UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
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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Randy Takian | ||||||||
(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, 2010 |
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Date of reporting period: | April 30, 2010 |
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Item 1 - Report to Shareholders
INVESTMENT MANAGEMENT
Welcome, Shareholder:
In this report, you'll learn about how your investment in Morgan Stanley International Fund performed during the semiannual 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 six months ended April 30, 2010
Total Return for the 6 Months Ended April 30, 2010 | |||||||||||||||||||||||||||||||
Class A | Class B | Class C | Class I | Class R | Class W | Morgan Stanley Capital International (MSCI) EAFE Index1 | Lipper International Large-Cap Core Funds Index2 | ||||||||||||||||||||||||
3.58 | % | 3.21 | % | 3.18 | % | 3.70 | % | 3.42 | % | 3.45 | % | 2.48 | % | 4.01 | % |
The performance of the Fund's six 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
International equity markets, as measured by the MSCI EAFE Index, rose 2.48 percent in U.S. dollar terms for the six-month period ended April 30, 2010. Regionally, Japan and Asia ex-Japan outperformed, each rising nearly 8 percent, while Europe was flat. On a sector basis, cyclical (or economically sensitive) sectors continued to lead, with information technology up 14 percent, materials up 12 percent, industrials up 10 percent, consumer discretionary up 7 percent, and consumer staples up 5 percent. However, energy was flat, utilities declined 3 percent, and financials and telecommunication services were each down 5 percent.
Global economic data continued to improve in April, even as dislocation in Europe intensified. The level of U.S. nominal gross domestic produce (GDP) reached a new record high in April — regaining all of the ground lost in last year's recession. Notably, the Institute of Supply Management (ISM) manufacturing survey showed improvement in both the headline and new orders components. Headline ISM is now 60.4, nearing the peak of 61.4 reached in early 2004, with new orders rising above 65 (readings above 50 indicate economic expansion). Non-farm payrolls for April saw the largest addition since early 2006, and better-than-expected durable goods orders and retail sales confirmed economic momentum. Housing inventories remain high, however, and the residential housing recovery remains fragile.
European data contains conflicting messages. April European business sentiment surveys made new highs and industrial production data improved. However, retail sales — reflective of consumer confidence — remain weak, and talk of fiscal austerity cannot be helping. The German economy is adding jobs. April saw the biggest decline in German unemployment since early 2008, while unemployment in Spain remains high. Additionally, the U.K. general election — with its first run on fiscal austerity in a long time — has not produced a decisive winner. The U.K. first quarter 2010 GDP reading was +0.2 percent quarter-over-quarter, below expectations, and –0.3 percent year-over-year.
Japanese production data continued to rebound, although the March consumer price index report showed renewed month-over-month deflation. Corporate earnings in Japan have been strong, but the recent strength in the yen is not a great portend, in our view. In the developing world, growth momentum is very strong with industrial production growth running at over 16 percent year-over-year in China, India and Brazil. Prior to Europe's downturn, we worried if tightening measures in the emerging markets could bring inflation under control without smothering the nascent expansion. Now there is growing concern about the impact of a
2
possible European double-dip recession on emerging market exports and investor risk appetite.
The U.S. first quarter earnings reporting season so far has had one of the strongest earnings performances in recent memory, with the highest percentage of positive earnings per share (EPS) surprises in 20 years. Since March 31, first quarter U.S. earnings have been revised up 7.5 percent and full-year estimates have risen 3 percent. Japanese earnings have also been impressive, with full-year estimates also revised up 3 percent since the end of March. European earnings have not been quite as strong, however; full-year European estimates have been revised up 1.4 percent since the end of the first quarter, and positive European EPS surprises are tracking better than in the fourth quarter of 2009.
Performance Analysis
All share classes of Morgan Stanley International Fund outperformed the MSCI EAFE Index (the "Index") and underperformed the Lipper International Large-Cap Core Funds Index for the six months ended April 30, 2010, assuming no deduction of applicable sales charges.
Performance for the period was helped by overweights to the materials and industrials sectors and to emerging markets. The above-Index allocation to energy was a drag on returns, however, as was the below-Index allocation to consumer staples. On a country basis, the underweight to Europe was a positive contributor, while an underweight to Japan detracted from performance.
As April drew to a close and May began, evidence of broadening economic strength and good fourth-quarter corporate earnings was entirely offset by growing policy uncertainty, particularly in Europe. The continued European dithering about providing fiscal support to Greece and other southern European countries led to shrinking financial market liquidity, a sharp fall in the euro, and almost palpable fear in many global equity and bond markets. With global growth already scarce, China apparently willing to continue tightening, no news out of Japanese authorities as deflation worsened again, and a ramp up in aggressive financial reform rhetoric in the U.S., investors moved to the sidelines.
The mammoth European government bond support package and liquidity facilities announced just after the close of the reporting period seem to have given the European governments and European Central Bank at least a shot at jumping "ahead of the curve." In our view, this action — combined with reasonable equity valuations, an oversold market condition, and continued evidence of U.S. reflation — may allow global equities to rise back to mid-April highs and beyond. We believe the market direction will depend on policy actions — e.g. central bank actions, government regulatory decisions, confidence, and continued signs of economic recovery. We think the recovery is on track, and equities have further to rise. But as we just saw in the beginning of May, investors, including ourselves, remain skittish. Ironically, the recent market tumble may provide the silver lining of better valuation, a renewed global central bank bi as to keep rates lower longer, and a political bias not to upset financial market confidence with tough regulations.
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.
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TOP 10 HOLDINGS as of 04/30/10 | |||||||
BHP Billiton Ltd. (Australia) | 2.0 | % | |||||
Nestle SA (Registered Shares) (Switzerland) | 2.0 | ||||||
HSBC Holdings PLC (United Kingdom) | 1.7 | ||||||
BP PLC (United Kingdom) | 1.6 | ||||||
Vodafone Group PLC (United Kingdom) | 1.1 | ||||||
Royal Dutch Shell PLC (Class A) (United Kingdom) | 1.1 | ||||||
Novartis AG (Registered Shares) (Switzerland) | 1.0 | ||||||
Roche Holding AG (Switzerland) | 0.9 | ||||||
Toyota Motor Corp. (Japan) | 0.9 | ||||||
Total SA (France) | 0.9 | ||||||
TOP FIVE COUNTRIES as of 04/30/10 | |||||||
Japan | 22.5 | % | |||||
United Kingdom | 17.1 | ||||||
Switzerland | 7.5 | ||||||
France | 6.2 | ||||||
Germany | 4.5 |
Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned above. Top 10 holdings and top five countries are as a percentage of net assets. 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 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
4
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 20549-1520.
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 SEC'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 SEC'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
Average Annual Total Returns—Period Ended April 30, 2010 | |||||||||||||||||||||||||||
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 I Shares†† (since 06/28/99) INLDX | Class R Shares# (since 03/31/08) INLRX | Class W Shares## (since 03/31/08) INLWX | |||||||||||||||||||||
1 Year | 32.79%3 25.82 4 | 31.80%3 26.80 4 | 31.76%3 30.76 4 | 33.12%3 — | 32.45%3 — | 32.54%3 — | |||||||||||||||||||||
5 Years | 4.87 3 3.74 4 | 4.05 3 3.70 4 | 4.06 3 4.06 4 | 5.11 3 — | — — | — — | |||||||||||||||||||||
10 Years | 1.97 3 1.42 4 | 1.33 3 1.33 4 | 1.20 3 1.20 4 | 2.19 3 — | — — | — — | |||||||||||||||||||||
Since Inception | 2.91 3 2.40 4 | 2.30 3 2.30 4 | 2.12 3 2.12 4 | 3.12 3 — | –8.87 3 — | –8.74 3 — | |||||||||||||||||||||
Gross Expense Ratio | 1.70 | 2.45 | 2.45 | 1.45 | 1.95 | 1.80 |
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/im 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 table does 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, Class I, Class R, and Class W shares will vary due to differences in sales charges and expenses. See the Fund's current prospectus for complete details on fees and sales charges. Expense ratios are as of each Fund's fiscal year end as outlined in the Fund's current prospectus.
* 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 I has no sales charge.
# Class R has no sales charge.
## Class W 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 the international equity market performance of developed markets, excluding the US & 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 currently consists of 21 developed market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. 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 was 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.
6
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 11/01/09 – 04/30/10.
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@ | |||||||||||||
11/01/09 | 04/30/10 | 11/01/09 – 04/30/10 | |||||||||||||
Class A | |||||||||||||||
Actual (3.58% return) | $ | 1,000.00 | $ | 1,035.80 | $ | 7.72 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,017.21 | $ | 7.65 | |||||||||
Class B | |||||||||||||||
Actual (3.21% return) | $ | 1,000.00 | $ | 1,032.10 | $ | 11.49 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,013.49 | $ | 11.38 | |||||||||
Class C | |||||||||||||||
Actual (3.18% return) | $ | 1,000.00 | $ | 1,031.80 | $ | 11.49 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,013.49 | $ | 11.38 | |||||||||
Class I | |||||||||||||||
Actual (3.70% return) | $ | 1,000.00 | $ | 1,037.00 | $ | 6.46 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,018.45 | $ | 6.41 | |||||||||
Class R | |||||||||||||||
Actual (3.42% return) | $ | 1,000.00 | $ | 1,034.20 | $ | 8.98 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,015.97 | $ | 8.90 | |||||||||
Class W | |||||||||||||||
Actual (3.45% return) | $ | 1,000.00 | $ | 1,034.50 | $ | 8.22 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,016.71 | $ | 8.15 |
@ Expenses are equal to the Fund's annualized expense ratios of 1.53%, 2.28%, 2.28%, 1.28%, 1.78%, and 1.63% for Class A, Class B, Class C, Class I, Class R, and Class W shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). If the Fund had borne all of its expenses, the annualized expense ratios would have been 1.55%, 2.30%, 2.30%, 1.30%, 1.80% and 1.65% for Class A, Class B, Class C, Class I, Class R, and Class W shares, respectively.
7
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited)
NUMBER OF SHARES | VALUE | ||||||||||
Common Stocks (84.5%) | |||||||||||
Australia (a)(4.0%) | |||||||||||
Air Freight & Logistics | |||||||||||
1,327 | Toll Holdings Ltd. | $ | 8,672 | ||||||||
Beverages | |||||||||||
1,810 | Coca-Cola Amatil Ltd. | 18,642 | |||||||||
6,839 | Foster's Group Ltd. | 34,327 | |||||||||
52,969 | |||||||||||
Biotechnology | |||||||||||
954 | CSL Ltd. | 28,627 | |||||||||
Capital Markets | |||||||||||
675 | Macquarie Group Ltd. (b) | 30,794 | |||||||||
Chemicals | |||||||||||
41,073 | Incitec Pivot Ltd. | 120,968 | |||||||||
2,675 | Nufarm Ltd. (b) | 18,780 | |||||||||
8,586 | Orica Ltd. | 207,507 | |||||||||
347,255 | |||||||||||
Commercial Banks | |||||||||||
16,070 | Australia & New Zealand Banking Group Ltd. | 354,503 | |||||||||
828 | Commonwealth Bank of Australia | 44,312 | |||||||||
1,109 | National Australia Bank Ltd. | 28,344 | |||||||||
1,162 | Westpac Banking Corp. | 28,879 | |||||||||
456,038 | |||||||||||
Commercial Services & Supplies | |||||||||||
3,300 | Brambles Ltd. | 21,974 | |||||||||
Construction & Engineering | |||||||||||
793 | Leighton Holdings Ltd. | 26,820 | |||||||||
Construction Materials | |||||||||||
10,539 | Boral Ltd. (b) | 56,988 | |||||||||
Containers & Packaging | |||||||||||
20,438 | Amcor Ltd. | 123,105 | |||||||||
Diversified Telecommunication Services | |||||||||||
7,188 | Telstra Corp. Ltd. | 21,041 |
NUMBER OF SHARES | VALUE | ||||||||||
Food & Staples Retailing | |||||||||||
1,368 | Wesfarmers Ltd. | $ | 36,630 | ||||||||
527 | Wesfarmers Ltd. (PPS) | 14,178 | |||||||||
3,256 | Woolworths Ltd. | 81,172 | |||||||||
131,980 | |||||||||||
Health Care Providers & Services | |||||||||||
485 | Sonic Healthcare Ltd. | 6,180 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
1,338 | TABCORP Holdings Ltd. | 8,452 | |||||||||
Industrial Conglomerates | |||||||||||
7,032 | CSR Ltd. | 11,352 | |||||||||
Insurance | |||||||||||
4,628 | AMP Ltd. | 26,610 | |||||||||
5,650 | Insurance Australia Group Ltd. | 19,864 | |||||||||
2,145 | QBE Insurance Group Ltd. (b) | 41,737 | |||||||||
1,895 | Suncorp-Metway Ltd. | 15,650 | |||||||||
103,861 | |||||||||||
Media | |||||||||||
3,245 | Fairfax Media Ltd. (b) | 5,115 | |||||||||
Metals & Mining | |||||||||||
38,820 | Alumina Ltd. | 54,943 | |||||||||
81,481 | BHP Billiton Ltd. | 2,976,705 | |||||||||
22,448 | BlueScope Steel Ltd. (c) | 53,874 | |||||||||
32,914 | Fortescue Metals Group Ltd. (c) | 138,554 | |||||||||
11,982 | Newcrest Mining Ltd. | 360,223 | |||||||||
20,593 | OneSteel Ltd. | 66,070 | |||||||||
71,809 | OZ Minerals Ltd. (c) | 75,133 | |||||||||
6,860 | Rio Tinto Ltd. | 446,287 | |||||||||
3,779 | Sims Metal Management Ltd. | 71,198 | |||||||||
4,242,987 | |||||||||||
Multi-Utilities | |||||||||||
1,643 | AGL Energy Ltd. | 22,729 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
1,443 | Caltex Australia Ltd. | 15,334 | |||||||||
2,477 | Origin Energy Ltd. | 37,156 |
See Notes to Financial Statements
8
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
1,710 | Santos Ltd. | $ | 21,809 | ||||||||
1,567 | Woodside Petroleum Ltd. | 64,969 | |||||||||
139,268 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
1,340 | Stockland (Stapled Securities) (d)(e) | 4,892 | |||||||||
Real Estate Management & Development | |||||||||||
3,307 | Lend Lease Corp., Ltd. (Stapled Securities) (d)(e) | 26,070 | |||||||||
Transportation Infrastructure | |||||||||||
