||||||||||
Investment Banks/Brokers | |||||||||||
60,000 | Daiwa Securities Group Inc. | 577,922 | |||||||||
79 | SBI E*TRADE Securities Co., Ltd. (a) | 84,528 |
See Notes to Financial Statements
22
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
6,500 | Matsui Securities Co., Ltd. | $ | 51,520 | ||||||||
41,450 | Nomura Holdings, Inc. | 738,503 | |||||||||
21,000 | Shinko Securities Co., Ltd. | 107,725 | |||||||||
1,560,198 | |||||||||||
Life/Health Insurance | |||||||||||
5,700 | T&D Holdings, Inc. | 342,067 | |||||||||
Major Banks | |||||||||||
35,000 | Bank of Yokohama, Ltd. (The) (a) | 247,038 | |||||||||
20,000 | Chiba Bank, Ltd. (The) | 160,119 | |||||||||
21,000 | Joyo Bank, Ltd. (The) | 129,816 | |||||||||
205,260 | Mitsubishi UFJ Financial Group, Inc. | 2,044,694 | |||||||||
16,623 | Chuo Mitsui Trust Holdings, Inc. | 132,771 | |||||||||
114 | Resona Holdings, Inc. (a) | 202,155 | |||||||||
29,500 | Shinsei Bank, Ltd. | 95,313 | |||||||||
18,000 | Shizuoka Bank, Ltd. (The) | 188,282 | |||||||||
146 | Sumitomo Mitsui Financial Group, Inc. | 1,191,340 | |||||||||
36,081 | Sumitomo Trust & Banking Co., Ltd. (The) (a) | 267,949 | |||||||||
4,659,477 | |||||||||||
Major Telecommunications | |||||||||||
44 | Nippon Telegraph & Telephone Corp. | 201,620 | |||||||||
Marine Shipping | |||||||||||
4,000 | Mitsui O.S.K. Lines, Ltd. | 66,033 | |||||||||
28,015 | Nippon Yusen Kabushiki Kaisha (a) | 289,052 | |||||||||
355,085 | |||||||||||
Medical Specialties | |||||||||||
4,400 | Olympus Corp. | 184,000 | |||||||||
4,750 | Terumo Corp. | 231,385 | |||||||||
415,385 | |||||||||||
Metal Fabrications | |||||||||||
10,000 | Minebea Co., Ltd. (a) | 69,232 | |||||||||
46,000 | Mitsubishi Materials Corp. (a) | 269,569 |
NUMBER OF SHARES | VALUE | ||||||||||
28,604 | Mitsui Mining & Smelting Co., Ltd. | $ | 121,138 | ||||||||
17,553 | NSK Ltd. (a) | 156,069 | |||||||||
13,051 | NTN Corp. (a) | 124,097 | |||||||||
740,105 | |||||||||||
Miscellaneous Commercial Services | |||||||||||
6,285 | Secom Co., Ltd. | 322,572 | |||||||||
1,030 | USS Co., Ltd. (a) | 67,324 | |||||||||
389,896 | |||||||||||
Miscellaneous Manufacturing | |||||||||||
10,527 | Ebara Corp. | 49,528 | |||||||||
6,500 | Kurita Water Industries Ltd. | 215,992 | |||||||||
265,520 | |||||||||||
Motor Vehicles | |||||||||||
38,809 | Honda Motor Co., Ltd. | 1,454,310 | |||||||||
57,505 | Nissan Motor Co., Ltd. | 662,567 | |||||||||
62,555 | Toyota Motor Corp. | 3,573,609 | |||||||||
1,100 | Yamaha Motor Co., Ltd. | 31,311 | |||||||||
5,721,797 | |||||||||||
Movies/Entertainment | |||||||||||
1,550 | Oriental Land Co., Ltd. | 91,978 | |||||||||
2,450 | TOHO Co., Ltd. | 48,918 | |||||||||
140,896 | |||||||||||
Office Equipment/Supplies | |||||||||||
2,500 | Kokuyo Co., Ltd. | 22,011 | |||||||||
Oil & Gas Production | |||||||||||
13 | INPEX Holdings Inc. | 140,842 | |||||||||
Oil Refining/Marketing | |||||||||||
38,000 | Nippon Oil Corp. | 337,202 | |||||||||
5,000 | Showa Shell Sekiyu K.K. | 59,030 | |||||||||
7,000 | TonenGeneral Sekiyu K.K. (a) | 70,644 | |||||||||
466,876 | |||||||||||
Other Consumer Services | |||||||||||
1,654 | Benesse Corp. | 61,668 | |||||||||
Other Metals/Minerals | |||||||||||
14,595 | Dowa Holdings Co., Ltd. | 170,034 | |||||||||
10,750 | Nippon Mining Holdings, Inc. | 101,264 |
See Notes to Financial Statements
23
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
24,500 | Sumitomo Metal Mining Co., Ltd. | $ | 545,436 | ||||||||
816,734 | |||||||||||
Other Transportation | |||||||||||
3,000 | Mitsubishi Logistics Corp. | 43,312 | |||||||||
Packaged Software | |||||||||||
1,100 | Fuji Soft Inc. | 21,797 | |||||||||
1,050 | Oracle Corp. (a) | 48,138 | |||||||||
2,200 | Trend Micro Inc. | 98,402 | |||||||||
168,337 | |||||||||||
Personnel Services | |||||||||||
1,000 | Meitec Corp. (a) | 29,416 | |||||||||
Pharmaceuticals: Major | |||||||||||
18,600 | Takeda Pharmaceutical Co., Ltd. | 1,160,947 | |||||||||
Pharmaceuticals: Other | |||||||||||
11,100 | Astellas Pharma Inc. | 490,595 | |||||||||
5,906 | Chugai Pharmaceutical Co., Ltd. | 102,220 | |||||||||
15,400 | Daiichi Sankyo Co., Ltd. (a)* | 438,061 | |||||||||
5,203 | Eisai Co., Ltd. | 218,246 | |||||||||
7,032 | Kyowa Hakko Kogyo Co., Ltd (a) | 76,797 | |||||||||
6,181 | Shionogi & Co., Ltd. (a) | 105,407 | |||||||||
3,959 | Taisho Pharmaceutical Co., Ltd. | 76,143 | |||||||||
1,507,469 | |||||||||||
Property - Casualty Insurers | |||||||||||
18,568 | Millea Holdings, Inc. | 731,329 | |||||||||
31,000 | Mitsui Sumitomo Insurance Co., Ltd. | 353,512 | |||||||||
21,000 | Sompo Japan Insurance Inc. | 245,121 | |||||||||
1,329,962 | |||||||||||
Pulp & Paper | |||||||||||
23 | Nippon Paper Group, Inc. | 69,052 | |||||||||
28,000 | Oji Paper Co., Ltd. (a) | 128,109 | |||||||||
197,161 |
NUMBER OF SHARES | VALUE | ||||||||||
Railroads | |||||||||||
34 | Central Japan Railway Co. | $ | 351,498 | ||||||||
83 | East Japan Railway Co. (a) | 683,261 | |||||||||
10,000 | Keihin Electric Express Railway Co., Ltd. (a) | 61,231 | |||||||||
7,000 | Keio Corp. (a) | 42,579 | |||||||||
38,550 | Kintetsu Corp. (a) | 117,125 | |||||||||
21,500 | Tobu Railway Co., Ltd. (a) | 101,334 | |||||||||
23,000 | Tokyu Corp. (a) | 149,311 | |||||||||
14 | West Japan Railway Co. (a) | 69,985 | |||||||||
1,576,324 | |||||||||||
Real Estate Development | |||||||||||
3,150 | Leopalace21 Corp. | 101,138 | |||||||||
29,000 | Mitsubishi Estate Co., Ltd. (a) | 866,510 | |||||||||
20,500 | Mitsui Fudosan Co., Ltd. | 565,992 | |||||||||
8,500 | Sumitomo Realty & Development Co., Ltd. | 299,118 | |||||||||
7,000 | Tokyo Tatemono Co., Ltd. | 89,776 | |||||||||
1,922,534 | |||||||||||
Real Estate Investment Trusts | |||||||||||
15 | Japan Real Estate Investment Corp. | 185,351 | |||||||||
14 | Japan Retail Fund Investment Corp. | 103,640 | |||||||||
19 | Nippon Building Fund Inc. | 275,473 | |||||||||
564,464 | |||||||||||
Recreational Products | |||||||||||
2,300 | KONAMI Corp. (a) | 68,070 | |||||||||
1,908 | Nintendo Co., Ltd. | 1,202,352 | |||||||||
2,350 | Shimano Inc. | 85,673 | |||||||||
3,200 | Yamaha Corp. | 74,495 | |||||||||
1,430,590 | |||||||||||
Regional Banks | |||||||||||
9,500 | 77 Bank, Ltd. (The) | 64,159 | |||||||||
8,000 | Bank of Kyoto, Ltd. (The) | 101,955 | |||||||||
17,000 | Fukuoka Financial Group, Inc. (a) | 109,280 |
See Notes to Financial Statements
24
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
34,000 | Hokuhoku Financial Group, Inc. (a) | $ | 104,826 | ||||||||
16,000 | Nishi-Nippon City Bank, Ltd. (The) (a) | 47,410 | |||||||||
427,630 | |||||||||||
Semiconductors | |||||||||||
1,300 | NEC Electronics Corp.* (a) | 35,585 | |||||||||
3,605 | Rohm Co., Ltd. | 315,087 | |||||||||
4,000 | Sanken Electric Co., Ltd | 22,736 | |||||||||
373,408 | |||||||||||
Specialty Stores | |||||||||||
2,000 | Shimachu Co., Ltd. | 57,271 | |||||||||
4,000 | UNY Co., Ltd. (a) | 34,569 | |||||||||
91,840 | |||||||||||
Steel | |||||||||||
8,300 | JFE Holdings, Inc. | 484,859 | |||||||||
42,000 | Kobe Steel, Ltd. (a) | 150,764 | |||||||||
108,108 | Nippon Steel Corp. (a) | 716,721 | |||||||||
65,000 | Sumitomo Metal Industries, Ltd. (a) | 320,294 | |||||||||
1,672,638 | |||||||||||
Telecommunication Equipment | |||||||||||
2,000 | Uniden Corp. | 13,726 | |||||||||
Textiles | |||||||||||
3,571 | Nisshinbo Industries, Inc. (a) | 48,644 | |||||||||
20,608 | Teijin Ltd. | 99,303 | |||||||||
31,000 | Toray Industries, Inc. (a) | 238,905 | |||||||||
386,852 | |||||||||||
Tobacco | |||||||||||
97 | Japan Tobacco Inc. | 564,560 | |||||||||
Trucks/Construction/ Farm Machinery | |||||||||||
1,000 | Hitachi Construction Machinery Co., Ltd. (a) | 40,835 | |||||||||
27,300 | Komatsu Ltd. | 914,551 | |||||||||
38,000 | Kubota Corp. (a) | 319,533 | |||||||||
1,274,919 |
NUMBER OF SHARES | VALUE | ||||||||||
Wholesale Distributors | |||||||||||
38,051 | Itochu Corp. | $ | 484,442 | ||||||||
37,550 | Marubeni Corp. | 321,413 | |||||||||
35,100 | Mitsubishi Corp. | 1,091,209 | |||||||||
43,000 | Mitsui & Co., Ltd. | 1,117,866 | |||||||||
25,800 | Sumitomo Corp. | 449,511 | |||||||||
3,464,441 | |||||||||||
Wireless Telecommunications | |||||||||||
57 | NTT DoCoMo, Inc. | 82,608 | |||||||||
Total Japan | 62,322,396 | ||||||||||
Luxembourg # (0.3%) | |||||||||||
Steel | |||||||||||
11,134 | ArcelorMittal | 900,970 | |||||||||
Malaysia # (0.1%) | |||||||||||
Engineering & Construction | |||||||||||
96,500 | IJM Corp. Berhad | 256,048 | |||||||||
Mexico (1.3%) | |||||||||||
Beverages: Alcoholic | |||||||||||
10,300 | Grupo Modelo, S.A. de C.V. (C Shares) | 48,445 | |||||||||
Beverages: Non-Alcoholic | |||||||||||
4,000 | Coca-Cola Femsa, S.A.B. de C.V. (Series L) | 18,570 | |||||||||
37,500 | Fomento Economico Mexicano, S.A.B. de C.V. (Series UBD) (Units) + | 133,294 | |||||||||
151,864 | |||||||||||
Broadcasting | |||||||||||
42,000 | Grupo Televisa S.A. (Series CPO) | 209,439 | |||||||||
Construction Materials | |||||||||||
119,256 | Cemex S.A.B de C.V. (Series CPO) (Units)* + | 365,178 | |||||||||
Discount Stores | |||||||||||
124,623 | Wal-Mart de Mexico S.A.B. de C.V. (Series V) | 502,700 |
See Notes to Financial Statements
25
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Home Building | |||||||||||
2,600 | Desarrolladora Homex S.A. de C.V. (Sponsored ADR)* (a) | $ | 146,926 | ||||||||
20,300 | Urbi, Desarrollos Urbanos, S.A. de C.V.* | 78,420 | |||||||||
225,346 | |||||||||||
Household/Personal Care | |||||||||||
10,300 | Kimberly-Clark de Mexico, S.A.B de C.V. (A Shares) | 44,533 | |||||||||
Industrial Conglomerates | |||||||||||
6,600 | Alfa, S.A.B (A Shares) | 44,320 | |||||||||
Major Telecommunications | |||||||||||
241,500 | Telefonos de Mexico S.A.B de C.V. (Series L) | 443,477 | |||||||||
Miscellaneous Manufacturing | |||||||||||
14,700 | Grupo Carso S.A.B de C.V. (Series A1) | 63,846 | |||||||||
Other Metals/Minerals | |||||||||||
21,400 | Grupo Mexico S.A.B de C.V. (Series B) | 194,080 | |||||||||
Real Estate Development | |||||||||||
35,500 | Corporacion GEO, S.A. de C.V. (Series B)* | 130,846 | |||||||||
Regional Banks | |||||||||||
99,900 | Grupo Financiero Banorte S.A.B de C.V. (O Shares) | 468,464 | |||||||||
Wireless Telecommunications | |||||||||||
521,300 | America Movil S.A.B de (Series L) | 1,660,337 | |||||||||
Total Mexico | 4,552,875 | ||||||||||
Netherlands # (1.9%) | |||||||||||
Aerospace & Defense | |||||||||||
5,703 | European Aeronautic Defence and Space Co.* (a) | 194,280 | |||||||||
Air Freight/Couriers | |||||||||||
14,902 | TNT NV | 612,676 |
NUMBER OF SHARES | VALUE | ||||||||||
Beverages: Alcoholic | |||||||||||
10,697 | Heineken NV | $ | 750,105 | ||||||||
Chemicals: Major Diversified | |||||||||||
2,125 | Koninklijke DSM NV | 120,809 | |||||||||
Electronic Equipment/ Instruments | |||||||||||
1,904 | Oce NV | 38,352 | |||||||||
Electronic Production Equipment | |||||||||||
7,109 | ASML Holding N.V.* | 248,773 | |||||||||
Financial Conglomerates | |||||||||||
18,700 | ING Groep NV (Share Certificates) | 844,014 | |||||||||
Food: Major Diversified | |||||||||||
31,798 | Unilever NV (Share Certificates) (a) | 1,035,668 | |||||||||
Industrial Conglomerates | |||||||||||
14,268 | Koninklijke (Royal) Philips Electronics NV | 592,396 | |||||||||
Industrial Specialties | |||||||||||
3,840 | Akzo Nobel NV | 309,768 | |||||||||
Life/Health Insurance | |||||||||||
32,935 | Aegon NV | 682,855 | |||||||||
Major Telecommunications | |||||||||||
29,992 | Koninklijke (Royal) KPN NV | 567,030 | |||||||||
Medical Specialties | |||||||||||
4,934 | Qiagen N.V.* | 116,551 | |||||||||
Personnel Services | |||||||||||
588 | Vedior NV - CVA (Share Certificates) | 13,444 | |||||||||
Publishing: Books/Magazines | |||||||||||
6,593 | Reed Elsevier NV | 127,965 | |||||||||
3,676 | Wolters Kluwer NV | 115,617 | |||||||||
243,582 | |||||||||||
Real Estate Investment Trusts | |||||||||||
1,007 | Corio NV | 88,534 | |||||||||
410 | Wereldhave NV | 48,858 | |||||||||
137,392 |
See Notes to Financial Statements
26
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Semiconductors | |||||||||||
15,686 | STMicroelectronics NV | $ | 269,366 | ||||||||
Total Netherlands | 6,777,061 | ||||||||||
Norway # (1.5%) | |||||||||||
Chemicals: Agricultural | |||||||||||
5,535 | Yara International ASA | 215,485 | |||||||||
Electrical Products | |||||||||||
