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 | |||||||
| ||||||||
Morgan Stanley International Fund | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
| ||||||||
522 Fifth Avenue, New York, New York |
| 10036 | ||||||
(Address of principal executive offices) |
| (Zip code) | ||||||
| ||||||||
Arthur Lev 522 Fifth Avenue, New York, New York 10036 | ||||||||
(Name and address of agent for service) | ||||||||
| ||||||||
Registrant’s telephone number, including area code: | 201-830-8802 |
| ||||||
| ||||||||
Date of fiscal year end: | October 31, 2012 |
| ||||||
| ||||||||
Date of reporting period: | April 30, 2012 |
| ||||||
Item 1 - Report to Shareholders
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
Arthur Lev
President and Principal Executive Officer
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.
P.O. Box 219886
Kansas City, Missouri 64121
Custodian
State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
Independent Registered Public Accounting Firm
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
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
Adviser
Morgan Stanley Investment Management 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 Distribution, Inc., member FINRA.
© 2012 Morgan Stanley
INLSAN
IU12-01272P-Y04/12
INVESTMENT MANAGEMENT
Morgan Stanley
International Fund
Semiannual Report
April 30, 2012
Morgan Stanley International Fund
Table of Contents
Welcome Shareholder | 3 | ||||||
Fund Report | 4 | ||||||
Performance Summary | 9 | ||||||
Expense Example | 10 | ||||||
Portfolio of Investments | 12 | ||||||
Statement of Assets and Liabilities | 36 | ||||||
Statement of Operations | 37 | ||||||
Statements of Changes in Net Assets | 38 | ||||||
Notes to Financial Statements | 39 | ||||||
Financial Highlights | 55 | ||||||
U.S. Privacy Policy | 61 | ||||||
2
Welcome Shareholder,
We are pleased to provide this semiannual report, in which you will learn how your investment in Morgan Stanley International Fund performed during the latest six-month period. It includes an overview of the market conditions and discusses some of the factors that affected performance during the reporting period. In addition, the report contains financial statements and a list of portfolio holdings.
Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.
As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.
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.
3
Fund Report (unaudited)
For the six months ended April 30, 2012
Total Return for the 6 Months Ended April 30, 2012 | |||||||||||||||||||||||||||||||
Class A | Class B | Class C | Class I | Class R | Class W | MSCI EAFE Index1 | Lipper International Large- Cap Core Funds Index2 | ||||||||||||||||||||||||
2.61 | % | 2.27 | % | 2.19 | % | 2.75 | % | 2.53 | % | 2.54 | % | 2.44 | % | 3.77 | % |
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
For the six-month period ended April 30, 2012 the MSCI EAFE Index (the "Index") returned 2.44 percent. On a regional basis, the U.K. was up 6 percent, Japan and Asia ex-Japan were each up 4 percent, and Europe ex-U.K. was down 1 percent (based on MSCI regional indices). Sector performance within the Index was led by consumer discretionary (up 8 percent), consumer staples and health care (each up 7 percent), while telecommunications (down 8 percent), utilities (down 5 percent) and technology (down 1 percent) were the weakest performers.
Equity markets were volatile but moved higher for this six-month period and stocks entered April near their highs for this period. Mixed global economic data and political uncertainty in Europe were the main drivers of equity market performance. In Europe, the European Central Bank's long-term refinancing operations (LTRO) and decent January and February economic data had provided some respite from last year's panic, but weaker April data has renewed investor concerns. The composite eurozone purchasing managers index (PMI) is now at 46.7, as of April 2012, the lowest level since last October. Admittedly, the aggregate picture masks big divergences between the "core" and the "periphery" countries, but even the German economy shed more jobs in April than in any other month since 2009. In Spain, the surprise bailout of the country's third largest bank by assets, Bankia, put a dent in confidence in the announcements of the Spanish authorities. Just last summer regulators allowed Bankia to list as a public company for the first time — and this time last month, all were denying the need for additional state funding for Spanish banks.
European politics are heating up again. In Greece, the radical anti-austerity party came in second in the May elections — and it is unclear if a government can form without calling new elections in June/July. Even if one dismisses Greece as too small to make an impact, this would increase the odds that Greece will have to leave the eurozone — and no one knows if extraction from the eurozone can be orderly. In France, recently elected socialist President Hollande will need to meet fiscal targets, agree with Germany on key features of the European Monetary Union structure, and secure a viable
4
long-term growth model for France. Time is running out — as may patience in Germany.
Spanish, Italian, and French growth continued to struggle under fiscal austerity. We expect Spain, in particular, to weaken throughout 2012. Spanish construction activity would need to see further declines in order to unwind the country's housing bubble, and Spain still has a large fiscal deficit to close (8.5 percent of Gross Domestic Product (GDP)). While the French deficit is not as daunting (5.1 percent of GDP in 2011), French labor competitiveness needs to improve. Thus, we believe income growth is likely to lag productivity growth in the medium term, although a high French household savings rate (13.5 percent) can help cushion the adjustment.
Although the U.S. manufacturing PMI survey continued to trend higher, most other U.S. data disappointed in April and the first quarter 2012 GDP number came in at only 1.5 percent. Total non-farm income (jobs, earnings, and hours) has now been roughly flat for two months in a row, indicating little nominal growth in consumer spending power, and March durable goods orders unexpectedly declined month over month. New residential construction fell for the second month in a row in March, dampening hopes that U.S. residential construction will pick up in response to an improving household formation rate. However, tentative signs of a pick-up in home purchases — and recent oil/gasoline price drops — add to the continued rise in U.S. consumer confidence.
A looming concern is the so-called U.S. "fiscal cliff" scheduled in 2013. Uncertainty as to how U.S. fiscal policy will affect economic and market sentiment in the second half of the year is very high. While the most bearish estimates for the 2013 fiscal impact exceed 4 percent of GDP, many people we follow believe that the fiscal drag will settle in the range of 1 percent of GDP (similar to this year). However, as the U.S. presidential election campaign gears up in late summer/early fall, policy uncertainty will most likely rise, along with divisive political rhetoric.
While Japanese growth was fairly solid through April, deflationary pressures continued and the hope for reconstruction-driven economic momentum has not developed. Optimism over the Bank of Japan's (BOJ) balance sheet expansion fueled yen weakness and Japanese equity outperformance in February and March. However, the BOJ disappointed market expectations for more rapid, large-scale asset purchases at its April meeting. As we head into the summer, Japan faces uncertainty as to how nuclear power capacity will be reactivated in time for peak electricity demand. The country may also face fiscal tightening next year (with tax increases to pay for earthquake rebuilding) and a proposed value-added tax increase in 2014.
Thus far, China has defied bearish skeptics. First quarter GDP growth was roughly 8 percent, despite continued weakness in residential real estate sales and depressed industrial profitability (profits down 5 percent year-over-year in February and 1.5 percent year-over-year in March). The Chinese manufacturing PMI index appears to have bottomed in the fourth quarter of last year (around 49) and has trended higher since (currently at 53.3). While residential construction activity is likely to
5
slow from here with a lag to sales, the Chinese government can increase infrastructure investment after virtually no growth in spending last year. There have also been some signs of incremental policy easing, as mortgage rates are falling for first-time buyers. While we expect slowing construction to cap the pace of any Chinese recovery, it does not appear that the bear case for Chinese growth is playing out.
Performance Analysis
Morgan Stanley International Fund Class A, Class I, Class R, and Class W shares outperformed and Class B and Class C shares underperformed the MSCI EAFE Index (the "Index"), and all share classes underperformed the Lipper International Large-Cap Core Funds Index for the six months ended April 30, 2012, assuming no deduction of applicable sales charges.
Regionally, the portfolio's overweight to Japan and the allocation to emerging markets (average balance over the period of about 5 percent) contributed to relative performance, while the underweight to Europe detracted from performance. Sector positions that added to portfolio performance were underweight positions in utilities and financials and an above-benchmark allocation to industrials. Overweight positions to technology and materials dampened relative results.
The Fund utilized stock index futures and currency forward contracts as additional vehicles to implement the portfolio manager's macro investment decisions. For the six-month period, stock index futures contributed to portfolio performance, while currency forward positions were a net detractor.
Overall, the portfolio is tilted cautiously, but we do not expect to position for a major market decline unless news from Europe (or China) worsens precipitously. For now, we are maintaining a portfolio beta marginally below one. We are still underweight Europe as we expect eurozone economies to underperform with fiscal austerity and bank deleveraging; however, we are mindful that European valuations are inexpensive and that European growth prospects may bottom sometime this year. Overall, we are looking for better visibility on U.S. fiscal plans, stabilization of European growth prospects and politics, or cheaper equity valuations to become more bullish.
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.
TOP 10 HOLDINGS+ as of 04/30/12 | |||||||
Nestle SA (Registered) | 2.2 | % | |||||
HSBC Holdings PLC | 2.0 | ||||||
Vodafone Group PLC | 1.7 | ||||||
Royal Dutch Shell PLC, Class A | 1.3 | ||||||
Siemens AG (Registered) | 1.3 | ||||||
Novartis AG (Registered) | 1.3 | ||||||
Roche Holding AG (Genusschein) | 1.3 | ||||||
GlaxoSmithKline PLC | 1.2 | ||||||
Royal Dutch Shell PLC, Class B | 1.0 | ||||||
BP PLC | 0.9 |
6
TOP FIVE COUNTRIES as of 04/30/12 | |||||||
United Kingdom | 22.4 | % | |||||
Japan | 20.9 | ||||||
Switzerland | 8.3 | ||||||
Germany | 6.5 | ||||||
France | 4.9 |
+ Does not include open long futures contracts with an underlying face amount of $12,230,750 with net unrealized depreciation of $48,896 and open foreign currency exchange contracts with net unrealized appreciation of $77,418.
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 "Adviser," Morgan Stanley Investment Management Inc., uses a "top-down" approach that emphasizes region, country, sector and industry 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 accessing 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 request copies of these materials, upon payment of a duplicating fee, by
7
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 Notices
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.
8
Performance Summary (unaudited)
Average Annual Total Returns—Period Ended April 30, 2012 | |||||||||||||||||||||||||||
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 | –15.51 –19.93 4 | %3 | –16.08 –20.28 4 | %3 | –16.15 –16.99 4 | %3 | –15.28 — | %3 | –15.66 — | %3 | –15.61 — | %3 | |||||||||||||||
5 Years | –4.11 3 –5.13 4 | –4.81 3 –5.18 4 | –4.82 3 –4.82 4 | –3.86 3 — | — — | — — | |||||||||||||||||||||
10 Years | 4.81 3 4.24 4 | 4.16 3 4.16 4 | 4.02 3 4.02 4 | 5.05 3 — | — — | — — | |||||||||||||||||||||
Since Inception | 2.53 3 2.10 4 | 2.02 3 2.02 4 | 1.75 3 1.75 4 | 2.76 3 — | –4.47 3 — | –4.35 3 — | |||||||||||||||||||||
Gross Expense Ratio | 1.58 | 2.33 | 2.32 | 1.33 | 1.83 | 1.68 |
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 22 developed market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. "Net dividends" reflects a reduction in dividends after taking into account withholding of taxes by certain foreign countries represented in the Index. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.
(2) The Lipper International Large-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Large-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. The Fund 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.
9
Expense Example (unaudited)
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 11/01/11 – 04/30/12.