7,808 | Intoll Group (Stapled Securities) (Units) (d)(e) | 8,115 | |||||||||
3,650 | Macquarie Atlas Roads Group (Stapled Securities) (c)(d)(e) | 3,307 | |||||||||
2,692 | Transurban Group (Stapled Securities) (d)(e) | 12,713 | |||||||||
24,135 | |||||||||||
Total Australia | 5,901,304 | ||||||||||
Austria (a)(0.5%) | |||||||||||
Commercial Banks | |||||||||||
5,431 | Erste Group Bank AG | 242,559 | |||||||||
1,572 | Raiffeisen International Bank Holding AG (b) | 76,718 | |||||||||
319,277 | |||||||||||
Diversified Telecommunication Services | |||||||||||
8,605 | Telekom Austria AG | 114,227 | |||||||||
Electric Utilities | |||||||||||
1,731 | Verbund - Oesterreichische Elektrizitaetswirtschafts AG (Class A) | 64,677 | |||||||||
Insurance | |||||||||||
958 | Vienna Insurance Group | 46,974 | |||||||||
Metals & Mining | |||||||||||
3,361 | Voestalpine AG | 126,885 |
NUMBER OF SHARES | VALUE | ||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
2,064 | OMV AG | $ | 74,285 | ||||||||
Total Austria | 746,325 | ||||||||||
Belgium (a)(0.5%) | |||||||||||
Beverages | |||||||||||
2,742 | Anheuser-Busch InBev N.V. (c) | 19 | |||||||||
4,920 | Anheuser-Busch InBev N.V. (b) | 239,394 | |||||||||
239,413 | |||||||||||
Chemicals | |||||||||||
884 | Solvay SA (Class A) | 84,099 | |||||||||
2,096 | Umicore (c) | 76,226 | |||||||||
160,325 | |||||||||||
Diversified Financial Services | |||||||||||
991 | Cie Nationale a Portefeuille | 51,399 | |||||||||
1,780 | Groupe Bruxelles Lambert SA | 150,864 | |||||||||
202,263 | |||||||||||
Diversified Telecommunication Services | |||||||||||
1,903 | Belgacom SA (b) | 66,739 | |||||||||
Insurance | |||||||||||
6,698 | Ageas (b)(c) | 20,599 | |||||||||
Pharmaceuticals | |||||||||||
1,336 | UCB SA (b) | 51,426 | |||||||||
Total Belgium | 740,765 | ||||||||||
Bermuda (a)(0.5%) | |||||||||||
Distributors | |||||||||||
25,220 | Li & Fung Ltd. (f) | 122,550 | |||||||||
Electric Utilities | |||||||||||
7,000 | Cheung Kong Infrastructure Holdings Ltd. (f) | 26,101 | |||||||||
Energy Equipment & Services | |||||||||||
12,329 | Seadrill Ltd. (b) | 311,695 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
8,713 | Shangri-La Asia Ltd. (f) | 16,802 |
See Notes to Financial Statements
9
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Real Estate Management & Development | |||||||||||
9,384 | Kerry Properties Ltd. (f) | $ | 43,228 | ||||||||
Specialty Retail | |||||||||||
20,299 | Esprit Holdings Ltd. (f) | 145,262 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
7,500 | Yue Yuen Industrial Holdings Ltd. (f) | 26,039 | |||||||||
Trading Companies & Distributors | |||||||||||
16,000 | Noble Group Ltd. | 34,622 | |||||||||
Total Bermuda | 726,299 | ||||||||||
Brazil (0.7%) | |||||||||||
Aerospace & Defense | |||||||||||
2,600 | Empresa Brasileira de Aeronautica SA | 14,210 | |||||||||
Commercial Banks | |||||||||||
11,800 | Banco do Brasil SA | 203,517 | |||||||||
Diversified Financial Services | |||||||||||
6,100 | BM&F Bovespa SA | 39,971 | |||||||||
Food Products | |||||||||||
17,628 | BRF - Brasil Foods SA | 230,409 | |||||||||
Information Technology Services | |||||||||||
1,700 | Redecard SA | 28,205 | |||||||||
Metals & Mining | |||||||||||
4,400 | Cia Siderurgica Nacional SA | 82,267 | |||||||||
2,600 | Vale SA | 79,125 | |||||||||
161,392 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
9,200 | Petroleo Brasileiro SA | 192,971 | |||||||||
Road & Rail | |||||||||||
12,800 | All America Latina Logistica SA (Units) (c)(e) | 114,874 | |||||||||
Total Brazil | 985,549 |
NUMBER OF SHARES | VALUE | ||||||||||
Canada (0.0%) | |||||||||||
Media | |||||||||||
191 | Thomson Reuters Corp. | $ | 6,882 | ||||||||
Denmark (a)(0.7%) | |||||||||||
Chemicals | |||||||||||
972 | Novozymes A/S (B Shares) | 116,245 | |||||||||
Electrical Equipment | |||||||||||
2,406 | Vestas Wind Systems A/S (c) | 146,780 | |||||||||
Marine | |||||||||||
24 | A P Moller - Maersk A/S (Class B) | 199,096 | |||||||||
Pharmaceuticals | |||||||||||
5,767 | Novo Nordisk A/S (Class B) | 471,034 | |||||||||
Road & Rail | |||||||||||
2,395 | DSV A/S | 42,643 | |||||||||
Total Denmark | 975,798 | ||||||||||
Finland (a)(1.1%) | |||||||||||
Communications Equipment | |||||||||||
55,483 | Nokia Oyj (c) | 675,241 | |||||||||
Electric Utilities | |||||||||||
7,489 | Fortum Oyj (b) | 194,033 | |||||||||
Food & Staples Retailing | |||||||||||
2,234 | Kesko Oyj (Class B) | 86,628 | |||||||||
Insurance | |||||||||||
4,880 | Sampo Oyj (Class A) | 120,412 | |||||||||
Machinery | |||||||||||
1,575 | Kone Oyj (Class B) | 69,580 | |||||||||
1,665 | Metso Oyj | 64,262 | |||||||||
752 | Wartsila Oyj (b) | 38,608 | |||||||||
172,450 | |||||||||||
Metals & Mining | |||||||||||
2,897 | Outokumpu Oyj | 61,489 | |||||||||
1,336 | Rautaruukki Oyj (b) | 28,110 | |||||||||
89,599 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
2,037 | Neste Oil Oyj (b) | 33,147 |
See Notes to Financial Statements
10
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Paper & Forest Products | |||||||||||
8,634 | Stora Enso Oyj (Class R) (b) | $ | 72,401 | ||||||||
7,130 | UPM-Kymmene Oyj | 102,941 | |||||||||
175,342 | |||||||||||
Total Finland | 1,546,852 | ||||||||||
France (a)(6.2%) | |||||||||||
Aerospace & Defense | |||||||||||
877 | Safran SA (b) | 22,442 | |||||||||
868 | Thales SA | 32,307 | |||||||||
54,749 | |||||||||||
Auto Components | |||||||||||
3,038 | Compagnie Generale des Etablissements Michelin (Class B) | 219,812 | |||||||||
Automobiles | |||||||||||
3,183 | Peugeot SA (c) | 94,912 | |||||||||
2,803 | Renault SA (c) | 131,781 | |||||||||
226,693 | |||||||||||
Beverages | |||||||||||
819 | Pernod-Ricard SA (b) | 69,675 | |||||||||
Building Products | |||||||||||
1,876 | Compagnie de Saint-Gobain (b) | 91,627 | |||||||||
Chemicals | |||||||||||
2,658 | Air Liquide SA (b) | 307,582 | |||||||||
Commercial Banks | |||||||||||
11,289 | BNP Paribas | 775,906 | |||||||||
7,433 | Credit Agricole SA | 106,035 | |||||||||
6,293 | Societe Generale (b) | 334,828 | |||||||||
1,216,769 | |||||||||||
Commercial Services & Supplies | |||||||||||
218 | Societe BIC SA | 16,877 | |||||||||
Communications Equipment | |||||||||||
20,688 | Alcatel-Lucent (b)(c) | 66,025 |
NUMBER OF SHARES | VALUE | ||||||||||
Construction & Engineering | |||||||||||
1,627 | Bouygues SA (b)(c) | $ | 81,052 | ||||||||
1,719 | Vinci SA (b) | 96,273 | |||||||||
177,325 | |||||||||||
Construction Materials | |||||||||||
495 | Imerys SA | 30,422 | |||||||||
2,631 | Lafarge SA | 191,375 | |||||||||
221,797 | |||||||||||
Diversified Financial Services | |||||||||||
289 | Eurazeo | 20,100 | |||||||||
Diversified Telecommunication Services | |||||||||||
13,683 | France Telecom SA | 299,936 | |||||||||
Electric Utilities | |||||||||||
1,390 | EDF SA (b) | 74,781 | |||||||||
Electrical Equipment | |||||||||||
4,228 | Alstom SA (b) | 249,908 | |||||||||
1,304 | Schneider Electric SA (b) | 148,959 | |||||||||
398,867 | |||||||||||
Energy Equipment & Services | |||||||||||
4,085 | Cie Generale de Geophysique-Veritas (c) | 121,183 | |||||||||
5,933 | Technip SA (b) | 474,130 | |||||||||
595,313 | |||||||||||
Food & Staples Retailing | |||||||||||
6,282 | Carrefour SA (b) | 307,797 | |||||||||
754 | Casino Guichard Perrachon SA (b) | 66,639 | |||||||||
374,436 | |||||||||||
Food Products | |||||||||||
4,473 | Danone SA (b)(c) | 264,014 | |||||||||
Health Care Equipment & Supplies | |||||||||||
1,588 | Cie Generale d'Optique Essilor International SA (b) | 97,041 |
See Notes to Financial Statements
11
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Hotels, Restaurants & Leisure | |||||||||||
1,618 | Accor SA | $ | 92,463 | ||||||||
886 | Sodexo | 54,426 | |||||||||
146,889 | |||||||||||
Information Technology Services | |||||||||||
361 | Atos Origin SA (c) | 18,223 | |||||||||
1,461 | Cap Gemini SA (b) | 74,125 | |||||||||
92,348 | |||||||||||
Insurance | |||||||||||
13,190 | AXA SA (b) | 262,177 | |||||||||
496 | CNP Assurances (c) | 41,531 | |||||||||
1,527 | SCOR SE (b) | 35,979 | |||||||||
339,687 | |||||||||||
Machinery | |||||||||||
258 | Vallourec SA (b) | 51,577 | |||||||||
Media | |||||||||||
1,747 | Lagardere SCA (b) | 70,554 | |||||||||
1,010 | Publicis Groupe SA (b) | 44,682 | |||||||||
2,036 | Societe Television Francaise 1 (b) | 37,550 | |||||||||
7,706 | Vivendi | 202,819 | |||||||||
355,605 | |||||||||||
Multi-Utilities | |||||||||||
11,338 | GDF Suez (b) | 403,991 | |||||||||
4,235 | Veolia Environnement | 133,075 | |||||||||
537,066 | |||||||||||
Multiline Retail | |||||||||||
897 | PPR (b) | 120,037 | |||||||||
Office Electronics | |||||||||||
360 | Neopost SA | 28,617 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
23,933 | Total SA (b) | 1,296,858 | |||||||||
Personal Products | |||||||||||
381 | L'Oreal SA (b) | 39,423 | |||||||||
Pharmaceuticals | |||||||||||
7,992 | Sanofi-Aventis SA (c) | 547,240 |
NUMBER OF SHARES | VALUE | ||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
244 | Fonciere Des Regions (b)(c) | $ | 25,235 | ||||||||
196 | Gecina SA | 20,116 | |||||||||
200 | ICADE (b) | 19,476 | |||||||||
908 | Klepierre (b) | 31,197 | |||||||||
1,558 | Unibail-Rodamco SE | 293,616 | |||||||||
389,640 | |||||||||||
Software | |||||||||||
631 | Dassault Systemes SA (b) | 41,170 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
586 | Hermes International (b) | 77,666 | �� | ||||||||
2,035 | LVMH Moet Hennessy Louis Vuitton SA (b) | 232,640 | |||||||||
310,306 | |||||||||||
Total France | 9,089,882 | ||||||||||
Germany (a)(4.3%) | |||||||||||
Air Freight & Logistics | |||||||||||
4,348 | Deutsche Post AG (Registered Shares) | 70,408 | |||||||||
Airlines | |||||||||||
1,432 | Deutsche Lufthansa AG (Registered Shares) | 23,899 | |||||||||
Automobiles | |||||||||||
7,178 | Bayerische Motoren Werke AG (b) | 351,716 | |||||||||
9,366 | Daimler AG (b)(c) | 483,301 | |||||||||
1,761 | Volkswagen AG (b) | 165,984 | |||||||||
1,001,001 | |||||||||||
Capital Markets | |||||||||||
6,354 | Deutsche Bank AG (Registered Shares) (b) | 439,115 | |||||||||
Chemicals | |||||||||||
4,084 | BASF SE (b) | 238,794 | |||||||||
3,960 | K+S AG (b) | 227,304 | |||||||||
583 | Linde AG (b) | 69,713 | |||||||||
535,811 |
See Notes to Financial Statements
12
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Commercial Banks | |||||||||||
4,997 | Commerzbank AG (b)(c) | $ | 39,209 | ||||||||
625 | Deutsche Postbank AG (b)(c) | 21,484 | |||||||||
60,693 | |||||||||||
Construction & Engineering | |||||||||||
364 | Hochtief AG | 30,120 | |||||||||
Diversified Financial Services | |||||||||||
1,927 | Deutsche Boerse AG | 150,120 | |||||||||
Diversified Telecommunication Services | |||||||||||
13,794 | Deutsche Telecom AG (Registered Shares) | 179,365 | |||||||||
Electric Utilities | |||||||||||
13,168 | E.ON AG (b) | 486,259 | |||||||||
Food & Staples Retailing | |||||||||||
1,481 | Metro AG (b) | 89,000 | |||||||||
Health Care Providers & Services | |||||||||||
841 | Celesio AG | 27,549 | |||||||||
1,678 | Fresenius Medical Care AG & Co. KGaA | 90,941 | |||||||||
118,490 | |||||||||||
Hotels, Restaurants & Leisure | |||||||||||
1,659 | TUI AG (b)(c) | 18,397 | |||||||||
Industrial Conglomerates | |||||||||||
11,206 | Siemens AG (Registered Shares) | 1,107,857 | |||||||||
Insurance | |||||||||||
3,212 | Allianz SE (Registered Shares) (b)(c) | 368,744 | |||||||||
1,477 | Muenchener Rueckversicherungs AG (Registered Shares) (b) | 208,735 | |||||||||
577,479 | |||||||||||
Machinery | |||||||||||
1,507 | GEA Group AG | 33,528 | |||||||||
522 | MAN SE | 49,427 | |||||||||
82,955 |
NUMBER OF SHARES | VALUE | ||||||||||
Metals & Mining | |||||||||||
1,988 | ThyssenKrupp AG | $ | 65,115 | ||||||||
Multi-Utilities | |||||||||||
2,123 | RWE AG (b) | 173,720 | |||||||||
Personal Products | |||||||||||
439 | Beiersdorf AG (b) | 24,722 | |||||||||
Pharmaceuticals | |||||||||||
6,669 | Bayer AG (b) | 426,685 | |||||||||
269 | Merck KGaA (b) | 22,102 | |||||||||
448,787 | |||||||||||
Software | |||||||||||
8,471 | SAP AG | 408,097 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
1,302 | Adidas AG | 76,454 | |||||||||
97 | Puma AG Rudolf Dassler Sport | 32,475 | |||||||||
108,929 | |||||||||||
Total Germany | 6,200,339 | ||||||||||
Hong Kong (a)(1.9%) | |||||||||||
Airlines | |||||||||||
15,000 | Cathay Pacific Airways Ltd. (c) | 31,142 | |||||||||
Commercial Banks | |||||||||||
33,727 | Bank of East Asia Ltd. | 120,078 | |||||||||
66,000 | BOC Hong Kong Holdings Ltd. | 159,330 | |||||||||
12,100 | Hang Seng Bank Ltd. | 165,083 | |||||||||
444,491 | |||||||||||
Diversified Financial Services | |||||||||||
12,400 | Hong Kong Exchanges and Clearing Ltd. | 202,996 | |||||||||
Electric Utilities | |||||||||||
21,304 | CLP Holdings Ltd. | 149,075 | |||||||||
16,500 | Hongkong Electric Holdings Ltd. | 97,259 | |||||||||
246,334 | |||||||||||
Gas Utilities | |||||||||||
57,838 | Hong Kong & China Gas Co., Ltd. | 140,316 |
See Notes to Financial Statements
13
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Industrial Conglomerates | |||||||||||
25,926 | Hutchison Whampoa Ltd. | $ | 177,646 | ||||||||
Media | |||||||||||
3,000 | Television Broadcasts Ltd. | 14,479 | |||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
34,435 | Link REIT (The) | 84,756 | |||||||||
Real Estate Management & Development | |||||||||||
25,000 | Cheung Kong Holdings Ltd. | 309,969 | |||||||||
35,000 | Hang Lung Properties Ltd. | 125,125 | |||||||||
10,000 | Henderson Land Development Co., Ltd. | 62,921 | |||||||||
10,500 | Hopewell Holdings Ltd. | 30,740 | |||||||||
14,807 | Hysan Development Co., Ltd. | 43,466 | |||||||||
48,393 | New World Development Ltd. | 85,643 | |||||||||
29,072 | Sino Land Co., Ltd. | 52,175 | |||||||||
21,000 | Sun Hung Kai Properties Ltd. | 293,200 | |||||||||
15,500 | Swire Pacific Ltd. (Class A) | 172,976 | |||||||||
25,020 | Wharf Holdings Ltd. | 135,005 | |||||||||
1,311,220 | |||||||||||
Road & Rail | |||||||||||
20,316 | MTR Corp. | 71,106 | |||||||||
Total Hong Kong | 2,724,486 | ||||||||||
Indonesia (a)(0.9%) | |||||||||||
Automobiles | |||||||||||
43,000 | Astra International Tbk PT | 222,331 | |||||||||
Commercial Banks | |||||||||||
249,500 | Bank Central Asia Tbk PT | 150,295 | |||||||||
65,500 | Bank Danamon Indonesia Tbk PT | 41,391 | |||||||||
140,000 | Bank Mandiri Tbk PT | 88,477 | |||||||||
119,000 | Bank Rakyat Indonesia | 117,618 | |||||||||
397,781 | |||||||||||
Construction Materials | |||||||||||
30,000 | Semen Gresik Persero Tbk PT | 26,952 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
205,000 | Telekomunikasi Indonesia Tbk PT | $ | 176,314 | ||||||||
Food Products | |||||||||||
9,000 | Astra Agro Lestari Tbk PT | 21,880 | |||||||||
Gas Utilities | |||||||||||
202,000 | Perusahaan Gas Negara PT | 90,697 | |||||||||
Household Products | |||||||||||
38,500 | Unilever Indonesia Tbk PT | 58,742 | |||||||||
Machinery | |||||||||||
32,500 | United Tractors Tbk PT | 69,127 | |||||||||
Metals & Mining | |||||||||||
48,500 | International Nickel Indonesia Tbk PT | 26,346 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
353,000 | Bumi Resources Tbk PT | 91,499 | |||||||||
17,000 | Tambang Batubara Bukit Asam Tbk PT | 34,926 | |||||||||
126,425 | |||||||||||