4,200 | Renewable Energy Corp. AS* | 215,537 | |||||||||
Financial Conglomerates | |||||||||||
8,797 | DnB Nor ASA | 145,564 | |||||||||
Food: Specialty/Candy | |||||||||||
40,530 | Orkla ASA | 756,636 | |||||||||
Industrial Conglomerates | |||||||||||
26,167 | Norsk Hydro ASA | 384,826 | |||||||||
Integrated Oil | |||||||||||
86,411 | StatoilHydro ASA | 2,925,730 | |||||||||
Major Telecommunications | |||||||||||
22,491 | Telenor ASA* | 530,577 | |||||||||
Miscellaneous Manufacturing | |||||||||||
515 | Tomra Systems ASA | 3,747 | |||||||||
Pulp & Paper | |||||||||||
5,283 | Norske Skogindustrier ASA (a) | 58,324 | |||||||||
Telecommunication Equipment | |||||||||||
5,736 | Tandberg ASA | 146,863 | |||||||||
Total Norway | 5,383,289 | ||||||||||
Philippines # (0.7%) | |||||||||||
Alternative Power Generation | |||||||||||
694,585 | PNOC Energy Development Corp. | 121,910 | |||||||||
Electric Utilities | |||||||||||
52,000 | Manila Electric Co. | 99,789 | |||||||||
Financial Conglomerates | |||||||||||
14,810 | Ayala Corp. | 213,582 | |||||||||
Real Estate Development | |||||||||||
1,167,926 | Ayala Land, Inc. | 406,561 | |||||||||
1,024,000 | Megaworld Corp. | 106,009 |
NUMBER OF SHARES | VALUE | ||||||||||
16,690 | SM Investments Corp. | $ | 146,624 | ||||||||
421,000 | SM Prime Holdings Inc. | 117,569 | |||||||||
776,763 | |||||||||||
Regional Banks | |||||||||||
92,661 | Banco de Oro - EPCI Inc. | 134,634 | |||||||||
130,060 | Bank of the Philippine Islands | 196,628 | |||||||||
48,400 | Metropolitan Bank & Trust Co. | 70,054 | |||||||||
401,316 | |||||||||||
Specialty Telecommunications | |||||||||||
13,010 | Philippine Long Distance Telephone Co. | 892,975 | |||||||||
Wireless Telecommunications | |||||||||||
3,060 | Globe Telecom, Inc. | 119,579 | |||||||||
Total Philippines | 2,625,914 | ||||||||||
Poland # (1.0%) | |||||||||||
Aluminum | |||||||||||
118 | Grupa Kety S.A. | 8,962 | |||||||||
Information Technology Services | |||||||||||
733 | Prokom Software S.A. | 42,420 | |||||||||
Major Telecommunications | |||||||||||
47,214 | Telekomunikacja Polska S.A. | 448,111 | |||||||||
Oil Refining/Marketing | |||||||||||
20,425 | Polski Koncern Naftowy Orlen S.A.* | 472,743 | |||||||||
Other Metals/Minerals | |||||||||||
8,725 | KGHM Polska Miedz S.A. | 473,021 | |||||||||
Publishing: Newspapers | |||||||||||
2,517 | Agora S.A. | 56,262 | |||||||||
Regional Banks | |||||||||||
7,651 | Bank Pekao S.A. | 818,345 | |||||||||
666 | Bank Przemyslowo- Handlowy BPH | 262,138 | |||||||||
1,784 | Bank Zachodni WBK S.A. | 198,481 | |||||||||
25,556 | Powszechna Kasa Oszczednosci Bank Polski S.A. | 569,526 | |||||||||
1,848,490 | |||||||||||
Total Poland | 3,350,009 |
See Notes to Financial Statements
27
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Portugal # (0.3%) | |||||||||||
Cable/Satellite TV | |||||||||||
4,955 | PT Multimedia - Servicos de Telecomunicacoes e Multimedia, SGPS, S.A. | $ | 67,459 | ||||||||
Electric Utilities | |||||||||||
25,212 | Energias de Portugal, S.A. | 162,492 | |||||||||
Major Telecommunications | |||||||||||
22,173 | Portugal Telecom, SGPS, S.A. (Registered Shares) (a) | 297,803 | |||||||||
Other Transportation | |||||||||||
13,568 | Brisa-Auto-Estradas de Portugal, S.A. (Private Shares) (a) | 192,910 | |||||||||
Regional Banks | |||||||||||
62,564 | Banco Comercial Portugues, S.A. (Registered Shares) (a) | 304,006 | |||||||||
Total Portugal | 1,024,670 | ||||||||||
Russia (1.7%) | |||||||||||
Electric Utilities | |||||||||||
2,370 | RAO Unified Energy System of Russia (Registered Shares) (GDR) # * | 289,595 | |||||||||
Food: Meat/Fish/Dairy | |||||||||||
1,700 | Wimm-Bill-Dann Foods (Sponsored ADR) (a) | 203,575 | |||||||||
Integrated Oil | |||||||||||
30,399 | OAO Gazprom (Sponsored ADR) (a) # | 1,519,306 | |||||||||
8,843 | Lukoil (Sponsored ADR) (a) # | 809,337 | |||||||||
2,328,643 | |||||||||||
Oil & Gas Production | |||||||||||
4,200 | Surgutneftegaz (Sponsored ADR) (a) # | 274,743 | |||||||||
1,900 | Tatneft (Sponsored Registered GDR) # | 237,304 | |||||||||
512,047 |
NUMBER OF SHARES | VALUE | ||||||||||
Other Metals/Minerals | |||||||||||
3,869 | JSC MMC Norilsk Nickel (Sponsored ADR) (a) # | $ | 1,201,157 | ||||||||
Precious Metals | |||||||||||
3,600 | Polyus Gold (Sponsored ADR) | 163,440 | |||||||||
Regional Banks | |||||||||||
359 | Sberbank (Registered Shares) (GDR) # | 178,482 | |||||||||
Steel | |||||||||||
6,900 | Cherepovets MK Severstal (Registered Shares) (GDR) | 164,220 | |||||||||
3,500 | Novolipetsk Steel (GDR) | 144,200 | |||||||||
308,420 | |||||||||||
Wireless Telecommunications | |||||||||||
5,100 | Mobile TeleSystems (Sponsored ADR) (a) | 423,300 | |||||||||
13,500 | Vimpel-Communications (Sponsored ADR) | 446,445 | |||||||||
869,745 | |||||||||||
Total Russia | 6,055,104 | ||||||||||
Singapore # (2.2%) | |||||||||||
Aerospace & Defense | |||||||||||
61,334 | Singapore Technologies Engineering Ltd. | 162,224 | |||||||||
Air Freight/Couriers | |||||||||||
69,000 | Singapore Post Ltd. | 58,545 | |||||||||
Airlines | |||||||||||
24,267 | Singapore Airlines Ltd. | 331,336 | |||||||||
Computer Peripherals | |||||||||||
4,843 | Creative Technology Ltd. (a) | 20,390 | |||||||||
Electronic Components | |||||||||||
12,696 | Venture Corp., Ltd. | 123,665 | |||||||||
Electronic Production Equipment | |||||||||||
62,000 | STATS ChipPAC Ltd.* | 70,318 | |||||||||
Hospital/Nursing Management | |||||||||||
28,000 | Parkway Holdings Ltd. (a) | 81,123 |
See Notes to Financial Statements
28
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Industrial Conglomerates | |||||||||||
62,000 | Fraser & Neave Ltd. | $ | 260,352 | ||||||||
50,000 | Keppel Corp. Ltd. | 515,974 | |||||||||
776,326 | |||||||||||
Investment Banks/Brokers | |||||||||||
35,479 | Singapore Exchange Ltd. | 390,278 | |||||||||
Major Banks | |||||||||||
48,393 | DBS Group Holdings Ltd. | 756,051 | |||||||||
110,078 | Oversea-Chinese Banking Corp., Ltd. | 707,551 | |||||||||
1,463,602 | |||||||||||
Major Telecommunications | |||||||||||
490,600 | Singapore Telecommunications Ltd. | 1,393,667 | |||||||||
Marine Shipping | |||||||||||
38,000 | Cosco Corp Ltd. | 208,265 | |||||||||
35,000 | Neptune Orient Lines Ltd. | 126,442 | |||||||||
334,707 | |||||||||||
Miscellaneous Commercial Services | |||||||||||
7,973 | Raffles Education Corp. Ltd. | 18,398 | |||||||||
Other Transportation | |||||||||||
87,068 | ComfortDelGro Corp. Ltd. | 117,255 | |||||||||
Publishing: Newspapers | |||||||||||
68,328 | Singapore Press Holdings Ltd. | 217,641 | |||||||||
Real Estate Development | |||||||||||
55,000 | Capitaland Ltd. | 309,613 | |||||||||
24,455 | City Developments Ltd. | 270,543 | |||||||||
17,000 | Keppel Land Ltd. (a) | 98,323 | |||||||||
11,000 | Singapore Land Ltd. | 74,449 | |||||||||
27,673 | UOL Group Ltd. | 101,252 | |||||||||
854,180 | |||||||||||
Real Estate Investment Trusts | |||||||||||
45,000 | Ascendas Real Estate Investment Trust | 81,328 | |||||||||
39,700 | CapitaMall Trust | 101,651 | |||||||||
4,800 | K-REIT Asia | 9,135 | |||||||||
192,114 |
NUMBER OF SHARES | VALUE | ||||||||||
Regional Banks | |||||||||||
51,489 | United Overseas Bank Ltd. | $ | 772,285 | ||||||||
Semiconductors | |||||||||||
64,000 | Chartered Semiconductor Manufacturing Ltd.* (a) | 50,955 | |||||||||
Specialty Stores | |||||||||||
9,031 | Jardine Cycle & Carriage Ltd. | 132,571 | |||||||||
Trucks/Construction/ Farm Machinery | |||||||||||
38,511 | SembCorp Industries Ltd. | 158,929 | |||||||||
36,400 | SembCorp Marine Ltd. | 113,725 | |||||||||
272,654 | |||||||||||
Water Utilities | |||||||||||
29,000 | Hyflux Ltd. | 74,020 | |||||||||
Total Singapore | 7,908,254 | ||||||||||
South Africa # (0.2%) | |||||||||||
Pulp & Paper | |||||||||||
4,693 | Mondi Ltd. | 46,008 | |||||||||
Wireless Telecommunications | |||||||||||
38,042 | MTN Group Ltd. | 742,539 | |||||||||
Total South Africa | 788,547 | ||||||||||
South Korea # (0.6%) | |||||||||||
Airlines | |||||||||||
270 | Korean Air Lines Co., Ltd. | 24,108 | |||||||||
Chemicals: Specialty | |||||||||||
320 | LG Chem Ltd. | 39,991 | |||||||||
Department Stores | |||||||||||
72 | Shinsegae Co., Ltd. | 56,621 | |||||||||
Electric Utilities | |||||||||||
1,140 | Korea Electric Power Corp. | 50,825 | |||||||||
Electronic Distributors | |||||||||||
430 | LG. Philips LCD Co., Ltd.* | 24,050 | |||||||||
Electronics/Appliances | |||||||||||
380 | LG Electronics Inc. | 39,967 | |||||||||
Engineering & Construction | |||||||||||
120 | Daelim Industrial Co., Ltd. | 26,452 |
See Notes to Financial Statements
29
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
160 | Doosan Heavy Industries and Construction Co., Ltd. | $ | 30,042 | ||||||||
200 | GS Engineering & Construction Corp. | 42,229 | |||||||||
300 | Hyundai Engineering & Construction Co., Ltd.* | 30,749 | |||||||||
170 | Samsung Engineering Co., Ltd. | 23,270 | |||||||||
152,742 | |||||||||||
Financial Conglomerates | |||||||||||
1,450 | Shinhan Financial Group Co., Ltd. | 94,538 | |||||||||
Industrial Conglomerates | |||||||||||
90 | SK Holdings Co., Ltd | 27,091 | |||||||||
Industrial Machinery | |||||||||||
170 | Hyundai Mobis | 17,277 | |||||||||
Internet Software/Services | |||||||||||
179 | NHN Corp.* | 58,095 | |||||||||
Investment Banks/Brokers | |||||||||||
310 | Samsung Securities Co., Ltd. | 38,887 | |||||||||
Major Banks | |||||||||||
1,300 | Kookmin Bank | 107,351 | |||||||||
Major Telecommunications | |||||||||||
1,050 | KT Corp. | 49,785 | |||||||||
Motor Vehicles | |||||||||||
580 | Hyundai Motor Co. | 46,123 | |||||||||
1,190 | Kia Motors Corp.* | 13,817 | |||||||||
59,940 | |||||||||||
Oil Refining/Marketing | |||||||||||
230 | S-Oil Corp. | 21,102 | |||||||||
Property - Casualty Insurers | |||||||||||
150 | Samsung Fire & Marine Insurance Co., Ltd. | 41,631 | |||||||||
Regional Banks | |||||||||||
610 | Hana Financial Group Inc. | 31,083 | |||||||||
Semiconductors | |||||||||||
1,147 | Samsung Electronics Co., Ltd. | 712,136 |
NUMBER OF SHARES | VALUE | ||||||||||
Steel | |||||||||||
283 | POSCO | $ | 206,645 | ||||||||
Tobacco | |||||||||||
550 | KT&G Corp. | 44,340 | |||||||||
Trucks/Construction/ Farm Machinery | |||||||||||
420 | Daewoo Shipbuilding & Marine Engineering Co., Ltd. | 26,932 | |||||||||
450 | Doosan Infracore Co., Ltd. | 19,574 | |||||||||
150 | Hyundai Heavy Industries Co., Ltd. | 84,941 | |||||||||
40 | Hyundai Mipo Dockyard Co., Ltd. | 17,906 | |||||||||
149,353 | |||||||||||
Wholesale Distributors | |||||||||||
580 | Samsung Corp. | 54,039 | |||||||||
Total South Korea | 2,101,597 | ||||||||||
Spain # (2.7%) | |||||||||||
Apparel/Footwear Retail | |||||||||||
2,411 | Industria de Diseno Textil, S.A. | 180,178 | |||||||||
Broadcasting | |||||||||||
789 | Antena 3 de Television S.A. (a) | 14,019 | |||||||||
Electric Utilities | |||||||||||
8,564 | Endesa, S.A. | 446,285 | |||||||||
22,700 | Iberdrola, S.A. (London Exchange) | 364,858 | |||||||||
28,080 | Iberdrola, S.A. | 452,464 | |||||||||
1,810 | Union Fenosa, S.A. | 120,481 | |||||||||
1,384,088 | |||||||||||
Electrical Products | |||||||||||
3,863 | Gamesa Corporacion Tecnologica, S.A. | 197,423 | |||||||||
Engineering & Construction | |||||||||||
360 | Acciona S.A. | 111,845 | |||||||||
3,150 | ACS, Actividades de Construccion y Servicios, S.A. | 196,078 |
See Notes to Financial Statements
30
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
2,457 | Cintra Concesiones de Infraestructuras de Transporte S.A. | $ | 43,082 | ||||||||
395 | Fomento de Construcciones y Contratas S.A. | 34,580 | |||||||||
804 | Grupo Ferrovial, S.A. (a) | 70,548 | |||||||||
891 | Sacyr Vallehermoso S.A. (a) | 42,209 | |||||||||
498,342 | |||||||||||
Gas Distributors | |||||||||||
15,412 | Gas Natural SDG, S.A. | 950,670 | |||||||||
Information Technology Services | |||||||||||
762 | Indra Sistemas S.A. | 22,169 | |||||||||
Integrated Oil | |||||||||||
12,776 | Repsol YPF, S.A. | 506,995 | |||||||||
Major Banks | |||||||||||
40,669 | Banco Bilbao Vizcaya Argentaria, S.A. | 1,028,991 | |||||||||
78,793 | Banco Santander S.A. | 1,722,240 | |||||||||
2,751,231 | |||||||||||
Major Telecommunications | |||||||||||
65,411 | Telefonica S.A. | 2,165,768 | |||||||||
Other Transportation | |||||||||||
4,825 | Abertis Infraestructuras S.A. (a) | 161,404 | |||||||||
Regional Banks | |||||||||||
10,446 | Banco Popular Espanol S.A. (a) | 183,143 | |||||||||