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@ | |||||||||||||
11/01/11 | 04/30/12 | 11/01/11 – 04/30/12 | |||||||||||||
Class A | |||||||||||||||
Actual (2.61% return) | $ | 1,000.00 | $ | 1,026.10 | $ | 8.56 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,016.41 | $ | 8.52 | |||||||||
Class B | |||||||||||||||
Actual (2.27% return) | $ | 1,000.00 | $ | 1,022.70 | $ | 12.32 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,012.68 | $ | 12.26 | |||||||||
Class C | |||||||||||||||
Actual (2.19% return) | $ | 1,000.00 | $ | 1,021.90 | $ | 12.27 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,012.73 | $ | 12.21 | |||||||||
Class I | |||||||||||||||
Actual (2.75% return) | $ | 1,000.00 | $ | 1,027.50 | $ | 7.31 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,017.65 | $ | 7.27 |
10
Expense Example (unaudited) continued
Beginning Account Value | Ending Account Value | Expenses Paid During Period@ | |||||||||||||
11/01/11 | 04/30/12 | 11/01/11 – 04/30/12 | |||||||||||||
Class R | |||||||||||||||
Actual (2.53% return) | $ | 1,000.00 | $ | 1,025.30 | $ | 9.82 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,015.17 | $ | 9.77 | |||||||||
Class W | |||||||||||||||
Actual (2.54% return) | $ | 1,000.00 | $ | 1,025.40 | $ | 9.06 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,015.91 | $ | 9.02 |
@ Expenses are equal to the Fund's annualized expense ratios of 1.70%, 2.45%, 2.44%, 1.45%, 1.95%, and 1.80% 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 182/366 (to reflect the one-half year period). If the Fund had borne all of its expenses, the annualized expense ratios would have been 1.72%, 2.47%, 2.46%, 1.47%, 1.97%, and 1.82% for Class A, Class B, Class C, Class I, Class R and Class W shares, respectively.
11
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited)
NUMBER OF SHARES | VALUE | ||||||||||
Common Stocks (86.4%) | |||||||||||
Australia (3.9%) | |||||||||||
Beverages | |||||||||||
970 | Coca-Cola Amatil Ltd. | $ | 12,583 | ||||||||
Biotechnology | |||||||||||
511 | CSL Ltd. | 19,519 | |||||||||
Capital Markets | |||||||||||
2,338 | Macquarie Group Ltd. | 71,158 | |||||||||
Chemicals | |||||||||||
1,659 | DuluxGroup Ltd. (a) | 5,359 | |||||||||
7,133 | Incitec Pivot Ltd. | 24,303 | |||||||||
1,537 | Orica Ltd. | 43,032 | |||||||||
72,694 | |||||||||||
Commercial Banks | |||||||||||
29,630 | Australia & New Zealand Banking Group Ltd. | 738,173 | |||||||||
8,839 | Commonwealth Bank of Australia (a) | 478,633 | |||||||||
12,157 | National Australia Bank Ltd. (a) | 319,588 | |||||||||
15,622 | Westpac Banking Corp. (a) | 369,984 | |||||||||
1,906,378 | |||||||||||
Commercial Services & Supplies | |||||||||||
1,772 | Brambles Ltd. | 13,349 | |||||||||
Construction & Engineering | |||||||||||
425 | Leighton Holdings Ltd. (a) | 9,118 | |||||||||
Construction Materials | |||||||||||
5,666 | Boral Ltd. (a) | 22,316 | |||||||||
2,078 | James Hardie Industries SE CDI | 16,217 | |||||||||
38,533 | |||||||||||
Containers & Packaging | |||||||||||
5,247 | Amcor Ltd. | 41,113 | |||||||||
Diversified Financial Services | |||||||||||
1,012 | ASX Ltd. | 33,743 | |||||||||
Diversified Telecommunication Services | |||||||||||
3,853 | Telstra Corp., Ltd. | 14,212 |
NUMBER OF SHARES | VALUE | ||||||||||
Food & Staples Retailing | |||||||||||
733 | Wesfarmers Ltd. | $ | 23,126 | ||||||||
1,629 | Woolworths Ltd. | 44,029 | |||||||||
67,155 | |||||||||||
Health Care Providers & Services | |||||||||||
310 | Sonic Healthcare Ltd. | 4,073 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
838 | Echo Entertainment Group Ltd. | 3,929 | |||||||||
859 | TABCORP Holdings Ltd. | 2,569 | |||||||||
6,498 | |||||||||||
Insurance | |||||||||||
18,551 | AMP Ltd. | 82,535 | |||||||||
15,201 | Insurance Australia Group Ltd. | 56,069 | |||||||||
7,173 | QBE Insurance Group Ltd. | 103,439 | |||||||||
8,235 | Suncorp Group Ltd. | 69,845 | |||||||||
311,888 | |||||||||||
Metals & Mining | |||||||||||
11,591 | Alumina Ltd. | 14,010 | |||||||||
13,067 | BHP Billiton Ltd. | 484,019 | |||||||||
5,072 | Fortescue Metals Group Ltd. (a) | 29,806 | |||||||||
2,994 | Newcrest Mining Ltd. | 82,045 | |||||||||
1,561 | OZ Minerals Ltd. | 15,175 | |||||||||
1,817 | Rio Tinto Ltd. | 125,615 | |||||||||
1,930 | Sims Metal Management Ltd. (a) | 28,596 | |||||||||
779,266 | |||||||||||
Multi-Utilities | |||||||||||
898 | AGL Energy Ltd. | 14,016 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
773 | Caltex Australia Ltd. | 11,091 | |||||||||
1,594 | Origin Energy Ltd. | 22,023 | |||||||||
916 | Santos Ltd. | 13,381 | |||||||||
840 | Woodside Petroleum Ltd. | 30,563 | |||||||||
77,058 |
See Notes to Financial Statements
12
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
13,129 | GPT Group REIT (Stapled Securities) (b) | $ | 44,733 | ||||||||
21,898 | Stockland REIT (Stapled Securities) (b)(c) | 70,731 | |||||||||
12,064 | Westfield Group REIT (Stapled Securities) (b)(c) | 116,148 | |||||||||
21,100 | Westfield Retail Trust REIT | 59,800 | |||||||||
291,412 | |||||||||||
Transportation Infrastructure | |||||||||||
1,444 | Transurban Group (Stapled Securities) (b) | 8,832 | |||||||||
Total Australia | 3,792,598 | ||||||||||
Austria (0.6%) | |||||||||||
Commercial Banks | |||||||||||
6,084 | Erste Group Bank AG | 140,089 | |||||||||
1,761 | Raiffeisen Bank International AG (a) | 58,474 | |||||||||
198,563 | |||||||||||
Diversified Telecommunication Services | |||||||||||
8,075 | Telekom Austria AG | 88,568 | |||||||||
Electric Utilities | |||||||||||
1,397 | Verbund AG | 39,102 | |||||||||
Insurance | |||||||||||
946 | Vienna Insurance Group AG Wiener Versicherung Gruppe | 38,568 | |||||||||
Metals & Mining | |||||||||||
3,006 | Voestalpine AG | 97,307 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
2,528 | OMV AG (a) | 85,582 | |||||||||
Total Austria | 547,690 | ||||||||||
Belgium (0.8%) | |||||||||||
Beverages | |||||||||||
5,360 | Anheuser-Busch InBev N.V. (a) | 386,324 |
NUMBER OF SHARES | VALUE | ||||||||||
2,742 | Anheuser-Busch InBev N.V. VVPR (d) | $ | 4 | ||||||||
386,328 | |||||||||||
Chemicals | |||||||||||
673 | Solvay SA, Class A | 81,896 | |||||||||
1,595 | Umicore SA | 86,553 | |||||||||
168,449 | |||||||||||
Diversified Financial Services | |||||||||||
1,305 | Groupe Bruxelles Lambert SA (a) | 90,534 | |||||||||
Diversified Telecommunication Services | |||||||||||
1,786 | Belgacom SA (a) | 50,734 | |||||||||
Electrical Equipment | |||||||||||
426 | NV Bekaert SA | 12,620 | |||||||||
Insurance | |||||||||||
5,238 | Ageas (a) | 9,534 | |||||||||
Pharmaceuticals | |||||||||||
1,255 | UCB SA (a) | 58,617 | |||||||||
Wireless Telecommunication Services | |||||||||||
297 | Mobistar SA | 11,232 | |||||||||
Total Belgium | 788,048 | ||||||||||
Brazil (0.6%) | |||||||||||
Aerospace & Defense | |||||||||||
600 | Embraer SA | 5,175 | |||||||||
Beverages | |||||||||||
800 | Cia de Bebidas das Americas | 33,697 | |||||||||
Commercial Banks | |||||||||||
2,021 | Banco Bradesco SA (Preference) | 32,475 | |||||||||
3,200 | Banco do Brasil SA | 39,586 | |||||||||
800 | Banco Santander Brasil SA (Units) (c) | 6,522 | |||||||||
2,378 | Itau Unibanco Holding SA (Preference) | 37,426 |
See Notes to Financial Statements
13
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
4,459 | Itausa - Investimentos Itau SA (Preference) | $ | 21,194 | ||||||||
137,203 | |||||||||||
Diversified Financial Services | |||||||||||
1,900 | BM&F Bovespa SA | 10,685 | |||||||||
Diversified Telecommunication Services | |||||||||||
1,168 | Oi SA | 7,041 | |||||||||
349 | Telefonica Brasil SA (Preference) | 9,960 | |||||||||
17,001 | |||||||||||
Electric Utilities | |||||||||||
1,032 | Cia Energetica de Minas Gerais (Preference) | 20,454 | |||||||||
Food & Staples Retailing | |||||||||||
120 | Cia Brasileira de Distribuicao Grupo Pao de Acucar | 5,571 | |||||||||
Food Products | |||||||||||
5,228 | BRF - Brasil Foods SA | 95,583 | |||||||||
Information Technology Services | |||||||||||
360 | Cielo SA | 10,803 | |||||||||
400 | Redecard SA | 6,736 | |||||||||
17,539 | |||||||||||
Metals & Mining | |||||||||||
368 | Bradespar SA (Preference) | 6,738 | |||||||||
1,100 | Cia Siderurgica Nacional SA | 9,435 | |||||||||
659 | Gerdau SA (Preference) | 6,195 | |||||||||
1,957 | Vale SA (Preference) | 42,556 | |||||||||
1,300 | Vale SA | 29,053 | |||||||||
93,977 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
1,600 | OGX Petroleo e Gas Participacoes SA (d) | 11,105 | |||||||||
2,900 | Petroleo Brasileiro SA | 34,064 | |||||||||
4,122 | Petroleo Brasileiro SA (Preference) | 46,039 |
NUMBER OF SHARES | VALUE | ||||||||||
400 | Ultrapar Participacoes SA | $ | 9,087 | ||||||||
100,295 | |||||||||||
Real Estate Management & Development | |||||||||||
500 | BR Malls Participacoes SA | 6,212 | |||||||||
Road & Rail | |||||||||||
3,200 | All America Latina Logistica SA (Units) (c) | 14,572 | |||||||||
Tobacco | |||||||||||
500 | Souza Cruz SA | 7,788 | |||||||||
Transportation Infrastructure | |||||||||||
1,100 | CCR SA | 8,541 | |||||||||