Real Estate Management & Development | |||||||||||
219,100 | Lippo Karawaci Tbk PT (c) | 14,012 | |||||||||
Wireless Telecommunication Services | |||||||||||
32,500 | Indosat Tbk PT | 20,995 | |||||||||
Total Indonesia | 1,251,602 | ||||||||||
Italy (a)(1.6%) | |||||||||||
Automobiles | |||||||||||
2,844 | Fiat SpA (c) | 37,589 | |||||||||
Capital Markets | |||||||||||
1,596 | Mediobanca SpA (c) | 14,733 | |||||||||
Commercial Banks | |||||||||||
1,402 | Banco Popolare (c) | 8,969 | |||||||||
131,369 | Intesa Sanpaolo SpA (c) | 432,339 | |||||||||
33,102 | UniCredit SpA (c) | 86,822 | |||||||||
1,664 | Unione di Banche Italiane ScpA | 20,581 | |||||||||
548,711 |
See Notes to Financial Statements
14
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
17,924 | Telecom Italia SpA (c) | $ | 25,087 | ||||||||
Electric Utilities | |||||||||||
7,633 | Enel SpA | 39,809 | |||||||||
Energy Equipment & Services | |||||||||||
11,465 | Saipem SpA | 430,077 | |||||||||
Insurance | |||||||||||
14,921 | Assicurazioni Generali SpA (b) | 314,533 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
39,447 | Eni SpA | 884,301 | |||||||||
Total Italy | 2,294,840 | ||||||||||
Japan (a)(22.5%) | |||||||||||
Air Freight & Logistics | |||||||||||
4,635 | Yamato Holdings Co., Ltd. | 66,649 | |||||||||
Auto Components | |||||||||||
1,600 | Aisin Seiki Co., Ltd. | 48,187 | |||||||||
16,500 | Bridgestone Corp. | 275,340 | |||||||||
13,600 | Denso Corp. | 394,045 | |||||||||
3,059 | NGK Spark Plug Co., Ltd. (b) | 41,458 | |||||||||
1,900 | Stanley Electric Co., Ltd. | 38,975 | |||||||||
1,000 | Toyota Boshoku Corp. (b) | 17,703 | |||||||||
1,800 | Toyota Industries Corp. | 52,490 | |||||||||
868,198 | |||||||||||
Automobiles | |||||||||||
30,809 | Honda Motor Co., Ltd. | 1,041,045 | |||||||||
30,905 | Nissan Motor Co., Ltd. (c) | 270,691 | |||||||||
2,900 | Suzuki Motor Corp. | 61,220 | |||||||||
33,655 | Toyota Motor Corp. | 1,299,759 | |||||||||
1,000 | Yamaha Motor Co., Ltd. (c) | 14,735 | |||||||||
2,687,450 | |||||||||||
Beverages | |||||||||||
8,100 | Asahi Breweries Ltd. (b) | 145,808 | |||||||||
1,400 | Ito En Ltd. (b) | 21,618 | |||||||||
17,051 | Kirin Holdings Co., Ltd. | 244,829 | |||||||||
5,000 | Sapporo Holdings Ltd. (b) | 24,639 | |||||||||
436,894 |
NUMBER OF SHARES | VALUE | ||||||||||
Building Products | |||||||||||
18,500 | Asahi Glass Co., Ltd. (b) | $ | 218,782 | ||||||||
4,400 | Daikin Industries Ltd. | 166,710 | |||||||||
3,862 | JS Group Corp. | 76,051 | |||||||||
9,500 | Nippon Sheet Glass Co., Ltd. | 31,446 | |||||||||
8,500 | TOTO Ltd. | 56,769 | |||||||||
549,758 | |||||||||||
Capital Markets | |||||||||||
42,000 | Daiwa Securities Group, Inc. | 217,503 | |||||||||
6,700 | Matsui Securities Co., Ltd. (b) | 50,341 | |||||||||
19,000 | Mizuho Securities Co., Ltd. | 53,007 | |||||||||
28,950 | Nomura Holdings, Inc. | 199,702 | |||||||||
282 | SBI Holdings, Inc. | 60,882 | |||||||||
581,435 | |||||||||||
Chemicals | |||||||||||
20,000 | Asahi Kasei Corp. | 111,729 | |||||||||
4,000 | Daicel Chemical Industries Ltd. | 25,531 | |||||||||
11,546 | Denki Kagaku Kogyo KK | 51,600 | |||||||||
22,588 | DIC Corp. (b) | 48,350 | |||||||||
3,308 | JSR Corp. | 67,258 | |||||||||
6,000 | Kaneka Corp. | 37,552 | |||||||||
6,056 | Kuraray Co., Ltd. | 79,422 | |||||||||
16,500 | Mitsubishi Chemical Holdings Corp. (b) | 88,028 | |||||||||
13,099 | Mitsubishi Rayon Co., Ltd. (c) | 54,811 | |||||||||
12,500 | Mitsui Chemicals, Inc. | 41,375 | |||||||||
3,500 | Nissan Chemical Industries Ltd. | 46,758 | |||||||||
3,200 | Nitto Denko Corp. | 125,281 | |||||||||
7,997 | Shin-Etsu Chemical Co., Ltd. | 461,780 | |||||||||
16,000 | Showa Denko KK | 36,604 | |||||||||
21,000 | Sumitomo Chemical Co., Ltd. | 99,255 | |||||||||
18,608 | Teijin Ltd. | 58,962 | |||||||||
19,000 | Toray Industries, Inc. | 108,405 | |||||||||
14,000 | Tosoh Corp. | 39,381 | |||||||||
1,582,082 |
See Notes to Financial Statements
15
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Commercial Banks | |||||||||||
5,500 | 77 Bank Ltd. (The) | $ | 31,315 | ||||||||
5,000 | Bank of Kyoto Ltd. (The) (b) | 43,997 | |||||||||
22,000 | Bank of Yokohama Ltd. (The) | 114,970 | |||||||||
12,000 | Chiba Bank Ltd. (The) | 76,379 | |||||||||
27,623 | Chuo Mitsui Trust Holdings, Inc. | 105,836 | |||||||||
14,000 | Fukuoka Financial Group, Inc. (b) | 60,215 | |||||||||
1,000 | Gunma Bank Ltd. (The) | 5,394 | |||||||||
1,000 | Hachijuni Bank Ltd. (The) | 5,631 | |||||||||
1,000 | Hiroshima Bank Ltd. (The) | 4,097 | |||||||||
27,000 | Hokuhoku Financial Group, Inc. (b) | 53,599 | |||||||||
14,000 | Joyo Bank Ltd. (The) | 57,981 | |||||||||
110,660 | Mitsubishi UFJ Financial Group, Inc. (See Note 6) | 575,756 | |||||||||
273,900 | Mizuho Financial Group, Inc. | 527,445 | |||||||||
15,000 | Nishi-Nippon City Bank Ltd. (The) | 43,181 | |||||||||
6,800 | Resona Holdings, Inc. | 83,160 | |||||||||
1,000 | Sapporo Hokuyo Holdings, Inc. | 4,601 | |||||||||
26,500 | Shinsei Bank Ltd. (b)(c) | 34,238 | |||||||||
11,000 | Shizuoka Bank Ltd. (The) | 92,343 | |||||||||
17,300 | Sumitomo Mitsui Financial Group, Inc. (b) | 570,752 | |||||||||
44,081 | Sumitomo Trust & Banking Co., Ltd (The) | 267,431 | |||||||||
1,000 | Suruga Bank Ltd. | 9,820 | |||||||||
2,768,141 | |||||||||||
Commercial Services & Supplies | |||||||||||
6,500 | Dai Nippon Printing Co., Ltd. (b) | 89,670 | |||||||||
3,285 | Secom Co., Ltd. | 142,101 | |||||||||
7,000 | Toppan Printing Co., Ltd. (b) | 63,935 | |||||||||
295,706 | |||||||||||
Computers & Peripherals | |||||||||||
39,000 | Fujitsu Ltd. | 276,044 | |||||||||
38,500 | NEC Corp. | 127,183 |
NUMBER OF SHARES | VALUE | ||||||||||
2,600 | Seiko Epson Corp. | $ | 46,211 | ||||||||
43,026 | Toshiba Corp. (c) | 246,710 | |||||||||
696,148 | |||||||||||
Construction & Engineering | |||||||||||
5,546 | JGC Corp. | 95,025 | |||||||||
21,000 | Kajima Corp. (b) | 53,209 | |||||||||
16,571 | Obayashi Corp. | 73,990 | |||||||||
16,000 | Shimizu Corp. | 63,930 | |||||||||
24,000 | Taisei Corp. | 54,726 | |||||||||
340,880 | |||||||||||
Construction Materials | |||||||||||
15,000 | Taiheiyo Cement Corp. (c) | 21,284 | |||||||||
Consumer Finance | |||||||||||
590 | Acom Co., Ltd. (b) | 9,303 | |||||||||
500 | Aeon Credit Service Co., Ltd. | 5,443 | |||||||||
2,200 | Credit Saison Co., Ltd. | 32,242 | |||||||||
380 | ORIX Corp. (b) | 34,803 | |||||||||
750 | Promise Co., Ltd. (b) | 7,135 | |||||||||
88,926 | |||||||||||
Containers & Packaging | |||||||||||
3,417 | Toyo Seikan Kaisha Ltd. (b) | 58,568 | |||||||||
Diversified Consumer Services | |||||||||||
1,154 | Benesse Holdings, Inc. | 53,192 | |||||||||
Diversified Financial Services | |||||||||||
200 | Mitsubishi UFJ Lease & Finance Co., Ltd. | 7,751 | |||||||||
Diversified Telecommunication Services | |||||||||||
2,500 | Nippon Telegraph & Telephone Corp. | 101,478 | |||||||||
Electric Utilities | |||||||||||
3,400 | Chubu Electric Power Co., Inc. | 78,926 | |||||||||
5,200 | Kansai Electric Power Co., Inc. (The) | 115,680 | |||||||||
2,100 | Kyushu Electric Power Co., Inc. | 42,488 |
See Notes to Financial Statements
16
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
3,900 | Tohoku Electric Power Co., Inc. (b) | $ | 79,500 | ||||||||
6,100 | Tokyo Electric Power Co., Inc. (The) | 153,045 | |||||||||
469,639 | |||||||||||
Electrical Equipment | |||||||||||
4,000 | Fuji Electric Holdings Co., Ltd. (b)(c) | 12,069 | |||||||||
13,500 | Furukawa Electric Co., Ltd. | 66,641 | |||||||||
41,552 | Mitsubishi Electric Corp. | 370,956 | |||||||||
4,500 | Panasonic Electric Works Co., Ltd. | 55,539 | |||||||||
9,800 | Sumitomo Electric Industries Ltd. | 121,001 | |||||||||
1,100 | Ushio, Inc. (b) | 18,220 | |||||||||
644,426 | |||||||||||
Electronic Equipment, Instruments & Components | |||||||||||
6,850 | Citizen Holdings Co., Ltd. | 47,405 | |||||||||
6,900 | FUJIFILM Holdings Corp. | 236,872 | |||||||||
600 | Hirose Electric Co., Ltd. (b) | 64,821 | |||||||||
50,000 | Hitachi Ltd. (b)(c) | 219,422 | |||||||||
6,300 | Hoya Corp. | 173,289 | |||||||||
3,000 | Ibiden Co., Ltd. | 107,145 | |||||||||
947 | Keyence Corp. | 225,853 | |||||||||
2,600 | Kyocera Corp. | 255,729 | |||||||||
600 | Mabuchi Motor Co., Ltd. (b) | 33,025 | |||||||||
3,000 | Murata Manufacturing Co., Ltd. | 176,587 | |||||||||
1,704 | Nidec Corp. | 176,576 | |||||||||
8,500 | Nippon Electric Glass Co., Ltd. | 129,692 | |||||||||
4,004 | Omron Corp. | 93,227 | |||||||||
2,052 | TDK Corp. | 129,914 | |||||||||
4,450 | Yokogawa Electric Corp. (b) | 37,970 | |||||||||
2,107,527 | |||||||||||
Food & Staples Retailing | |||||||||||
6,903 | Aeon Co., Ltd. (b) | 79,421 | |||||||||
1,352 | FamilyMart Co., Ltd. (b) | 46,559 | |||||||||
1,203 | Lawson, Inc. (b) | 53,242 | |||||||||
14,600 | Seven & I Holdings Co., Ltd. | 372,789 |
NUMBER OF SHARES | VALUE | ||||||||||
4,500 | UNY Co., Ltd. | $ | 40,846 | ||||||||
592,857 | |||||||||||
Food Products | |||||||||||
9,000 | Ajinomoto Co., Inc. | 84,510 | |||||||||
3,500 | Kikkoman Corp. | 38,621 | |||||||||
800 | MEIJI Holdings Co., Ltd. (b) | 28,905 | |||||||||
3,000 | Nippon Meat Packers, Inc. | 37,614 | |||||||||
4,000 | Nisshin Seifun Group, Inc. (b) | 49,247 | |||||||||
1,500 | Nissin Foods Holdings Co., Ltd. | 50,320 | |||||||||
2,200 | Yakult Honsha Co., Ltd. (b) | 57,579 | |||||||||
3,000 | Yamazaki Baking Co., Ltd. (b) | 38,176 | |||||||||
384,972 | |||||||||||
Gas Utilities | |||||||||||
11,000 | Osaka Gas Co., Ltd. | 38,251 | |||||||||
13,000 | Tokyo Gas Co., Ltd. | 55,154 | |||||||||
93,405 | |||||||||||
Health Care Equipment & Supplies | |||||||||||
3,200 | Olympus Corp. (b) | 96,069 | |||||||||
3,650 | Terumo Corp. | 186,002 | |||||||||
282,071 | |||||||||||
Hotels, Restaurants & Leisure | |||||||||||
850 | Oriental Land Co., Ltd. (b) | 60,242 | |||||||||
Household Durables | |||||||||||
6,750 | Casio Computer Co., Ltd. (b) | 52,956 | |||||||||
800 | Makita Corp. | 24,803 | |||||||||
39,500 | Panasonic Corp. | 577,428 | |||||||||
27,000 | Sanyo Electric Co., Ltd. (b)(c) | 43,352 | |||||||||
8,072 | Sekisui Chemical Co., Ltd. | 55,137 | |||||||||
14,046 | Sekisui House Ltd. | 134,040 | |||||||||
10,500 | Sharp Corp. | 137,009 | |||||||||
14,496 | Sony Corp. | 495,545 | |||||||||
1,520,270 | |||||||||||
Household Products | |||||||||||
8,200 | Kao Corp. | 198,481 | |||||||||
1,200 | Unicharm Corp. (b) | 116,512 | |||||||||
314,993 |
See Notes to Financial Statements
17
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Information Technology Services | |||||||||||
900 | Itochu Techno-Solutions Corp. (b) | $ | 34,104 | ||||||||
3,050 | Nomura Research Institute Ltd. (b) | 78,274 | |||||||||
24 | NTT Data Corp. (b) | 87,238 | |||||||||
240 | Obic Co., Ltd. (b) | 48,166 | |||||||||
247,782 | |||||||||||
Insurance | |||||||||||
6,490 | Mitsui Sumitomo Insurance Group Holdings, Inc. | 186,438 | |||||||||
12,900 | NKSJ Holdings, Inc. (c)(g) | 93,658 | |||||||||
2 | Sony Financial Holdings, Inc. | 7,217 | |||||||||
3,550 | T&D Holdings, Inc. | 92,490 | |||||||||
15,268 | Tokio Marine Holdings, Inc. | 454,722 | |||||||||
834,525 | |||||||||||
Internet Software & Services | |||||||||||
271 | Yahoo! Japan Corp. | 103,562 | |||||||||
Leisure Equipment & Products | |||||||||||
4,600 | Nikon Corp. (b) | 103,383 | |||||||||
2,150 | Shimano, Inc. | 97,870 | |||||||||
2,900 | Yamaha Corp. | 35,739 | |||||||||
236,992 | |||||||||||
Machinery | |||||||||||
5,553 | Amada Co., Ltd. | 45,620 | |||||||||
3,950 | Fanuc Ltd. | 467,243 | |||||||||
2,100 | Hitachi Construction Machinery Co., Ltd. (b) | 44,640 | |||||||||
22,530 | IHI Corp. (b) | 44,874 | |||||||||
20,500 | Kawasaki Heavy Industries Ltd. (b) | 63,697 | |||||||||
20,800 | Komatsu Ltd. | 419,779 | |||||||||
30,000 | Kubota Corp. | 263,838 | |||||||||
1,900 | Kurita Water Industries Ltd. | 54,764 | |||||||||
10,000 | Minebea Co., Ltd. (b) | 57,810 | |||||||||
50,550 | Mitsubishi Heavy Industries Ltd. (b) | 203,472 | |||||||||
8,060 | NGK Insulators Ltd. (b) | 158,659 |
NUMBER OF SHARES | VALUE | ||||||||||
10,553 | NSK Ltd. (b) | $ | 80,728 | ||||||||
11,051 | NTN Corp. | 48,710 | |||||||||
1,405 | SMC Corp. | 201,650 | |||||||||
9,000 | Sumitomo Heavy Industries Ltd. | 59,672 | |||||||||
1,300 | THK Co., Ltd. | 28,209 | |||||||||
2,243,365 | |||||||||||
Marine | |||||||||||
9,000 | Mitsui O.S.K. Lines Ltd. | 67,813 | |||||||||
18,015 | Nippon Yusen KK | 74,005 | |||||||||
141,818 | |||||||||||
Media | |||||||||||
12 | Fuji Media Holdings, Inc. | 19,439 | |||||||||
2,150 | Toho Co., Ltd. | 37,144 | |||||||||
2,300 | Tokyo Broadcasting System Holdings, Inc. | 39,870 | |||||||||
96,453 | |||||||||||
Metals & Mining | |||||||||||
10,595 | Dowa Holdings Co., Ltd. (b) | 58,933 | |||||||||
4,900 | JFE Holdings, Inc. | 176,533 | |||||||||
34,000 | Kobe Steel Ltd. | 76,714 | |||||||||
29,000 | Mitsubishi Materials Corp. (b)(c) | 86,194 | |||||||||
21,604 | Mitsui Mining & Smelting Co., Ltd. | 59,444 | |||||||||
101,108 | Nippon Steel Corp. | 361,579 | |||||||||
67,000 | Sumitomo Metal Industries Ltd. (b) | 182,366 | |||||||||
17,500 | Sumitomo Metal Mining Co., Ltd. | 259,332 | |||||||||
1,261,095 | |||||||||||
Multiline Retail | |||||||||||
6,187 | Isetan Mitsukoshi Holdings Ltd. | 71,682 | |||||||||
8,500 | J. Front Retailing Co., Ltd. | 49,381 | |||||||||
7,807 | Marui Group Co., Ltd. | 61,768 | |||||||||
4,540 | Takashimaya Co., Ltd. (b) | 43,343 | |||||||||
226,174 |
See Notes to Financial Statements
18
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Office Electronics | |||||||||||
22,704 | Canon, Inc. | $ | 1,036,550 | ||||||||
9,530 | Konica Minolta Holdings, Inc. | 119,967 | |||||||||
13,432 | Ricoh Co., Ltd. | 229,590 | |||||||||
1,386,107 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
20 | INPEX Corp. | 141,381 | |||||||||
32,790 | JX Holdings, Inc. (c)(g) | 182,913 | |||||||||
4,500 | Showa Shell Sekiyu KK | 30,587 | |||||||||
5,000 | TonenGeneral Sekiyu KK | 42,661 | |||||||||
397,542 | |||||||||||
Paper & Forest Products | |||||||||||
1,900 | Nippon Paper Group, Inc. | 53,493 | |||||||||
21,000 | OJI Paper Co., Ltd. (b) | 99,046 | |||||||||
152,539 | |||||||||||
Personal Products | |||||||||||
7,200 | Shiseido Co., Ltd. | 150,555 | |||||||||
Pharmaceuticals | |||||||||||
6,000 | Astellas Pharma, Inc. | 210,568 | |||||||||
3,306 | Chugai Pharmaceutical Co., Ltd. | 59,967 | |||||||||
12,100 | Daiichi Sankyo Co., Ltd. | 210,512 | |||||||||
3,003 | Eisai Co., Ltd. (b) | 102,876 | |||||||||
4,032 | Kyowa Hakko Kirin Co., Ltd. (b) | 42,110 | |||||||||
3,981 | Shionogi & Co., Ltd. (b) | 71,608 | |||||||||
3,959 | Taisho Pharmaceutical Co., Ltd. | 72,121 | |||||||||
14,200 | Takeda Pharmaceutical Co., Ltd. (b) | 611,110 | |||||||||
1,380,872 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
2 | Japan Prime Realty Investment Corp. | 4,752 | |||||||||
8 | Japan Real Estate Investment Corp. | 66,794 | |||||||||
40 | Japan Retail Fund Investment Corp. (b) | 53,781 |
NUMBER OF SHARES | VALUE | ||||||||||
9 | Nippon Building Fund, Inc. | $ | 75,549 | ||||||||
1 | Nomura Real Estate Office Fund, Inc. | 5,653 | |||||||||
206,529 | |||||||||||
Real Estate Management & Development | |||||||||||
200 | Aeon Mall Co., Ltd. | 4,234 | |||||||||