Steel | |||||||||||
2,965 | Acerinox, S.A. | 87,882 | |||||||||
Tobacco | |||||||||||
3,736 | Altadis, S.A. | 266,725 | |||||||||
Water Utilities | |||||||||||
1,994 | Sociedad General de Aguas de Barcelona, S.A. (Class A) | 79,731 | |||||||||
Total Spain | 9,449,768 |
NUMBER OF SHARES | VALUE | ||||||||||
Sweden # (2.3%) | |||||||||||
Advertising/Marketing Services | |||||||||||
2,500 | Eniro AB | $ | 32,047 | ||||||||
Apparel/Footwear Retail | |||||||||||
7,600 | Hennes & Mauritz AB (B Shares) | 507,185 | |||||||||
Broadcasting | |||||||||||
800 | Modern Times Group AB (B Shares) (a) | 56,387 | |||||||||
Electronics/Appliances | |||||||||||
4,900 | Electrolux AB (B Shares) | 94,826 | |||||||||
Engineering & Construction | |||||||||||
9,280 | Skanska AB (B Shares) | 183,669 | |||||||||
Household/Personal Care | |||||||||||
14,058 | Svenska Cellulosa AB (B Shares) (a) | 248,479 | |||||||||
Industrial Machinery | |||||||||||
500 | Alfa Laval AB | 40,002 | |||||||||
7,800 | Assa Abloy AB (B Shares) (a) | 164,393 | |||||||||
17,120 | Atlas Copco AB (A Shares) | 286,892 | |||||||||
11,444 | Atlas Copco AB (B Shares) | 180,186 | |||||||||
24,345 | Sandvik AB | 464,784 | |||||||||
1,136,257 | |||||||||||
Major Banks | |||||||||||
11,750 | Skandinaviska Enskilda Banken AB (A Shares) | 361,551 | |||||||||
19,500 | Svenska Handelsbanken AB (A Shares) | 648,864 | |||||||||
1,010,415 | |||||||||||
Major Telecommunications | |||||||||||
3,205 | Tele2 AB (B Shares) | 75,775 | |||||||||
38,848 | TeliaSonera AB | 383,215 | |||||||||
458,990 | |||||||||||
Medical Specialties | |||||||||||
3,800 | Getinge AB (B Shares) (a) | 100,978 | |||||||||
Metal Fabrications | |||||||||||
6,408 | SKF AB (B Shares) | 125,572 |
See Notes to Financial Statements
31
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Miscellaneous Commercial Services | |||||||||||
1,600 | Securitas AB (B Shares) | $ | 20,239 | ||||||||
2,000 | Securitas Systems AB (B Shares) | 8,045 | |||||||||
28,284 | |||||||||||
Other Consumer Services | |||||||||||
2,000 | Securitas Direct AB (B Shares) | 5,987 | |||||||||
Pulp & Paper | |||||||||||
1,250 | Holmen AB (B Shares) | 49,309 | |||||||||
Regional Banks | |||||||||||
69,334 | Nordea Bank AB | 1,244,458 | |||||||||
Steel | |||||||||||
4,500 | SSAB Svenskt Stal AB (Series A) | 146,246 | |||||||||
Telecommunication Equipment | |||||||||||
435,552 | Telefonaktiebolaget LM Ericsson (B Shares) | 1,308,473 | |||||||||
Tobacco | |||||||||||
13,400 | Swedish Match AB | 300,417 | |||||||||
Tools/Hardware | |||||||||||
1,470 | Husqvarna AB (A Shares) | 17,665 | |||||||||
4,900 | Husqvarna AB (B Shares) | 59,082 | |||||||||
76,747 | |||||||||||
Trucks/Construction/ Farm Machinery | |||||||||||
9,600 | Scania AB (B Shares) (a) | 262,704 | |||||||||
12,785 | Volvo AB (A Shares) | 250,548 | |||||||||
26,150 | Volvo AB (B Shares) | 516,774 | |||||||||
1,030,026 | |||||||||||
Total Sweden | 8,144,752 | ||||||||||
Switzerland # (5.6%) | |||||||||||
Building Products | |||||||||||
960 | Geberit AG (Registered Shares) | 129,365 | |||||||||
2,000 | Schindler Holding AG (Participation Certificates) | 140,375 | |||||||||
269,740 |
NUMBER OF SHARES | VALUE | ||||||||||
Chemicals: Agricultural | |||||||||||
2,167 | Syngenta AG (Registered Shares) | $ | 523,242 | ||||||||
Chemicals: Specialty | |||||||||||
1,354 | Ciba Specialty Chemicals AG (Registered Shares) | 67,442 | |||||||||
4,563 | Clariant AG (Registered Shares)* | 58,653 | |||||||||
770 | Lonza Group AG (Registered Shares) | 89,937 | |||||||||
216,032 | |||||||||||
Computer Peripherals | |||||||||||
4,725 | Logitech International S.A (Registered Shares)* | 164,217 | |||||||||
Construction Materials | |||||||||||
6,344 | Holcim Ltd. (Registered Shares) | 725,694 | |||||||||
Electronic Equipment/ Instruments | |||||||||||
984 | Kudelski S.A (Bearer Shares) | 27,792 | |||||||||
Financial Conglomerates | |||||||||||
17,984 | UBS AG (Registered Shares) | 965,212 | |||||||||
Food: Major Diversified | |||||||||||
10,475 | Nestle S.A. (Registered Shares) | 4,842,139 | |||||||||
Household/Personal Care | |||||||||||
138 | Givaudan S.A. (Registered Shares) | 135,930 | |||||||||
Industrial Conglomerates | |||||||||||
13,200 | ABB Ltd. (Sponsored ADR) ## | 398,904 | |||||||||
40,208 | ABB Ltd. (Registered Shares) | 1,215,747 | |||||||||
146 | OC Oerlikon Corp. AG (Registered Shares)* (a) | 69,699 | |||||||||
1,684,350 | |||||||||||
Major Banks | |||||||||||
12,893 | Credit Suisse Group (Registered Shares) | 870,434 |
See Notes to Financial Statements
32
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Major Telecommunications | |||||||||||
489 | Swisscom AG (Registered Shares) | $ | 181,182 | ||||||||
Marine Shipping | |||||||||||
519 | Kuehne & Nagel International AG (Registered Shares) | 55,646 | |||||||||
Medical Specialties | |||||||||||
626 | Nobel Biocare Holding AG (Bearer Shares) | 182,849 | |||||||||
283 | Straumann Holding AG (Registered Shares) | 79,233 | |||||||||
1,322 | Synthes, Inc. | 165,321 | |||||||||
427,403 | |||||||||||
Miscellaneous Commercial Services | |||||||||||
22 | SGS SA (Registered Shares) | 28,996 | |||||||||
Multi-Line Insurance | |||||||||||
1,117 | Zurich Financial Services AG (Registered Shares) | 337,551 | |||||||||
Other Consumer Specialties | |||||||||||
17,989 | Compagnie Financiere Richemont SA ("A" Bearer Shares) (Units) + | 1,286,718 | |||||||||
1,414 | Swatch Group AG (Bearer Shares) | 453,286 | |||||||||
1,148 | Swatch Group AG (Registered Shares) | 72,097 | |||||||||
1,812,101 | |||||||||||
Other Metals/Minerals | |||||||||||
19,730 | Xstrata PLC | 1,416,734 | |||||||||
Personnel Services | |||||||||||
238 | Adecco S.A. (Registered Shares) | 14,362 | |||||||||
Pharmaceuticals: Major | |||||||||||
40,004 | Novartis AG (Registered Shares) | 2,131,246 | |||||||||
12,033 | Roche Holding AG | 2,056,948 | |||||||||
4,188,194 |
NUMBER OF SHARES | VALUE | ||||||||||
Property - Casualty Insurers | |||||||||||
10,359 | Swiss Re (Registered Shares) | $ | 975,503 | ||||||||
Semiconductors | |||||||||||
750 | Micronas Semiconductor Holding AG (Registered Shares)* (a) | 10,051 | |||||||||
Total Switzerland | 19,872,505 | ||||||||||
Taiwan (0.2%) | |||||||||||
Electronic Equipment/ Instruments | |||||||||||
25,888 | AU Optronics Corp. (Sponsored ADR) (a) | 562,546 | |||||||||
Thailand # (0.1%) | |||||||||||
Coal | |||||||||||
17,100 | Banpu Public Co., Ltd. | 225,293 | |||||||||
Turkey # (1.6%) | |||||||||||
Beverages: Alcoholic | |||||||||||
18,892 | Anadolu Efes Biracilik ve Malt Sanayii A.S. | 230,940 | |||||||||
Electronics/Appliances | |||||||||||
10,662 | Arcelik A.S. | 81,806 | |||||||||
Financial Conglomerates | |||||||||||
38,745 | Haci Omer Sabanci Holding A.S. | 266,307 | |||||||||
Food Retail | |||||||||||
7,889 | Migros Turk T.A.S. | 138,271 | |||||||||
Industrial Specialties | |||||||||||
37,972 | Turk Sise ve Cam Fabrikalari A.S. | 83,969 | |||||||||
Miscellaneous Manufacturing | |||||||||||
43,859 | Dogan Sirketler Grubu Holding A.S.* | 97,012 | |||||||||
Motor Vehicles | |||||||||||
12,086 | Ford Otomotiv Sanayi A.S. | 142,510 | |||||||||
33,561 | Koc Holding A.S.* | 184,409 | |||||||||
326,919 |
See Notes to Financial Statements
33
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Oil Refining/Marketing | |||||||||||
10,093 | Tupras-Turkiye Petrol Rafinerileri A.S. | $ | 287,362 | ||||||||
Property - Casualty Insurers | |||||||||||
13,547 | Aksigorta AS | 100,564 | |||||||||
Publishing: Newspapers | |||||||||||
20,041 | Dogan Yayin Holding A.S.* | 101,257 | |||||||||
Regional Banks | |||||||||||
82,803 | Akbank T.A.S. | 758,746 | |||||||||
75,699 | Turkiye Garanti Bankasi A.S. | 701,073 | |||||||||
103,916 | Turkiye Is Bankasi (Series C) | 715,303 | |||||||||
62,102 | Turkiye Vakiflar Bankasi T.A.O. (D Shares) | 237,286 | |||||||||
51,323 | Yapi ve Kredi Bankasi A.S. | 201,302 | |||||||||
2,613,710 | |||||||||||
Steel | |||||||||||
32,003 | Eregli Demir ve Celik Fabrikalari T.A.S. | 311,886 | |||||||||
Wireless Telecommunications | |||||||||||
118,586 | Turkcell Iletisim Hizmetleri A.S. | 1,140,399 | |||||||||
Total Turkey | 5,780,402 | ||||||||||
United Kingdom # (16.6%) | |||||||||||
Advertising/Marketing Services | |||||||||||
17,397 | Aegis Group PLC | 45,717 | |||||||||
13,410 | WPP Group PLC | 183,605 | |||||||||
8,973 | Yell Group PLC | 85,175 | |||||||||
314,497 | |||||||||||
Aerospace & Defense | |||||||||||
69,906 | BAE Systems PLC | 726,310 | |||||||||
23,713 | Cobham PLC | 104,162 | |||||||||
11,324 | Meggitt PLC | 80,872 | |||||||||
40,392 | Rolls-Royce Group PLC* | 453,339 | |||||||||
1,632,311 | Rolls-Royce Group PLC (B Shares) | 3,733 | |||||||||
1,368,416 | |||||||||||
Airlines | |||||||||||
14,329 | British Airways PLC* | 133,304 |
NUMBER OF SHARES | VALUE | ||||||||||
Apparel/Footwear | |||||||||||
15,676 | Burberry Group PLC | $ | 201,080 | ||||||||
Auto Parts: O.E.M. | |||||||||||
10,171 | GKN PLC | 77,818 | |||||||||
2,453 | TI Automotive Ltd.* | 0 | |||||||||
77,818 | |||||||||||
Beverages: Alcoholic | |||||||||||
78,810 | Diageo PLC | 1,806,763 | |||||||||
6,365 | SABMiller PLC | 191,699 | |||||||||
1,998,462 | |||||||||||
Broadcasting | |||||||||||
52,249 | ITV PLC | 107,899 | |||||||||
Cable/Satellite TV | |||||||||||
15,201 | British Sky Broadcasting Group PLC | 215,458 | |||||||||
Casino/Gaming | |||||||||||
14,030 | Ladbrokes PLC | 120,545 | |||||||||
10,233 | William Hill PLC | 132,177 | |||||||||
252,722 | |||||||||||
Catalog/Specialty Distribution | |||||||||||
10,876 | Home Retail Group PLC | 99,020 | |||||||||
Chemicals: Major Diversified | |||||||||||
18,966 | Imperial Chemical Industries PLC | 260,018 | |||||||||
8,136 | Johnson Matthey PLC | 303,437 | |||||||||
563,455 | |||||||||||
Containers/Packaging | |||||||||||
10,347 | Rexam PLC | 117,068 | |||||||||
Department Stores | |||||||||||
22,378 | Marks & Spencer Group PLC | 304,268 | |||||||||
3,491 | Next PLC | 160,903 | |||||||||
465,171 | |||||||||||
Electric Utilities | |||||||||||
4,096 | International Power PLC | 41,800 | |||||||||
64,113 | National Grid PLC | 1,071,086 |
See Notes to Financial Statements
34
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
20,431 | Scottish & Southern Energy PLC | $ | 662,567 | ||||||||
2,429 | United Utilities PLC | 36,940 | |||||||||
1,812,393 | |||||||||||
Electronic Equipment/ Instruments | |||||||||||
5,721 | Invensys PLC* | 38,973 | |||||||||
Electronics/Appliance Stores | |||||||||||
26,580 | DSG International PLC | 71,745 | |||||||||
4,063 | Kesa Electricals PLC | 26,915 | |||||||||
98,660 | |||||||||||
Engineering & Construction | |||||||||||
6,257 | AMEC PLC | 109,478 | |||||||||
11,318 | Balfour Beatty PLC | 117,658 | |||||||||
227,136 | |||||||||||
Environmental Services | |||||||||||
10,648 | Biffa PLC | 57,932 | |||||||||
Finance/Rental/Leasing | |||||||||||
1,021 | International Personal Finance | 5,267 | |||||||||
511 | Provident Financial PLC | 9,405 | |||||||||
14,672 | |||||||||||
Financial Conglomerates | |||||||||||
520 | Close Brothers Group PLC | 8,334 | |||||||||
103,122 | Lloyds TSB Group PLC | 1,173,330 | |||||||||
1,181,664 | |||||||||||
Financial Publishing/Services | |||||||||||
20,293 | Reuters Group PLC | 279,141 | |||||||||
Food Retail | |||||||||||
23,347 | Sainsbury (J) PLC | 265,675 | |||||||||
126,424 | Tesco PLC | 1,286,067 | |||||||||
1,551,742 | |||||||||||
Food: Major Diversified | |||||||||||
29,011 | Unilever PLC | 982,837 | |||||||||
Food: Specialty/Candy | |||||||||||
44,003 | Cadbury Schweppes PLC | 583,801 | |||||||||
15,384 | Tate & Lyle PLC | 139,740 | |||||||||
723,541 |
NUMBER OF SHARES | VALUE | ||||||||||
Gas Distributors | |||||||||||
54,214 | Centrica PLC | $ | 416,861 | ||||||||
Home Building | |||||||||||
3,603 | Barratt Developments PLC | 49,083 | |||||||||
1,768 | Bellway PLC | 39,674 | |||||||||
1,777 | Berkeley Group Holdings PLC (The) (Units)* + | 63,124 | |||||||||
3,901 | Persimmon PLC | 85,446 | |||||||||
17,270 | Taylor Wimpey PLC | 89,378 | |||||||||
326,705 | |||||||||||
Home Improvement Chains | |||||||||||
16,731 | Kingfisher PLC | 68,828 | |||||||||
Hotels/Resorts/Cruiselines | |||||||||||
4,309 | Carnival PLC | 201,871 | |||||||||
8,641 | InterContinental Hotels Group PLC | 202,209 | |||||||||
404,080 | |||||||||||
Household/Personal Care | |||||||||||