Water Utilities | |||||||||||
200 | Cia de Saneamento Basico do Estado de Sao Paulo | 7,853 | |||||||||
Total Brazil | 582,146 | ||||||||||
Canada (0.7%) | |||||||||||
Metals & Mining | |||||||||||
900 | Agnico-Eagle Mines Ltd. | 35,951 | |||||||||
5,300 | Barrick Gold Corp. | 214,393 | |||||||||
900 | Centerra Gold, Inc. | 11,653 | |||||||||
3,000 | Eldorado Gold Corp. | 42,516 | |||||||||
700 | Franco-Nevada Corp. | 31,398 | |||||||||
4,200 | Goldcorp, Inc. | 160,840 | |||||||||
2,000 | IAMGOLD Corp. | 24,801 | |||||||||
6,100 | Kinross Gold Corp. | 54,649 | |||||||||
2,400 | New Gold, Inc. (Units) (c)(d) | 21,866 | |||||||||
1,900 | Osisko Mining Corp. (d) | 19,561 | |||||||||
4,100 | Yamana Gold, Inc. | 60,140 | |||||||||
Total Canada | 677,768 | ||||||||||
China (0.0%) | |||||||||||
Household Durables | |||||||||||
58 | Skyworth Digital Holdings Ltd. (e) | 24 |
See Notes to Financial Statements
14
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Transportation Infrastructure | |||||||||||
1 | China Merchants Holdings International Co., Ltd. (e) | $ | 3 | ||||||||
Total China | 27 | ||||||||||
Denmark (1.3%) | |||||||||||
Chemicals | |||||||||||
5,165 | Novozymes A/S, Series B | 135,462 | |||||||||
Diversified Telecommunication Services | |||||||||||
3,974 | TDC A/S | 28,496 | |||||||||
Electrical Equipment | |||||||||||
2,332 | Vestas Wind Systems A/S (d) | 20,585 | |||||||||
Marine | |||||||||||
24 | AP Moller - Maersk A/S, Class B | 187,723 | |||||||||
Pharmaceuticals | |||||||||||
5,598 | Novo Nordisk A/S, Class B | 825,725 | |||||||||
Road & Rail | |||||||||||
2,395 | DSV A/S | 54,546 | |||||||||
Total Denmark | 1,252,537 | ||||||||||
Finland (1.0%) | |||||||||||
Communications Equipment | |||||||||||
55,483 | Nokia Oyj | 199,324 | |||||||||
Diversified Telecommunication Services | |||||||||||
1,306 | Elisa Oyj (a) | 29,458 | |||||||||
Electric Utilities | |||||||||||
6,044 | Fortum Oyj | 130,007 | |||||||||
Food & Staples Retailing | |||||||||||
2,234 | Kesko Oyj, Class B | 59,675 | |||||||||
Insurance | |||||||||||
3,993 | Sampo Oyj, Class A | 106,239 | |||||||||
Machinery | |||||||||||
1,639 | Kone Oyj, Class B | 101,426 | |||||||||
2,394 | Metso Oyj | 102,674 |
NUMBER OF SHARES | VALUE | ||||||||||
1,566 | Wartsila Oyj | $ | 63,390 | ||||||||
267,490 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
2,667 | Neste Oil Oyj | 31,526 | |||||||||
Paper & Forest Products | |||||||||||
6,572 | Stora Enso Oyj, Class R | 44,802 | |||||||||
7,711 | UPM-Kymmene Oyj (a) | 98,702 | |||||||||
143,504 | |||||||||||
Total Finland | 967,223 | ||||||||||
France (4.9%) | |||||||||||
Aerospace & Defense | |||||||||||
1,139 | European Aeronautic Defense and Space Co. N.V. (a) | 44,967 | |||||||||
851 | Safran SA | 31,541 | |||||||||
656 | Thales SA | 22,729 | |||||||||
99,237 | |||||||||||
Auto Components | |||||||||||
812 | Cie Generale des Etablissements Michelin, Class B | 60,643 | |||||||||
Automobiles | |||||||||||
1,662 | Peugeot SA | 19,954 | |||||||||
840 | Renault SA | 38,166 | |||||||||
58,120 | |||||||||||
Beverages | |||||||||||
413 | Pernod-Ricard SA | 42,866 | |||||||||
Building Products | |||||||||||
1,158 | Cie de St-Gobain | 48,507 | |||||||||
Chemicals | |||||||||||
1,314 | Air Liquide SA | 169,012 | |||||||||
Commercial Banks | |||||||||||
4,527 | BNP Paribas SA | 181,869 | |||||||||
4,897 | Credit Agricole SA | 25,170 | |||||||||
2,524 | Societe Generale SA | 59,671 | |||||||||
266,710 |
See Notes to Financial Statements
15
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Commercial Services & Supplies | |||||||||||
1,030 | Edenred | $ | 32,899 | ||||||||
218 | Societe BIC SA | 24,012 | |||||||||
56,911 | |||||||||||
Communications Equipment | |||||||||||
13,164 | Alcatel-Lucent (d) | 20,283 | |||||||||
Construction & Engineering | |||||||||||
3,937 | Bouygues SA (a) | 106,938 | |||||||||
2,587 | Vinci SA | 119,855 | |||||||||
226,793 | |||||||||||
Construction Materials | |||||||||||
340 | Imerys SA | 19,325 | |||||||||
2,495 | Lafarge SA (a) | 97,279 | |||||||||
116,604 | |||||||||||
Diversified Financial Services | |||||||||||
301 | Eurazeo | 15,425 | |||||||||
Diversified Telecommunication Services | |||||||||||
7,818 | France Telecom SA | 106,953 | |||||||||
5,870 | Vivendi SA | 108,510 | |||||||||
215,463 | |||||||||||
Electric Utilities | |||||||||||
714 | Electricite de France SA | 15,108 | |||||||||
Electrical Equipment | |||||||||||
3,868 | Alstom SA | 138,140 | |||||||||
3,066 | Schneider Electric SA (d) | 188,353 | |||||||||
326,493 | |||||||||||
Energy Equipment & Services | |||||||||||
3,712 | Cie Generale de Geophysique-Veritas (d) | 105,691 | |||||||||
1,559 | Technip SA | 176,297 | |||||||||
281,988 | |||||||||||
Food & Staples Retailing | |||||||||||
3,825 | Carrefour SA | 76,834 |
NUMBER OF SHARES | VALUE | ||||||||||
479 | Casino Guichard Perrachon SA (d) | $ | 47,040 | ||||||||
123,874 | |||||||||||
Food Products | |||||||||||
3,938 | Danone | 277,057 | |||||||||
Health Care Equipment & Supplies | |||||||||||
967 | Cie Generale d'Optique Essilor International SA | 85,172 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
1,030 | Accor SA | 35,578 | |||||||||
564 | Sodexo | 44,914 | |||||||||
80,492 | |||||||||||
Information Technology Services | |||||||||||
361 | Atos | 23,250 | |||||||||
929 | Cap Gemini SA | 36,264 | |||||||||
59,514 | |||||||||||
Insurance | |||||||||||
6,804 | AXA SA (d) | 96,369 | |||||||||
2,004 | CNP Assurances | 28,119 | |||||||||
1,759 | SCOR SE | 46,509 | |||||||||
170,997 | |||||||||||
Machinery | |||||||||||
418 | Vallourec SA | 25,137 | |||||||||
Media | |||||||||||
1,112 | Lagardere SCA | 33,707 | |||||||||
642 | Publicis Groupe SA | 33,109 | |||||||||
591 | SES SA FDR | 14,152 | |||||||||
3,229 | Societe Television Francaise 1 (a) | 31,202 | |||||||||
112,170 | |||||||||||
Multi-Utilities | |||||||||||
5,571 | GDF Suez (a) | 128,239 |
See Notes to Financial Statements
16
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
2,175 | Veolia Environnement SA | $ | 31,857 | ||||||||
160,096 | |||||||||||
Multiline Retail | |||||||||||
546 | PPR (a) | 91,318 | |||||||||
Office Electronics | |||||||||||
281 | Neopost SA (a) | 16,156 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
12,070 | Total SA | 576,293 | |||||||||
Personal Products | |||||||||||
242 | L'Oreal SA (a) | 29,115 | |||||||||
Pharmaceuticals | |||||||||||
6,517 | Sanofi | 497,407 | |||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
244 | Fonciere Des Regions REIT | 18,911 | |||||||||
196 | Gecina SA REIT | 18,169 | |||||||||
200 | ICADE REIT (a)(d) | 16,872 | |||||||||
708 | Klepierre REIT | 22,417 | |||||||||
815 | Unibail-Rodamco SE REIT | 152,329 | |||||||||
228,698 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
4,447 | STMicroelectronics N.V. | 25,224 | |||||||||
Software | |||||||||||
402 | Dassault Systemes SA | 39,016 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
316 | LVMH Moet Hennessy Louis Vuitton SA (a) | 52,349 | |||||||||
Total France | 4,670,248 | ||||||||||
Germany (6.5%) | |||||||||||
Air Freight & Logistics | |||||||||||
6,717 | Deutsche Post AG (Registered) | 125,367 | |||||||||
Airlines | |||||||||||
1,432 | Deutsche Lufthansa AG (Registered) | 18,635 |
NUMBER OF SHARES | VALUE | ||||||||||
Auto Components | |||||||||||
364 | Continental AG (a) | $ | 35,279 | ||||||||
Automobiles | |||||||||||
3,729 | Bayerische Motoren Werke AG | 354,460 | |||||||||
6,684 | Daimler AG (Registered) | 369,521 | |||||||||
1,133 | Porsche Automobil Holding SE (Preference) | 69,161 | |||||||||
835 | Volkswagen AG | 142,527 | |||||||||
881 | Volkswagen AG (Preference) | 166,880 | |||||||||
1,102,549 | |||||||||||
Capital Markets | |||||||||||
6,662 | Deutsche Bank AG (Registered) | 289,864 | |||||||||
Chemicals | |||||||||||
4,065 | BASF SE (a) | 334,635 | |||||||||
1,254 | K+S AG (Registered) | 62,670 | |||||||||
597 | Lanxess AG | 47,533 | |||||||||
503 | Linde AG | 86,091 | |||||||||
530,929 | |||||||||||
Commercial Banks | |||||||||||
6,020 | Commerzbank AG (d) | 13,029 | |||||||||
Construction & Engineering | |||||||||||
780 | Hochtief AG | 45,729 | |||||||||
Diversified Financial Services | |||||||||||
445 | Deutsche Boerse AG | 27,938 | |||||||||
Diversified Telecommunication Services | |||||||||||
14,659 | Deutsche Telekom AG (Registered) | 165,265 | |||||||||
Electric Utilities | |||||||||||
10,627 | E.ON AG (a) | 240,756 | |||||||||
Food & Staples Retailing | |||||||||||
1,677 | Metro AG | 54,109 | |||||||||
Health Care Providers & Services | |||||||||||
2,542 | Celesio AG | 43,827 |
See Notes to Financial Statements
17
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
1,900 | Fresenius Medical Care AG & Co. KGaA | $ | 134,881 | ||||||||
178,708 | |||||||||||
Household Products | |||||||||||
513 | Henkel AG & Co. KGaA (Preference) | 38,163 | |||||||||
Industrial Conglomerates | |||||||||||
13,400 | Siemens AG (Registered) | 1,241,099 | |||||||||
Insurance | |||||||||||