2,156 | Daito Trust Construction Co., Ltd. | 115,428 | |||||||||
11,000 | Daiwa House Industry Co., Ltd. | 118,164 | |||||||||
2,450 | Leopalace21 Corp. (b)(c) | 15,358 | |||||||||
12,000 | Mitsubishi Estate Co., Ltd. | 216,913 | |||||||||
9,500 | Mitsui Fudosan Co., Ltd. | 176,839 | |||||||||
3,500 | Sumitomo Realty & Development Co., Ltd. | 72,059 | |||||||||
5,000 | Tokyo Tatemono Co., Ltd. | 23,093 | |||||||||
1,000 | Tokyu Land Corp. | 4,288 | |||||||||
746,376 | |||||||||||
Road & Rail | |||||||||||
18 | Central Japan Railway Co. | 146,648 | |||||||||
4,500 | East Japan Railway Co. | 300,564 | |||||||||
7,000 | Keihin Electric Express Railway Co., Ltd. (b) | 58,696 | |||||||||
4,000 | Keio Corp. (b) | 25,866 | |||||||||
21,550 | Kintetsu Corp. (b) | 68,028 | |||||||||
15,500 | Nippon Express Co., Ltd. | 72,878 | |||||||||
11,500 | Tobu Railway Co., Ltd. (b) | 60,609 | |||||||||
16,000 | Tokyu Corp. | 66,970 | |||||||||
12 | West Japan Railway Co. | 43,686 | |||||||||
843,945 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
3,350 | Advantest Corp. (b) | 86,749 | |||||||||
2,105 | Rohm Co., Ltd. | 156,551 | |||||||||
4,300 | Tokyo Electron Ltd. | 284,190 | |||||||||
527,490 | |||||||||||
Software | |||||||||||
2,300 | Konami Corp. | 44,765 | |||||||||
2,108 | Nintendo Co., Ltd. | 708,478 |
See Notes to Financial Statements
19
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
1,050 | Oracle Corp. Japan (b) | $ | 52,028 | ||||||||
2,100 | Trend Micro, Inc. (b) | 70,639 | |||||||||
875,910 | |||||||||||
Specialty Retail | |||||||||||
1,700 | Fast Retailing Co., Ltd. (b) | 257,315 | |||||||||
400 | Shimamura Co., Ltd. | 40,268 | |||||||||
830 | USS Co., Ltd. | 56,678 | |||||||||
1,560 | Yamada Denki Co., Ltd. | 121,335 | |||||||||
475,596 | |||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
3,571 | Nisshinbo Holdings, Inc. (b) | 38,061 | |||||||||
3,546 | Onward Holdings Co., Ltd. | 29,435 | |||||||||
67,496 | |||||||||||
Tobacco | |||||||||||
105 | Japan Tobacco, Inc. | 363,040 | |||||||||
Trading Companies & Distributors | |||||||||||
23,051 | ITOCHU Corp. | 200,485 | |||||||||
40,550 | Marubeni Corp. | 240,244 | |||||||||
29,000 | Mitsubishi Corp. | 688,163 | |||||||||
24,300 | Mitsui & Co., Ltd. | 366,667 | |||||||||
14,700 | Sumitomo Corp. | 177,897 | |||||||||
1,673,456 | |||||||||||
Transportation Infrastructure | |||||||||||
3,000 | Mitsubishi Logistics Corp. | 39,375 | |||||||||
Wireless Telecommunication Services | |||||||||||
40 | NTT DoCoMo, Inc. | 62,220 | |||||||||
17,300 | Softbank Corp. (b) | 387,198 | |||||||||
449,418 | |||||||||||
Total Japan | 32,802,954 | ||||||||||
Luxembourg (a)(0.3%) | |||||||||||
Metals & Mining | |||||||||||
7,319 | ArcelorMittal (b) | 288,326 |
NUMBER OF SHARES | VALUE | ||||||||||
Personal Products | |||||||||||
1,967 | Oriflame Cosmetics SA (SDR) (b) | $ | 112,308 | ||||||||
Total Luxembourg | 400,634 | ||||||||||
Malaysia (a)(0.0%) | |||||||||||
Multi-Utilities | |||||||||||
192 | YTL Corp. Berhad | 444 | |||||||||
Netherlands (a)(2.5%) | |||||||||||
Aerospace & Defense | |||||||||||
1,848 | European Aeronautic Defence and Space Co. (b) | 34,248 | |||||||||
Air Freight & Logistics | |||||||||||
8,488 | TNT N.V. | 260,560 | |||||||||
Beverages | |||||||||||
3,824 | Heineken N.V. (b) | 177,504 | |||||||||
Chemicals | |||||||||||
3,013 | Akzo Nobel N.V. (b) | 177,105 | |||||||||
1,989 | Koninklijke DSM N.V. (b) | 88,669 | |||||||||
265,774 | |||||||||||
Construction Materials | |||||||||||
6,557 | James Hardie Industries (CDI) (c) | 45,903 | |||||||||
Diversified Financial Services | |||||||||||
20,300 | ING Groep N.V. (Share Certificates) (c) | 181,713 | |||||||||
Diversified Telecommunication Services | |||||||||||
22,293 | Koninklijke KPN N.V. | 333,311 | |||||||||
Energy Equipment & Services | |||||||||||
2,844 | Fugro N.V. (Share Certificates) | 185,567 | |||||||||
6,539 | SBM Offshore N.V. | 129,585 | |||||||||
315,152 | |||||||||||
Food & Staples Retailing | |||||||||||
18,160 | Koninklijke Ahold N.V. | 249,335 | |||||||||
Food Products | |||||||||||
21,786 | Unilever N.V. (Share Certificates) (b) | 665,799 |
See Notes to Financial Statements
20
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Industrial Conglomerates | |||||||||||
11,099 | Koninklijke Philips Electronics N.V. | $ | 375,055 | ||||||||
Insurance | |||||||||||
22,326 | Aegon N.V. (c) | 156,290 | |||||||||
Media | |||||||||||
8,407 | Reed Elsevier N.V. | 99,803 | |||||||||
5,723 | Wolters Kluwer N.V. | 117,366 | |||||||||
217,169 | |||||||||||
Professional Services | |||||||||||
395 | Randstad Holding (c) | 20,137 | |||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
769 | Corio (b) | 44,677 | |||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
5,597 | ASML Holding | 182,445 | |||||||||
6,988 | STMicroelectronics N.V. | 65,367 | |||||||||
247,812 | |||||||||||
Total Netherlands | 3,590,439 | ||||||||||
Norway (a)(1.5%) | |||||||||||
Chemicals | |||||||||||
21,469 | Yara International ASA (b) | 750,525 | |||||||||
Commercial Banks | |||||||||||
21,286 | DnB NOR ASA (b) | 250,479 | |||||||||
Diversified Telecommunication Services | |||||||||||
31,299 | Telenor ASA (c) | 447,170 | |||||||||
Electrical Equipment | |||||||||||
2,800 | Renewable Energy Corp. ASA (b)(c) | 9,607 | |||||||||
Industrial Conglomerates | |||||||||||
14,535 | Orkla ASA (b) | 123,084 | |||||||||
Metals & Mining | |||||||||||
21,841 | Norsk Hydro ASA (b)(c) | 172,506 |
NUMBER OF SHARES | VALUE | ||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
17,657 | Statoil ASA | $ | 426,242 | ||||||||
Total Norway | 2,179,613 | ||||||||||
Poland (a)(1.5%) | |||||||||||
Commercial Banks | |||||||||||
14,146 | Bank Handlowy w Warszawie SA (c) | 388,455 | |||||||||
1,298 | Bank Pekao SA (c) | 73,679 | |||||||||
8,881 | Bank Zachodni WBK SA (c) | 650,782 | |||||||||
99,550 | Getin Holding SA (c) | 366,792 | |||||||||
6,625 | Powszechna Kasa Oszczednosci Bank Polski SA | 95,097 | |||||||||
1,574,805 | |||||||||||
Construction & Engineering | |||||||||||
2,800 | PBG SA (c) | 224,786 | |||||||||
Diversified Telecommunication Services | |||||||||||
7,306 | Telekomunikacja Polska SA | 39,833 | |||||||||
Metals & Mining | |||||||||||
1,435 | KGHM Polska Miedz SA | 53,648 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
3,627 | Polski Koncern Naftowy Orlen (c) | 48,027 | |||||||||
212,224 | Polskie Gornictwo Naftowe I Gazownictwo SA | 249,347 | |||||||||
297,374 | |||||||||||
Real Estate Management & Development | |||||||||||
1,600 | Globe Trade Centre SA (c) | 12,627 | |||||||||
Software | |||||||||||
843 | Asseco Poland SA | 16,161 | |||||||||
Total Poland | 2,219,234 | ||||||||||
Russia (1.5%) | |||||||||||
Commercial Banks | |||||||||||
32,411 | VTB Bank OJSC (Registered GDR) | 173,992 |
See Notes to Financial Statements
21
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Gold Mining | |||||||||||
3,023 | Polyus Gold Co. (ADR) (b) | $ | 75,192 | ||||||||
Metals & Mining | |||||||||||
14,639 | MMC Norilsk Nickel (ADR) (c) | 280,151 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
28,550 | Gazprom OAO (ADR) (b) | 662,711 | |||||||||
5,800 | LUKOIL OAO (ADR) (b) | 330,877 | |||||||||
951 | NovaTek OAO (Registered GDR) | 71,818 | |||||||||
18,900 | Rosneft Oil Co. (Registered GDR) | 152,782 | |||||||||
18,200 | Surgutneftegaz (ADR) | 173,659 | |||||||||
5,009 | Tatneft (ADR) | 153,011 | |||||||||
1,544,858 | |||||||||||
Wireless Telecommunication Services | |||||||||||
2,300 | Mobile Telesystems OJSC (ADR) (b) | 127,075 | |||||||||
Total Russia | 2,201,268 | ||||||||||
Singapore (a)(1.0%) | |||||||||||
Aerospace & Defense | |||||||||||
13,000 | Singapore Technologies Engineering Ltd. | 29,850 | |||||||||
Airlines | |||||||||||
8,276 | Singapore Airlines Ltd. | 90,831 | |||||||||
Commercial Banks | |||||||||||
17,413 | DBS Group Holdings Ltd. | 192,916 | |||||||||
26,093 | Oversea-Chinese Banking Corp., Ltd. | 165,645 | |||||||||
12,508 | United Overseas Bank Ltd. | 183,263 | |||||||||
541,824 | |||||||||||
Distributors | |||||||||||
1,031 | Jardine Cycle & Carriage Ltd. | 22,651 | |||||||||
Diversified Financial Services | |||||||||||
8,490 | Singapore Exchange Ltd. (b) | 50,407 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
82,630 | Singapore Telecommunications Ltd. | $ | 183,345 | ||||||||
Food & Staples Retailing | |||||||||||
13,000 | Olam International Ltd. (b) | 24,501 | |||||||||
Food Products | |||||||||||
14,000 | Wilmar International Ltd. (b) | 70,206 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
51,000 | Genting Singapore PLC (b)(c) | 35,059 | |||||||||
Industrial Conglomerates | |||||||||||
11,000 | Fraser and Neave Ltd. | 38,963 | |||||||||
14,000 | Keppel Corp., Ltd. | 99,455 | |||||||||
10,511 | SembCorp Industries Ltd. | 31,974 | |||||||||
170,392 | |||||||||||
Machinery | |||||||||||
9,400 | SembCorp Marine Ltd. | 28,877 | |||||||||
Media | |||||||||||
15,350 | Singapore Press Holdings Ltd. (b) | 45,871 | |||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
16,000 | Ascendas Real Estate Investment Trust | 22,568 | |||||||||
22,704 | CapitaMall Trust | 31,927 | |||||||||
54,495 | |||||||||||
Real Estate Management & Development | |||||||||||
26,000 | CapitaLand Ltd. | 70,169 | |||||||||
5,462 | City Developments Ltd. (b) | 42,075 | |||||||||
112,244 | |||||||||||
Road & Rail | |||||||||||
18,089 | ComfortDelgro Corp., Ltd. | 20,590 | |||||||||
Total Singapore | 1,481,143 |
See Notes to Financial Statements
22
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Spain (a)(2.8%) | |||||||||||
Commercial Banks | |||||||||||
42,780 | Banco Bilbao Vizcaya Argentaria SA | $ | 560,163 | ||||||||
15,509 | Banco Popular Espanol SA (b) | 109,585 | |||||||||
99,122 | Banco Santander SA (b) | 1,245,322 | |||||||||
1,915,070 | |||||||||||
Construction & Engineering | |||||||||||
1,536 | ACS Actividades de Construccion y Servicios SA (b) | 69,095 | |||||||||
3,919 | Ferrovial SA (b) | 34,546 | |||||||||
286 | Fomento de Construcciones y Contratas SA | 9,377 | |||||||||
891 | Sacyr Vallehermoso SA (b)(c) | 6,754 | |||||||||
119,772 | |||||||||||
Diversified Financial Services | |||||||||||
2,881 | Criteria Caixacorp SA | 14,340 | |||||||||
Diversified Telecommunication Services | |||||||||||
50,757 | Telefonica SA | 1,139,841 | |||||||||
Electric Utilities | |||||||||||
345 | Acciona SA (b) | 34,327 | |||||||||
38,156 | Iberdrola SA | 303,947 | |||||||||
338,274 | |||||||||||
Gas Utilities | |||||||||||
2,121 | Gas Natural SDG SA | 36,329 | |||||||||
Information Technology Services | |||||||||||
662 | Indra Sistemas SA (b) | 13,201 | |||||||||
Insurance | |||||||||||
8,998 | Mapfre SA (b) | 29,362 | |||||||||
Machinery | |||||||||||
1,271 | Zardoya Otis SA (b) | 19,871 | |||||||||
Metals & Mining | |||||||||||
1,782 | Acerinox SA (b) | 35,561 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
11,849 | Repsol YPF SA | 278,114 |
NUMBER OF SHARES | VALUE | ||||||||||
Specialty Retail | |||||||||||
1,874 | Inditex SA (b) | $ | 115,197 | ||||||||
Transportation Infrastructure | |||||||||||
3,305 | Abertis Infraestructuras SA (b) | 57,022 | |||||||||
Total Spain | 4,111,954 | ||||||||||
Sweden (a)(2.3%) | |||||||||||
Building Products | |||||||||||
4,074 | Assa Abloy AB (B Shares) (b) | 94,756 | |||||||||
Commercial Banks | |||||||||||
23,031 | Nordea Bank AB | 226,039 | |||||||||
6,815 | Svenska Handelsbanken AB (Class A) (b) | 192,130 | |||||||||
418,169 | |||||||||||
Commercial Services & Supplies | |||||||||||
1,600 | Securitas AB (Class B) (b) | 16,929 | |||||||||
Communications Equipment | |||||||||||
52,416 | Telefonaktiebolaget LM Ericsson (Class B) (b) | 609,508 | |||||||||
Construction & Engineering | |||||||||||
4,913 | Skanska AB (Class B) (b) | 81,850 | |||||||||
Diversified Financial Services | |||||||||||
10,004 | Investor AB (Class B) (b) | 190,104 | |||||||||
Diversified Telecommunication Services | |||||||||||
2,733 | Tele2 AB (Class B) (b) | 46,455 | |||||||||
28,889 | TeliaSonera AB | 198,430 | |||||||||
244,885 | |||||||||||
Health Care Equipment & Supplies | |||||||||||
4,160 | Getinge AB (Class B) (b) | 93,524 | |||||||||
Household Durables | |||||||||||
4,900 | Electrolux AB (Series B) | 126,669 | |||||||||
4,900 | Husqvarna AB (Class B) (b) | 36,238 | |||||||||
162,907 |
See Notes to Financial Statements
23
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Machinery | |||||||||||
3,148 | Alfa Laval AB (b) | $ | 47,282 | ||||||||
8,030 | Atlas Copco AB (Class A) (b) | 130,419 | |||||||||
5,089 | Atlas Copco AB (Class B) (b) | 74,512 | |||||||||
10,577 | Sandvik AB (b)(c) | 153,106 | |||||||||
3,383 | SKF AB (Class B) (b) | 68,084 | |||||||||
7,651 | Volvo AB (Class A) (c) | 92,618 | |||||||||
11,420 | Volvo AB (Class B) (c) | 141,348 | |||||||||
707,369 | |||||||||||
Metals & Mining | |||||||||||
3,673 | SSAB AB (Class A) (b) | 65,042 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
3,306 | Lundin Petroleum AB (b)(c) | 20,107 | |||||||||
Paper & Forest Products | |||||||||||
1,250 | Holmen AB (Class B) (b) | 31,692 | |||||||||
11,597 | Svenska Cellulosa AB (Class B) (b) | 151,911 | |||||||||
183,603 | |||||||||||
Specialty Retail | |||||||||||
6,458 | Hennes & Mauritz AB (Class B) (b) | 411,674 | |||||||||
Tobacco | |||||||||||
4,193 | Swedish Match AB (b) | 95,718 | |||||||||
Total Sweden | 3,396,145 | ||||||||||
Switzerland (a)(7.5%) | |||||||||||
Building Products | |||||||||||
534 | Geberit AG (Registered Shares) | 94,981 | |||||||||
Capital Markets | |||||||||||
15,258 | Credit Suisse Group AG (Registered Shares) (c) | 698,004 | |||||||||
4,106 | GAM Holding Ltd. (c) | 51,050 | |||||||||
4,106 | Julius Baer Group Ltd. | 141,805 | |||||||||
24,039 | UBS AG (Registered Shares) (c) | 371,391 | |||||||||
1,262,250 |
NUMBER OF SHARES | VALUE | ||||||||||
Chemicals | |||||||||||
110 | Givaudan SA | $ | 95,753 | ||||||||
3,600 | Syngenta AG (Registered Shares) | 914,138 | |||||||||
1,009,891 | |||||||||||
Computers & Peripherals | |||||||||||
3,420 | Logitech International SA (Registered Shares) (b)(c) | 55,947 | |||||||||
Construction Materials | |||||||||||
3,563 | Holcim Ltd. (b)(c) | 267,179 | |||||||||
Diversified Financial Services | |||||||||||
100 | Pargesa Holding SA | 8,144 | |||||||||
Diversified Telecommunication Services | |||||||||||
336 | Swisscom AG (Registered Shares) (b) | 113,903 | |||||||||
Electrical Equipment | |||||||||||
36,166 | ABB Ltd. (Registered Shares) (c) | 696,009 | |||||||||
Food Products | |||||||||||
60,698 | Nestle SA (Registered Shares) | 2,962,335 | |||||||||
Health Care Equipment & Supplies | |||||||||||
2,730 | Nobel Biocare Holding AG (Registered Shares) (b) | 59,970 | |||||||||
178 | Straumann Holding AG (Registered Shares) | 44,119 | |||||||||
104,089 | |||||||||||
Insurance | |||||||||||
668 | Baloise-Holding AG (Registered Shares) | 52,500 | |||||||||
344 | Swiss Life Holding AG (Registered Shares) (c) | 41,882 | |||||||||
5,434 | Swiss Reinsurance Co., Ltd. (Registered Shares) | 236,885 | |||||||||
1,655 | Zurich Financial Services AG | 368,990 | |||||||||
700,257 |
See Notes to Financial Statements
24
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Life Sciences Tools & Services | |||||||||||
527 | Lonza Group AG (Registered Shares) (b) | $ | 41,343 | ||||||||