20,528 | Reckitt Benckiser Group PLC | 1,192,882 | |||||||||
Industrial Conglomerates | |||||||||||
7,896 | Smiths Group PLC | 186,224 | |||||||||
19,933 | Tomkins PLC | 92,545 | |||||||||
278,769 | |||||||||||
Industrial Machinery | |||||||||||
6,480 | FKI PLC | 12,541 | |||||||||
Information Technology Services | |||||||||||
20,898 | LogicaCMG PLC | 70,956 | |||||||||
12,889 | Misys PLC | 65,126 | |||||||||
136,082 | |||||||||||
Integrated Oil | |||||||||||
71,632 | BG Group PLC | 1,326,025 | |||||||||
373,910 | BP PLC | 4,861,892 | |||||||||
79,903 | Royal Dutch Shell PLC (A Shares) | 3,496,499 | |||||||||
55,821 | Royal Dutch Shell PLC (B Shares) | 2,433,841 | |||||||||
12,118,257 |
See Notes to Financial Statements
35
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Investment Banks/Brokers | |||||||||||
1,519 | ICAP PLC | $ | 18,542 | ||||||||
672 | London Stock Exchange Group PLC | 23,495 | |||||||||
42,037 | |||||||||||
Investment Managers | |||||||||||
1,120 | 3i Group PLC | 25,358 | |||||||||
2,028 | Invesco PLC | 31,213 | |||||||||
4,101 | Man Group PLC | 50,433 | |||||||||
497 | Schroders PLC | 15,962 | |||||||||
122,966 | |||||||||||
Life/Health Insurance | |||||||||||
48,301 | Friends Provident PLC | 185,344 | |||||||||
46,108 | Prudential PLC | 752,899 | |||||||||
938,243 | |||||||||||
Major Banks | |||||||||||
106,345 | Barclays PLC | 1,349,549 | |||||||||
61,582 | HBOS PLC | 1,122,669 | |||||||||
100,523 | HSBC Holdings PLC (Registered Shares) | 1,991,589 | |||||||||
152,769 | Royal Bank of Scotland Group PLC | 1,648,309 | |||||||||
6,112,116 | |||||||||||
Major Telecommunications | |||||||||||
175,896 | BT Group PLC | 1,196,075 | |||||||||
Medical Specialties | |||||||||||
15,392 | Smith & Nephew PLC | 208,389 | |||||||||
Miscellaneous Commercial Services | |||||||||||
10,545 | BBA Aviation PLC | 53,330 | |||||||||
10,926 | Experian Group Ltd. | 115,129 | |||||||||
4,556 | G4S PLC | 20,221 | |||||||||
5,673 | Rentokil Initial PLC | 20,364 | |||||||||
1,852 | Serco Group PLC | 17,498 | |||||||||
226,542 | |||||||||||
Miscellaneous Manufacturing | |||||||||||
4,162 | Fiberweb PLC | 4,360 | |||||||||
9,042 | IMI PLC | 106,594 | |||||||||
110,954 |
NUMBER OF SHARES | VALUE | ||||||||||
Multi-Line Insurance | |||||||||||
63,577 | Aviva PLC | $ | 1,002,426 | ||||||||
163,194 | Legal & General Group PLC | 476,992 | |||||||||
793 | Resolution PLC | 12,058 | |||||||||
1,491,476 | |||||||||||
Other Metals/Minerals | |||||||||||
38,216 | Anglo American PLC | 2,638,334 | |||||||||
60,896 | BHP Billiton PLC | 2,323,113 | |||||||||
28,490 | Rio Tinto PLC | 2,667,123 | |||||||||
7,628,570 | |||||||||||
Other Transportation | |||||||||||
3,603 | Arriva PLC | 63,322 | |||||||||
9,153 | FirstGroup PLC | 152,533 | |||||||||
9,091 | Stagecoach Group PLC | 51,519 | |||||||||
267,374 | |||||||||||
Packaged Software | |||||||||||
28,484 | Sage Group PLC (The) | 143,679 | |||||||||
Personnel Services | |||||||||||
1,773 | Capita Group PLC | 27,762 | |||||||||
4,987 | Hays PLC | 14,292 | |||||||||
42,054 | |||||||||||
Pharmaceuticals: Major | |||||||||||
23,087 | AstraZeneca PLC | 1,140,179 | |||||||||
86,832 | GlaxoSmithKline PLC | 2,239,583 | |||||||||
3,379,762 | |||||||||||
Publishing: Books/Magazines | |||||||||||
3,334 | EMAP PLC | 60,982 | |||||||||
10,943 | Pearson PLC | 181,929 | |||||||||
17,294 | Reed Elsevier PLC | 226,825 | |||||||||
469,736 | |||||||||||
Publishing: Newspapers | |||||||||||
4,759 | Daily Mail and General Trust (A Shares) | 60,880 | |||||||||
3,867 | United Business Media PLC | 58,737 | |||||||||
119,617 | |||||||||||
Pulp & Paper | |||||||||||
8,223 | Bunzl PLC | 124,488 | |||||||||
11,731 | Mondi PLC | 109,144 | |||||||||
233,632 |
See Notes to Financial Statements
36
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Railroads | |||||||||||
3,313 | National Express Group PLC | $ | 91,501 | ||||||||
Real Estate Investment Trusts | |||||||||||
8,120 | British Land Company PLC | 183,786 | |||||||||
4,436 | Hammerson PLC | 102,944 | |||||||||
7,260 | Land Securities Group PLC | 249,104 | |||||||||
3,868 | Liberty International PLC | 96,549 | |||||||||
5,810 | Segro PLC | 56,612 | |||||||||
688,995 | |||||||||||
Restaurants | |||||||||||
52,088 | Compass Group PLC | 376,095 | |||||||||
17,719 | Enterprise Inns PLC | 232,740 | |||||||||
6,319 | Punch Taverns PLC | 132,468 | |||||||||
4,927 | Whitbread PLC | 181,823 | |||||||||
923,126 | |||||||||||
Semiconductors | |||||||||||
30,903 | ARM Holdings PLC | 95,789 | |||||||||
2,965 | CSR PLC* | 39,962 | |||||||||
135,751 | |||||||||||
Specialty Stores | |||||||||||
7,209 | Galiform PLC* | 17,289 | |||||||||
22,954 | Signet Group PLC | 43,257 | |||||||||
60,546 | |||||||||||
Tobacco | |||||||||||
20,859 | British American Tobacco PLC | 794,988 | |||||||||
8,848 | Imperial Tobacco Group PLC | 448,691 | |||||||||
1,243,679 | |||||||||||
Water Utilities | |||||||||||
9,009 | Kelda Group PLC | 178,237 | |||||||||
6,863 | Severn Trent PLC | 207,554 | |||||||||
385,791 | |||||||||||
Wholesale Distributors | |||||||||||
14,982 | Electrocomponents PLC | 78,573 | |||||||||
12,575 | Wolseley PLC | 218,621 | |||||||||
297,194 |
NUMBER OF SHARES | VALUE | ||||||||||
Wireless Telecommunications | |||||||||||
1,092,548 | Vodafone Group PLC | $ | 4,309,437 | ||||||||
Total United Kingdom | 58,707,308 | ||||||||||
Total Common Stocks (Cost $204,378,274) | 322,242,090 | ||||||||||
Preferred Stocks (2.9%) | |||||||||||
Brazil (2.4%) | |||||||||||
Airlines | |||||||||||
12,500 | Gol - Linhas Aereas Inteligentes S.A. (Sponsored ADR) (a) | 342,250 | |||||||||
Beverages: Alcoholic | |||||||||||
1,976 | Companhia de Bebidas das Americas | 162,131 | |||||||||
Containers/Packaging | |||||||||||
15,871 | Klabin S.A. | 66,211 | |||||||||
Electric Utilities | |||||||||||
5,628 | Centrais Eletricas Brasileiras S.A. (B Shares) | 85,852 | |||||||||
7,441 | Companhia Energetica de Minas Gerais | 160,330 | |||||||||
246,182 | |||||||||||
Food: Meat/Fish/Dairy | |||||||||||
11,639 | Sadia S.A. | 79,358 | |||||||||
Food Retail | |||||||||||
200 | Companhia Brasileira de Distribuicao Grupo Pao de Acucar (Sponsored ADR) (a) | 6,436 | |||||||||
Integrated Oil | |||||||||||
56,525 | Petroleo Brasileiro S.A. | 2,356,501 | |||||||||
Major Telecommunications | |||||||||||
6,000 | Brasil Telecom Participacoes S.A. | 89,620 | |||||||||
Miscellaneous Commercial Services | |||||||||||
4,578 | Contax Participacoes S.A. | 7,248 |
See Notes to Financial Statements
37
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF SHARES | VALUE | ||||||||||
Other Metals/Minerals | |||||||||||
63,004 | Companhia Vale do Rio Doce (A Shares) | $ | 1,987,703 | ||||||||
Pulp & Paper | |||||||||||
10,555 | Aracruz Celulose S.A. (B Shares) | 80,810 | |||||||||
1,626 | Votorantim Celulose e Papel S.A. | 51,148 | |||||||||
131,958 | |||||||||||
Regional Banks | |||||||||||
16,936 | Banco Bradesco S.A. | 575,412 | |||||||||
31,645 | Banco Itau Holding Financeira S.A. | 897,795 | |||||||||
3,750 | Unibanco-Uniao de Bancos Brasileiros S.A. (GDR) (Units)+ (a) | 592,650 | |||||||||
2,065,857 | |||||||||||
Specialty Telecommunications | |||||||||||
1,982,422 | Embratel Participacoes S.A. | 9,278 | |||||||||
7,525 | Tele Norte Leste Participacoes S.A. | 163,836 | |||||||||
173,114 | |||||||||||
Steel | |||||||||||
8,993 | Gerdau S.A. | 280,237 | |||||||||
3,386 | Usinas Siderurgicas de Minas Gerais S.A. (A Shares) | 265,476 | |||||||||
545,713 | |||||||||||
Wireless Telecommunications | |||||||||||
8,441 | Vivo Participacoes S.A. | 50,090 | |||||||||
Total Brazil | 8,310,372 | ||||||||||
Colombia (0.1%) | |||||||||||
Regional Banks | |||||||||||
5,100 | Bancolombia S.A. (Sponsored ADR) | 187,425 | |||||||||
Germany # (0.4%) | |||||||||||
Electric Utilities | |||||||||||
1,125 | RWE AG | 137,401 |
NUMBER OF SHARES | VALUE | ||||||||||
Household/Personal Care | |||||||||||
5,318 | Henkel KGaA - Vorzug (a) | $ | 272,305 | ||||||||
Motor Vehicles | |||||||||||
219 | Porsche Automobil Holding SE | 585,343 | |||||||||
2,789 | Volkswagen AG | 529,939 | |||||||||
1,115,282 | |||||||||||
Total Germany | 1,524,988 | ||||||||||
Japan # (0.0%) | |||||||||||
Beverages: Non-Alcoholic | |||||||||||
509 | ITO EN Ltd. (a) | 8,121 | |||||||||
Russia (0.0%) | |||||||||||
Oil & Gas Production | |||||||||||
2,100 | Surgutneftegaz (Sponsored ADR) (a) | 142,800 | |||||||||
South Korea # (0.0%) | |||||||||||
Semiconductors | |||||||||||
77 | Samsung Electronics Co., Ltd. | 36,988 | |||||||||
Total Preferred Stocks (Cost $5,579,002) | 10,210,694 | ||||||||||
NUMBER OF RIGHTS | |||||||||||
Rights (0.0%) | |||||||||||
Brazil (0.0%) | |||||||||||
Specialty Telecommunications | |||||||||||
39,962 | Embratel Participacoes S.A.* | 18,473 | |||||||||
India (0.0%) | |||||||||||
Steel | |||||||||||
575 | Tata Steel Ltd. (Equity Shares) # * | 9,255 | |||||||||
2,589 | Tata Steel Ltd. (Convertible Preference Shares) # * | 3,461 | |||||||||
12,716 | |||||||||||
Japan (0.0%) | |||||||||||
Other Metals/Minerals | |||||||||||
22,095 | Dowa Mining Co. # * | 0 |
See Notes to Financial Statements
38
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
NUMBER OF RIGHTS | VALUE | ||||||||||
Sweden (0.0%) | |||||||||||
Advertising/ Marketing Services | |||||||||||
2,500 | Eniro AB # * | $ | 720 | ||||||||
Total Rights (Cost $0) | 31,909 | ||||||||||
NUMBER OF SHARES (000) | |||||||||||
Short-Term Investments (11.8%) | |||||||||||
Investment Company (c) (1.8%) | |||||||||||
6,370 | Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $6,369,611) | 6,369,611 | |||||||||
PRINCIPAL AMOUNT IN THOUSANDS | |||||||||||
Short-Term Debt Securities held as Collateral on Loaned Securities (10.0%) | |||||||||||
$ | 1,242 | AIG Match Funding Corp., 5.03%, 12/17/07 (b) | 1,241,785 | ||||||||
887 | Alliance and Leister PLC, 5.14%, 09/02/08 (b) | 886,975 | |||||||||
443 | Bancaja, 5.35%, 08/12/08 (b) | 443,487 | |||||||||
443 | Bank of New York Co., Inc. 5.12%, 08/08/08 (b) | 443,487 | |||||||||
1,685 | Bank of Nova Scotia (London) 4.75%, 11/01/07 (b) | 1,685,252 | |||||||||
443 | BASF AG, 5.18%, 08/19/08 (b) | 443,456 | |||||||||
887 | BNP Paribas Mtn., 5.50%, 05/19/08 (b) | 886,975 | |||||||||
1,774 | Cam U.S. Finance S.A. Unipersonal, 5.24%, 07/25/08 (b) | 1,773,950 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
$ | 887 | Canadian Imperial Bank N.Y., 4.67%, 07/28/08 (b) | $ | 886,975 | |||||||
443 | CC USA Inc., 4.55%, 01/28/08 (b) | 443,294 | |||||||||
1,597 | CIT Group Holdings, 5.23%, 06/18/08 (b) | 1,596,555 | |||||||||
4,435 | Citigroup Global Markets, Inc., 4.95%, 11/01/07 (b) | 4,434,875 | |||||||||
887 | Credit Suisse First Boston, N.Y., 4.57%, 03/14/08 (b) | 886,975 | |||||||||
First Tennesee Bank | |||||||||||
443 | 5.05%, 08/15/08 (b) | 443,487 | |||||||||
1,774 | 5.07%, 08/15/08 (b) | 1,773,844 | |||||||||
Goldman Sachs Group, Inc., | |||||||||||
834 | 5.06%, 11/14/08 (b) | 833,756 | |||||||||
443 | 5.16%, 09/12/08 (b) | 443,487 | |||||||||
443 | HSBC Finance Corp., 5.14%, 08/05/08 (b) | 443,487 | |||||||||
1,774 | IBM Corp., 5.10%, 09/08/08 (b) | 1,774,007 | |||||||||
2,228 | Lehman Brothers, Inc., 4.94%, 11/01/07 (b) | 2,228,250 | |||||||||
887 | Macquarie Bank Ltd., 5.02%, 08/20/08 (b) | 886,975 | |||||||||
889 | Marshall & Ilsley Bank 5.37%, 12/17/07 | 889,463 | |||||||||
1,330 | Metropolitan Life Global Funding, 4.99%, 08/21/08 (b) | 1,330,463 | |||||||||
1,774 | National Rural Utilities Coop., Fin., 5.14%, 09/02/08 (b) | 1,773,950 | |||||||||
1,029 | Nationwide Building Society, 5.28%, 07/25/08 (b) | 1,028,890 | |||||||||
1,774 | National Bank of Canada, 5.11%, 04/02/08 (b) | 1,773,731 | |||||||||
2,128 | Societe Generale, N.Y., 4.73%, 12/31/07 (b) | 2,128,631 | |||||||||
976 | Unicredito Delaware Inc., 5.10%, 08/14/08 (b) | 975,699 |
See Notes to Financial Statements
39
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
$ | 621 | Unicredito Italiano Bank (IRE) PLC, 5.15%, 08/08/08 (b) | $ | 620,883 | |||||||
Total Short-Term Debt Securities held as Collateral on Loaned Securities (Cost $35,403,044) | 35,403,044 | ||||||||||
Total Short-Term Investments (Cost $41,772,655) | 41,772,655 |
Total Investments (Cost $251,729,931) (d) (e) | 106.1 | % | 374,257,348 | ||||||||
Liabilities in Excess of Other Assets | (6.1 | ) | (21,606,226 | ) | |||||||
Net Assets | 100.0 | % | $ | 352,651,122 |
ADR American Depositary Receipt.