3,148 | Allianz SE (Registered) | 350,779 | |||||||||
568 | Hannover Rueckversicherung AG (a) | 34,334 | |||||||||
1,470 | Muenchener Rueckversicherungs AG (Registered) (a) | 213,361 | |||||||||
598,474 | |||||||||||
Machinery | |||||||||||
1,654 | GEA Group AG | 54,582 | |||||||||
Media | |||||||||||
1,212 | ProSiebenSat.1 Media AG | 30,771 | |||||||||
Metals & Mining | |||||||||||
2,014 | ThyssenKrupp AG | 47,720 | |||||||||
Multi-Utilities | |||||||||||
1,713 | RWE AG | 73,637 | |||||||||
186 | RWE AG (Preference) | 7,354 | |||||||||
80,991 | |||||||||||
Personal Products | |||||||||||
439 | Beiersdorf AG (a) | 30,799 | |||||||||
Pharmaceuticals | |||||||||||
7,698 | Bayer AG (Registered) (a) | 542,202 | |||||||||
253 | Merck KGaA (a) | 27,796 | |||||||||
569,998 | |||||||||||
Software | |||||||||||
10,594 | SAP AG | 702,426 |
NUMBER OF SHARES | VALUE | ||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
377 | Adidas AG | $ | 31,439 | ||||||||
Total Germany | 6,254,619 | ||||||||||
Hong Kong (0.0%) | |||||||||||
Diversified Financial Services | |||||||||||
56 | Hong Kong Exchanges and Clearing Ltd. | 896 | |||||||||
Real Estate Management & Development | |||||||||||
45 | Henderson Land Development Co., Ltd. | 256 | |||||||||
Total Hong Kong | 1,152 | ||||||||||
Indonesia (0.3%) | |||||||||||
Automobiles | |||||||||||
5,500 | Astra International Tbk PT | 42,490 | |||||||||
Commercial Banks | |||||||||||
34,500 | Bank Central Asia Tbk PT | 30,031 | |||||||||
8,500 | Bank Danamon Indonesia Tbk PT | 5,179 | |||||||||
26,500 | Bank Mandiri Tbk PT | 21,337 | |||||||||
22,500 | Bank Negara Indonesia Persero Tbk PT | 9,854 | |||||||||
32,000 | Bank Rakyat Indonesia Persero Tbk PT | 23,155 | |||||||||
89,556 | |||||||||||
Construction Materials | |||||||||||
4,000 | Indocement Tunggal Prakarsa Tbk PT | 7,856 | |||||||||
10,500 | Semen Gresik Persero Tbk PT | 13,881 | |||||||||
21,737 | |||||||||||
Diversified Telecommunication Services | |||||||||||
28,000 | Telekomunikasi Indonesia Tbk PT | 25,896 |
See Notes to Financial Statements
18
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Food Products | |||||||||||
24,500 | Charoen Pokphand Indonesia Tbk PT | $ | 7,331 | ||||||||
13,500 | Indofood Sukses Makmur Tbk PT | 7,124 | |||||||||
14,455 | |||||||||||
Gas Utilities | |||||||||||
31,000 | Perusahaan Gas Negara Tbk PT | 11,300 | |||||||||
Household Products | |||||||||||
4,000 | Unilever Indonesia Tbk PT | 8,639 | |||||||||
Machinery | |||||||||||
4,833 | United Tractors Tbk PT | 15,566 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
30,200 | Adaro Energy Tbk PT | 6,112 | |||||||||
52,500 | Bumi Resources Tbk PT | 11,567 | |||||||||
1,300 | Indo Tambangraya Megah Tbk PT | 5,623 | |||||||||
2,500 | Tambang Batubara Bukit Asam Tbk PT | 5,019 | |||||||||
28,321 | |||||||||||
Pharmaceuticals | |||||||||||
15,000 | Kalbe Farma Tbk PT | 6,569 | |||||||||
Tobacco | |||||||||||
2,000 | Gudang Garam Tbk PT | 12,883 | |||||||||
Total Indonesia | 277,412 | ||||||||||
Japan (20.9%) | |||||||||||
Air Freight & Logistics | |||||||||||
3,435 | Yamato Holdings Co., Ltd. | 53,220 | |||||||||
Auto Components | |||||||||||
12,500 | Bridgestone Corp. | 298,253 | |||||||||
10,200 | Denso Corp. | 333,314 | |||||||||
2,059 | NGK Spark Plug Co., Ltd. | 29,554 | |||||||||
3,800 | Stanley Electric Co., Ltd. | 58,590 | |||||||||
1,600 | Toyota Boshoku Corp. (a) | 19,780 | |||||||||
1,200 | Toyota Industries Corp. | 34,163 | |||||||||
773,654 |
NUMBER OF SHARES | VALUE | ||||||||||
Automobiles | |||||||||||
18,009 | Honda Motor Co., Ltd. | $ | 653,232 | ||||||||
25,605 | Nissan Motor Co., Ltd. | 268,109 | |||||||||
2,800 | Suzuki Motor Corp. | 66,528 | |||||||||
15,555 | Toyota Motor Corp. | 643,904 | |||||||||
700 | Yamaha Motor Co., Ltd. (a) | 9,425 | |||||||||
1,641,198 | |||||||||||
Beverages | |||||||||||
5,000 | Kirin Holdings Co., Ltd. | 64,003 | |||||||||
Building Products | |||||||||||
10,500 | Asahi Glass Co., Ltd. | 83,248 | |||||||||
2,900 | Daikin Industries Ltd. | 77,149 | |||||||||
2,262 | JS Group Corp. | 44,565 | |||||||||
6,500 | Nippon Sheet Glass Co., Ltd. (a) | 8,467 | |||||||||
4,500 | TOTO Ltd. | 33,367 | |||||||||
246,796 | |||||||||||
Capital Markets | |||||||||||
28,000 | Daiwa Securities Group, Inc. (a) | 106,613 | |||||||||
19,050 | Nomura Holdings, Inc. | 78,739 | |||||||||
186 | SBI Holdings, Inc. | 15,143 | |||||||||
200,495 | |||||||||||
Chemicals | |||||||||||
15,000 | Asahi Kasei Corp. | 93,186 | |||||||||
3,000 | Daicel Corp. (a) | 19,088 | |||||||||
8,546 | Denki Kagaku Kogyo KK | 33,396 | |||||||||
2,408 | JSR Corp. | 47,834 | |||||||||
5,000 | Kaneka Corp. (a) | 31,062 | |||||||||
4,556 | Kuraray Co., Ltd. | 65,281 | |||||||||
19,500 | Mitsubishi Chemical Holdings Corp. | 103,069 | |||||||||
9,500 | Mitsui Chemicals, Inc. | 27,486 | |||||||||
2,400 | Nitto Denko Corp. | 99,499 | |||||||||
5,697 | Shin-Etsu Chemical Co., Ltd. | 331,088 | |||||||||
12,000 | Showa Denko KK | 26,904 | |||||||||
16,000 | Sumitomo Chemical Co., Ltd. | 66,333 | |||||||||
13,608 | Teijin Ltd. | 46,019 | |||||||||
14,000 | Toray Industries, Inc. | 108,192 |
See Notes to Financial Statements
19
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
11,000 | Tosoh Corp. (a) | $ | 30,724 | ||||||||
1,129,161 | |||||||||||
Commercial Banks | |||||||||||
3,000 | Bank of Kyoto Ltd. (The) (a) | 25,513 | |||||||||
14,000 | Bank of Yokohama Ltd. (The) | 68,211 | |||||||||
7,000 | Chiba Bank Ltd. (The) | 42,698 | |||||||||
8,000 | Fukuoka Financial Group, Inc. | 33,467 | |||||||||
17,000 | Hokuhoku Financial Group, Inc. | 29,810 | |||||||||
8,000 | Joyo Bank Ltd. (The) (a) | 35,070 | |||||||||
73,260 | Mitsubishi UFJ Financial Group, Inc. (See Note 6) | 355,105 | |||||||||
178,600 | Mizuho Financial Group, Inc. | 284,096 | |||||||||
9,000 | Nishi-Nippon City Bank Ltd. (The) | 23,785 | |||||||||
3,900 | Resona Holdings, Inc. | 16,657 | |||||||||
17,500 | Shinsei Bank Ltd. | 22,796 | |||||||||
7,000 | Shizuoka Bank Ltd. (The) | 73,384 | |||||||||
10,100 | Sumitomo Mitsui Financial Group, Inc. | 326,884 | |||||||||
55,623 | Sumitomo Mitsui Trust Holdings, Inc. | 164,417 | |||||||||
1,000 | Suruga Bank Ltd. | 10,020 | |||||||||
1,511,913 | |||||||||||
Commercial Services & Supplies | |||||||||||
5,500 | Dai Nippon Printing Co., Ltd. | 49,117 | |||||||||
2,485 | Secom Co., Ltd. | 118,274 | |||||||||
6,000 | Toppan Printing Co., Ltd. (a) | 40,807 | |||||||||
208,198 | |||||||||||
Computers & Peripherals | |||||||||||
33,000 | Fujitsu Ltd. | 161,197 | |||||||||
29,500 | NEC Corp. (d) | 53,576 | |||||||||
4,400 | Seiko Epson Corp. (a) | 59,299 | |||||||||
41,026 | Toshiba Corp. | 169,057 | |||||||||
443,129 | |||||||||||
Construction & Engineering | |||||||||||
7,546 | JGC Corp. | 218,516 | |||||||||
12,000 | Kajima Corp. (a) | 34,269 | |||||||||
9,571 | Obayashi Corp. | 40,638 |
NUMBER OF SHARES | VALUE | ||||||||||
9,000 | Shimizu Corp. (a) | $ | 34,269 | ||||||||
14,000 | Taisei Corp. (a) | 35,596 | |||||||||
363,288 | |||||||||||
Consumer Finance | |||||||||||
1,600 | Credit Saison Co., Ltd. | 34,549 | |||||||||
Containers & Packaging | |||||||||||
2,517 | Toyo Seikan Kaisha Ltd. | 33,795 | |||||||||
Diversified Consumer Services | |||||||||||
854 | Benesse Holdings, Inc. | 42,358 | |||||||||
Diversified Financial Services | |||||||||||
290 | ORIX Corp. | 27,896 | |||||||||
Diversified Telecommunication Services | |||||||||||
1,900 | Nippon Telegraph & Telephone Corp. | 86,266 | |||||||||
Electric Utilities | |||||||||||
2,500 | Chubu Electric Power Co., Inc. | 40,957 | |||||||||
3,800 | Kansai Electric Power Co., Inc. (The) | 55,115 | |||||||||
1,600 | Kyushu Electric Power Co., Inc. | 21,262 | |||||||||
2,900 | Tohoku Electric Power Co., Inc. (a)(d) | 30,475 | |||||||||
147,809 | |||||||||||
Electrical Equipment | |||||||||||
7,500 | Furukawa Electric Co., Ltd. | 20,479 | |||||||||
5,000 | GS Yuasa Corp. (a) | 25,927 | |||||||||
1,200 | Mabuchi Motor Co., Ltd. (a) | 50,576 | |||||||||
25,552 | Mitsubishi Electric Corp. | 226,268 | |||||||||
904 | Nidec Corp. (a) | 81,523 | |||||||||
5,600 | Sumitomo Electric Industries Ltd. | 76,383 | |||||||||
800 | Ushio, Inc. | 10,511 | |||||||||
491,667 | |||||||||||
Electronic Equipment, Instruments & Components | |||||||||||
5,150 | Citizen Holdings Co., Ltd. | 32,446 |
See Notes to Financial Statements
20
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
7,900 | FUJIFILM Holdings Corp. | $ | 168,904 | ||||||||
500 | Hirose Electric Co., Ltd. | 52,668 | |||||||||
38,000 | Hitachi Ltd. | 243,687 | |||||||||
4,800 | Hoya Corp. | 110,621 | |||||||||
2,600 | Ibiden Co., Ltd. (a) | 53,700 | |||||||||
847 | Keyence Corp. | 201,141 | |||||||||
2,900 | Kyocera Corp. | 285,496 | |||||||||
2,200 | Murata Manufacturing Co., Ltd. | 126,616 | |||||||||
4,500 | Nippon Electric Glass Co., Ltd. | 36,748 | |||||||||
4,604 | Omron Corp. | 98,435 | |||||||||
1,552 | TDK Corp. | 82,032 | |||||||||
3,450 | Yokogawa Electric Corp. (a) | 33,359 | |||||||||
1,525,853 | |||||||||||
Food & Staples Retailing | |||||||||||