Machinery | |||||||||||
664 | Schindler Holding AG | 58,377 | |||||||||
Pharmaceuticals | |||||||||||
27,660 | Novartis AG (Registered Shares) | 1,411,247 | |||||||||
8,324 | Roche Holding AG | 1,314,635 | |||||||||
2,725,882 | |||||||||||
Professional Services | |||||||||||
238 | Adecco SA (Registered Shares) | 14,027 | |||||||||
27 | SGS SA (Registered Shares) | 35,028 | |||||||||
49,055 | |||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
10,988 | Compagnie Financiere Richemont SA | 406,199 | |||||||||
909 | Swatch Group AG (The) | 267,948 | |||||||||
1,148 | Swatch Group AG (The) (Registered Shares) | 62,944 | |||||||||
737,091 | |||||||||||
Total Switzerland | 10,886,733 | ||||||||||
Turkey (a)(1.0%) | |||||||||||
Beverages | |||||||||||
9,376 | Anadolu Efes Biracilik Ve Malt Sanayii | 116,460 | |||||||||
Commercial Banks | |||||||||||
38,691 | Akbank TAS | 192,057 | |||||||||
45,498 | Turkiye Garanti Bankasi | 221,107 | |||||||||
8,511 | Turkiye Halk Bankasi | 66,936 | |||||||||
39,508 | Turkiye Is Bankasi | 137,708 | |||||||||
18,022 | Turkiye Vakiflar Bankasi Tao (c) | 47,331 | |||||||||
20,229 | Yapi ve Kredi Bankasi AS (c) | 57,473 | |||||||||
722,612 | |||||||||||
Diversified Financial Services | |||||||||||
14,591 | Haci Omer Sabanci Holding | 66,153 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
22,297 | Turk Telekomunikasyon | $ | 82,305 | ||||||||
Food & Staples Retailing | |||||||||||
1,627 | BIM Birlesik Magazalar | 91,367 | |||||||||
Industrial Conglomerates | |||||||||||
13,001 | Enka Insaat ve Sanayi | 62,210 | |||||||||
11,022 | KOC Holding (c) | 42,246 | |||||||||
104,456 | |||||||||||
Metals & Mining | |||||||||||
21,866 | Eregli Demir ve Celik Fabrikalari TAS (c) | 68,646 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
4,092 | Tupras Turkiye Petrol Rafine | 90,439 | |||||||||
Wireless Telecommunication Services | |||||||||||
20,900 | Turkcell Iletisim Hizmet | 135,235 | |||||||||
Total Turkey | 1,477,673 | ||||||||||
United Kingdom (a)(17.1%) | |||||||||||
Aerospace & Defense | |||||||||||
34,620 | BAE Systems PLC | 181,978 | |||||||||
13,788 | Cobham PLC | 55,908 | |||||||||
20,445 | Rolls-Royce Group PLC (c) | 180,557 | |||||||||
418,443 | |||||||||||
Airlines | |||||||||||
15,370 | British Airways PLC (b)(c) | 52,923 | |||||||||
Beverages | |||||||||||
42,560 | Diageo PLC | 725,813 | |||||||||
6,988 | SABMiller PLC | 219,429 | |||||||||
945,242 | |||||||||||
Capital Markets | |||||||||||
9,461 | 3i Group PLC | 39,160 | |||||||||
3,014 | ICAP PLC | 17,349 | |||||||||
3,558 | Investec PLC | 28,208 | |||||||||
32,393 | Man Group PLC | 120,427 | |||||||||
3,118 | Schroders PLC | 65,710 | |||||||||
270,854 |
See Notes to Financial Statements
25
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Chemicals | |||||||||||
2,898 | Johnson Matthey PLC | $ | 77,184 | ||||||||
Commercial Banks | |||||||||||
86,643 | Barclays PLC | 443,616 | |||||||||
242,007 | HSBC Holdings PLC | 2,465,433 | |||||||||
118,000 | Lloyds Banking Group PLC (c) | 118,003 | |||||||||
231,734 | Royal Bank of Scotland Group PLC (c) | 190,350 | |||||||||
27,556 | Standard Chartered PLC | 734,527 | |||||||||
3,951,929 | |||||||||||
Commercial Services & Supplies | |||||||||||
7,769 | Aggreko PLC | 145,320 | |||||||||
4,556 | G4S PLC | 18,624 | |||||||||
1,852 | Serco Group PLC | 17,702 | |||||||||
181,646 | |||||||||||
Construction & Engineering | |||||||||||
8,559 | Balfour Beatty PLC | 36,237 | |||||||||
Containers & Packaging | |||||||||||
10,347 | Rexam PLC | 50,853 | |||||||||
Diversified Financial Services | |||||||||||
869 | London Stock Exchange Group PLC (b) | 9,061 | |||||||||
Diversified Telecommunication Services | |||||||||||
120,827 | BT Group PLC | 233,990 | |||||||||
Electric Utilities | |||||||||||
20,881 | Scottish & Southern Energy PLC | 344,479 | |||||||||
Energy Equipment & Services | |||||||||||
14,253 | AMEC PLC | 179,782 | |||||||||
8,856 | Petrofac Ltd. | 153,901 | |||||||||
333,683 | |||||||||||
Food & Staples Retailing | |||||||||||
15,053 | J Sainsbury PLC | 77,330 | |||||||||
81,517 | Tesco PLC | 542,263 | |||||||||
619,593 |
NUMBER OF SHARES | VALUE | ||||||||||
Food Products | |||||||||||
17,446 | Unilever PLC | $ | 522,620 | ||||||||
Health Care Equipment & Supplies | |||||||||||
20,839 | Smith & Nephew PLC | 216,329 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
2,716 | Carnival PLC | 117,743 | |||||||||
28,993 | Compass Group PLC | 236,652 | |||||||||
5,641 | Intercontinental Hotels Group PLC | 99,225 | |||||||||
9,958 | Ladbrokes PLC | 23,729 | |||||||||
3,327 | Whitbread PLC | 78,188 | |||||||||
555,537 | |||||||||||
Household Durables | |||||||||||
1,777 | Berkeley Group Holdings PLC (c) | 22,569 | |||||||||
Household Products | |||||||||||
8,184 | Reckitt Benckiser Group PLC | 424,750 | |||||||||
Independent Power Producers & Energy Traders | |||||||||||
5,345 | International Power PLC | 27,005 | |||||||||
Industrial Conglomerates | |||||||||||
4,159 | Smiths Group PLC | 71,621 | |||||||||
12,589 | Tomkins PLC | 47,904 | |||||||||
119,525 | |||||||||||
Insurance | |||||||||||
2,090 | Admiral Group PLC | 41,843 | |||||||||
28,972 | Aviva PLC | 153,319 | |||||||||
74,369 | Legal & General Group PLC | 96,329 | |||||||||
62,200 | Old Mutual PLC (c) | 109,919 | |||||||||
27,932 | Prudential PLC | 247,380 | |||||||||
42,325 | RSA Insurance Group PLC | 78,277 | |||||||||
23,765 | Standard Life PLC | 72,026 | |||||||||
799,093 | |||||||||||
Internet & Catalog Retail | |||||||||||
10,876 | Home Retail Group PLC | 45,819 | |||||||||
Machinery | |||||||||||
8,683 | Charter International PLC | 107,033 |
See Notes to Financial Statements
26
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
6,890 | Invensys PLC | $ | 35,543 | ||||||||
142,576 | |||||||||||
Media | |||||||||||
27,957 | British Sky Broadcasting Group PLC | 262,205 | |||||||||
13,711 | Pearson PLC | 220,112 | |||||||||
18,758 | Reed Elsevier PLC | 147,743 | |||||||||
48,900 | WPP PLC | 519,892 | |||||||||
1,149,952 | |||||||||||
Metals & Mining | |||||||||||
11,579 | Anglo American PLC (c) | 495,918 | |||||||||
4,951 | BHP Billiton PLC | 152,108 | |||||||||
8,729 | Rio Tinto PLC | 440,331 | |||||||||
12,727 | Xstrata PLC | 210,757 | |||||||||
1,299,114 | |||||||||||
Multi-Utilities | |||||||||||
40,904 | Centrica PLC | 183,321 | |||||||||
48,356 | National Grid PLC | 466,921 | |||||||||
2,444 | United Utilities Group PLC | 20,051 | |||||||||
670,293 | |||||||||||
Multiline Retail | |||||||||||
17,549 | Marks & Spencer Group PLC | 98,303 | |||||||||
3,214 | Next PLC | 112,754 | |||||||||
211,057 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
46,524 | BG Group PLC | 781,123 | |||||||||
269,123 | BP PLC | 2,344,508 | |||||||||
10,200 | EnQuest PLC (c)(g) | 15,404 | |||||||||
51,197 | Royal Dutch Shell PLC (Class A) | 1,601,874 | |||||||||
37,881 | Royal Dutch Shell PLC (Class B) | 1,143,098 | |||||||||
5,886,007 | |||||||||||
Pharmaceuticals | |||||||||||
15,835 | AstraZeneca PLC | 700,147 | |||||||||
59,855 | GlaxoSmithKline PLC | 1,108,513 | |||||||||
1,808,660 |
NUMBER OF SHARES | VALUE | ||||||||||
Professional Services | |||||||||||
1,773 | Capita Group PLC (The) | $ | 21,648 | ||||||||
10,125 | Experian PLC | 93,683 | |||||||||
115,331 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
12,620 | British Land Co., PLC | 90,068 | |||||||||
10,112 | Hammerson PLC | 59,102 | |||||||||
11,109 | Land Securities Group PLC | 110,919 | |||||||||
6,556 | Liberty International PLC | 49,061 | |||||||||
10,225 | Segro PLC | 48,040 | |||||||||
357,190 | |||||||||||
Road & Rail | |||||||||||
9,040 | Firstgroup PLC | 52,741 | |||||||||
Software | |||||||||||
23,668 | Sage Group PLC (The) | 88,709 | |||||||||
Specialty Retail | |||||||||||
16,731 | Kingfisher PLC | 63,930 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
7,072 | Burberry Group PLC | 72,803 | |||||||||
Tobacco | |||||||||||
21,622 | British American Tobacco PLC | 679,108 | |||||||||
8,638 | Imperial Tobacco Group PLC | 246,571 | |||||||||
925,679 | |||||||||||
Trading Companies & Distributors | |||||||||||
4,549 | Bunzl PLC | 53,116 | |||||||||
808 | Wolseley PLC (c) | 20,321 | |||||||||
73,437 | |||||||||||
Water Utilities | |||||||||||
7,000 | Severn Trent PLC | 124,051 | |||||||||
Wireless Telecommunication Services | |||||||||||
749,547 | Vodafone Group PLC | 1,666,255 | |||||||||
Total United Kingdom | 24,967,149 |
See Notes to Financial Statements
27
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
United States (a)(0.1%) | |||||||||||
Health Care Equipment & Supplies | |||||||||||
1,207 | Synthes, Inc. | $ | 137,488 | ||||||||
Total Common Stocks (Cost $118,250,942) | 123,043,794 | ||||||||||
Preferred Stocks (0.9%) | |||||||||||
Brazil (0.7%) | |||||||||||
Commercial Banks | |||||||||||
8,753 | Banco Bradesco SA | 160,880 | |||||||||
10,498 | Investimentos Itau SA | 72,473 | |||||||||
8,518 | Itau Unibanco Holding SA | 184,301 | |||||||||
417,654 | |||||||||||
Diversified Telecommunication Services | |||||||||||
2,232 | Tele Norte Leste Participacoes SA | 33,360 | |||||||||
Electric Utilities | |||||||||||
4,269 | Centrais Eletricas Brasileiras SA | 74,414 | |||||||||
2,980 | Cia Energetica de Minas Gerais | 47,058 | |||||||||
121,472 | |||||||||||
Metals & Mining | |||||||||||
928 | Bradespar SA | 21,274 | |||||||||
2,529 | Gerdau SA | 41,465 | |||||||||
1,161 | Metalurgica Gerdau SA | 22,736 | |||||||||
1,272 | Usinas Siderurgicas de Minas Gerais SA | 41,572 | |||||||||
3,903 | Vale SA | 104,746 | |||||||||
231,793 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
12,938 | Petroleo Brasileiro SA | 243,762 | |||||||||
Total Brazil | 1,048,041 | ||||||||||
Germany (a)(0.2%) | |||||||||||
Automobiles | |||||||||||
1,607 | Porsche Automobil Holding SE | 93,370 | |||||||||
1,213 | Volkswagen AG (b) | 116,958 | |||||||||
210,328 |
NUMBER OF SHARES | VALUE | ||||||||||
Household Products | |||||||||||
513 | Henkel AG & Co. KGaA (b) | $ | 27,452 | ||||||||
Multi-Utilities | |||||||||||
230 | RWE AG (b) | 17,748 | |||||||||
Total Germany | 255,528 | ||||||||||
Total Preferred Stocks (Cost $1,087,244) | 1,303,569 | ||||||||||
NUMBER OF RIGHTS | |||||||||||
Rights (0.0%) | |||||||||||
Australia (0.0%) | |||||||||||
Chemicals | |||||||||||
535 | Nufarm Ltd. (a)(c) | 0 | |||||||||
Hong Kong (0.0%) | |||||||||||
Real Estate Management & Development | |||||||||||
2,000 | Henderson Land Development Co., Ltd. (a)(c) | 0 | |||||||||
Norway (0.0%) | |||||||||||
Electrical Equipment | |||||||||||
1,400 | Renewable Energy Corp. ASA (c) | 1,932 | |||||||||
Poland (0.0%) | |||||||||||
Software | |||||||||||
843 | Asseco Poland SA (c) | 721 | |||||||||
Total Rights (Cost $0) | 2,653 |
See Notes to Financial Statements
28
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
NUMBER OF WARRANTS | EXPIRATION DATE | VALUE | |||||||||||||
Warrants (0.0%) | |||||||||||||||
France (0.0%) | |||||||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||||||
244 | Fonciere Des Regions (c) | 12/31/10 | $ | 229 | |||||||||||
Italy (0.0%) | |||||||||||||||
Capital Markets | |||||||||||||||
1,520 | Mediobanca SpA (c) | 03/18/11 | 133 | ||||||||||||
Commercial Banks | |||||||||||||||
1,664 | Unione di Banche Italiane ScpA (c) | 06/30/11 | 69 | ||||||||||||
Total Italy | 202 | ||||||||||||||
Total Warrants (Cost $0) | 431 |
PRINCIPAL AMOUNT IN THOUSANDS | |||||||||||
Short-Term Investments (29.3%) Securities Held as Collateral on Loaned Securities (15.8%) | |||||||||||
Repurchase Agreements (3.6%) | |||||||||||
$ | 636 | Bank of America Securities LLC (0.20%, dated 04/30/10, due 05/03/10; proceeds $636,192; fully collateralized by a U.S. Government Agency security at the date of this Portfolio of Investments as follows: Federal National Mortgage Association 5.50% due 11/01/38; valued at $648,905) | 636,181 | ||||||||
4,639 | Barclays Capital (0.46%, dated 04/30/10, due 05/03/10; proceeds $4,639,324; fully collateralized by common stocks at the date of this Portfolio of |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Investments as follows: 1-800-FLOWERS.COM, Inc., Acme Packet, Inc., Argon ST, Inc., Atheros Communications, Cardiome Pharma Corp., Career Education Corp., Casual Male Retail Group, Inc., Century Aluminum Co., Cheesecake Factory (The), Inc., Deckers Outdoor Corp., DryShips, Inc., Dyax Corp., ENGlobal Corp., First Niagara Financial Group, Inc., Gen-Probe, Inc., GigaMedia Ltd., HealthTronics, Inc., Hudson City Bancor, Inc., IAC/InterActiveCorp, Interactive Brokers Group, Inc., InterMune, Inc., Ista Pharmaceuticals, Inc., Lamar Advertising Co., Landstar System, Inc., Limelight Networks, Inc., Lincare Holdings, Inc., Lincoln Electric Holdings, Inc., Lufkin Industries, Inc., Mattson Technology, Inc., Pantry (The), Inc., P.F. Chang's China Bistro, Inc., PMC-Sierra, Inc., People's United Financial, Inc., Quality Systems, Inc., Regeneron Pharmaceuticals, Inc., Royal Gold, Inc., Savient Pharmaceuticals, Inc., Select Comfort Corp., Sierra Wireless, Inc., Smith & Wesson Holding Corp., Sohu.com, Inc., Steel Dynamics, Inc., SunPower Corp., Synta |
See Notes to Financial Statements
29
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Pharmaceuticals Corp., Tellabs, Inc., Westamerica Bancorp., Youbet.com, Inc., Yucheng Technologies Ltd.; valued at $4,871,104) | $ | 4,639,146 | |||||||||
Total Repurchase Agreements (Cost $5,275,327) | 5,275,327 | ||||||||||
NUMBER OF SHARES (000) | |||||||||||
Investment Company (12.2%) | |||||||||||
17,786 | Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $17,785,866) | 17,785,866 | |||||||||
Total Securities Held as Collateral on Loaned Securities (Cost $23,061,193) | 23,061,193 | ||||||||||
Investment Company (13.5%) | |||||||||||
19,594 | Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $19,593,726) | 19,593,726 | |||||||||
Total Short-Term Investments (Cost $42,654,919) | 42,654,919 | ||||||||||
Total Investments (Cost $161,993,105) (h)(i) | 114.7 | % | 167,005,366 | ||||||||
Liabilities in Excess of Other Assets | (14.7 | ) | (21,410,413 | ) | |||||||
Net Assets | 100.0 | % | $ | 145,594,953 |
ADR American Depositary Receipt.
CDI CHESS Depositary Interest.
GDR Global Depositary Receipt.
PPS Price Protected Share.
SDR Swedish Depositary Receipt.
(a) Securities with a total market value equal to $119,813,648 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. Such fair value measurements may be level 2 measurements if observable inputs are available. See Note 2.
(b) All or a portion of this security was on loan at April 30, 2010.
(c) Non-income producing security.
(d) Comprised of securities in separate entities that are traded as a single stapled security.
(e) Consists of one or more class of securities traded together as a unit; stocks with attached warrants.
(f) Security trades on the Hong Kong exchange.
(g) Security noted was not fair valued in accordance with (a) above.
(h) Securities have been designated as collateral in connection with open futures and forward foreign currency contracts.
(i) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $17,933,763 and the aggregate gross unrealized depreciation is $12,921,502 resulting in net unrealized appreciation of $5,012,261.