CDI CHESS Depositary Interest.
GDR Global Depositary Receipt.
* Non-income producing security.
** Comprised of securities in separate entities that are traded as a single stapled security.
+ Consists of one or more class of securities traded together as a unit; stocks with attached warrants.
# Securities with total market value equal to $315,714,193 have been valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees.
## Security noted was not fair valued.
(a) All or a portion of this security was on loan at October 31, 2007.
(b) Variable/Floating Rate Security - interest rate changes on these instruments are based on changes in a designated base rate. The rates shown are those in effect on October 31, 2007.
(c) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class.
(d) Securities have been designated as collateral in an amount equal to $136,159,188 in connection with open forward foreign currency contracts and open futures contracts.
(e) The aggregate cost for federal income tax purposes is $255,837,942. The aggregate gross unrealized appreciation is $122,693,399 and the aggregate gross unrealized depreciation is $4,273,993, resulting in net unrealized appreciation of $118,419,406.
Futures Contracts Open at October 31, 2007:
NUMBER OF CONTRACTS | LONG/SHORT | DESCRIPTION, DELIVERY MONTH AND YEAR | UNDERLYING FACE AMOUNT AT VALUE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
61 | Long | HANG SENG Index Future November/2007 | $ | 12,305,468 | $ | 65,385 | |||||||||||||
91 | Long | MSCI TAIWAN Index Future November/2007 | 3,488,030 | 11,828 | |||||||||||||||
15 | Long | CAC40 10 EURO Future November/2007 | 1,269,573 | 19,163 | |||||||||||||||
12 | Short | DAX Index Future December/2007 | (3,502,354 | ) | (21,509 | ) | |||||||||||||
Net Unrealized Appreciation | $ | 74,867 |
See Notes to Financial Statements
40
Morgan Stanley International Fund
Portfolio of Investments n October 31, 2007 continued
Forward Foreign Currency Contracts Open at October 31, 2007:
CONTRACTS TO DELIVER | IN EXCHANGE FOR | DELIVERY DATE | UNREALIZED APPRECIATION (DEPRECIATION) | ||||||||||||
$ | 1,747,613 | NOK | 9,367,204 | 11/1/07 | $ | (2,214 | ) | ||||||||
$ | 4,325,075 | AUD | 4,811,745 | 12/13/07 | 145,764 | ||||||||||
$ | 7,577,319 | EUR | 5,444,650 | 12/13/07 | 314,370 | ||||||||||
$ | 24,034,039 | EUR | 17,232,408 | 12/13/07 | 943,289 | ||||||||||
$ | 2,642,675 | EUR | 1,896,117 | 12/13/07 | 105,631 | ||||||||||
EUR | 38,058,716 | $ | 53,061,842 | 12/13/07 | (2,101,954 | ) | |||||||||
EUR | 6,200,664 | $ | 8,647,787 | 12/13/07 | (339,699 | ) | |||||||||
EUR | 216,702 | $ | 302,020 | 12/13/07 | (12,077 | ) | |||||||||
EUR | 2,575,527 | $ | 3,590,800 | 12/13/07 | (142,270 | ) | |||||||||
$ | 25,792,396 | EUR | 18,496,863 | 12/13/07 | 1,017,683 | ||||||||||
$ | 14,648,964 | EUR | 10,505,944 | 12/13/07 | 578,764 | ||||||||||
$ | 8,574,141 | EUR | 6,043,064 | 12/13/07 | 184,913 | ||||||||||
$ | 254,187 | GBP | 122,814 | 12/13/07 | 827 | ||||||||||
$ | 4,186,753 | HKD | 32,540,700 | 12/13/07 | 14,122 | ||||||||||
HKD | 105,720,805 | $ | 13,602,955 | 12/13/07 | (45,181 | ) | |||||||||
JPY | 1,444,487,298 | $ | 12,796,663 | 12/13/07 | 211,299 | ||||||||||
$ | 916,720 | JPY | 103,432,639 | 12/13/07 | (15,544 | ) | |||||||||
$ | 5,514,747 | JPY | 623,028,596 | 12/13/07 | (86,495 | ) | |||||||||
$ | 8,990,706 | JPY | 1,014,061,747 | 12/13/07 | (155,505 | ) | |||||||||
JPY | 1,003,233,880 | $ | 8,574,141 | 12/13/07 | (166,720 | ) | |||||||||
$ | 6,912,464 | JPY | 802,667,732 | 12/13/07 | 80,927 | ||||||||||
JPY | 492,633,491 | $ | 4,324,343 | 12/13/07 | 32,183 | ||||||||||
JPY | 677,922,497 | $ | 5,905,454 | 12/13/07 | (1,071 | ) | |||||||||
JPY | 328,783,851 | $ | 2,862,400 | 12/13/07 | (2,190 | ) | |||||||||
Net Unrealized Appreciation | $ | 558,852 |
Currency Abbreviations: | |||||||
AUD | Australian Dollar. | ||||||
GBP | British Pound. | ||||||
EUR | Euro. | ||||||
HKD | Hong Kong Dollar. | ||||||
JPY | Japanese Yen. | ||||||
NOK | Norwegian Krone. |
See Notes to Financial Statements
41
Morgan Stanley International Fund
Summary of Investments n October 31, 2007
INDUSTRY | VALUE | PERCENT OF TOTAL INVESTMENTS | |||||||||
Collateral on Loaned Securities | $ | 35,403,044 | 9.5 | % | |||||||
Major Banks | 32,010,646 | 8.6 | |||||||||
Integrated Oil | 25,508,272 | 6.8 | |||||||||
Other Metals/Minerals | 18,190,170 | 4.9 | |||||||||
Regional Banks | 15,192,243 | 4.1 | |||||||||
Major Telecommunications | 13,981,707 | 3.7 | |||||||||
Electric Utilities | 13,033,696 | 3.5 | |||||||||
Motor Vehicles | 12,157,522 | 3.2 | |||||||||
Industrial Conglomerates | 11,520,577 | 3.1 | |||||||||
Pharmaceuticals: Major | 10,763,608 | 2.9 | |||||||||
Wireless Telecommunications | 10,331,501 | 2.8 | |||||||||
Multi-Line Insurance | 7,564,138 | 2.0 | |||||||||
Food: Major Diversified | 7,507,991 | 2.0 | |||||||||
Real Estate Development | 6,607,032 | 1.8 | |||||||||
Financial Conglomerates | 6,392,294 | 1.7 | |||||||||
Investment Company | 6,369,611 | 1.7 | |||||||||
Electronic Equipment/ Instruments | 5,934,670 | 1.6 | |||||||||
Steel | 5,375,709 | 1.4 | |||||||||
Engineering & Construction | 4,969,024 | 1.3 | |||||||||
Chemicals: Major Diversified | 4,393,468 | 1.2 | |||||||||
Telecommunication Equipment | 4,291,391 | 1.1 | |||||||||
Food Retail | 4,199,135 | 1.1 | |||||||||
Wholesale Distributors | 4,143,421 | 1.1 | |||||||||
Beverages: Alcoholic | 4,123,434 | 1.1 | |||||||||
Life/Health Insurance | 3,994,549 | 1.1 | |||||||||
Trucks/Construction/Farm Machinery | 3,790,613 | 1.0 | |||||||||
Oil & Gas Production | 3,451,653 | 0.9 | |||||||||
Oil Refining/Marketing | 3,415,547 | 0.9 | |||||||||
Industrial Machinery | 3,397,595 | 0.9 | |||||||||
Investment Banks/Brokers | 3,062,206 | 0.8 | |||||||||
Chemicals: Specialty | 3,025,993 | 0.8 | |||||||||
Household/Personal Care | 2,985,986 | 0.8 | |||||||||
Electrical Products | 2,941,432 | 0.8 | |||||||||
Property - Casualty Insurers | 2,747,350 | 0.7 | |||||||||
Gas Distributors | 2,645,714 | 0.7 | |||||||||
Tobacco | 2,599,017 | 0.7 | |||||||||
Construction Materials | 2,412,520 | 0.6 | |||||||||
Electronics/Appliances | 2,368,266 | 0.6 | |||||||||
Apparel/Footwear | 2,205,985 | 0.6 |
INDUSTRY | VALUE | PERCENT OF TOTAL INVESTMENTS | |||||||||
Information Technology Services | $ | 2,045,514 | 0.5 | % | |||||||
Aerospace & Defense | 2,010,466 | 0.5 | |||||||||
Food: Specialty/Candy | 1,928,453 | 0.5 | |||||||||
Marine Shipping | 1,909,261 | 0.5 | |||||||||
Department Stores | 1,863,700 | 0.5 | |||||||||
Other Consumer Specialties | 1,835,604 | 0.5 | |||||||||
Packaged Software | 1,823,116 | 0.5 | |||||||||
Semiconductors | 1,792,260 | 0.5 | |||||||||
Real Estate Investment Trusts | 1,774,699 | 0.5 | |||||||||
Pharmaceuticals: Other | 1,749,352 | 0.5 | |||||||||
Railroads | 1,727,409 | 0.5 | |||||||||
Auto Parts: O.E.M. | 1,656,367 | 0.4 | |||||||||
Electronic Components | 1,604,135 | 0.4 | |||||||||
Air Freight/Couriers | 1,533,743 | 0.4 | |||||||||
Building Products | 1,503,789 | 0.4 | |||||||||
Home Building | 1,431,060 | 0.4 | |||||||||
Recreational Products | 1,430,590 | 0.4 | |||||||||
Medical Specialties | 1,372,611 | 0.4 | |||||||||
Other Transportation | 1,338,781 | 0.4 | |||||||||
Airlines | 1,233,457 | 0.3 | |||||||||
Pulp & Paper | 1,124,596 | 0.3 | |||||||||
Industrial Specialties | 1,100,004 | 0.3 | |||||||||
Hotels/Resorts/Cruiselines | 1,094,997 | 0.3 | |||||||||
Specialty Telecommunications | 1,094,750 | 0.3 | |||||||||
Apparel/Footwear Retail | 1,064,863 | 0.3 | |||||||||
Water Utilities | 1,020,485 | 0.3 | |||||||||
Coal | 997,769 | 0.3 | |||||||||
Restaurants | 923,126 | 0.3 | |||||||||
Metal Fabrications | 907,092 | 0.2 | |||||||||
Publishing: Books/Magazines | 893,892 | 0.2 | |||||||||
Miscellaneous Commercial Services | 885,788 | 0.2 | |||||||||
Electronic Production Equipment | 800,733 | 0.2 | |||||||||
Chemicals: Agricultural | 800,673 | 0.2 | |||||||||
Automotive Aftermarket | 711,036 | 0.2 | |||||||||
Casino/Gaming | 621,848 | 0.2 | |||||||||
Media Conglomerates | 601,240 | 0.2 | |||||||||
Broadcasting | 561,613 | 0.2 | |||||||||
Publishing: Newspapers | 556,978 | 0.2 |
See Notes to Financial Statements
42
Morgan Stanley International Fund
Summary of Investments n October 31, 2007 continued
INDUSTRY | VALUE | PERCENT OF TOTAL INVESTMENTS | |||||||||
Miscellaneous Manufacturing | $ | 551,475 | 0.2 | % | |||||||
Precious Metals | 536,563 | 0.1 | |||||||||
Discount Stores | 502,700 | 0.1 | |||||||||
Containers/Packaging | 478,301 | 0.1 | |||||||||
Food: Meat/Fish/Dairy | 454,583 | 0.1 | |||||||||
Aluminum | 449,021 | 0.1 | |||||||||
Advertising/Marketing Services | 446,090 | 0.1 | |||||||||
Specialty Stores | 427,004 | 0.1 | |||||||||
Finance/Rental/Leasing | 423,862 | 0.1 | |||||||||
Textiles | 386,852 | 0.1 | |||||||||
Electronics/Appliance Stores | 383,770 | 0.1 | |||||||||
Medical/Nursing Services | 335,790 | 0.1 | |||||||||
Computer Processing Hardware | 331,106 | 0.1 | |||||||||
Internet Software/Services | 311,835 | 0.1 | |||||||||
Investment Managers | 302,469 | 0.1 | |||||||||
Financial Publishing/Services | 297,273 | 0.1 | |||||||||
Cable/Satellite TV | 286,212 | 0.1 | |||||||||
Biotechnology | 286,009 | 0.1 | |||||||||
Beverages: Non-Alcoholic | 263,852 | 0.1 | |||||||||
Commercial Printing/Forms | 259,621 | 0.1 | |||||||||
Other Consumer Services | 255,699 | 0.1 | |||||||||
Food Distributors | 186,592 | 0.1 | |||||||||
Computer Peripherals | 184,607 | 0.1 | |||||||||
Movies/Entertainment | 172,482 | 0.1 | |||||||||
Medical Distributors | 141,107 | 0.0 |
INDUSTRY | VALUE | PERCENT OF TOTAL INVESTMENTS | |||||||||
Office Equipment/Supplies | $ | 134,481 | 0.0 | % | |||||||
Hospital/Nursing Management | 132,044 | 0.0 | |||||||||
Trucking | 127,373 | 0.0 | |||||||||
Alternative Power Generation | 121,910 | 0.0 | |||||||||
Agricultural Commodities/ Milling | 101,581 | 0.0 | |||||||||
Personnel Services | 99,276 | 0.0 | |||||||||
Catalog/Specialty Distribution | 99,020 | 0.0 | |||||||||
Investment Trusts/Mutual Funds | 97,665 | 0.0 | |||||||||
Tools/Hardware | 88,643 | 0.0 | |||||||||
Home Improvement Chains | 68,828 | 0.0 | |||||||||
Environmental Services | 57,932 | 0.0 | |||||||||
Oilfield Services/Equipment | 57,132 | 0.0 | |||||||||
Pharmaceuticals: Generic Drugs | 29,058 | 0.0 | |||||||||
Data Processing Services | 28,900 | 0.0 | |||||||||
Electronic Distributors | 24,050 | 0.0 | |||||||||
$ | 374,257,348 | * | 100.0 | % |
* Does not include open short/long futures contracts with underlying face amount of $20,565,425 and net unrealized appreciation of $74,867. Also open forward foreign currency contracts with net unrealized appreciation of $558,852.