1,299 | FamilyMart Co., Ltd. | 57,921 | |||||||||
3,400 | Seven & I Holdings Co., Ltd. | 103,184 | |||||||||
161,105 | |||||||||||
Food Products | |||||||||||
1,600 | Yakult Honsha Co., Ltd. (a) | 59,078 | |||||||||
Gas Utilities | |||||||||||
8,000 | Osaka Gas Co., Ltd. | 32,365 | |||||||||
10,000 | Tokyo Gas Co., Ltd. | 48,346 | |||||||||
80,711 | |||||||||||
Health Care Equipment & Supplies | |||||||||||
1,300 | Sysmex Corp. | 52,593 | |||||||||
2,850 | Terumo Corp. | 131,184 | |||||||||
183,777 | |||||||||||
Hotels, Restaurants & Leisure | |||||||||||
650 | Oriental Land Co., Ltd. (a) | 72,132 | |||||||||
Household Durables | |||||||||||
5,050 | Casio Computer Co., Ltd. (a) | 33,840 | |||||||||
26,800 | Panasonic Corp. | 208,788 | |||||||||
7,072 | Sekisui Chemical Co., Ltd. | 63,775 | |||||||||
11,046 | Sekisui House Ltd. | 103,072 | |||||||||
7,500 | Sharp Corp. (a) | 48,472 |
NUMBER OF SHARES | VALUE | ||||||||||
9,096 | Sony Corp. | $ | 149,929 | ||||||||
607,876 | |||||||||||
Household Products | |||||||||||
2,700 | Unicharm Corp. | 150,827 | |||||||||
Information Technology Services | |||||||||||
700 | Itochu Techno-Solutions Corp. (a) | 31,958 | |||||||||
2,250 | Nomura Research Institute Ltd. (a) | 51,994 | |||||||||
18 | NTT Data Corp. | 62,743 | |||||||||
146,695 | |||||||||||
Insurance | |||||||||||
4,200 | MS&AD Insurance Group Holdings | 78,014 | |||||||||
2,200 | NKSJ Holdings, Inc. | 45,604 | |||||||||
4,700 | T&D Holdings, Inc. | 51,038 | |||||||||
8,968 | Tokio Marine Holdings, Inc. | 231,276 | |||||||||
405,932 | |||||||||||
Internet Software & Services | |||||||||||
203 | Yahoo! Japan Corp. | 61,047 | |||||||||
Leisure Equipment & Products | |||||||||||
3,400 | Nikon Corp. | 101,906 | |||||||||
1,950 | Shimano, Inc. | 128,470 | |||||||||
2,100 | Yamaha Corp. | 20,490 | |||||||||
250,866 | |||||||||||
Machinery | |||||||||||
3,553 | Amada Co., Ltd. | 24,298 | |||||||||
2,250 | Fanuc Corp. | 382,985 | |||||||||
2,800 | Hitachi Construction Machinery Co., Ltd. (a) | 61,267 | |||||||||
12,530 | IHI Corp. | 30,446 | |||||||||
11,500 | Kawasaki Heavy Industries Ltd. | 34,857 | |||||||||
12,400 | Komatsu Ltd. | 359,544 | |||||||||
19,000 | Kubota Corp. (a) | 184,669 | |||||||||
1,100 | Kurita Water Industries Ltd. (a) | 27,018 | |||||||||
700 | Makita Corp. | 27,092 |
See Notes to Financial Statements
21
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
28,550 | Mitsubishi Heavy Industries Ltd. | $ | 130,163 | ||||||||
1,300 | Nabtesco Corp. (a) | 28,039 | |||||||||
6,060 | NGK Insulators Ltd. | 76,281 | |||||||||
5,553 | NSK Ltd. | 38,532 | |||||||||
6,051 | NTN Corp. | 23,116 | |||||||||
805 | SMC Corp. | 135,208 | |||||||||
5,000 | Sumitomo Heavy Industries Ltd. | 25,927 | |||||||||
1,000 | THK Co., Ltd. | 20,090 | |||||||||
1,609,532 | |||||||||||
Marine | |||||||||||
23,000 | Kawasaki Kisen Kaisha Ltd. (a)(d) | 48,973 | |||||||||
2,000 | Mitsui OSK Lines Ltd. | 7,816 | |||||||||
13,015 | Nippon Yusen KK (a) | 38,797 | |||||||||
95,586 | |||||||||||
Metals & Mining | |||||||||||
3,700 | JFE Holdings, Inc. (a) | 70,024 | |||||||||
25,000 | Kobe Steel Ltd. (a) | 36,009 | |||||||||
21,000 | Mitsubishi Materials Corp. | 63,126 | |||||||||
48,108 | Nippon Steel Corp. | 121,114 | |||||||||
32,000 | Sumitomo Metal Industries Ltd. | 58,116 | |||||||||
14,500 | Sumitomo Metal Mining Co., Ltd. | 191,784 | |||||||||
540,173 | |||||||||||
Office Electronics | |||||||||||
6,004 | Canon, Inc. | 275,986 | |||||||||
7,030 | Konica Minolta Holdings, Inc. | 57,585 | |||||||||
333,571 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
19 | Inpex Corp. | 126,127 | |||||||||
24,400 | JX Holdings, Inc. | 138,442 | |||||||||
3,400 | Showa Shell Sekiyu KK | 21,506 | |||||||||
4,000 | TonenGeneral Sekiyu KK | 37,575 | |||||||||
323,650 | |||||||||||
Paper & Forest Products | |||||||||||
1,400 | Nippon Paper Group, Inc. (a) | 28,056 |
NUMBER OF SHARES | VALUE | ||||||||||
16,000 | OJI Paper Co., Ltd. | $ | 73,547 | ||||||||
101,603 | |||||||||||
Personal Products | |||||||||||
2,500 | Shiseido Co., Ltd. | 43,900 | |||||||||
Pharmaceuticals | |||||||||||
5,300 | Astellas Pharma, Inc. | 215,412 | |||||||||
2,600 | Chugai Pharmaceutical Co., Ltd. | 47,024 | |||||||||
11,500 | Daiichi Sankyo Co., Ltd. | 197,908 | |||||||||
2,500 | Eisai Co., Ltd. | 97,695 | |||||||||
700 | Hisamitsu Pharmaceutical Co., Inc. | 31,213 | |||||||||
2,700 | Mitsubishi Tanabe Pharma Corp. | 37,605 | |||||||||
900 | Ono Pharmaceutical Co., Ltd. | 50,952 | |||||||||
2,800 | Otsuka Holdings Co., Ltd. | 84,519 | |||||||||
900 | Santen Pharmaceutical Co. Ltd. | 37,594 | |||||||||
3,400 | Shionogi & Co., Ltd. | 44,502 | |||||||||
10,300 | Takeda Pharmaceutical Co., Ltd. | 449,593 | |||||||||
1,294,017 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
9 | Japan Real Estate Investment Corp. REIT | 79,810 | |||||||||
29 | Japan Retail Fund Investment Corp. REIT | 46,311 | |||||||||
10 | Nippon Building Fund, Inc. REIT | 95,316 | |||||||||
221,437 | |||||||||||
Real Estate Management & Development | |||||||||||
1,500 | Aeon Mall Co., Ltd. | 33,461 | |||||||||
1,556 | Daito Trust Construction Co., Ltd. | 140,516 | |||||||||
9,000 | Daiwa House Industry Co., Ltd. | 116,558 | |||||||||
21,000 | Mitsubishi Estate Co., Ltd. | 374,549 | |||||||||
15,500 | Mitsui Fudosan Co., Ltd. | 286,742 |
See Notes to Financial Statements
22
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
7,500 | Sumitomo Realty & Development Co., Ltd. | $ | 180,736 | ||||||||
11,000 | Tokyu Land Corp. | 53,457 | |||||||||
1,186,019 | |||||||||||
Road & Rail | |||||||||||
13 | Central Japan Railway Co. | 108,116 | |||||||||
3,400 | East Japan Railway Co. | 212,074 | |||||||||
6,000 | Keikyu Corp. | 51,553 | |||||||||
3,000 | Keio Corp. (a) | 21,719 | |||||||||
15,550 | Kintetsu Corp. (a) | 54,924 | |||||||||
11,500 | Nippon Express Co., Ltd. | 43,644 | |||||||||
8,500 | Tobu Railway Co., Ltd. | 43,330 | |||||||||
12,000 | Tokyu Corp. | 56,212 | |||||||||
900 | West Japan Railway Co. | 37,030 | |||||||||
628,602 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
2,450 | Advantest Corp. | 41,120 | |||||||||
1,605 | Rohm Co., Ltd. | 72,772 | |||||||||
3,100 | Tokyo Electron Ltd. | 172,977 | |||||||||
286,869 | |||||||||||
Software | |||||||||||
1,700 | Konami Corp. (a) | 49,612 | |||||||||
1,008 | Nintendo Co., Ltd. | 137,615 | |||||||||
750 | Oracle Corp. Japan | 29,027 | |||||||||
1,600 | Trend Micro, Inc. (a) | 48,777 | |||||||||
265,031 | |||||||||||
Specialty Retail | |||||||||||
1,300 | Fast Retailing Co., Ltd. | 291,946 | |||||||||
300 | Shimamura Co., Ltd. | 34,081 | |||||||||
620 | USS Co., Ltd. | 63,134 | |||||||||
1,160 | Yamada Denki Co., Ltd. | 75,551 | |||||||||
464,712 | |||||||||||
Tobacco | |||||||||||
27 | Japan Tobacco, Inc. | 149,981 | |||||||||
Trading Companies & Distributors | |||||||||||
16,351 | ITOCHU Corp. | 185,546 | |||||||||
17,550 | Marubeni Corp. | 122,657 |
NUMBER OF SHARES | VALUE | ||||||||||
14,900 | Mitsubishi Corp. | $ | 325,284 | ||||||||
13,700 | Mitsui & Co., Ltd. | 215,178 | |||||||||
8,300 | Sumitomo Corp. | 118,512 | |||||||||
967,177 | |||||||||||
Transportation Infrastructure | |||||||||||
2,000 | Mitsubishi Logistics Corp. | 22,069 | |||||||||
Wireless Telecommunication Services | |||||||||||
30 | NTT DoCoMo, Inc. | 51,178 | |||||||||
11,300 | Softbank Corp. | 339,113 | |||||||||
390,291 | |||||||||||
Total Japan | 20,129,514 | ||||||||||
Korea, Republic of (1.3%) | |||||||||||
Auto Components | |||||||||||
117 | Hyundai Mobis | 31,835 | |||||||||
Automobiles | |||||||||||
280 | Hyundai Motor Co. | 66,523 | |||||||||
420 | Kia Motors Corp. | 30,995 | |||||||||
97,518 | |||||||||||
Capital Markets | |||||||||||
360 | Daewoo Securities Co., Ltd. (d) | 3,663 | |||||||||
142 | Samsung Securities Co., Ltd. | 6,308 | |||||||||
9,971 | |||||||||||
Chemicals | |||||||||||
142 | Cheil Industries, Inc. | 12,188 | |||||||||
88 | LG Chem Ltd. | 22,153 | |||||||||
35 | OCI Co., Ltd. | 6,628 | |||||||||
40,969 | |||||||||||
Commercial Banks | |||||||||||
380 | Hana Financial Group, Inc. | 13,063 | |||||||||
610 | Industrial Bank of Korea | 6,747 | |||||||||
710 | KB Financial Group, Inc. | 24,188 | |||||||||
1,020 | Korea Exchange Bank | 7,753 | |||||||||
790 | Shinhan Financial Group Co., Ltd. | 27,612 |
See Notes to Financial Statements
23
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
470 | Woori Finance Holdings Co., Ltd. | $ | 4,970 | ||||||||
84,333 | |||||||||||
Construction & Engineering | |||||||||||
190 | Doosan Heavy Industries and Construction Co., Ltd. | 8,961 | |||||||||
123 | GS Engineering & Construction Corp. | 9,175 | |||||||||
150 | Hyundai Engineering & Construction Co., Ltd. | 9,477 | |||||||||
70 | Samsung Engineering Co., Ltd. | 13,317 | |||||||||
40,930 | |||||||||||
Diversified Telecommunication Services | |||||||||||
420 | KT Corp. | 10,926 | |||||||||
Electric Utilities | |||||||||||
510 | Korea Electric Power Corp. (d) | 9,793 | |||||||||
Electronic Equipment, Instruments & Components | |||||||||||