See Notes to Financial Statements
30
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2010 (unaudited) continued
Forward Foreign Currency Contracts Open at April 30, 2010:
CONTRACTS TO DELIVER | IN EXCHANGE FOR | DELIVERY DATE | UNREALIZED APPRECIATION (DEPRECIATION) | ||||||||||||
DKK | 405,085 | $ | 71,970 | 05/03/10 | $ | (495 | ) | ||||||||
EUR | 2,922 | $ | 3,862 | 05/03/10 | (29 | ) | |||||||||
GBP | 3,519 | $ | 5,349 | 05/04/10 | (36 | ) | |||||||||
$ | 6,081,268 | AUD | 6,602,037 | 05/20/10 | 13,439 | ||||||||||
$ | 3,024,034 | EUR | 2,266,060 | 05/20/10 | (6,686 | ) | |||||||||
$ | 2,476,963 | EUR | 1,856,091 | 05/20/10 | (5,504 | ) | |||||||||
$ | 2,923,598 | EUR | 2,190,831 | 05/20/10 | (6,421 | ) | |||||||||
$ | 376,954 | EUR | 280,665 | 05/20/10 | (3,237 | ) | |||||||||
$ | 6,277,066 | GBP | 4,084,717 | 05/20/10 | (27,782 | ) | |||||||||
$ | 2,426,053 | HKD | 18,827,823 | 05/20/10 | (584 | ) | |||||||||
$ | 1,709,707 | JPY | 159,478,077 | 05/20/10 | (11,645 | ) | |||||||||
$ | 12,723 | JPY | 1,184,156 | 05/20/10 | (114 | ) | |||||||||
EUR | 3,759,668 | $ | 5,011,562 | 05/20/10 | 5,416 | ||||||||||
EUR | 1,695,652 | $ | 2,230,978 | 05/20/10 | (26,850 | ) | |||||||||
GBP | 807,723 | $ | 1,240,929 | 05/20/10 | 5,179 | ||||||||||
HKD | 20,608,508 | $ | 2,656,420 | 05/20/10 | 1,557 | ||||||||||
JPY | 72,656,651 | $ | 780,189 | 05/20/10 | 6,568 | ||||||||||
JPY | 99,454,084 | $ | 1,067,906 | 05/20/10 | 8,956 | ||||||||||
JPY | 673,224,941 | $ | 7,156,121 | 05/20/10 | (12,126 | ) | |||||||||
Net Unrealized Depreciation | $ | (60,394 | ) |
Currency Abbreviations:
AUD Australian Dollar.
DKK Danish Krone.
EUR Euro.
GBP British Pound.
HKD Hong Kong Dollar.
JPY Japanese Yen.
Futures Contracts Open at April 30, 2010:
NUMBER OF CONTRACTS | LONG/SHORT | DESCRIPTION, DELIVERY MONTH AND YEAR | UNDERLYING FACE AMOUNT AT VALUE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
37 | Long | DAX Index Future, June 2010 | $ | 7,550,279 | $ | 239,923 | |||||||||||||
45 | Long | FTSE 100 Index Future, June 2010 | 3,792,057 | (56,468 | ) | ||||||||||||||
29 | Long | H-SHARES Index, May 2010 | 2,249,660 | 43,041 | |||||||||||||||
61 | Long | Dow Jones Euro Stoxx 50 Index Future, June 2010 | 2,231,886 | (14,164 | ) | ||||||||||||||
176 | Long | SGX S&P CNX Nifty Index, May 2010 | 1,851,696 | (24,680 | ) | ||||||||||||||
17 | Long | SGX MSCI Singapore Index, May 2010 | 869,912 | (7,296 | ) | ||||||||||||||
6 | Long | Tokyo Price Index Future, June 2010 | 627,881 | 43,144 | |||||||||||||||
Net Unrealized Appreciation | $ | 223,500 |
See Notes to Financial Statements
31
Morgan Stanley International Fund
Summary of Investments n April 30, 2010 (unaudited) continued
INDUSTRY | VALUE | PERCENT OF TOTAL INVESTMENTS | |||||||||
Investment Company | $ | 19,593,726 | 13.6 | % | |||||||
Commercial Banks - FDIC Guaranteed | 16,382,021 | 11.4 | |||||||||
Oil, Gas & Consumable Fuels | 11,931,700 | 8.3 | |||||||||
Metals & Mining | 8,468,206 | 5.9 | |||||||||
Pharmaceuticals | 7,433,901 | 5.2 | |||||||||
Chemicals | 5,152,674 | 3.6 | |||||||||
Food Products | 5,122,235 | 3.6 | |||||||||
Automobiles | 4,385,392 | 3.0 | |||||||||
Insurance | 4,043,072 | 2.8 | |||||||||
Diversified Telecommunication Services | 3,836,130 | 2.7 | |||||||||
Machinery | 3,576,544 | 2.5 | |||||||||
Capital Markets - FDIC Guaranteed | 2,599,314 | 1.8 | |||||||||
Electric Utilities | 2,405,858 | 1.7 | |||||||||
Wireless Telecommunication Services | 2,398,978 | 1.7 | |||||||||
Real Estate Management & Development | 2,265,777 | 1.6 | |||||||||
Food & Staples Retailing | 2,259,697 | 1.6 | |||||||||
Industrial Conglomerates | 2,189,367 | 1.5 | |||||||||
Electronic Equipment, Instruments & Components | 2,107,527 | 1.5 | |||||||||
Beverages | 2,038,157 | 1.4 | |||||||||
Energy Equipment & Services | 1,985,920 | 1.4 | |||||||||
Electrical Equipment | 1,897,621 | 1.3 | |||||||||
Media | 1,891,526 | 1.3 | |||||||||
Trading Companies & Distributors | 1,781,515 | 1.2 | |||||||||
Household Durables | 1,705,746 | 1.2 | |||||||||
Software | 1,430,768 | 1.0 | |||||||||
Multi-Utilities | 1,422,000 | 1.0 | |||||||||
Office Electronics | 1,414,724 | 1.0 | |||||||||
Tobacco | 1,384,437 | 1.0 | |||||||||
Communications Equipment | 1,350,774 | 0.9 | |||||||||
Textiles, Apparel & Luxury Goods | 1,322,664 | 0.9 | |||||||||
Specialty Retail | 1,211,659 | 0.8 | |||||||||
Road & Rail | 1,145,899 | 0.8 | |||||||||
Diversified Financial Services - FDIC Guaranteed | 1,143,123 | 0.8 | |||||||||
Real Estate Investment Trusts (REITs) | 1,142,408 | 0.8 | |||||||||
Auto Components | 1,088,010 | 0.7 | |||||||||
Construction & Engineering | 1,037,790 | 0.7 | |||||||||
Health Care Equipment & Supplies | 930,542 | 0.6 |
INDUSTRY | VALUE | PERCENT OF TOTAL INVESTMENTS | |||||||||
Hotels, Restaurants & Leisure | $ | 841,378 | 0.6 | % | |||||||
Building Products | 831,122 | 0.6 | |||||||||
Household Products | 825,937 | 0.6 | |||||||||
Semiconductors & Semiconductor Equipment | 775,302 | 0.5 | |||||||||
Computers & Peripherals | 752,095 | 0.5 | |||||||||
Construction Materials | 640,103 | 0.4 | |||||||||
Multiline Retail | 557,268 | 0.4 | |||||||||
Aerospace & Defense | 551,500 | 0.4 | |||||||||
Commercial Services & Supplies | 533,132 | 0.4 | |||||||||
Paper & Forest Products | 511,484 | 0.3 | |||||||||
Air Freight & Logistics | 406,289 | 0.3 | |||||||||
Information Technology Services | 381,536 | 0.3 | |||||||||
Gas Utilities | 360,747 | 0.2 | |||||||||
Marine | 340,914 | 0.2 | |||||||||
Personal Products | 327,008 | 0.2 | |||||||||
Leisure Equipment & Products | 236,992 | 0.2 | |||||||||
Containers & Packaging | 232,526 | 0.2 | |||||||||
Airlines | 198,795 | 0.1 | |||||||||
Professional Services | 184,523 | 0.1 | |||||||||
Distributors | 145,201 | 0.1 | |||||||||
Health Care Providers & Services | 124,670 | 0.1 | |||||||||
Water Utilities | 124,051 | 0.1 | |||||||||
Transportation Infrastructure | 120,532 | 0.1 | |||||||||
Internet Software & Services | 103,562 | 0.1 | |||||||||
Consumer Finance | 88,926 | 0.1 | |||||||||
Gold Mining | 75,192 | 0.1 | |||||||||
Diversified Consumer Services | 53,192 | 0.0 | |||||||||
Internet & Catalog Retail | 45,819 | 0.0 | |||||||||
Life Sciences Tools & Services | 41,343 | 0.0 | |||||||||
Biotechnology | 28,627 | 0.0 | |||||||||
Independent Power Producers & Energy Traders | 27,005 | 0.0 | |||||||||
$ | 143,944,173+ | ^ | 100.0 | % |
+ Does not reflect the value of securities held as collateral on loaned securities.
^ Does not include open long futures contracts with an underlying face amount of $19,173,371 and net unrealized appreciation of $223,500 and open forward foreign currency contracts with net unrealized depreciation of $60,394.
See Notes to Financial Statements
32
Morgan Stanley International Fund
Financial Statements
Statement of Assets and Liabilities
April 30, 2010 (unaudited)
Assets: | |||||||
Investments in securities, at value (cost $123,510,910) (Including $22,008,691 for securities loaned) | $ | 129,050,018 | |||||
Investment in affiliates, at value (cost $38,482,195) | 37,955,348 | ||||||
Unrealized appreciation on open forward foreign currency contracts | 41,115 | ||||||
Cash (including foreign currency valued at $150,131 with a cost of $149,105 and $1,083,016 in segregation) | 1,233,147 | ||||||
Receivable for: | |||||||
Dividends | 520,349 | ||||||
Foreign withholding taxes reclaimed | 140,946 | ||||||
Variation margin | 123,262 | ||||||
Shares of beneficial interest sold | 99,922 | ||||||
Investments sold | 90,349 | ||||||
Dividends from affiliates | 8,913 | ||||||
Prepaid expenses and other assets | 68,431 | ||||||
Total Assets | 169,331,800 | ||||||
Liabilities: | |||||||
Collateral on securities loaned, at value | 23,061,193 | ||||||
Unrealized depreciation on open forward foreign currency contracts | 101,509 | ||||||
Payable for: | |||||||
Shares of beneficial interest redeemed | 270,028 | ||||||
Investment advisory fee | 76,481 | ||||||
Distribution fee | 53,192 | ||||||
Transfer agent fee | 24,295 | ||||||
Administration fee | 9,965 | ||||||
Accrued expenses and other payables | 140,184 | ||||||
Total Liabilities | 23,736,847 | ||||||
Net Assets | $ | 145,594,953 | |||||
Composition of Net Assets: | |||||||
Paid-in-capital | $ | 169,064,788 | |||||
Net unrealized appreciation | 5,160,220 | ||||||
Accumulated undistributed net investment income | 489,819 | ||||||
Accumulated net realized loss | (29,119,874 | ) | |||||
Net Assets | $ | 145,594,953 | |||||
Class A Shares: | |||||||
Net Assets | $ | 110,651,369 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 9,625,312 | ||||||
Net Asset Value Per Share | $ | 11.50 | |||||
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value) | $ | 12.14 | |||||
Class B Shares: | |||||||
Net Assets | $ | 17,187,844 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 1,515,700 | ||||||
Net Asset Value Per Share | $ | 11.34 | |||||
Class C Shares: | |||||||
Net Assets | $ | 16,882,421 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 1,504,843 | ||||||
Net Asset Value Per Share | $ | 11.22 | |||||
Class I Shares: | |||||||
Net Assets | $ | 697,737 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 60,286 | ||||||
Net Asset Value Per Share | $ | 11.57 | |||||
Class R Shares: | |||||||
Net Assets | $ | 88,457 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 7,724 | ||||||
Net Asset Value Per Share | $ | 11.45 | |||||
Class W Shares: | |||||||
Net Assets | $ | 87,125 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 7,593 | ||||||
Net Asset Value Per Share | $ | 11.48 |
See Notes to Financial Statements
33
Morgan Stanley International Fund
Financial Statements continued
Statement of Operations
For the six months ended April 30, 2010 (unaudited)
Net Investment Income: Income | |||||||
Dividends (net of $150,759 foreign withholding tax) | $ | 1,720,294 | |||||
Income from securities loaned - net | 30,280 | ||||||
Dividends from affiliates (net of $502 foreign withholding tax) | 21,276 | ||||||
Interest | 1,051 | ||||||
Total Income | 1,772,901 | ||||||
Expenses | |||||||
Investment advisory fee | 493,368 | ||||||
Distribution fee (Class A shares) | 142,098 | ||||||
Distribution fee (Class B shares) | 99,008 | ||||||
Distribution fee (Class C shares) | 87,229 | ||||||
Distribution fee (Class R shares) | 216 | ||||||
Distribution fee (Class W shares) | 153 | ||||||
Transfer agent fees and expenses | 149,468 | ||||||
Custodian fees | 84,225 | ||||||
Administration fee | 60,722 | ||||||
Shareholder reports and notices | 51,482 | ||||||
Professional fees | 42,773 | ||||||
Registration fees | 31,315 | ||||||
Trustees' fees and expenses | 1,374 | ||||||
Other | 68,588 | ||||||
Total Expenses | 1,312,019 | ||||||
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6) | (13,201 | ) | |||||
Net Expenses | 1,298,818 | ||||||
Net Investment Income | 474,083 | ||||||
Realized and Unrealized Gain (Loss): Realized Gain (Loss) on: | |||||||
Investments | 3,177,165 | ||||||
Investments in affiliates | (108,395 | ) | |||||
Futures contracts | 773,370 | ||||||
Forward foreign currency contracts | (1,407,555 | ) | |||||
Foreign currency translation | (38,286 | ) | |||||
Net Realized Gain | 2,396,299 | ||||||
Change in Unrealized Appreciation/Depreciation on: | |||||||
Investments | 1,357,259 | ||||||
Investments in affiliates | 100,407 | ||||||
Futures contracts | 946,075 | ||||||
Forward foreign currency contracts | 109,679 | ||||||
Foreign currency translation | (43,704 | ) | |||||
Net Change in Unrealized Appreciation/Depreciation | 2,469,716 | ||||||
Net Gain | 4,866,015 | ||||||
Net Increase | $ | 5,340,098 |
See Notes to Financial Statements
34
Morgan Stanley International Fund
Financial Statements continued
Statements of Changes in Net Assets
FOR THE SIX MONTHS ENDED APRIL 30, 2010 | FOR THE YEAR ENDED OCTOBER 31, 2009 | ||||||||||
(unaudited) | |||||||||||
Increase (Decrease) in Net Assets: Operations: | |||||||||||
Net investment income | $ | 474,083 | $ | 1,547,202 | |||||||
Net realized gain (loss) | 2,396,299 | (17,228,584 | ) | ||||||||
Net change in unrealized appreciation/depreciation | 2,469,716 | 42,264,663 | |||||||||
Net Increase | 5,340,098 | 26,583,281 | |||||||||
Dividends to Shareholders from Net Investment Income: | |||||||||||
Class A shares | (2,237,415 | ) | — | ||||||||
Class B shares | (235,383 | ) | — | ||||||||
Class C shares | (237,045 | ) | — | ||||||||
Class I shares | (15,223 | ) | — | ||||||||
Class R shares | (1,546 | ) | — | ||||||||
Class W shares | (1,680 | ) | — | ||||||||
Total Dividends | (2,728,292 | ) | — | ||||||||
Net decrease from transactions in shares of beneficial interest | (10,118,376 | ) | (35,161,464 | ) | |||||||
Net Decrease | (7,506,570 | ) | (8,578,183 | ) | |||||||
Net Assets: | |||||||||||
Beginning of period | 153,101,523 | 161,679,706 | |||||||||
End of Period (Including accumulated undistributed net investment income of $489,819 and $2,744,028, respectively) | $ | 145,594,953 | $ | 153,101,523 |
See Notes to Financial Statements
35
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2010 (unaudited)
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. On March 31, 2008, the Fund commenced offering Class R and Class W shares.
The Fund offers Class A shares, Class B shares, Class C shares, Class I shares, Class R shares and Class W shares. The six 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 I shares, Class R shares, and Class W shares are not subject to a sales charge. Additionally, Class A shares, Class B shares, Class C shares, Class R shares and Class W shares incur distribution expenses.
The Fund will assess a 2% redemption fee, on Class A shares, Class B shares, Class C shares, Class I shares, Class R shares and Class W 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 ask 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 ask price; (4) all other portfolio securities for which over-the-counter market quotations are readily available are valued a t the mean between the last reported bid and ask 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"), a wholly owned subsidiary of Morgan Stanley, determines that the latest sale price, the bid price or the mean between the last reported bid and ask 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
36
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2010 (unaudited) continued
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 securities trade) and the close of business on the NYSE. If 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 de bt 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 having a maturity date of sixty days or less at the time of purchase are valued at amortized cost, which approximates market value.
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 as earned.
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 — 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.
37
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2010 (unaudited) continued
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 gains/losses on forward contracts and foreign currency translations. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gains/losses are included in or are a reduction of ordinary income f or 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 held. Forward contracts are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are recorded as unrealized foreign currency translation gains or losses. 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. Federal Income Tax Policy — It is the Fund's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. The Fund files tax returns with the U.S. Internal Revenue Service, New York State and New York City. The Fund recognizes the tax effects of a tax position taken or expected to be taken in a tax return only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of the benefit. The difference between the tax benefit recognized in the financial statements for a tax position t aken and the tax benefit claimed in the income tax return is referred to as an unrecognized tax benefit. There are no unrecognized tax benefits in the accompanying financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statement of Operations. Each of the tax years filed in the four-year period ended October 31, 2009 remains subject to examination by taxing authorities.
G. Securities 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.
38
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Notes to Financial Statements n April 30, 2010 (unaudited) continued
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 April 30, 2010 were $22,008,691 and $23,236,273, respectively. The Fund received cash collateral of $23,061,193 which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. The remaining collateral of $175,080 was received in the form of a common stock and U.S. Government Obligations, which the Fund cannot sell or re-pledge and accordingly are not reflected in the Portfolio of Investments. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
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 in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.
J. Subsequent Events — The Fund considers events or transactions that occur after the date of the Statement of Assets and Liabilities but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements.
2. Fair Valuation Measurements
Fair value is defined as the price that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. GAAP utilizes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below.
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Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2010 (unaudited) continued
• Level 1 — unadjusted quoted prices in active markets for identical investments
• Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.