See Notes to Financial Statements
43
Morgan Stanley International Fund
Financial Statements
Statement of Assets and Liabilities
October 31, 2007
Assets: | |||||||
Investments in securities, at value (cost $245,360,320) (Including $33,918,509 of securities loaned) | $ | 367,887,737 | |||||
Investment in affiliate, at value (cost $6,369,611) | 6,369,611 | ||||||
Unrealized appreciation on open forward foreign currency contracts | 3,629,772 | ||||||
Cash (including $10,793,329 in foreign currency, at value with cost of $10,610,352 and $2,291,129 in segregation) | 13,084,458 | ||||||
Receivable for: | |||||||
Investments sold | 1,711,082 | ||||||
Variation margin | 1,488,260 | ||||||
Dividends | 541,098 | ||||||
Foreign withholding taxes reclaimed | 216,575 | ||||||
Shares of beneficial interest sold | 176,252 | ||||||
Compensated forward foreign currency contracts | 82,853 | ||||||
Dividends from affiliate | 28,797 | ||||||
Prepaid expenses and other assets | 524,857 | ||||||
Total Assets | 395,741,352 | ||||||
Liabilities: | |||||||
Collateral on securities loaned at value | 35,403,044 | ||||||
Unrealized depreciation on open forward foreign currency contracts | 3,070,920 | ||||||
Payable for: | |||||||
Investments purchased | 1,745,399 | ||||||
Shares of beneficial interest redeemed | 337,026 | ||||||
Investment advisory fee | 199,434 | ||||||
Distribution fee | 162,813 | ||||||
Compensated forward foreign currency contracts | 140,152 | ||||||
Administration fee | 24,619 | ||||||
Transfer agent fee | 5,870 | ||||||
Payable to bank | 1,715,599 | ||||||
Accrued expenses and other payables | 285,354 | ||||||
Total Liabilities | 43,090,230 | ||||||
Net Assets | $ | 352,651,122 | |||||
Composition of Net Assets: | |||||||
Paid-in-capital | $ | 257,898,214 | |||||
Net unrealized appreciation | 123,216,028 | † | |||||
Accumulated undistributed net investment income | 3,205,575 | ||||||
Accumulated net realized loss | (31,668,695 | ) | |||||
Net Assets | $ | 352,651,122 | |||||
Class A Shares: | |||||||
Net Assets | $ | 193,043,200 | |||||
Shares Outstanding (unlimited authorized, $.01 par value) | 11,394,967 | ||||||
Net Asset Value Per Share | $ | 16.94 | |||||
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value) | $ | 17.88 | |||||
Class B Shares: | |||||||
Net Assets | $ | 99,635,282 | |||||
Shares Outstanding (unlimited authorized, $.01 par value) | 5,969,909 | ||||||
Net Asset Value Per Share | $ | 16.69 | |||||
Class C Shares: | |||||||
Net Assets | $ | 37,084,755 | |||||
Shares Outstanding (unlimited authorized, $.01 par value) | 2,230,270 | ||||||
Net Asset Value Per Share | $ | 16.63 | |||||
Class D Shares: | |||||||
Net Assets | $ | 22,887,885 | |||||
Shares Outstanding (unlimited authorized, $.01 par value) | 1,346,611 | ||||||
Net Asset Value Per Share | $ | 17.00 |
† Net of $146,271 deferred capital gain country tax.
See Notes to Financial Statements
44
Morgan Stanley International Fund
Financial Statements continued
Statement of Operations
For the year ended October 31, 2007
Net Investment Income: Income | |||||||
Dividends (net of $692,477 foreign withholding tax) | $ | 7,513,503 | |||||
Income from securities loaned - net | 262,439 | ||||||
Interest | 170,259 | ||||||
Dividends from affiliate | 152,126 | ||||||
Total Income | 8,098,327 | ||||||
Expenses | |||||||
Investment advisory fee | 2,101,333 | ||||||
Distribution fee (Class A shares) | 304,296 | ||||||
Distribution fee (Class B shares) | 1,452,746 | ||||||
Distribution fee (Class C shares) | 330,810 | ||||||
Transfer agent fees and expenses | 474,979 | ||||||
Administration fee | 258,626 | ||||||
Custodian fees | 206,181 | ||||||
Shareholder reports and notices | 158,827 | ||||||
Professional fees | 85,460 | ||||||
Registration fees | 53,735 | ||||||
Trustees' fees and expenses | 5,976 | ||||||
Other | 165,716 | ||||||
Total Expenses | 5,598,685 | ||||||
Less: amounts waived/reimbursed | (7,029 | ) | |||||
Less: expense offset | (3,189 | ) | |||||
Net Expenses | 5,588,467 | ||||||
Net Investment Income | 2,509,860 | ||||||
Net Realized and Unrealized Gain: Net Realized Gain on: | |||||||
Investments | 64,485,823 | ||||||
Futures contracts | 2,212,215 | ||||||
Foreign exchange transactions | 2,066,162 | ||||||
Net Realized Gain | 68,764,200 | ||||||
Net Change in Unrealized Appreciation/Depreciation on: | |||||||
Investments | 13,860,007 | † | |||||
Futures contracts | 145,618 | ||||||
Translation of forward foreign currency contracts and other assets and liabilities denominated in foreign currencies | 236,429 | ||||||
Net Change in Unrealized Appreciation/Depreciation | 14,242,054 | ||||||
Net Gain | 83,006,254 | ||||||
Net Increase | $ | 85,516,114 |
† Net of $146,271 deferred capital gain country tax.
See Notes to Financial Statements
45
Morgan Stanley International Fund
Financial Statements continued
Statements of Changes in Net Assets
FOR THE YEAR ENDED OCTOBER 31, 2007 | FOR THE YEAR ENDED OCTOBER 31, 2006 | ||||||||||
Increase (Decrease) in Net Assets: Operations: | |||||||||||
Net investment income | $ | 2,509,860 | $ | 2,813,125 | |||||||
Net realized gain | 68,764,200 | 53,543,484 | |||||||||
Net change in unrealized appreciation/depreciation | 14,242,054 | 23,518,932 | |||||||||
Net Increase | 85,516,114 | 79,875,541 | |||||||||
Dividends to Shareholders from Net Investment Income: | |||||||||||
Class A shares | (1,452,280 | ) | (2,410,830 | ) | |||||||
Class B shares | (1,374,886 | ) | (1,853,783 | ) | |||||||
Class C shares | (299,910 | ) | (338,879 | ) | |||||||
Class D shares | (457,373 | ) | (496,509 | ) | |||||||
Total Dividends | (3,584,449 | ) | (5,100,001 | ) | |||||||
Net decrease from transactions in shares of beneficial interest | (92,719,912 | ) | (148,477,266 | ) | |||||||
Net Decrease | (10,788,247 | ) | (73,701,726 | ) | |||||||
Net Assets: | |||||||||||
Beginning of period | 363,439,369 | 437,141,095 | |||||||||
End of Period (Including accumulated undistributed net investment income of $3,205,575 and $1,880,548, respectively) | $ | 352,651,122 | $ | 363,439,369 |
See Notes to Financial Statements
46
Morgan Stanley International Fund
Notes to Financial Statements n October 31, 2007
1. Organization and Accounting Policies
Morgan Stanley International Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The Fund's investment objective is long-term capital growth. The Fund was organized as a Massachusetts business trust on October 23, 1998 and commenced operations June 28, 1999.
The Fund offers Class A shares, Class B shares, Class C shares and Class D shares. The four classes are substantially the same except that most Class A shares are subject to a sales charge imposed at the time of purchase and some Class A shares, and most Class B shares and Class C shares are subject to a contingent deferred sales charge imposed on shares redeemed within eighteen months, six years and one year, respectively. Class D shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses.
The Fund will assess a 2% redemption fee, on Class A shares, Class B shares, Class C shares, and Class D shares, which is paid directly to the Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading.
The following is a summary of significant accounting policies:
A. Valuation of Investments — (1) for equity securities traded on foreign exchanges, the last reported sale price or the latest bid price may be used if there were no sales on a particular day; (2) an equity portfolio security listed or traded on the New York Stock Exchange ("NYSE") or American Stock Exchange or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (3) an equity portfolio security listed or traded on the Nasdaq is valued at the Nasdaq Official Closing Price; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (4) all other portfolio securities for which over-the-counter market quotations are readily ava ilable are valued at the mean between the last reported bid and asked price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (5) futures are valued at the latest price published by the commodities exchange on which they trade; (6) when market quotations are not readily available including circumstances under which Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") determines that the latest sale price, the bid price or the mean between the last reported bid and asked price do not reflect a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securitie s trade) and the close of business on the NYSE. If
47
Morgan Stanley International Fund
Notes to Financial Statements n October 31, 2007 continued
developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund's Trustees or by the Investment Adviser using a pricing service and/or procedures approved by the Trustees of the Fund; (7) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees; (8) investments in open-end mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (9) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities ha ving a maturity date of sixty days or less at the time of purchase are valued at amortized cost.
B. Accounting for Investments — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Dividend income and other distributions are recorded on the ex-dividend date except for certain dividends on foreign securities which are recorded as soon as the Fund is informed after the ex-dividend date. Discounts are accreted and premiums are amortized over the life of the respective securities and are included in interest income. Interest income is accrued daily.
C. Multiple Class Allocations — Investment income, expenses (other than distribution fees), and realized and unrealized gains and losses are allocated to each class of shares based upon the relative net asset value on the date such items are recognized. Distribution fees are charged directly to the respective class.
D. Futures Contracts — A futures contract is an agreement between two parties to buy and sell financial instruments or contracts based on financial indices at a set price on a future date. Upon entering into such a contract, the Fund is required to pledge to the broker cash, U.S. Government securities or other liquid portfolio securities equal to the minimum initial margin requirements of the applicable futures exchange. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments known as variation margin are recorded by the Fund as unrealized gains and losses. Upon closing of the contract, the Fund realizes a gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
E. Foreign Currency Translation and Forward Foreign Currency Contracts — The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and forward foreign currency contracts ("forward contracts") are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded as realized and unrealized
48
Morgan Stanley International Fund
Notes to Financial Statements n October 31, 2007 continued
gain/loss on foreign exchange transactions. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities. Forward contracts are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are recorded as unrealized foreign currency gain or loss. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery.
F. Security Lending — The Fund may lend securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund receives cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily, by the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.
Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in high-quality short-term investments. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent.
The value of loaned securities and related collateral outstanding at October 31, 2007 are $33,918,509 and $35,403,044, respectively. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
G. Federal Income Tax Policy — It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required.
H. Dividends and Distributions to Shareholders — Dividends and distributions to shareholders are recorded on the ex-dividend date.
I. Use of Estimates — The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.
2. Investment Advisory/Administration Agreements
Pursuant to an Investment Advisory Agreement with the Investment Adviser, the Fund pays an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 0.65% to the portion of the daily net assets not exceeding $1 billion and 0.60% to the portion of the daily net assets in excess of $1 billion.
49
Morgan Stanley International Fund
Notes to Financial Statements n October 31, 2007 continued
Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. ("the Administrator"), an affiliate of the Investment Adviser, the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.08% to the Fund's daily net assets.
Under an agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Trust. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Trust.
For the period November 18, 2005 through November 17, 2006, the Investment Adviser had agreed to cap the Fund's operating expenses (except for brokerage and 12b-1 fees) for one year by assuming the Fund's "other expenses" and/or waiving the Fund's advisory fees, and the Administrator had agreed to waive the Fund's administrative fees, to the extent such operating expenses on an annualized basis exceed 1.05% of the average daily net assets of the fund. For the year ended October 31, 2007, the total operating expenses waived were $4,590.
3. Plan of Distribution
Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser and Administrator. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A — up to 0.25% of the average daily net assets of Class A shares; (ii) Class B — up to 1.0% of the average daily net assets of Class B shares; and (iii) Class C — up to 1.0% of the average daily net assets of Class C shares.
In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $18,172,386 at October 31, 2007.
In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Financial Advisors and other authorized financial representatives at the time of sale may be reimbursed in the subsequent calendar year. For the
50
Morgan Stanley International Fund
Notes to Financial Statements n October 31, 2007 continued
year ended October 31, 2007, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 1.0%, respectively.
The Distributor has informed the Fund that for the year ended October 31, 2007, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $139, $90,052 and $2,317, respectively and received $113,045 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges which are not an expense of the Fund.
4. Security Transactions and Transactions with Affiliates
The Fund invests in Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class, an open-end management investment company managed by the Investment Adviser. Investment advisory fees paid by the Fund are reduced by an amount equal to the advisory and administrative services fees paid by Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class with respect to assets invested by the Fund in Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class. For the year ended October 31, 2007, advisory fees paid were reduced by $2,439 relating to the Fund's investment in Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class. Income distributions earned by the Fund are recorded as dividends from affiliate in the Statement of Operations and totaled $152,126 for the year ended October 31, 2007. During the year ended O ctober 31, 2007, cost of purchases and sales in investments in Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class aggregated $46,597,543 and $40,227,932, respectively.
The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the year ended October 31, 2007 aggregated $70,151,021 and $172,318,663, respectively.
Morgan Stanley Trust, an affiliate of the Investment Adviser, Administrator, and Distributor, is the Fund's transfer agent.
The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan") which allows each independent Trustee to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Trustees. Each eligible Trustee generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund.
51
Morgan Stanley International Fund
Notes to Financial Statements n October 31, 2007 continued
5. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:
FOR THE YEAR ENDED OCTOBER 31, 2007 | FOR THE YEAR ENDED OCTOBER 31, 2006 | ||||||||||||||||||
SHARES | AMOUNT | SHARES | AMOUNT | ||||||||||||||||
CLASS A SHARES | |||||||||||||||||||
Sold | 1,302,836 | $ | 19,623,783 | 4,153,948 | $ | 50,077,268 | |||||||||||||
Conversion from Class B | 5,091,894 | 77,565,898 | 479,764 | 5,857,661 | |||||||||||||||
Reinvestment of dividends and distributions | 100,076 | 1,363,035 | 206,798 | 2,345,090 | |||||||||||||||
Redeemed | (6,035,617 | ) | (82,173,956 | ) | (4,714,979 | ) | (56,894,448 | ) | |||||||||||
Net increase — Class A | 459,189 | 16,378,760 | 125,531 | 1,385,571 | |||||||||||||||
CLASS B SHARES | |||||||||||||||||||
Sold | 822,174 | 12,075,106 | 1,663,505 | 19,918,053 | |||||||||||||||
Conversion to Class A | (5,156,674 | ) | (77,565,898 | ) | (484,622 | ) | (5,857,661 | ) | |||||||||||
Reinvestment of dividends and distributions | 87,184 | 1,179,605 | 146,771 | 1,652,647 | |||||||||||||||
Redeemed | (2,596,205 | ) | (37,102,280 | ) | (4,057,259 | ) | (48,475,853 | ) | |||||||||||
Net decrease — Class B | (6,843,521 | ) | (101,413,467 | ) | (2,731,605 | ) | (32,762,814 | ) | |||||||||||
CLASS C SHARES | |||||||||||||||||||
Sold | 270,024 | 3,923,053 | 618,843 | 7,191,377 | |||||||||||||||
Reinvestment of dividends and distributions | 19,416 | 261,724 | 27,740 | 311,530 | |||||||||||||||
Redeemed | (420,507 | ) | (6,030,252 | ) | (453,382 | ) | (5,399,128 | ) | |||||||||||
Net increase (decrease) — Class C | (131,067 | ) | (1,845,475 | ) | 193,201 | 2,103,779 | |||||||||||||
CLASS D SHARES | |||||||||||||||||||
Sold | 71,254 | 1,048,307 | 142,166 | 1,703,456 | |||||||||||||||
Reinvestment of dividends and distributions | 28,871 | 394,384 | 37,562 | 427,455 | |||||||||||||||
Redeemed | (490,485 | ) | (7,282,421 | ) | (10,951,429 | ) | (121,334,713 | ) | |||||||||||
Net decrease — Class D | (390,360 | ) | (5,839,730 | ) | (10,771,701 | ) | (119,203,802 | ) | |||||||||||
Net increase (decrease) in Fund | 6,905,759 | $ | (92,719,912 | ) | (13,184,574 | ) | $ | (148,477,266 | ) |
6. Purposes of and Risks Relating to Certain Financial Instruments
The Fund may enter into forward contracts for many purposes, including to facilitate settlement of foreign currency denominated portfolio transactions or to manage foreign currency exposure associated with foreign currency denominated securities.
To hedge against adverse interest rate, foreign currency and market risks, the Fund may purchase and sell interest rate, currency and index futures ("futures contracts").