450 | LG Display Co., Ltd. (d) | 9,915 | |||||||||
115 | Samsung Electro-Mechanics Co., Ltd. | 11,142 | |||||||||
72 | Samsung SDI Co., Ltd. | 10,385 | |||||||||
31,442 | |||||||||||
Food & Staples Retailing | |||||||||||
47 | E-Mart Co., Ltd. | 11,166 | |||||||||
Household Durables | |||||||||||
199 | LG Electronics, Inc. | 12,361 | |||||||||
Industrial Conglomerates | |||||||||||
339 | LG Corp. | 17,278 | |||||||||
77 | Samsung Techwin Co., Ltd. | 4,715 | |||||||||
21,993 | |||||||||||
Insurance | |||||||||||
75 | Samsung Fire & Marine Insurance Co., Ltd. | 14,335 | |||||||||
Internet Software & Services | |||||||||||
83 | NHN Corp. | 18,801 |
NUMBER OF SHARES | VALUE | ||||||||||
Machinery | |||||||||||
84 | Hyundai Heavy Industries Co., Ltd. | $ | 21,035 | ||||||||
450 | Samsung Heavy Industries Co., Ltd. | 16,604 | |||||||||
37,639 | |||||||||||
Metals & Mining | |||||||||||
149 | Hyundai Steel Co. | 13,000 | |||||||||
118 | POSCO | 39,207 | |||||||||
52,207 | |||||||||||
Multiline Retail | |||||||||||
26 | Lotte Shopping Co., Ltd. | 8,075 | |||||||||
16 | Shinsegae Co., Ltd. | 3,511 | |||||||||
11,586 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
140 | S-Oil Corp. | 12,128 | |||||||||
126 | SK Innovation Co., Ltd. | 17,616 | |||||||||
29,744 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
900 | Hynix Semiconductor, Inc. (d) | 22,338 | |||||||||
506 | Samsung Electronics Co., Ltd. | 622,356 | |||||||||
36 | Samsung Electronics Co., Ltd. (Preference) | 25,771 | |||||||||
670,465 | |||||||||||
Tobacco | |||||||||||
221 | KT&G Corp. | 15,175 | |||||||||
Trading Companies & Distributors | |||||||||||
290 | Samsung C&T Corp. | 19,708 | |||||||||
Wireless Telecommunication Services | |||||||||||
98 | SK Telecom Co., Ltd. | 11,707 | |||||||||
Total Korea, Republic of | 1,284,604 | ||||||||||
Netherlands (3.1%) | |||||||||||
Air Freight & Logistics | |||||||||||
8,488 | TNT Express N.V. | 102,918 |
See Notes to Financial Statements
24
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Beverages | |||||||||||
2,696 | Heineken N.V. (a) | $ | 147,441 | ||||||||
Chemicals | |||||||||||
3,337 | Akzo Nobel N.V. | 178,830 | |||||||||
1,514 | Koninklijke DSM N.V. | 86,807 | |||||||||
265,637 | |||||||||||
Construction & Engineering | |||||||||||
822 | Koninklijke Boskalis Westminster N.V. | 29,987 | |||||||||
Diversified Financial Services | |||||||||||
46,563 | ING Groep N.V. CVA (d) | 328,332 | |||||||||
Diversified Telecommunication Services | |||||||||||
20,919 | Koninklijke KPN N.V. (a) | 187,769 | |||||||||
Energy Equipment & Services | |||||||||||
738 | Fugro N.V. CVA | 53,787 | |||||||||
1,865 | SBM Offshore N.V. | 33,883 | |||||||||
87,670 | |||||||||||
Food & Staples Retailing | |||||||||||
18,160 | Koninklijke Ahold N.V. (a) | 230,336 | |||||||||
Food Products | |||||||||||
15,359 | Unilever N.V. CVA | 525,956 | |||||||||
Industrial Conglomerates | |||||||||||
13,946 | Koninklijke Philips Electronics N.V. (d) | 276,905 | |||||||||
Insurance | |||||||||||
19,354 | Aegon N.V. (d) | 89,384 | |||||||||
Media | |||||||||||
8,407 | Reed Elsevier N.V. (a) | 99,142 | |||||||||
7,415 | Wolters Kluwer N.V. | 127,991 | |||||||||
227,133 | |||||||||||
Metals & Mining | |||||||||||
6,021 | ArcelorMittal | 104,128 | |||||||||
Professional Services | |||||||||||
1,227 | Randstad Holding N.V. | 42,489 |
NUMBER OF SHARES | VALUE | ||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
769 | Corio N.V. REIT (a) | $ | 34,416 | ||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
5,597 | ASML Holding N.V. (a) | 284,792 | |||||||||
Total Netherlands | 2,965,293 | ||||||||||
Norway (1.7%) | |||||||||||
Chemicals | |||||||||||
8,199 | Yara International ASA | 402,146 | |||||||||
Commercial Banks | |||||||||||
15,497 | DnB NOR ASA (a) | 167,076 | |||||||||
Diversified Telecommunication Services | |||||||||||
29,041 | Telenor ASA | 533,835 | |||||||||
Energy Equipment & Services | |||||||||||
2,989 | Aker Solutions ASA (a) | 50,792 | |||||||||
1,992 | Subsea 7 SA (d) | 51,619 | |||||||||
102,411 | |||||||||||
Industrial Conglomerates | |||||||||||
12,726 | Orkla ASA | 93,483 | |||||||||
Metals & Mining | |||||||||||
12,701 | Norsk Hydro ASA (a) | 61,786 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
9,737 | Statoil ASA | 259,973 | |||||||||
Total Norway | 1,620,710 | ||||||||||
Philippines (0.9%) | |||||||||||
Commercial Banks | |||||||||||
58,200 | Bank of the Philippine Islands | 101,595 | |||||||||
34,300 | Metropolitan Bank & Trust | 74,254 | |||||||||
175,849 | |||||||||||
Diversified Financial Services | |||||||||||
7,176 | Ayala Corp. | 73,086 | |||||||||
Electric Utilities | |||||||||||
9,230 | Manila Electric Co. | 57,671 |
See Notes to Financial Statements
25
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Independent Power Producers & Energy Traders | |||||||||||
59,200 | Aboitiz Power Corp. | $ | 47,674 | ||||||||
250,000 | Energy Development Corp. | 34,936 | |||||||||
82,610 | |||||||||||
Industrial Conglomerates | |||||||||||
69,000 | Aboitiz Equity Ventures, Inc. | 83,349 | |||||||||
130,700 | Alliance Global Group, Inc. | 38,263 | |||||||||
6,000 | SM Investments Corp. | 99,337 | |||||||||
220,949 | |||||||||||
Real Estate Management & Development | |||||||||||
172,300 | Ayala Land, Inc. | 87,537 | |||||||||
173,000 | SM Prime Holdings, Inc. | 68,430 | |||||||||
155,967 | |||||||||||
Wireless Telecommunication Services | |||||||||||
1,530 | Philippine Long Distance Telephone Co. | 93,786 | |||||||||
Total Philippines | 859,918 | ||||||||||
Poland (1.0%) | |||||||||||
Chemicals | |||||||||||
405 | Synthos SA | 783 | |||||||||
Commercial Banks | |||||||||||
2,638 | Bank Pekao SA | 124,400 | |||||||||
334 | BRE Bank SA (d) | 30,600 | |||||||||
4,848 | Get Bank SA (d) | 2,921 | |||||||||
15,012 | Powszechna Kasa Oszczednosci Bank Polski SA | 160,913 | |||||||||
318,834 | |||||||||||
Diversified Telecommunication Services | |||||||||||
15,679 | Telekomunikacja Polska SA | 82,042 | |||||||||
Electric Utilities | |||||||||||
15,174 | PGE SA | 90,852 |
NUMBER OF SHARES | VALUE | ||||||||||
23,900 | Tauron Polska Energia SA | $ | 35,396 | ||||||||
126,248 | |||||||||||
Insurance | |||||||||||
1,100 | Powszechny Zaklad Ubezpieczen SA | 111,211 | |||||||||
Metals & Mining | |||||||||||
3,062 | KGHM Polska Miedz SA | 134,781 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
7,537 | Polski Koncern Naftowy Orlen SA (d) | 87,935 | |||||||||
41,073 | Polskie Gornictwo Naftowe i Gazownictwo SA | 53,144 | |||||||||
141,079 | |||||||||||
Software | |||||||||||
646 | Asseco Poland SA | 9,594 | |||||||||
Total Poland | 924,572 | ||||||||||
Singapore (2.2%) | |||||||||||
Aerospace & Defense | |||||||||||
16,000 | Singapore Technologies Engineering Ltd. | 38,917 | |||||||||
Airlines | |||||||||||
9,276 | Singapore Airlines Ltd. (a) | 80,205 | |||||||||
Commercial Banks | |||||||||||
24,413 | DBS Group Holdings Ltd. | 275,398 | |||||||||
45,093 | Oversea-Chinese Banking Corp., Ltd. | 326,492 | |||||||||
21,508 | United Overseas Bank Ltd. | 334,569 | |||||||||
936,459 | |||||||||||
Distributors | |||||||||||
31 | Jardine Cycle & Carriage Ltd. | 1,182 | |||||||||
Diversified Financial Services | |||||||||||
7,490 | Singapore Exchange Ltd. | 40,552 | |||||||||
Diversified Telecommunication Services | |||||||||||
94,630 | Singapore Telecommunications Ltd. | 237,818 |
See Notes to Financial Statements
26
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Food & Staples Retailing | |||||||||||
7,000 | Olam International Ltd. (a) | $ | 12,840 | ||||||||
Food Products | |||||||||||
13,000 | Wilmar International Ltd. (a) | 51,159 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
87,000 | Genting Singapore PLC (a)(d) | 121,624 | |||||||||
Industrial Conglomerates | |||||||||||
13,000 | Fraser and Neave Ltd. | 73,955 | |||||||||
18,700 | Keppel Corp., Ltd. | 166,978 | |||||||||
12,511 | SembCorp Industries Ltd. | 51,055 | |||||||||
291,988 | |||||||||||
Machinery | |||||||||||
11,400 | SembCorp Marine Ltd. (a) | 46,797 | |||||||||
Media | |||||||||||
11,350 | Singapore Press Holdings Ltd. (a) | 36,412 | |||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
18,000 | Ascendas Real Estate Investment Trust REIT | 30,255 | |||||||||
26,704 | CapitaMall Trust REIT | 38,842 | |||||||||
69,097 | |||||||||||
Real Estate Management & Development | |||||||||||
30,000 | CapitaLand Ltd. | 71,273 | |||||||||
6,462 | City Developments Ltd. | 52,949 | |||||||||
124,222 | |||||||||||
Road & Rail | |||||||||||
19,089 | ComfortDelGro Corp., Ltd. | 23,601 | |||||||||
Trading Companies & Distributors | |||||||||||
29,726 | Noble Group Ltd. (a) | 28,345 | |||||||||
Total Singapore | 2,141,218 | ||||||||||
South Africa (0.4%) | |||||||||||
Beverages | |||||||||||
9,770 | SABMiller PLC | 410,426 |
NUMBER OF SHARES | VALUE | ||||||||||
Sweden (3.3%) | |||||||||||
Building Products | |||||||||||
3,264 | Assa Abloy AB, Class B (a) | $ | 95,133 | ||||||||
Commercial Banks | |||||||||||