The following is the summary of the inputs used as of April 30, 2010 in valuing the Fund's investments carried at fair value:
FAIR VALUE MEASUREMENTS AT APRIL 30, 2010 USING | |||||||||||||||||||
INVESTMENT TYPE | TOTAL | UNADJUSTED QUOTED PRICES IN ACTIVE MARKET FOR IDENTICAL INVESTMENTS (LEVEL 1) | OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | |||||||||||||||
Assets: | |||||||||||||||||||
Common Stocks | |||||||||||||||||||
Aerospace & Defense | $ | 551,500 | $ | 14,210 | $ | 537,290 | — | ||||||||||||
Air Freight & Logistics | 406,289 | — | 406,289 | — | |||||||||||||||
Airlines | 198,795 | — | 198,795 | — | |||||||||||||||
Auto Components | 1,088,010 | — | 1,088,010 | — | |||||||||||||||
Automobiles | 4,175,064 | — | 4,175,064 | — | |||||||||||||||
Beverages | 2,038,157 | — | 2,038,157 | — | |||||||||||||||
Biotechnology | 28,627 | — | 28,627 | — | |||||||||||||||
Building Products | 831,122 | — | 831,122 | — | |||||||||||||||
Capital Markets | 2,599,181 | — | 2,599,181 | — | |||||||||||||||
Chemicals | 5,152,674 | — | 5,152,674 | — | |||||||||||||||
Commercial Banks | 15,964,298 | 377,509 | 15,586,789 | — | |||||||||||||||
Commercial Services & Supplies | 533,132 | — | 533,132 | — | |||||||||||||||
Communications Equipment | 1,350,774 | — | 1,350,774 | — | |||||||||||||||
Computers & Peripherals | 752,095 | — | 752,095 | — | |||||||||||||||
Construction & Engineering | 1,037,790 | — | 1,037,790 | — | |||||||||||||||
Construction Materials | 640,103 | — | 640,103 | — | |||||||||||||||
Consumer Finance | 88,926 | — | 88,926 | — | |||||||||||||||
Containers & Packaging | 232,526 | — | 232,526 | — | |||||||||||||||
Distributors | 145,201 | — | 145,201 | — | |||||||||||||||
Diversified Consumer Services | 53,192 | — | 53,192 | — |
40
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Notes to Financial Statements n April 30, 2010 (unaudited) continued
FAIR VALUE MEASUREMENTS AT APRIL 30, 2010 USING | |||||||||||||||||||
INVESTMENT TYPE | TOTAL | UNADJUSTED QUOTED PRICES IN ACTIVE MARKET FOR IDENTICAL INVESTMENTS (LEVEL 1) | OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | |||||||||||||||
Diversified Financial Services | $ | 1,143,123 | $ | 39,971 | $ | 1,103,152 | — | ||||||||||||
Diversified Telecommunication Services | 3,802,770 | — | 3,802,770 | — | |||||||||||||||
Electric Utilities | 2,284,386 | — | 2,284,386 | — | |||||||||||||||
Electrical Equipment | 1,895,689 | — | 1,895,689 | — | |||||||||||||||
Electronic Equipment, Instruments & Components | 2,107,527 | — | 2,107,527 | — | |||||||||||||||
Energy Equipment & Services | 1,985,920 | — | 1,985,920 | — | |||||||||||||||
Food & Staples Retailing | 2,259,697 | — | 2,259,697 | — | |||||||||||||||
Food Products | 5,122,235 | 230,409 | 4,891,826 | — | |||||||||||||||
Gas Utilities | 360,747 | — | 360,747 | — | |||||||||||||||
Gold Mining | 75,192 | 75,192 | — | — | |||||||||||||||
Health Care Equipment & Supplies | 930,542 | — | 930,542 | — | |||||||||||||||
Health Care Providers & Services | 124,670 | — | 124,670 | — | |||||||||||||||
Hotels, Restaurants & Leisure | 841,378 | — | 841,378 | — | |||||||||||||||
Household Durables | 1,705,746 | — | 1,705,746 | — | |||||||||||||||
Household Products | 798,485 | — | 798,485 | — | |||||||||||||||
Independent Power Producers & Energy Traders | 27,005 | — | 27,005 | — | |||||||||||||||
Industrial Conglomerates | 2,189,367 | — | 2,189,367 | — | |||||||||||||||
Information Technology Services | 381,536 | 28,205 | 353,331 | — | |||||||||||||||
Insurance | 4,043,072 | 93,658 | 3,949,414 | — | |||||||||||||||
Internet & Catalog Retail | 45,819 | — | 45,819 | — | |||||||||||||||
Internet Software & Services | 103,562 | — | 103,562 | — | |||||||||||||||
Leisure Equipment & Products | 236,992 | — | 236,992 | — | |||||||||||||||
Life Sciences Tools & Services | 41,343 | — | 41,343 | — | |||||||||||||||
Machinery | 3,576,544 | — | 3,576,544 | — | |||||||||||||||
Marine | 340,914 | — | 340,914 | — | |||||||||||||||
Media | 1,891,526 | 6,882 | 1,884,644 | — | |||||||||||||||
Metals & Mining | 8,236,413 | 441,543 | 7,794,870 | — | |||||||||||||||
Multi-Utilities | 1,404,252 | — | 1,404,252 | — | |||||||||||||||
Multiline Retail | 557,268 | — | 557,268 | — | |||||||||||||||
Office Electronics | 1,414,724 | — | 1,414,724 | — | |||||||||||||||
Oil, Gas & Consumable Fuels | 11,687,938 | 1,936,146 | 9,751,792 | — | |||||||||||||||
Paper & Forest Products | 511,484 | — | 511,484 | — | |||||||||||||||
Personal Products | 327,008 | — | 327,008 | — | |||||||||||||||
Pharmaceuticals | 7,433,901 | — | 7,433,901 | — | |||||||||||||||
Professional Services | 184,523 | — | 184,523 | — | |||||||||||||||
Real Estate Investment Trusts (REITs) | 1,142,179 | — | 1,142,179 | — | |||||||||||||||
Real Estate Management & Development | 2,265,777 | — | 2,265,777 | — | |||||||||||||||
Road & Rail | 1,145,899 | 114,874 | 1,031,025 | — |
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Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2010 (unaudited) continued
FAIR VALUE MEASUREMENTS AT APRIL 30, 2010 USING | |||||||||||||||||||
INVESTMENT TYPE | TOTAL | UNADJUSTED QUOTED PRICES IN ACTIVE MARKET FOR IDENTICAL INVESTMENTS (LEVEL 1) | OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | |||||||||||||||
Semiconductors & Semiconductor Equipment | $ | 775,302 | — | $ | 775,302 | — | |||||||||||||
Software | 1,430,047 | — | 1,430,047 | — | |||||||||||||||
Specialty Retail | 1,211,659 | — | 1,211,659 | — | |||||||||||||||
Textiles, Apparel & Luxury Goods | 1,322,664 | — | 1,322,664 | — | |||||||||||||||
Tobacco | 1,384,437 | — | 1,384,437 | — | |||||||||||||||
Trading Companies & Distributors | 1,781,515 | — | 1,781,515 | — | |||||||||||||||
Transportation Infrastructure | 120,532 | — | 120,532 | — | |||||||||||||||
Water Utilities | 124,051 | — | 124,051 | — | |||||||||||||||
Wireless Telecommunication Services | 2,398,978 | $ | 127,075 | 2,271,903 | — | ||||||||||||||
Total Common Stocks | 123,043,794 | 3,485,674 | 119,558,120 | — | |||||||||||||||
Preferred Stocks | 1,303,569 | 1,048,041 | 255,528 | — | |||||||||||||||
Rights | 2,653 | 2,653 | 0 | — | |||||||||||||||
Warrants | 431 | 431 | — | — | |||||||||||||||
Short-Term Investments | |||||||||||||||||||
Repurchase Agreements | 5,275,327 | — | 5,275,327 | — | |||||||||||||||
Investment Company | 37,379,592 | 37,379,592 | — | — | |||||||||||||||
Total Short-Term Investments | 42,654,919 | 37,379,592 | 5,275,327 | — | |||||||||||||||
Forward Foreign Currency Contracts | 41,115 | — | 41,115 | — | |||||||||||||||
Futures | 326,108 | 326,108 | — | — | |||||||||||||||
Total | $ | 167,372,589 | $ | 42,242,499 | $ | 125,130,090 | — | ||||||||||||
Liabilities: | |||||||||||||||||||
Forward Foreign Currency Contracts | $ | (101,509 | ) | — | $ | (101,509 | ) | — | |||||||||||
Futures | (102,608 | ) | (102,608 | ) | — | — | |||||||||||||
Total | $ | (204,117 | ) | $ | (102,608 | ) | $ | (101,509 | ) | — |
3. Derivative Financial Instruments
A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate or index.
The Fund may use derivative instruments for a variety of reasons, such as to attempt to protect the Fund against possible changes in the market value of its portfolio or to manage the Fund's foreign currency exposure or to generate potential gain. All of the Fund's portfolio holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation/depreciation. Upon disposition, a realized gain or loss is recognized accordingly, except
42
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2010 (unaudited) continued
when taking delivery of a security underlying a contract. In these instances, the recognition of gain or loss is postponed until the disposal of the security underlying the contract. Risk may arise as a result of the potential inability of the counterparties to meet the terms of their contracts.
Summarized below is a specific type of derivative financial instrument used by the Fund.
Futures To hedge against adverse interest rate, foreign currency and market risks, the Fund may purchase and sell interest rate, currency and index futures contracts ("futures contracts"). These futures contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the value of the underlying securities. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.
Transactions in futures contracts for the six months ended April 30, 2010, were as follows:
NUMBER OF CONTRACTS | |||||||
Futures, outstanding at beginning of the period | 460 | ||||||
Futures opened | 1,835 | ||||||
Futures closed | (1,924 | ) | |||||
Futures, outstanding at end of the period | 371 |
Forward Foreign Currency Contracts 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. Forward contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rates underlying the forward contracts. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.
During the six months ended April 30, 2010, the value of forward foreign currency contracts opened and closed were $838,662,563 and $862,501,901, respectively.
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Notes to Financial Statements n April 30, 2010 (unaudited) continued
The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of April 30, 2010.
PRIMARY RISK EXPOSURE | ASSET DERIVATIVES BALANCE SHEET LOCATION | FAIR VALUE | LIABILITY DERIVATIVES BALANCE SHEET LOCATION | FAIR VALUE | |||||||||||||||
Foreign Exchange Risk | Unrealized appreciation on open forward foreign currency contracts | $ | 41,115 | Unrealized depreciation on open forward foreign currency contracts | $ | (101,509 | ) | ||||||||||||
Equity Risk | Variation margin | 326,108 | † | Variation margin | (102,608 | )† | |||||||||||||
Total | $ | 367,223 | $ | (204,117 | ) |
† Includes cumulative appreciation/depreciation of futures contracts as reported in the Portfolio of Investments. Only current day's variation margin is reported within the Statement of Assets and Liabilities.
The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized gains (losses) by type of derivative contract for the six months ended April 30, 2010.
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVE CONTRACTS
PRIMARY RISK EXPOSURE | FUTURES | FORWARD FOREIGN CURRENCY | |||||||||
Foreign Exchange Risk | — | $ | (1,407,555 | ) | |||||||
Equity Risk | $ | 773,370 | — | ||||||||
Total | $ | 773,370 | $ | (1,407,555 | ) |
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON DERIVATIVE CONTRACTS
PRIMARY RISK EXPOSURE | FUTURES | FORWARD FOREIGN CURRENCY | |||||||||
Foreign Exchange Risk | — | $ | 109,679 | ||||||||
Equity Risk | $ | 946,075 | — | ||||||||
Total | $ | 946,075 | $ | 109,679 |
4. Investment Advisory/Administration Agreements
Pursuant to an Investment Advisory Agreement, the Fund pays the Investment Adviser an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined at 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 exceeding $1 billion.
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.
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Notes to Financial Statements n April 30, 2010 (unaudited) continued
Under an agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.
5. 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; (iv) Class R — up to 0.50% of the average daily net assets of Class R shares; and (v) Class W — up to 0.35% of the average daily net assets of Class W 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 $17,965,280 at April 30, 2010.
In the case of Class A, Class C, Class R and Class W shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25%, 1.00%, 0.50% or 0.35% of the average daily net assets of Class A, Class C, Class R or Class W shares, 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 six months ended April 30, 2010, the distribution fee was accrued for Class A, Class C, Class R and Class W shares at the annual rate of 0.25%, 1.00%, 0.50% and 0.35% respectively.
The Distributor has informed the Fund that for the six months ended April 30, 2010, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C shares of $11,184 and $377, respectively and received $9,842 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.
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Notes to Financial Statements n April 30, 2010 (unaudited) continued
6. Security Transactions and Transactions with Affiliates
The Fund invests in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class, an open-end management investment company managed by an affiliate of the Investment Adviser, both directly, and as a portion of the securities held as collateral on loaned securities. Investment advisory fees paid by the Fund are reduced by an amount equal to the advisory and administrative service fees paid by Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class with respect to assets invested by the Fund in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class. For the six months ended April 30, 2010, advisory fees paid were reduced by $13,201 relating to the Fund's investment in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class. Income distributions earned by the Fund are included in "dividends from affiliates" in the Statement of Operations and totaled $14,602 for the six months ended April 30, 2010. During the six months ended April 30, 2010, the cost of purchases and sales of investments in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class aggregated $24,958,542 and $22,706,854, respectively.
The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended April 30, 2010 aggregated $7,717,143 and $20,296,695, respectively.
For the six months ended April 30, 2010, the Fund had transactions with Mitsubishi UFJ Financial Group, Inc., an affiliate of the Investment Adviser, Administrator and Distributor:
PURCHASES | SALES | NET REALIZED LOSS | INCOME | VALUE | |||||||||||||||
— | $ | 106,275 | $ | (108,395 | ) | $ | 6,674 | $ | 575,756 |
Morgan Stanley Services Company Inc., 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.
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Notes to Financial Statements n April 30, 2010 (unaudited) continued
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 GAAP. 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.
As of October 31, 2009, the Fund had temporary book/tax differences attributable to mark-to-market of open forward foreign currency exchange contracts, passive foreign investment companies ("PFICs"), foreign tax credit pass-through and capital loss deferrals on wash sales.
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Notes to Financial Statements n April 30, 2010 (unaudited) continued
8. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:
FOR THE SIX MONTHS ENDED APRIL 30, 2010 | FOR THE YEAR ENDED OCTOBER 31, 2009 | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
SHARES | AMOUNT | SHARES | AMOUNT | ||||||||||||||||
CLASS A SHARES | |||||||||||||||||||
Sold | 448,415 | $ | 5,273,957 | 1,563,352 | $ | 14,659,765 | |||||||||||||
Conversion from Class B | 23,638 | 275,020 | 83,267 | 796,024 | |||||||||||||||
Reinvestment of dividends | 187,478 | 2,170,992 | — | — | |||||||||||||||
Redeemed | (1,059,970 | ) | (12,351,827 | ) | (2,884,586 | ) | (26,795,544 | ) | |||||||||||
Net decrease — Class A | (400,439 | ) | (4,631,858 | ) | (1,237,967 | ) | (11,339,755 | ) | |||||||||||
CLASS B SHARES | |||||||||||||||||||
Sold | 59,056 | 694,952 | 165,568 | 1,530,130 | |||||||||||||||
Conversion to Class A | (23,974 | ) | (275,020 | ) | (84,474 | ) | (796,024 | ) | |||||||||||
Reinvestment of dividends | 19,413 | 222,279 | — | — | |||||||||||||||
Redeemed | (451,072 | ) | (5,145,436 | ) | (1,453,703 | ) | (13,055,070 | ) | |||||||||||
Net decrease — Class B | (396,577 | ) | (4,503,225 | ) | (1,372,609 | ) | (12,320,964 | ) | |||||||||||
CLASS C SHARES | |||||||||||||||||||
Sold | 28,752 | 339,272 | 159,215 | 1,425,797 | |||||||||||||||
Reinvestment of dividends | 20,327 | 230,305 | — | — | |||||||||||||||
Redeemed | (133,439 | ) | (1,510,296 | ) | (398,485 | ) | (3,544,619 | ) | |||||||||||
Net decrease — Class C | (84,360 | ) | (940,719 | ) | (239,270 | ) | (2,118,822 | ) | |||||||||||
CLASS I SHARES | |||||||||||||||||||
Sold | 325 | 4,267 | 7,872 | 77,663 | |||||||||||||||
Reinvestment of dividends | 1,148 | 13,362 | — | — | |||||||||||||||
Redeemed | (5,511 | ) | (64,854 | ) | (1,024,517 | ) | (9,468,540 | ) | |||||||||||
Net decrease — Class I | (4,038 | ) | (47,225 | ) | (1,016,645 | ) | (9,390,877 | ) | |||||||||||
CLASS R SHARES | |||||||||||||||||||
Sold | 378 | 4,404 | 267 | 2,964 | |||||||||||||||
Reinvestment of dividends and distributions | 7 | 80 | — | — | |||||||||||||||
Net increase — Class R | 385 | 4,484 | 267 | 2,964 | |||||||||||||||
CLASS W SHARES | |||||||||||||||||||
Sold | — | 54 | 511 | 5,990 | |||||||||||||||
Reinvestment of dividends and distributions | 10 | 113 | — | — | |||||||||||||||
Net increase — Class W | 10 | 167 | 511 | 5,990 | |||||||||||||||
Net decrease in Fund | (885,019 | ) | $ | (10,118,376 | ) | (3,865,713 | ) | $ | (35,161,464 | ) |
48
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2010 (unaudited) continued
9. Purposes of and Risks Relating to Certain Financial Instruments
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 April 30, 2010, investments in securities of issuers in Japan and the United Kingdom represented 22.5% and 17.1%, respectively, of the Fund's net assets. These investments, as well as other non-U.S. investments, which involve risks and considerations not present with respect to U.S. securities, may be affected by economic or political developments in these countries.
At April 30, 2010, the Fund's cash balance consisted principally of interest bearing deposits with State Street, the Fund's custodian.
10. New Accounting Pronouncement
On January 21, 2010, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2010-06. The ASU amends Accounting Standards Codification 820 to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques in Level 2 and Level 3 fair value measurements. The application of ASU 2010-06 is required for fiscal years and interim periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements, which are required for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The impact of this new guidance on the Fund's financial stat ements, if any, is currently being assessed.