Forward contracts and futures contracts involve elements of market risk in excess of the amounts reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in
52
Morgan Stanley International Fund
Notes to Financial Statements n October 31, 2007 continued
the foreign exchange rates underlying the forward contracts or an unfavorable change in the value of the securities underlying the futures contracts. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.
The Fund may lend securities to qualified financial institutions, such as broker-dealers, to earn additional income. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.
At October 31, 2007, the Fund's cash balance consisted principally of interest bearing deposits with J.P. Morgan Chase, the Fund's custodian.
7. Federal Income Tax Status
The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in-capital.
The tax character of distributions paid was as follows:
FOR THE YEAR ENDED OCTOBER 31, 2007 | FOR THE YEAR ENDED OCTOBER 31, 2006 | ||||||||||
Ordinary income | $ | 3,584,449 | $ | 5,100,001 | |||||||
As of October 31, 2007, the tax-basis components of accumulated earnings were as follows: |
Undistributed ordinary income | $ | 4,680,871 | |||||
Undistributed long-term gains | — | ||||||
Net accumulated earnings | 4,680,871 | ||||||
Foreign tax credit pass-through | 580,956 | ||||||
Capital loss carryforward* | (28,416,296 | ) | |||||
Temporary differences | (612,111 | ) | |||||
Net unrealized appreciation | 118,519,488 | ||||||
Total accumulated earnings | $ | 94,752,908 |
*During the year ended October 31, 2007, the Fund utilized $65,537,911 of its net capital loss carryforward. As of October 31, 2007, the Fund had a net capital loss carryforward of $28,416,296
53
Morgan Stanley International Fund
Notes to Financial Statements n October 31, 2007 continued
which will expire on October 31, 2011 to offset future capital gains to the extent provided by regulations.
As of October 31, 2007, the Fund had temporary book/tax differences primarily attributable to the mark-to-market of open forward foreign currency exchange contracts and passive foreign investment companies ("PFICs"), foreign tax credit pass-through and capital loss deferrals on wash sales.
Permanent differences, due to foreign currency gains and tax adjustments on PFICs sold by the Fund, resulted in the following reclassifications among the Fund's components of net assets at October 31, 2007:
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME | ACCUMULATED NET REALIZED LOSS | PAID-IN-CAPITAL | |||||||||
$ | 2,399,616 | $ | (2,398,952 | ) | $ | (664 | ) |
8. Expense Offset
The expense offset represents a reduction of the fees and expenses for interest earned on cash balances maintained by the Fund with the transfer agent.
9. Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. The impact to the Fund's financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
54
Morgan Stanley International Fund
Financial Highlights
Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE YEAR ENDED OCTOBER 31, | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
Class A Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 13.14 | $ | 10.70 | $ | 9.19 | $ | 8.03 | $ | 6.70 | |||||||||||||
Income from investment operations: | |||||||||||||||||||||||
Net investment income‡ | 0.15 | 0.14 | 0.13 | 0.06 | 0.08 | ||||||||||||||||||
Net realized and unrealized gain | 3.86 | 2.52 | 1.50 | 1.20 | 1.33 | ||||||||||||||||||
Total income from investment operations | 4.01 | 2.66 | 1.63 | 1.26 | 1.41 | ||||||||||||||||||
Less dividends from net investment income | (0.21 | ) | (0.22 | ) | (0.12 | ) | (0.10 | ) | (0.08 | ) | |||||||||||||
Net asset value, end of period | $ | 16.94 | $ | 13.14 | $ | 10.70 | $ | 9.19 | $ | 8.03 | |||||||||||||
Total Return† | 31.03 | % | 25.21 | % | 17.65 | % | 15.89 | % | 21.31 | % | |||||||||||||
Ratios to Average Net Assets(1): | |||||||||||||||||||||||
Total expenses (before expense offset) | 1.33 | %(2)(3) | 1.30 | %(2) | 1.30 | % | 1.57 | % | 1.58 | % | |||||||||||||
Net investment income | 1.18 | %(2)(3) | 1.18 | %(2) | 1.27 | % | 0.67 | % | 1.02 | % | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 193,043 | $ | 143,730 | $ | 115,680 | $ | 83,766 | $ | 63,422 | |||||||||||||
Portfolio turnover rate | 22 | % | 13 | % | 22 | % | 33 | % | 43 | % |
‡ The per share amounts were computed using an average number of shares outstanding during the period.
† Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific expenses.
(2) If the Fund had borne all its expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been as follows:
PERIOD ENDED | EXPENSE RATIO | NET INVESTMENT INCOME RATIO | |||||||||
October 31, 2007 | 1.34 | % | 1.17 | % | |||||||
October 31, 2006 | 1.32 | 1.16 |
(3) Reflects waivers of certain Fund expenses in connection with the investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class during the period. As a result of such waivers the expenses as a percentage of its net assets had an effect of less than 0.005%.
See Notes to Financial Statements
55
Morgan Stanley International Fund
Financial Highlights continued
FOR THE YEAR ENDED OCTOBER 31, | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
Class B Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.97 | $ | 10.55 | $ | 9.06 | $ | 7.93 | $ | 6.58 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income (loss)‡ | 0.08 | 0.05 | 0.05 | (0.01 | ) | 0.01 | |||||||||||||||||
Net realized and unrealized gain | 3.75 | 2.49 | 1.48 | 1.19 | 1.34 | ||||||||||||||||||
Total income from investment operations | 3.83 | 2.54 | 1.53 | 1.18 | 1.35 | ||||||||||||||||||
Less dividends from net investment income | (0.11 | ) | (0.12 | ) | (0.04 | ) | (0.05 | ) | – | ||||||||||||||
Net asset value, end of period | $ | 16.69 | $ | 12.97 | $ | 10.55 | $ | 9.06 | $ | 7.93 | |||||||||||||
Total Return† | 29.58 | % | 24.28 | % | 16.88 | % | 14.87 | % | 20.52 | % | |||||||||||||
Ratios to Average Net Assets(1): | |||||||||||||||||||||||
Total expenses (before expense offset) | 2.08 | %(2)(3) | 2.05 | %(2) | 2.05 | % | 2.33 | % | 2.37 | % | |||||||||||||
Net investment income (loss) | 0.43 | %(2)(3) | 0.43 | %(2) | 0.52 | % | (0.09 | )% | 0.23 | % | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 99,635 | $ | 166,184 | $ | 163,974 | $ | 193,796 | $ | 205,544 | |||||||||||||
Portfolio turnover rate | 22 | % | 13 | % | 22 | % | 33 | % | 43 | % |
‡ The per share amounts were computed using an average number of shares outstanding during the period.
† Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific expenses.
(2) If the Fund had borne all its expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been as follows:
PERIOD ENDED | EXPENSE RATIO | NET INVESTMENT INCOME RATIO | |||||||||
October 31, 2007 | 2.09 | % | 0.42 | % | |||||||
October 31, 2006 | 2.07 | 0.41 |
(3) Reflects waivers of certain Fund expenses in connection with the investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class during the period. As a result of such waivers the expenses as a percentage of its net assets had an effect of less than 0.005%.
See Notes to Financial Statements
56
Morgan Stanley International Fund
Financial Highlights continued
FOR THE YEAR ENDED OCTOBER 31, | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
Class C Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.94 | $ | 10.54 | $ | 9.06 | $ | 7.92 | $ | 6.59 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income (loss)‡ | 0.06 | 0.06 | 0.05 | (0.01 | ) | 0.01 | |||||||||||||||||
Net realized and unrealized gain | 3.76 | 2.48 | 1.47 | 1.20 | 1.33 | ||||||||||||||||||
Total income from investment operations | 3.82 | 2.54 | 1.52 | 1.19 | 1.34 | ||||||||||||||||||
Less dividends from net investment income | (0.13 | ) | (0.14 | ) | (0.04 | ) | (0.05 | ) | (0.01 | ) | |||||||||||||
Net asset value, end of period | $ | 16.63 | $ | 12.94 | $ | 10.54 | $ | 9.06 | $ | 7.92 | |||||||||||||
Total Return† | 29.58 | % | 24.34 | % | 16.81 | % | 15.03 | % | 20.40 | % | |||||||||||||
Ratios to Average Net Assets(1): | |||||||||||||||||||||||
Total expenses (before expense offset) | 2.08 | %(2)(3) | 2.04 | %(2) | 2.05 | % | 2.31 | % | 2.37 | % | |||||||||||||
Net investment income (loss) | 0.43 | %(2)(3) | 0.44 | %(2) | 0.52 | % | (0.07 | )% | 0.23 | % | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 37,085 | $ | 30,552 | $ | 22,856 | $ | 24,527 | $ | 25,471 | |||||||||||||
Portfolio turnover rate | 22 | % | 13 | % | 22 | % | 33 | % | 43 | % |
‡ The per share amounts were computed using an average number of shares outstanding during the period.
† Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific expenses.
(2) If the Fund had borne all its expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been as follows:
PERIOD ENDED | EXPENSE RATIO | NET INVESTMENT INCOME RATIO | |||||||||
October 31, 2007 | 2.09 | % | 0.42 | % | |||||||
October 31, 2006 | 2.06 | 0.42 |
(3) Reflects waivers of certain Fund expenses in connection with the investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class during the period. As a result of such waivers the expenses as a percentage of its net assets had an effect of less than 0.005%.
See Notes to Financial Statements
57
Morgan Stanley International Fund
Financial Highlights continued
FOR THE YEAR ENDED OCTOBER 31, | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
Class D Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 13.23 | $ | 10.76 | $ | 9.24 | $ | 8.07 | $ | 6.73 | |||||||||||||
Income from investment operations: | |||||||||||||||||||||||
Net investment income‡ | 0.21 | 0.15 | 0.15 | 0.08 | 0.08 | ||||||||||||||||||
Net realized and unrealized gain | 3.83 | 2.57 | 1.51 | 1.20 | 1.36 | ||||||||||||||||||
Total income from investment operations | 4.04 | 2.72 | 1.66 | 1.28 | 1.44 | ||||||||||||||||||
Less dividends from net investment income | (0.27 | ) | (0.25 | ) | (0.14 | ) | (0.11 | ) | (0.10 | ) | |||||||||||||
Net asset value, end of period | $ | 17.00 | $ | 13.23 | $ | 10.76 | $ | 9.24 | $ | 8.07 | |||||||||||||
Total Return† | 31.33 | % | 25.61 | % | 18.03 | % | 15.97 | % | 21.68 | % | |||||||||||||
Ratios to Average Net Assets(1): | |||||||||||||||||||||||
Total expenses (before expense offset) | 1.08 | %(2)(3) | 1.05 | %(2) | 1.05 | % | 1.33 | % | 1.37 | % | |||||||||||||
Net investment income | 1.43 | %(2)(3) | 1.43 | %(2) | 1.52 | % | 0.91 | % | 1.23 | % | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 22,888 | $ | 22,974 | $ | 134,631 | $ | 143,890 | $ | 132,544 | |||||||||||||
Portfolio turnover rate | 22 | % | 13 | % | 22 | % | 33 | % | 43 | % |
‡ The per share amounts were computed using an average number of shares outstanding during the period.
† Calculated based on the net asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific expenses.
(2) If the Fund had borne all its expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been as follows:
PERIOD ENDED | EXPENSE RATIO | NET INVESTMENT INCOME RATIO | |||||||||
October 31, 2007 | 1.09 | % | 1.42 | % | |||||||
October 31, 2006 | 1.07 | 1.41 |
(3) Reflects waivers of certain Fund expenses in connection with the investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class during the period. As a result of such waivers the expenses as a percentage of its net assets had an effect of less than 0.005%.
See Notes to Financial Statements
58
Morgan Stanley International Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of
Morgan Stanley International Fund:
We have audited the accompanying statement of assets and liabilities of Morgan Stanley International Fund (the "Fund"), including the portfolio of investments, as of October 31, 2007, and the related statements of operations for the year then ended and changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2007, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Morgan Stanley International Fund as of October 31, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
New York, New York
December 27, 2007
59
Morgan Stanley International Fund
Trustee and Officer Information (unaudited)
Independent Trustees:
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Independent Trustee** | Other Directorships Held by Independent Trustee | ||||||||||||||||||
Frank L. Bowman (62) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since August 2006 | President and Chief Executive Officer, Nuclear Energy Institute (policy organization) (since February 2005); Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); Chairperson of the Insurance Sub-Committee of the Valuation, Insurance and Compliance Committee (since February 2007); formerly, variously, Admiral in the U.S. Navy, Director of Naval Nuclear Propulsion Program and Deputy Administrator – Naval Reactors in the National Nuclear Security Administration at the U.S. Department of Energy (1996-2004). Honorary Knight Commander of the Most Excellent Order of the British Empire. | 171 | Director of the National Energy Foundation, the U.S. Energy Association, the American Council for Capital Formation and the Armed Services YMCA of the USA. | ||||||||||||||||||
Michael Bozic (66) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since April 1994 | Private investor; Chairperson of the Valuation, Insurance and Compliance Committee (since October 2006); Director or Trustee of the Retail Funds (since April 1994) and the Institutional Funds (since July 2003); formerly, Chairperson of the Insurance Committee (July 2006-September 2006); Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck & Co. | 173 | Director of various business organizations. | ||||||||||||||||||
60
Morgan Stanley International Fund
Trustee and Officer Information (unaudited) continued
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Independent Trustee** | Other Directorships Held by Independent Trustee | ||||||||||||||||||
Kathleen A. Dennis (54) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since August 2006 | President, Cedarwood Associates (mutual fund consulting) (since July 2006); Chairperson of the Money Market and Alternatives Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006). | 171 | None. | ||||||||||||||||||
Dr. Manuel H. Johnson (58) c/o Johnson Smick Group, Inc. 888 16th Street, N.W. Suite 740 Washington, D.C. 20006 | Trustee | Since July 1991 | Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Investment Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury. | 173 | Director of NVR, Inc. (home construction); Director of Evergreen Energy. | ||||||||||||||||||
Joseph J. Kearns (65) c/o Kearns & Associates LLC PMB754 23852 Pacific Coast Highway Malibu, CA 90265 | Trustee | Since August 1994 | President, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 2003) and the Institutional Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of the Institutional Funds (October 2001-July 2003); CFO of the J. Paul Getty Trust. | 174 | Director of Electro Rent Corporation (equipment leasing), The Ford Family Foundation, and the UCLA Foundation. | ||||||||||||||||||
61
Morgan Stanley International Fund
Trustee and Officer Information (unaudited) continued
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Independent Trustee** | Other Directorships Held by Independent Trustee | ||||||||||||||||||
Michael F. Klein (48) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since August 2006 | Managing Director, Aetos Capital, LLC (since March 2000) and Co-President, Aetos Alternatives Management, LLC (since January 2004); Chairperson of the Fixed-Income Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management, President, Morgan Stanley Institutional Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999). | 171 | Director of certain investment funds managed or sponsored by Aetos Capital, LLC. Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals). | ||||||||||||||||||
Michael E. Nugent (71) c/o Triumph Capital, L.P. 445 Park Avenue New York, NY 10022 | Chairperson of the Board and Trustee | Chairperson of the Boards since July 2006 and Trustee since July 1991 | General Partner, Triumph Capital, L.P. (private investment partnership); Chairperson of the Boards of the Retail Funds and Institutional Funds (since July 2006); Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2001); formerly, Chairperson of the Insurance Committee (until July 2006); Vice President, Bankers Trust Company and BT Capital Corporation (1984-1988). | 173 | None. | ||||||||||||||||||
62
Morgan Stanley International Fund
Trustee and Officer Information (unaudited) continued
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Independent Trustee** | Other Directorships Held by Independent Trustee | ||||||||||||||||||
W. Allen Reed (60) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since August 2006 | Chairperson of the Equity Sub-Commitee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, President and CEO of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005). | 171 | Director of GMAC (financial services) and Temple-Inland Industries (packaging, banking and forest products); Director of Legg Mason, Inc. and Director of the Auburn University Foundation. | ||||||||||||||||||
Fergus Reid (75) c/o Lumelite Plastics Corporation 85 Charles Colman Blvd. Pawling, NY 12564 | Trustee | Since June 1992 | Chairman of Lumelite Plastics Corporation; Chairperson of the Governance Committee and Director or Trustee of the Retail Funds (since July 2003) and the Institutional Funds (since June 1992). | 174 | Trustee and Director of certain investment companies in the JPMorgan Funds complex managed by J.P. Morgan Investment Management Inc. | ||||||||||||||||||
63
Morgan Stanley International Fund
Trustee and Officer Information (unaudited) continued
Interested Trustee:
Name, Age and Address of Interested Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Interested Trustee** | Other Directorships Held by Interested Trustee | ||||||||||||||||||
James F. Higgins (59) c/o Morgan Stanley Trust Harborside Financial Center Plaza Two Jersey City, NJ 07311 | Trustee | Since June 2000 | Director or Trustee of the Retail Funds (since June 2000) and the Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000). | 173 | Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services). | ||||||||||||||||||
* This is the earliest date the Trustee began serving the funds advised by Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") (the "Retail Funds") or the funds advised by Morgan Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the "Institutional Funds").