24,832 | Nordea Bank AB | 220,194 | |||||||||
7,349 | Svenska Handelsbanken AB, Class A | 238,140 | |||||||||
458,334 | |||||||||||
Commercial Services & Supplies | |||||||||||
4,869 | Securitas AB, Class B | 44,624 | |||||||||
Communications Equipment | |||||||||||
43,347 | Telefonaktiebolaget LM Ericsson, Class B (d) | 429,517 | |||||||||
Construction & Engineering | |||||||||||
7,691 | Skanska AB, Class B (a) | 125,183 | |||||||||
Diversified Financial Services | |||||||||||
7,327 | Investor AB, Class B | 146,075 | |||||||||
Diversified Telecommunication Services | |||||||||||
3,665 | Tele2 AB, Class B | 69,851 | |||||||||
26,725 | TeliaSonera AB | 178,649 | |||||||||
248,500 | |||||||||||
Health Care Equipment & Supplies | |||||||||||
3,440 | Getinge AB, Class B | 92,330 | |||||||||
Household Durables | |||||||||||
2,466 | Electrolux AB, Class B | 55,071 | |||||||||
3,614 | Husqvarna AB, Class B | 20,798 | |||||||||
75,869 | |||||||||||
Machinery | |||||||||||
2,708 | Alfa Laval AB (a) | 53,988 | |||||||||
6,909 | Atlas Copco AB, Class A (a) | 164,468 | |||||||||
4,378 | Atlas Copco AB, Class B | 91,907 | |||||||||
9,100 | Sandvik AB | 144,191 | |||||||||
2,911 | SKF AB, Class B (a) | 69,080 | |||||||||
6,131 | Volvo AB, Class A | 84,924 |
See Notes to Financial Statements
27
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
9,151 | Volvo AB, Class B | $ | 126,891 | ||||||||
735,449 | |||||||||||
Metals & Mining | |||||||||||
1,794 | Boliden AB | 28,720 | |||||||||
3,286 | SSAB AB, Class A (a) | 33,538 | |||||||||
62,258 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
2,027 | Lundin Petroleum AB (d) | 40,321 | |||||||||
Paper & Forest Products | |||||||||||
859 | Holmen AB, Class B | 22,813 | |||||||||
9,059 | Svenska Cellulosa AB, Class B | 143,541 | |||||||||
166,354 | |||||||||||
Specialty Retail | |||||||||||
10,681 | Hennes & Mauritz AB, Class B (d) | 366,929 | |||||||||
Tobacco | |||||||||||
2,444 | Swedish Match AB | 99,341 | |||||||||
Total Sweden | 3,186,217 | ||||||||||
Switzerland (8.3%) | |||||||||||
Building Products | |||||||||||
418 | Geberit AG (Registered) (d) | 88,376 | |||||||||
Capital Markets | |||||||||||
7,663 | Credit Suisse Group AG (Registered) | 183,290 | |||||||||
1,827 | GAM Holding AG (d) | 23,450 | |||||||||
2,435 | Julius Baer Group Ltd. (d) | 93,226 | |||||||||
25,115 | UBS AG (Registered) (d) | 313,505 | |||||||||
613,471 | |||||||||||
Chemicals | |||||||||||
68 | Givaudan SA (Registered) (d) | 66,003 | |||||||||
1,918 | Syngenta AG (Registered) | 673,461 | |||||||||
739,464 | |||||||||||
Computers & Peripherals | |||||||||||
2,768 | Logitech International SA (Registered) (a)(d) | 28,270 | |||||||||
Construction Materials | |||||||||||
2,195 | Holcim Ltd. (Registered) (d) | 136,636 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Financial Services | |||||||||||
76 | Pargesa Holding SA | $ | 5,087 | ||||||||
Diversified Telecommunication Services | |||||||||||
255 | Swisscom AG (Registered) (a) | 94,988 | |||||||||
Electrical Equipment | |||||||||||
32,443 | ABB Ltd. (Registered) (d) | 591,205 | |||||||||
Food Products | |||||||||||
35,151 | Nestle SA (Registered) | 2,153,248 | |||||||||
Health Care Equipment & Supplies | |||||||||||
144 | Straumann Holding AG (Registered) | 23,893 | |||||||||
977 | Synthes, Inc. (f) | 168,457 | |||||||||
192,350 | |||||||||||
Insurance | |||||||||||
519 | Baloise-Holding AG (Registered) | 40,169 | |||||||||
294 | Swiss Life Holding AG (Registered) (d) | 30,075 | |||||||||
3,577 | Swiss Re AG (d) | 224,240 | |||||||||
1,090 | Zurich Insurance Group AG (d) | 266,601 | |||||||||
561,085 | |||||||||||
Life Sciences Tools & Services | |||||||||||
401 | Lonza Group AG (Registered) (d) | 18,083 | |||||||||
Machinery | |||||||||||
559 | Schindler Holding AG | 72,304 | |||||||||
Pharmaceuticals | |||||||||||
22,312 | Novartis AG (Registered) | 1,230,337 | |||||||||
6,721 | Roche Holding AG (Genusschein) | 1,227,722 | |||||||||
2,458,059 | |||||||||||
Professional Services | |||||||||||
193 | Adecco SA (Registered) (d) | 9,398 | |||||||||
22 | SGS SA (Registered) | 42,490 | |||||||||
51,888 |
See Notes to Financial Statements
28
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
1,585 | Cie Financiere Richemont SA | $ | 97,966 | ||||||||
107 | Swatch Group AG (The) | 49,347 | |||||||||
237 | Swatch Group AG (The) (Registered) | 18,905 | |||||||||
166,218 | |||||||||||
Total Switzerland | 7,970,732 | ||||||||||
Thailand (0.3%) | |||||||||||
Commercial Banks | |||||||||||
5,500 | Bangkok Bank PCL | 34,163 | |||||||||
9,900 | Bangkok Bank PCL (Foreign Registered) | 62,459 | |||||||||
22,100 | Bank of Ayudhya PCL (Foreign) | 20,303 | |||||||||
7,000 | Kasikornbank PCL | 37,219 | |||||||||
13,600 | Kasikornbank PCL (Foreign) | 72,091 | |||||||||
30,600 | Krung Thai Bank PCL | 17,912 | |||||||||
17,800 | Siam Commercial Bank PCL (Foreign) | 87,119 | |||||||||
Total Thailand | 331,266 | ||||||||||
United Kingdom (22.4%) | |||||||||||
Aerospace & Defense | |||||||||||
34,102 | BAE Systems PLC | 163,376 | |||||||||
18,140 | Cobham PLC | 66,680 | |||||||||
16,402 | Rolls-Royce Holdings PLC (d) | 219,206 | |||||||||
449,262 | |||||||||||
Beverages | |||||||||||
24,840 | Diageo PLC | 625,252 | |||||||||
Capital Markets | |||||||||||
7,704 | 3i Group PLC | 23,893 | |||||||||
5,144 | ICAP PLC | 31,698 | |||||||||
3,373 | Investec PLC | 19,444 | |||||||||
20,565 | Man Group PLC | 34,543 | |||||||||
2,284 | Schroders PLC | 52,561 | |||||||||
162,139 | |||||||||||
Chemicals | |||||||||||
1,911 | Johnson Matthey PLC | 71,766 |
NUMBER OF SHARES | VALUE | ||||||||||
Commercial Banks | |||||||||||
66,316 | Barclays PLC | $ | 234,890 | ||||||||
215,622 | HSBC Holdings PLC | 1,942,478 | |||||||||
94,546 | Lloyds Banking Group PLC (d) | 47,581 | |||||||||
177,365 | Royal Bank of Scotland Group PLC (d) | 69,860 | |||||||||
27,563 | Standard Chartered PLC | 673,664 | |||||||||
2,968,473 | |||||||||||
Commercial Services & Supplies | |||||||||||
12,385 | Aggreko PLC | 452,442 | |||||||||
4,556 | G4S PLC | 20,674 | |||||||||
1,852 | Serco Group PLC | 16,305 | |||||||||
489,421 | |||||||||||
Construction & Engineering | |||||||||||
14,043 | Balfour Beatty PLC | 59,483 | |||||||||
Containers & Packaging | |||||||||||
7,876 | Rexam PLC | 54,962 | |||||||||
Diversified Telecommunication Services | |||||||||||
93,863 | BT Group PLC | 321,112 | |||||||||
Electric Utilities | |||||||||||
13,950 | SSE PLC | 299,067 | |||||||||
Energy Equipment & Services | |||||||||||
3,695 | AMEC PLC | 68,061 | |||||||||
2,898 | Petrofac Ltd. | 81,600 | |||||||||
149,661 | |||||||||||
Food & Staples Retailing | |||||||||||
13,046 | J Sainsbury PLC | 65,190 | |||||||||
67,485 | Tesco PLC | 347,566 | |||||||||
412,756 | |||||||||||
Food Products | |||||||||||
10,182 | Unilever PLC | 347,507 | |||||||||
Health Care Equipment & Supplies | |||||||||||
17,251 | Smith & Nephew PLC | 169,800 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
3,425 | Carnival PLC | 111,336 |
See Notes to Financial Statements
29
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
24,002 | Compass Group PLC | $ | 250,856 | ||||||||
4,888 | Intercontinental Hotels Group PLC | 116,373 | |||||||||
9,998 | TUI Travel PLC (a) | 30,991 | |||||||||
2,883 | Whitbread PLC | 90,161 | |||||||||
599,717 | |||||||||||
Household Products | |||||||||||
7,345 | Reckitt Benckiser Group PLC | 427,578 | |||||||||
Independent Power Producers & Energy Traders | |||||||||||
4,314 | International Power PLC | 29,195 | |||||||||
Industrial Conglomerates | |||||||||||
3,494 | Smiths Group PLC | 60,673 | |||||||||
Insurance | |||||||||||
1,798 | Admiral Group PLC | 35,337 | |||||||||
26,507 | Aviva PLC | 132,539 | |||||||||
71,100 | Legal & General Group PLC | 135,696 | |||||||||
44,499 | Old Mutual PLC | 106,737 | |||||||||
20,110 | Prudential PLC | 246,243 | |||||||||
3,330 | Resolution Ltd. | 12,095 | |||||||||
34,960 | RSA Insurance Group PLC | 59,573 | |||||||||
19,165 | Standard Life PLC | 69,546 | |||||||||
797,766 | |||||||||||
Machinery | |||||||||||
6,676 | Invensys PLC | 24,063 | |||||||||
Media | |||||||||||
23,145 | British Sky Broadcasting Group PLC | 254,670 | |||||||||
13,002 | Pearson PLC | 244,771 | |||||||||
15,530 | Reed Elsevier PLC | 128,539 | |||||||||
49,043 | WPP PLC | 663,398 | |||||||||
1,291,378 | |||||||||||
Metals & Mining | |||||||||||
11,462 | Anglo American PLC | 440,488 | |||||||||
7,988 | BHP Billiton PLC | 255,969 | |||||||||
13,612 | Rio Tinto PLC | 758,270 | |||||||||
12,598 | Xstrata PLC | 240,743 | |||||||||
1,695,470 |
NUMBER OF SHARES | VALUE | ||||||||||
Multi-Utilities | |||||||||||
33,839 | Centrica PLC | $ | 168,541 | ||||||||
32,306 | National Grid PLC | 348,918 | |||||||||
517,459 | |||||||||||
Multiline Retail | |||||||||||
20,663 | Marks & Spencer Group PLC | 119,717 | |||||||||
2,785 | Next PLC | 132,384 | |||||||||
252,101 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
32,972 | BG Group PLC | 776,166 | |||||||||
126,168 | BP PLC | 911,173 | |||||||||