49
Morgan Stanley International Fund
Financial Highlights
Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | ||||||||||||||||||||||||||
MONTHS ENDED | |||||||||||||||||||||||||||
APRIL 30, 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Class A Shares | |||||||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.32 | $ | 9.29 | $ | 16.94 | $ | 13.14 | $ | 10.70 | $ | 9.19 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income(1) | 0.05 | 0.12 | 0.24 | 0.15 | 0.14 | 0.13 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.36 | 1.91 | (7.61 | ) | 3.86 | 2.52 | 1.50 | ||||||||||||||||||||
Total income (loss) from investment operations | 0.41 | 2.03 | (7.37 | ) | 4.01 | 2.66 | 1.63 | ||||||||||||||||||||
Less dividends from net investment income | (0.23 | ) | – | (0.28 | ) | (0.21 | ) | (0.22 | ) | (0.12 | ) | ||||||||||||||||
Net asset value, end of period | $ | 11.50 | $ | 11.32 | $ | 9.29 | $ | 16.94 | $ | 13.14 | $ | 10.70 | |||||||||||||||
Total Return(2) | 3.58 | %(7) | 21.85 | % | (44.19 | )% | 31.03 | % | 25.21 | % | 17.65 | % | |||||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||||||
Total expenses (before expense offset) | 1.53 | %(4)(8) | 1.69 | %(4) | 1.36 | %(4) | 1.33 | %(4)(5) | 1.30 | %(5) | 1.30 | % | |||||||||||||||
Net investment income | 0.81 | %(4)(8) | 1.30 | %(4) | 1.71 | %(4) | 1.18 | %(4)(5) | 1.18 | %(5) | 1.27 | % | |||||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(8) | 0.01 | % | 0.01 | % | 0.00 | %(6) | – | – | |||||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 110,651 | $ | 113,446 | $ | 104,619 | $ | 193,043 | $ | 143,730 | $ | 115,680 | |||||||||||||||
Portfolio turnover rate | 6 | %(7) | 36 | % | 31 | % | 22 | % | 13 | % | 22 | % |
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(3) Reflects overall Fund ratios for investment income and non-class specific expenses.
(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate".
(5) If the Fund had borne all 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 |
(6) Amount is less than 0.005%.
(7) Not annualized.
(8) Annualized.
See Notes to Financial Statements
50
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | ||||||||||||||||||||||||||
MONTHS ENDED | |||||||||||||||||||||||||||
APRIL 30, 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Class B Shares | |||||||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.11 | $ | 9.19 | $ | 16.69 | $ | 12.97 | $ | 10.55 | $ | 9.06 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income(1) | 0.00 | (2) | 0.05 | 0.13 | 0.08 | 0.05 | 0.05 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.36 | 1.87 | (7.53 | ) | 3.75 | 2.49 | 1.48 | ||||||||||||||||||||
Total income (loss) from investment operations | 0.36 | 1.92 | �� | (7.40 | ) | 3.83 | 2.54 | 1.53 | |||||||||||||||||||
Less dividends from net investment income | (0.13 | ) | – | (0.10 | ) | (0.11 | ) | (0.12 | ) | (0.04 | ) | ||||||||||||||||
Net asset value, end of period | $ | 11.34 | $ | 11.11 | $ | 9.19 | $ | 16.69 | $ | 12.97 | $ | 10.55 | |||||||||||||||
Total Return(3) | 3.21 | %(8) | 20.89 | % | (44.49 | )% | 29.58 | % | 24.28 | % | 16.88 | % | |||||||||||||||
Ratios to Average Net Assets(4): | |||||||||||||||||||||||||||
Total expenses (before expense offset) | 2.28 | %(5)(9) | 2.44 | %(5) | 2.10 | %(5) | 2.08 | %(5)(6) | 2.05 | %(6) | 2.05 | % | |||||||||||||||
Net investment income | 0.06 | %(5)(9) | 0.55 | %(5) | 0.90 | %(5) | 0.43 | %(5)(6) | 0.43 | %(6) | 0.52 | % | |||||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(9) | 0.01 | % | 0.01 | % | 0.00 | %(7) | – | – | |||||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 17,188 | $ | 21,247 | $ | 30,185 | $ | 99,635 | $ | 166,184 | $ | 163,974 | |||||||||||||||
Portfolio turnover rate | 6 | %(8) | 36 | % | 31 | % | 22 | % | 13 | % | 22 | % |
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Amount is less than $0.005.
(3) Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(4) Reflects overall Fund ratios for investment income and non-class specific expenses.
(5) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate".
(6) If the Fund had borne all 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 |
(7) Amount is less than 0.005%.
(8) Not annualized.
(9) Annualized.
See Notes to Financial Statements
51
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | ||||||||||||||||||||||||||
MONTHS ENDED | |||||||||||||||||||||||||||
APRIL 30, 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Class C Shares | |||||||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.02 | $ | 9.11 | $ | 16.63 | $ | 12.94 | $ | 10.54 | $ | 9.06 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income(1) | 0.00 | (2) | 0.05 | 0.13 | 0.06 | 0.06 | 0.05 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.35 | 1.86 | (7.47 | ) | 3.76 | 2.48 | 1.47 | ||||||||||||||||||||
Total income (loss) from investment operations | 0.35 | 1.91 | (7.34 | ) | 3.82 | 2.54 | 1.52 | ||||||||||||||||||||
Less dividends from net investment income | (0.15 | ) | – | (0.18 | ) | (0.13 | ) | (0.14 | ) | (0.04 | ) | ||||||||||||||||
Net asset value, end of period | $ | 11.22 | $ | 11.02 | $ | 9.11 | $ | 16.63 | $ | 12.94 | $ | 10.54 | |||||||||||||||
Total Return(3) | 3.18 | %(8) | 20.97 | % | (44.50 | )% | 29.58 | % | 24.34 | % | 16.81 | % | |||||||||||||||
Ratios to Average Net Assets(4): | |||||||||||||||||||||||||||
Total expenses (before expense offset) | 2.28 | %(5)(9) | 2.44 | %(5) | 2.07 | %(5) | 2.08 | %(5)(6) | 2.04 | %(6) | 2.05 | % | |||||||||||||||
Net investment income | 0.06 | %(5)(9) | 0.55 | %(5) | 0.96 | %(5) | 0.43 | %(5)(6) | 0.44 | %(6) | 0.52 | % | |||||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(9) | 0.01 | % | 0.01 | % | 0.00 | %(7) | – | – | |||||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 16,882 | $ | 17,507 | $ | 16,660 | $ | 37,085 | $ | 30,552 | $ | 22,856 | |||||||||||||||
Portfolio turnover rate | 6 | %(8) | 36 | % | 31 | % | 22 | % | 13 | % | 22 | % |
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Amount is less than $0.005.
(3) Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(4) Reflects overall Fund ratios for investment income and non-class specific expenses.
(5) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate".
(6) If the Fund had borne all 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 |
(7) Amount is less than 0.005%.
(8) Not annualized.
(9) Annualized.
See Notes to Financial Statements
52
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | ||||||||||||||||||||||||||
MONTHS ENDED | |||||||||||||||||||||||||||
APRIL 30, 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Class I Shares | |||||||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.40 | $ | 9.33 | $ | 17.00 | $ | 13.23 | $ | 10.76 | $ | 9.24 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income(1) | 0.06 | 0.16 | 0.27 | 0.21 | 0.15 | 0.15 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.36 | 1.91 | (7.64 | ) | 3.83 | 2.57 | 1.51 | ||||||||||||||||||||
Total income (loss) from investment operations | 0.42 | 2.07 | (7.37 | ) | 4.04 | 2.72 | 1.66 | ||||||||||||||||||||
Less dividends from net investment income | (0.25 | ) | – | (0.30 | ) | (0.27 | ) | (0.25 | ) | (0.14 | ) | ||||||||||||||||
Net asset value, end of period | $ | 11.57 | $ | 11.40 | $ | 9.33 | $ | 17.00 | $ | 13.23 | $ | 10.76 | |||||||||||||||
Total Return(2) | 3.70 | %(7) | 22.19 | % | (44.16 | )% | 31.33 | % | 25.61 | % | 18.03 | % | |||||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||||||
Total expenses (before expense offset) | 1.28 | %(4)(8) | 1.44 | %(4) | 1.10 | %(4) | 1.08 | %(4)(5) | 1.05 | %(5) | 1.05 | % | |||||||||||||||
Net investment income | 1.06 | %(4)(8) | 1.55 | %(4) | 1.95 | %(4) | 1.43 | %(4)(5) | 1.43 | %(5) | 1.52 | % | |||||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(8) | 0.01 | % | 0.01 | % | 0.00 | %(6) | – | – | |||||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 697,737 | $ | 733 | $ | 10,085 | $ | 22,888 | $ | 22,974 | $ | 134,631 | |||||||||||||||
Portfolio turnover rate | 6 | %(7) | 36 | % | 31 | % | 22 | % | 13 | % | 22 | % |
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Calculated based on the net asset value as of the last business day of the period.
(3) Reflects overall Fund ratios for investment income and non-class specific expenses.
(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate".
(5) If the Fund had borne all 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 |
(6) Amount is less than 0.005%.
(7) Not annualized.
(8) Annualized.
See Notes to Financial Statements
53
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX MONTHS ENDED APRIL 30, 2010 | FOR THE YEAR ENDED OCTOBER 31, 2009 | FOR THE PERIOD MARCH 31, 2008@@@ THROUGH OCTOBER 31, 2008 | |||||||||||||
(unaudited) | |||||||||||||||
Class R Shares | |||||||||||||||
Selected Per Share Data: | |||||||||||||||
Net asset value, beginning of period | $ | 11.27 | $ | 9.28 | $ | 14.14 | |||||||||
Income (loss) from investment operations: | |||||||||||||||
Net investment income(1) | 0.03 | 0.10 | 0.15 | ||||||||||||
Net realized and unrealized gain (loss) | 0.36 | 1.89 | (5.01 | ) | |||||||||||
Total income (loss) from investment operations | 0.39 | 1.99 | (4.86 | ) | |||||||||||
Less dividends from net investment income | (0.21 | ) | – | – | |||||||||||
Net asset value, end of period | $ | 11.45 | $ | 11.27 | $ | 9.28 | |||||||||
Total Return(2) | 3.42 | %(5) | 21.57 | % | (34.44 | )%(5) | |||||||||
Ratios to Average Net Assets(3): | |||||||||||||||
Total expenses (before expense offset) | 1.78 | %(4)(6) | 1.94 | %(4) | 1.62 | %(4)(6) | |||||||||
Net investment income | 0.56 | %(4)(6) | 1.05 | %(4) | 1.96 | %(4)(6) | |||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(6) | 0.01 | % | 0.01 | %(6) | |||||||||
Supplemental Data: | |||||||||||||||
Net assets, end of period, in thousands | $ | 88 | $ | 83 | $ | 66 | |||||||||
Portfolio turnover rate | 6 | %(5) | 36 | % | 31 | %(5) |
@@@ The date shares were first issued.
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Calculated based on the net asset value as of the last business day of the period.
(3) Reflects overall Fund ratios for investment income and non-class specific expenses.
(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate".
(5) Not annualized.
(6) Annualized.
See Notes to Financial Statements
54
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX MONTHS ENDED APRIL 30, 2010 | FOR THE YEAR ENDED OCTOBER 31, 2009 | FOR THE PERIOD MARCH 31, 2008@@@ THROUGH OCTOBER 31, 2008 | |||||||||||||
(unaudited) | |||||||||||||||
Class W Shares | |||||||||||||||
Selected Per Share Data: | |||||||||||||||
Net asset value, beginning of period | $ | 11.30 | $ | 9.28 | $ | 14.14 | |||||||||
Income (loss) from investment operations: | |||||||||||||||
Net investment income(1) | 0.04 | 0.11 | 0.16 | ||||||||||||
Net realized and unrealized gain (loss) | 0.36 | 1.91 | (5.02 | ) | |||||||||||
Total income (loss) from investment operations | 0.39 | 2.02 | (4.86 | ) | |||||||||||
Less dividends from net investment income | (0.22 | ) | – | – | |||||||||||
Net asset value, end of period | $ | 11.48 | $ | 11.30 | $ | 9.28 | |||||||||
Total Return(2) | 3.45 | %(5) | 21.77 | % | (34.37 | )%(5) | |||||||||
Ratios to Average Net Assets(3): | |||||||||||||||
Total expenses (before expense offset) | 1.63 | %(4)(6) | 1.79 | %(4) | 1.47 | %(4)(6) | |||||||||
Net investment income | 0.71 | %(4)(6) | 1.20 | %(4) | 2.11 | %(4)(6) | |||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(6) | 0.01 | % | 0.01 | %(6) | |||||||||
Supplemental Data: | |||||||||||||||
Net assets, end of period, in thousands | $ | 87 | $ | 86 | $ | 66 | |||||||||
Portfolio turnover rate | 6 | %(5) | 36 | % | 31 | %(5) |
@@@ The date shares were first issued.
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Calculated based on the net asset value as of the last business day of the period.
(3) Reflects overall Fund ratios for investment income and non-class specific expenses.
(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate".
(5) Not annualized.
(6) Annualized.
See Notes to Financial Statements
55
Morgan Stanley International Fund
An Important Notice Concerning Our U.S. Privacy Policy (unaudited)
We are required by federal law to provide you with a copy of our privacy policy ("Policy") annually.
This Policy applies to current and former individual clients of Morgan Stanley Distributors Inc., as well as current and former individual investors in Morgan Stanley mutual funds and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, 529 Educational Savings Accounts, accounts subject to the Uniform Gifts to Minors Act, or similar accounts. We may amend this Policy at any time, and will inform you of any changes to this Policy as required by law.
We Respect Your Privacy
We appreciate that you have provided us with your personal financial information and understand your concerns about safeguarding such information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Policy describes what non-public personal information we collect about you, how we collect it, when we may share it with others, and how others may use it. It discusses the steps you may take to limit our sharing of information about you with affiliated Morgan Stanley companies ("affiliated companies"). It also discloses how you may limit our affiliates' use of shared information for marketing purposes. Throughout this Policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."
1. What Personal Information Do We Collect About You?
To better serve you and manage our business, it is important that we collect and maintain accurate information about you. We obtain this information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our websites and from third parties and other sources.
For example:
• We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through application forms you submit to us.
• We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.
• We may obtain information about your creditworthiness and credit history from consumer reporting agencies.
56
Morgan Stanley International Fund
An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
• We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.
• If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." "Cookies" recognize your computer each time you return to one of our sites, and help to improve our sites' content and personalize your experience on our sites by, for example, suggesting offerings that may interest you. Please consult the Terms of Use of these sites for more details on our use of cookies.
2. When Do We Disclose Personal Information We Collect About You?
To provide you with the products and services you request, to better serve you, to manage our business and as otherwise required or permitted by law, we may disclose personal information we collect about you to other affiliated companies and to non-affiliated third parties.
A. Information We Disclose to Our Affiliated Companies. In order to manage your account(s) effectively, including servicing and processing your transactions, to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law, we may disclose personal information about you to other affiliated companies. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.
B. Information We Disclose to Third Parties. We do not disclose personal information that we collect about you to non-affiliated third parties except to enable them to provide marketing services on our behalf, to perform joint marketing agreements with other financial institutions, and as otherwise required or permitted by law. For example, some instances where we may disclose information about you to third parties include: for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be required by law.
3. How Do We Protect the Security and Confidentiality of Personal Information We Collect About You?
We maintain physical, electronic and procedural security measures to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client
57
Morgan Stanley International Fund
An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
information. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to confidentiality standards with respect to such information.
4. How Can You Limit Our Sharing of Certain Personal Information About You With Our Affiliated Companies for Eligibility Determination?
We respect your privacy and offer you choices as to whether we share with our affiliated companies personal information that was collected to determine your eligibility for products and services such as credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Please note that, even if you direct us not to share certain eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with those companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account. We may also share certain other types of personal information with affiliated companies — such as your name, address, telephone number, e-mail address and account number(s), and information about your transactions and experiences with us.
5. How Can You Limit the Use of Certain Personal Information About You by Our Affiliated Companies for Marketing?
You may limit our affiliated companies from using certain personal information about you that we may share with them for marketing their products or services to you. This information includes our transactions and other experiences with you such as your assets and account history. Please note that, even if you choose to limit our affiliated companies from using certain personal information about you that we may share with them for marketing their products and services to you, we may still share such personal information about you with them, including our transactions and experiences with you, for other purposes as permitted under applicable law.
6. How Can You Send Us an Opt-Out Instruction?
If you wish to limit our sharing of certain personal information about you with our affiliated companies for "eligibility purposes" and for our affiliated companies' use in marketing products and services to you as described in this notice, you may do so by:
• Calling us at (800) 869-6397
Monday–Friday between 8a.m. and 8p.m. (EST)
• Writing to us at the following address:
Morgan Stanley Privacy Department
Harborside Financial Center, Plaza Two, 3rd Floor
Jersey City, NJ 07311
58
Morgan Stanley International Fund
An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
If you choose to write to us, your written request should include: your name, address, telephone number and account number(s) to which the opt-out applies and should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account. Please allow approximately 30 days from our receipt of your opt-out for your instructions to become effective.
Please understand that if you opt-out, you and any joint account holders may not receive certain Morgan Stanley or our affiliated companies' products and services that could help you manage your financial resources and achieve your investment objectives.
If you have more than one account with us or our affiliates, you may receive multiple privacy policies from us, and would need to follow the directions stated in each particular policy for each account you have with us.
Special Notice to Residents of Vermont
This section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.
The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other affiliated companies unless you provide us with your written consent to share such information ("opt-in").
If you wish to receive offers for investment products and services offered by or through other affiliated companies, please notify us in writing at the following address:
Morgan Stanley Privacy Department
Harborside Financial Center, Plaza Two, 3rd Floor
Jersey City, NJ 07311
Your authorization should include: your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third-party.
59
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
Randy Takian
President and Principal Executive Officer
Kevin Klingert
Vice President
Mary Ann Picciotto
Chief Compliance Officer
Stefanie V. Chang Yu
Vice President
Francis J. Smith
Treasurer and Principal Financial Officer
Mary E. Mullin
Secretary
Transfer Agent
Morgan Stanley Services Company Inc.
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
Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
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
The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors and accordingly they do not express an opinion thereon.
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.
© 2010 Morgan Stanley
INVESTMENT MANAGEMENT
Morgan Stanley
International Fund
Semiannual Report
April 30, 2010
INLSAN
IU10-02463P-Y04/10
Item 2. Code of Ethics.
Not applicable for semiannual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semiannual reports.
Item 4. Principal Accountant Fees and Services
Not applicable for semiannual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semiannual reports.
Item 6.
(a) Refer to Item 1.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable for semiannual reports.
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 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) Code of Ethics — Not applicable for semiannual reports.
(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/ Randy Takian |
|
Randy Takian |
|
Principal Executive Officer |
|
June 22, 2010 |
|
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/ Randy Takian |
|
Randy Takian |
|
Principal Executive Officer |
|
June 22, 2010 |
|
/s/ Francis Smith |
|
Francis Smith |
|
Principal Financial Officer |
|
June 22, 2010 |
|