** The Fund Complex includes all open-end and closed-end funds (including all of their portfolios) advised by the Investment Adviser and any funds that have an investment adviser that is an affiliated person of the Investment Adviser (including, but not limited to, Morgan Stanley Investment Management Inc.).
64
Morgan Stanley International Fund
Trustee and Officer Information (unaudited) continued
Executive Officers:
Name, Age and Address of Executive Officer | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | ||||||||||||
Ronald E. Robison (68) 522 Fifth Avenue New York, NY 10036 | President and Principal Executive Officer | President since September 2005 and Principal Executive Officer since May 2003 | President (since September 2005) and Principal Executive Officer (since May 2003) of funds in the Fund Complex; President (since September 2005) and Principal Executive Officer (since May 2003) of the Van Kampen Funds; Managing Director, Director and/or Officer of the Investment Adviser and various entities affiliated with the Investment Adviser; Director of Morgan Stanley SICAV (since May 2004). Formerly, Executive Vice President (July 2003-September 2005) of funds in the Fund Complex and the Van Kampen Funds; President and Director of the Institutional Funds (March 2001-July 2003); Chief Administrative Officer of the Investment Adviser; Chief Administrative Officer of Morgan Stanley Services Company Inc. | ||||||||||||
J. David Germany (53) Morgan Stanley Investment Management Limited 20 Bank Street Canary Wharf, London, England E14 4AD | Vice President | Since February 2006 | Managing Director and (since December 2005) Chief Investment Officer – Global Fixed Income of Morgan Stanley Investment Management; Managing Director and Director of Morgan Stanley Investment Management Limited; Vice President of the Retail Funds and Institutional Funds (since February 2006). | ||||||||||||
Dennis F. Shea (54) 522 Fifth Avenue New York, NY 10036 | Vice President | Since February 2006 | Managing Director and (since February 2006) Chief Investment Officer – Global Equity of Morgan Stanley Investment Management; Vice President of the Retail Funds and Institutional Funds (since February 2006). Formerly, Managing Director and Director of Global Equity Research at Morgan Stanley. | ||||||||||||
Amy R. Doberman (45) 522 Fifth Avenue New York, NY 10036 | Vice President | Since July 2004 | Managing Director and General Counsel, U.S. Investment Management of Morgan Stanley Investment Management (since July 2004); Vice President of the Retail Funds and Institutional Funds (since July 2004); Vice President of the Van Kampen Funds (since August 2004); Secretary (since February 2006) and Managing Director (since July 2004) of the Investment Adviser and various entities affiliated with the Investment Adviser. Formerly, Managing Director and General Counsel – Americas, UBS Global Asset Management (July 2000-July 2004). | ||||||||||||
Carsten Otto (43) 522 Fifth Avenue New York, NY 10036 | Chief Compliance Officer | Since October 2004 | Managing Director and Global Head of Compliance for Morgan Stanley Investment Management (since April 2007); and Chief Compliance Officer of Morgan Stanley Retail Funds and Institutional Funds (since October 2004). Formerly, U.S. Director of Compliance (October 2004-April 2007) and Assistant Secretary and Assistant General Counsel of the Retail Funds. | ||||||||||||
Stefanie V. Chang Yu (40) 522 Fifth Avenue New York, NY 10036 | Vice President | Since December1997 | Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Vice President of the Retail Funds (since July 2002) and the Institutional Funds (since December 1997). Formerly, Secretary of various entities affiliated with the Investment Adviser. | ||||||||||||
65
Morgan Stanley International Fund
Trustee and Officer Information (unaudited) continued
Name, Age and Address of Executive Officer | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | ||||||||||||
Francis J. Smith (42) c/o Morgan Stanley Trust Harborside Financial Center Plaza Two Jersey City, NJ 07311 | Treasurer and Chief Financial Officer | Treasurer since July 2003 and Chief Financial Officer since September 2002 | Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Treasurer and Chief Financial Officer of the Retail Funds (since July 2003). Formerly, Vice President of the Retail Funds (September 2002-July 2003). | ||||||||||||
Mary E. Mullin (40) 522 Fifth Avenue New York, NY 10036 | Secretary | Since June 1999 | Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Secretary of the Retail Funds (since July 2003) and the Institutional Funds (since June 1999). | ||||||||||||
* This is the earliest date the Officer began serving the Retail Funds or Institutional Funds.
2007 Federal Tax Notice (unaudited)
For Federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended October 31, 2007. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of $5,810,149 as taxable at this lower rate. The Fund intends to pass through foreign tax credits of $546,217, and has derived net income from sources within foreign countries amounting to $3,763,488.
In January, the Fund provides tax information to shareholders for the preceding calendar year.
66
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Trustees
Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid
Officers
Michael E. Nugent
Chairperson of the Board
Ronald E. Robison
President and Principal Executive Officer
J. David Germany
Vice President
Dennis F. Shea
Vice President
Amy R. Doberman
Vice President
Carsten Otto
Chief Compliance Officer
Stefanie V. Chang Yu
Vice President
Francis J. Smith
Treasurer and Chief Financial Officer
Mary E. Mullin
Secretary
Transfer Agent
Morgan Stanley Trust
Harborside Financial Center, Plaza Two
Jersey City, New Jersey 07311
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
Legal Counsel
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
Counsel to the Independent Trustees
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
Investment Adviser
Morgan Stanley Investment Advisors Inc.
522 Fifth Avenue
New York, New York 10036
This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS.
This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing.
Morgan Stanley Distributors Inc., member FINRA.
© 2007 Morgan Stanley
MORGAN STANLEY FUNDS
Morgan Stanley
International Fund
Annual Report
October 31, 2007
INLANN
IU07–05457P–Y10/07
Item 2. Code of Ethics.
(a) The Fund has adopted a code of ethics (the “Code of Ethics”) that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Fund or a third party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f)
(1) The Fund’s Code of Ethics is attached hereto as Exhibit 12 A.
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Fund’s Board of Trustees has determined that Joseph J. Kearns, an “independent” Trustee, is an “audit committee financial expert” serving on its audit committee. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2007
|
| Registrant |
| Covered Entities(1) |
| ||
Audit Fees |
| $ | 33,950 |
| N/A |
| |
|
|
|
|
|
| ||
Non-Audit Fees |
|
|
|
|
| ||
Audit-Related Fees |
| $ | –– | (2) | $ | 5,041,000 | (2) |
Tax Fees |
| $ | 6,901 | (3) | $ | 761,000 | (4) |
All Other Fees |
| $ |
|
| $ |
|
|
Total Non-Audit Fees |
| $ | 6,901 |
| $ | 5,802,000 |
|
|
|
|
|
|
| ||
Total |
| $ | 40,851 |
| $ | 5,802,000 |
|
2006
|
| Registrant |
| Covered Entities(1) |
| ||
Audit Fees |
| $ | 33,600 |
| N/A |
| |
|
|
|
|
|
| ||
Non-Audit Fees |
|
|
|
|
| ||
Audit-Related Fees |
| $ | 531 | (2) | $ | 5,217,590 | (2) |
Tax Fees |
| $ | 6,980 | (3) | $ | 1,472,895 | (4) |
All Other Fees |
| $ |
|
| $ |
| (5) |
Total Non-Audit Fees |
| $ | 7,511 |
| $ | 6,690,485 |
|
|
|
|
|
|
| ||
Total |
| $ | 41,111 |
| $ | 6,690,485 |
|
N/A- Not applicable, as not required by Item 4.
(1) Covered Entities include the Adviser (excluding sub-advisors) and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Registrant.
(2) Audit-Related Fees represent assurance and related services provided that are reasonably related to the performance of the audit of the financial statements of the Covered Entities’ and funds advised by the Adviser or its affiliates, specifically data verification and agreed-upon procedures related to asset securitizations and agreed-upon procedures engagements.
(3) Tax Fees represent tax compliance, tax planning and tax advice services provided in connection with the preparation and review of the Registrant’s tax returns.
(4) Tax Fees represent tax compliance, tax planning and tax advice services provided in connection with the review of Covered Entities’ tax returns.
(5) All other fees represent project management for future business applications and improving business and operational processes.
(e)(1) The audit committee’s pre-approval policies and procedures are as follows:
APPENDIX A
AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS
AS ADOPTED AND AMENDED JULY 23, 2004,(1)
1. Statement of Principles
The Audit Committee of the Board is required to review and, in its sole discretion, pre-approve all Covered Services to be provided by the Independent Auditors to the Fund and Covered Entities in order to assure that services performed by the Independent Auditors do not impair the auditor’s independence from the Fund.
The SEC has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the audit committee’s administration of the engagement of the independent auditor. The SEC’s rules establish two different approaches to pre-approving services, which the SEC considers to be equally valid. Proposed services either: may be pre-approved without consideration of specific case-by-case services by the Audit Committee (“general pre-approval”); or require the specific pre-approval of the Audit Committee or its delegate (“specific pre-approval”). The Audit Committee believes that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the Independent Auditors. As set forth in this Policy, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee (or by any member of the Audit Committee to which pre-approval authority has been delegated) if it is to be provided by the Independent Auditors. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit Committee.
The appendices to this Policy describe the Audit, Audit-related, Tax and All Other services that have the general pre-approval of the Audit Committee. The term of any general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers and provides a different period and states otherwise. The Audit Committee will annually review and pre-approve the services that may be provided by the Independent Auditors without obtaining specific pre-approval from the Audit Committee. The Audit Committee will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.
(1) This Audit Committee Audit and Non-Audit Services Pre-Approval Policy and Procedures (the “Policy”), adopted as of the date above, supersedes and replaces all prior versions that may have been adopted from time to time.
The purpose of this Policy is to set forth the policy and procedures by which the Audit Committee intends to fulfill its responsibilities. It does not delegate the Audit Committee’s responsibilities to pre-approve services performed by the Independent Auditors to management.
The Fund’s Independent Auditors have reviewed this Policy and believes that implementation of the Policy will not adversely affect the Independent Auditors’ independence.
2. Delegation
As provided in the Act and the SEC’s rules, the Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
3. Audit Services
The annual Audit services engagement terms and fees are subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by the Independent Auditors to be able to form an opinion on the Fund’s financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund structure or other items.
In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the Independent Auditors reasonably can provide. Other Audit services may include statutory audits and services associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1. All other Audit services not listed in Appendix B.1 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).
4. Audit-related Services
Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements and, to the extent they are Covered Services, the Covered Entities or that are traditionally performed by the Independent Auditors. Because the Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor and is consistent with the SEC’s rules on auditor independence, the Audit Committee may grant general pre-approval to Audit-related services. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters
not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix B.2. All other Audit-related services not listed in Appendix B.2 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).
5. Tax Services
The Audit Committee believes that the Independent Auditors can provide Tax services to the Fund and, to the extent they are Covered Services, the Covered Entities, such as tax compliance, tax planning and tax advice without impairing the auditor’s independence, and the SEC has stated that the Independent Auditors may provide such services.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved the Tax Services in Appendix B.3. All Tax services in Appendix B.3 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).
6. All Other Services
The Audit Committee believes, based on the SEC’s rules prohibiting the Independent Auditors from providing specific non-audit services, that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC’s rules on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix B.4. Permissible All Other services not listed in Appendix B.4 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).
7. Pre-Approval Fee Levels or Budgeted Amounts
Pre-approval fee levels or budgeted amounts for all services to be provided by the Independent Auditors will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services.
8. Procedures
All requests or applications for services to be provided by the Independent Auditors that do not require specific approval by the Audit Committee will be submitted to the Fund’s Chief Financial Officer and must include a detailed description of the services to be
rendered. The Fund’s Chief Financial Officer will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by the Independent Auditors. Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the Independent Auditors and the Fund’s Chief Financial Officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence.
The Audit Committee has designated the Fund’s Chief Financial Officer to monitor the performance of all services provided by the Independent Auditors and to determine whether such services are in compliance with this Policy. The Fund’s Chief Financial Officer will report to the Audit Committee on a periodic basis on the results of its monitoring. Both the Fund’s Chief Financial Officer and management will immediately report to the chairman of the Audit Committee any breach of this Policy that comes to the attention of the Fund’s Chief Financial Officer or any member of management.
9. Additional Requirements
The Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the Independent Auditors and to assure the auditor’s independence from the Fund, such as reviewing a formal written statement from the Independent Auditors delineating all relationships between the Independent Auditors and the Fund, consistent with Independence Standards Board No. 1, and discussing with the Independent Auditors its methods and procedures for ensuring independence.
10. Covered Entities
Covered Entities include the Fund’s investment adviser(s) and any entity controlling, controlled by or under common control with the Fund’s investment adviser(s) that provides ongoing services to the Fund(s). Beginning with non-audit service contracts entered into on or after May 6, 2003, the Fund’s audit committee must pre-approve non-audit services provided not only to the Fund but also to the Covered Entities if the engagements relate directly to the operations and financial reporting of the Fund. This list of Covered Entities would include:
Morgan Stanley Retail Funds
Morgan Stanley Investment Advisors Inc.
Morgan Stanley & Co. Incorporated
Morgan Stanley DW Inc.
Morgan Stanley Investment Management Inc.
Morgan Stanley Investment Management Limited
Morgan Stanley Investment Management Private Limited
Morgan Stanley Asset & Investment Trust Management Co., Limited
Morgan Stanley Investment Management Company
Van Kampen Asset Management
Morgan Stanley Services Company, Inc.
Morgan Stanley Distributors Inc.
Morgan Stanley Trust FSB
Morgan Stanley Institutional Funds
Morgan Stanley Investment Management Inc.
Morgan Stanley Investment Advisors Inc.
Morgan Stanley Investment Management Limited
Morgan Stanley Investment Management Private Limited
Morgan Stanley Asset & Investment Trust Management Co., Limited
Morgan Stanley Investment Management Company
Morgan Stanley & Co. Incorporated
Morgan Stanley Distribution, Inc.
Morgan Stanley AIP GP LP
Morgan Stanley Alternative Investment Partners LP
(e)(2) Beginning with non-audit service contracts entered into on or after May 6, 2003, the audit committee also is required to pre-approve services to Covered Entities to the extent that the services are determined to have a direct impact on the operations or financial reporting of the Registrant. 100% of such services were pre-approved by the audit committee pursuant to the Audit Committee’s pre-approval policies and procedures (attached hereto).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees has considered whether the provision of services other than audit services performed by the auditors to the Registrant and Covered Entities is compatible with maintaining the auditors’ independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
(a) The Fund has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: Joseph Kearns, Michael Nugent and Allen Reed.
(b) Not applicable.
Item 6. Schedule of Investments
Refer to Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Applicable only to reports filed by closed-end funds.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Applicable only to reports filed by closed-end funds.
Item 9. Closed-End Fund Repurchases
Applicable only to reports filed by closed-end funds.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
(a) The Fund’s principal executive officer and principal financial officer have concluded that the Fund’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.
(b) There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
(a) The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto.
(b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Morgan Stanley International Fund
/s/ Ronald E. Robison |
|
Ronald E. Robison | |
Principal Executive Officer | |
December 20, 2007 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Ronald E. Robison |
|
Ronald E. Robison | |
Principal Executive Officer | |
December 20, 2007 |
/s/ Francis Smith |
|
Francis Smith | |
Principal Financial Officer | |
December 20, 2007 |