36,068 | Royal Dutch Shell PLC, Class A | 1,283,667 | |||||||||
26,821 | Royal Dutch Shell PLC, Class B | 977,852 | |||||||||
557 | Tullow Oil PLC | 13,867 | |||||||||
3,962,725 | |||||||||||
Pharmaceuticals | |||||||||||
13,431 | AstraZeneca PLC | 588,414 | |||||||||
49,530 | GlaxoSmithKline PLC | 1,145,447 | |||||||||
1,733,861 | |||||||||||
Professional Services | |||||||||||
1,773 | Capita Group PLC (The) | 19,077 | |||||||||
8,775 | Experian PLC | 138,493 | |||||||||
157,570 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
9,395 | British Land Co., PLC REIT | 74,620 | |||||||||
6,556 | Capital Shopping Centres Group PLC REIT | 34,579 | |||||||||
8,687 | Hammerson PLC REIT | 58,874 | |||||||||
8,271 | Land Securities Group PLC REIT | 97,652 | |||||||||
8,784 | Segro PLC REIT | 31,519 | |||||||||
297,244 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
25,507 | ARM Holdings PLC | 216,911 |
See Notes to Financial Statements
30
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES | VALUE | ||||||||||
Software | |||||||||||
20,512 | Sage Group PLC (The) | $ | 95,240 | ||||||||
Specialty Retail | |||||||||||
15,420 | Kingfisher PLC | 72,698 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
1,565 | Burberry Group PLC | 37,717 | |||||||||
Tobacco | |||||||||||
13,243 | British American Tobacco PLC | 678,934 | |||||||||
5,837 | Imperial Tobacco Group PLC | 233,412 | |||||||||
912,346 | |||||||||||
Trading Companies & Distributors | |||||||||||
4,063 | Bunzl PLC | 67,455 | |||||||||
783 | Wolseley PLC | 29,773 | |||||||||
97,228 | |||||||||||
Water Utilities | |||||||||||
4,677 | Severn Trent PLC | 128,276 | |||||||||
1,972 | United Utilities Group PLC | 19,794 | |||||||||
148,070 | |||||||||||
Wireless Telecommunication Services | |||||||||||
593,962 | Vodafone Group PLC | 1,643,519 | |||||||||
Total United Kingdom | 21,651,190 | ||||||||||
United States (0.0%) | |||||||||||
Real Estate Management & Development | |||||||||||
1,774 | Lend Lease Group REIT (Stapled Securities) (b)(c) | 13,771 | |||||||||
Total Common Stocks (Cost $83,584,338) | 83,300,899 | ||||||||||
Preferred Stock (0.0%) | |||||||||||
United Kingdom | |||||||||||
Aerospace & Defense | |||||||||||
1,738,612 | Rolls-Royce Holdings PLC, Class C (Cost $2,806) (d) | 2,822 |
NUMBER OF SHARES | VALUE | ||||||||||
Rights (0.0%) | |||||||||||
Brazil | |||||||||||
1 | Cia de Bebidas das Americas (d) | $ | — | ||||||||
54 | Itausa - Investimentos Itau SA (d) | 16 | |||||||||
Total Rights (Cost $0) | 16 | ||||||||||
PRINCIPAL AMOUNT IN THOUSANDS | |||||||||||
Short-Term Investments (18.7%) | |||||||||||
Securities held as Collateral on Loaned Securities (7.4%) | |||||||||||
Repurchase Agreements (2.0%) | |||||||||||
$ | 761 | Barclays Capital, Inc. (0.20%, dated 04/30/12, due 05/01/12; proceeds $760,572; fully collateralized by a U.S. Government Agency; Federal Home Loan Mortgage Corporation 4.00% due 08/01/41; valued at $775,779) | 760,568 | ||||||||
1,184 | Merrill Lynch & Co., Inc. (0.21%, dated 04/30/12, due 05/01/12; proceeds $1,184,320; fully collateralized by a U.S. Government Agency; Federal Home Loan Mortgage Corporation 4.50% due 07/01/41; valued at $1,207,999) | 1,184,312 | |||||||||
Total Repurchase Agreements (Cost $1,944,880) | 1,944,880 |
See Notes to Financial Statements
31
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
NUMBER OF SHARES (000) | VALUE | ||||||||||
Investment Company (5.4%) | |||||||||||
5,237 | Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $5,237,227) | $ | 5,237,227 | ||||||||
Total Securities held as Collateral on Loaned Securities (Cost $7,182,107) | 7,182,107 | ||||||||||
Investment Company (11.3%) | |||||||||||
10,903 | Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $10,902,618) | 10,902,618 | |||||||||
Total Short-Term Investments (Cost $18,084,725) | 18,084,725 | ||||||||||
Total Investments (Cost $101,671,869) (g) | 105.1 | % | 101,388,462 | ||||||||
Liabilities in Excess of Other Assets | (5.1 | ) | (4,938,432 | ) | |||||||
Net Assets | 100.0 | % | $ | 96,450,030 |
CDI CHESS Depositary Interest.
CVA Certificaten Van Aandelen.
FDR Fiduciary Depositary Receipt.
VVPR Verminderde Voorheffing Précompte Réduit.
(a) All or a portion of this security was on loan at April 30, 2012.
(b) Comprised of securities in separate entities that are traded as a single stapled security.
(c) Consists of one or more classes of securities traded together as a unit; stocks with attached warrants.
(d) Non-income producing security.
(e) Security trades on the Hong Kong exchange.
(f) 144A security - Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.
(g) Securities are available for collateral in connection with open foreign currency exchange contracts and futures contracts.
See Notes to Financial Statements
32
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
Foreign Currency Exchange Contracts Open at April 30, 2012:
COUNTERPARTY | CONTRACTS TO DELIVER | IN EXCHANGE FOR | DELIVERY DATE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
Mellon Bank | $ | 1,219,186 | AUD | 1,176,991 | 05/24/12 | $ | 4,312 | ||||||||||||
Credit Suisse London Branch | $ | 104,164 | CAD | 103,049 | 05/24/12 | 102 | |||||||||||||
Credit Suisse London Branch | $ | 186,431 | CHF | 170,421 | 05/24/12 | 1,371 | |||||||||||||
UBS AG | $ | 16,564 | CHF | 15,143 | 05/24/12 | 123 | |||||||||||||
JPMorgan Chase Bank | $ | 775,081 | EUR | 589,735 | 05/24/12 | 5,613 | |||||||||||||
Credit Suisse London Branch | $ | 5,154,188 | EUR | 3,921,580 | 05/24/12 | 37,221 | |||||||||||||
Deutsche Bank AG London | $ | 1,784,277 | EUR | 1,357,484 | 05/24/12 | 12,768 | |||||||||||||
Mellon Bank | $ | 909,711 | EUR | 692,143 | 05/24/12 | 6,551 | |||||||||||||
Royal Bank of Scotland | $ | 277,949 | EUR | 211,472 | 05/24/12 | 2,000 | |||||||||||||
UBS AG | $ | 1,132,564 | EUR | 861,718 | 05/24/12 | 8,182 | |||||||||||||
UBS AG | $ | 490,481 | GBP | 308,015 | 05/24/12 | 9,330 | |||||||||||||
State Street Bank and Trust Co. | $ | 150,611 | HKD | 1,168,596 | 05/24/12 | 19 | |||||||||||||
Royal Bank of Scotland | $ | 527,456 | JPY | 42,594,189 | 05/24/12 | 6,135 | |||||||||||||
Credit Suisse London Branch | CAD | 1,092,758 | $ | 1,105,647 | 05/24/12 | (11 | ) | ||||||||||||
Credit Suisse London Branch | CHF | 185,563 | $ | 202,880 | 05/24/12 | (1,609 | ) | ||||||||||||
UBS AG | EUR | 176,593 | $ | 232,138 | 05/24/12 | (1,637 | ) | ||||||||||||
Deutsche Bank AG London | GBP | 375,886 | $ | 598,538 | 05/24/12 | (11,404 | ) | ||||||||||||
UBS AG | GBP | 96,366 | $ | 154,723 | 05/24/12 | (1,648 | ) | ||||||||||||
Net Unrealized Appreciation | $ | 77,418 |
See Notes to Financial Statements
33
Morgan Stanley International Fund
Portfolio of Investments n April 30, 2012 (unaudited) continued
Futures Contracts Open at April 30, 2012:
NUMBER OF CONTRACTS | LONG/SHORT | DESCRIPTION, DELIVERY MONTH AND YEAR | UNDERLYING FACE AMOUNT AT VALUE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
18 | Long | DAX Index, Jun-12 | $ | 4,035,632 | $ | (102,382 | ) | ||||||||||||
25 | Long | TOPIX Index, Jun-12 | 2,512,838 | (61,377 | ) | ||||||||||||||
17 | Long | Hang Seng Index, May-12 | 2,294,085 | 47,425 | |||||||||||||||
12 | Long | ASX SPI 200 Index, Jun-12 | 1,374,436 | 56,265 | |||||||||||||||
11 | Long | FTSE 100 Index, Jun-12 | 1,020,236 | (15,352 | ) | ||||||||||||||
14 | Long | Hang Seng China ENT Index, May-12 | 993,523 | 26,525 | |||||||||||||||
Net Unrealized Depreciation | $ | (48,896 | ) |
Currency Abbreviations:
AUD Australian Dollar.
CAD Canadian Dollar.
CHF Swiss Franc.
EUR Euro.
GBP British Pound.
HKD Hong Kong Dollar.
JPY Japanese Yen.
See Notes to Financial Statements
34
Morgan Stanley International Fund
Summary of Investments n April 30, 2012 (unaudited)
INDUSTRY | VALUE | PERCENT OF TOTAL INVESTMENTS | |||||||||
Investment Companies | $ | 10,902,618 | 11.6 | % | |||||||
Commercial Banks | 9,563,976 | 10.1 | |||||||||
Pharmaceuticals | 7,444,253 | 7.9 | |||||||||
Oil, Gas & Consumable Fuels | 5,656,567 | 6.0 | |||||||||
Metals & Mining | 4,346,841 | 4.6 | |||||||||
Chemicals | 3,726,472 | 4.0 | |||||||||
Food Products | 3,524,043 | 3.7 | |||||||||
Insurance | 3,215,429 | 3.4 | |||||||||
Automobiles | 2,941,875 | 3.1 | |||||||||
Machinery | 2,888,559 | 3.1 | |||||||||
Diversified Telecommunication Services | 2,438,349 | 2.6 | |||||||||
Industrial Conglomerates | 2,207,090 | 2.3 | |||||||||
Wireless Telecommunication Services | 2,150,535 | 2.3 | |||||||||
Beverages | 1,722,596 | 1.8 | |||||||||
Media | 1,697,864 | 1.8 | |||||||||
Electronic Equipment, Instruments & Components | 1,557,295 | 1.7 | |||||||||
Real Estate Management & Development | 1,486,447 | 1.6 | |||||||||
Semiconductors & Semiconductor Equipment | 1,484,261 | 1.6 | |||||||||
Electrical Equipment | 1,442,570 | 1.5 | |||||||||
Capital Markets | 1,347,098 | 1.4 | |||||||||
Tobacco | 1,197,514 | 1.3 | |||||||||
Real Estate Investment Trusts (REITs) | 1,142,304 | 1.2 | |||||||||
Food & Staples Retailing | 1,138,587 | 1.2 | |||||||||
Trading Companies & Distributors | 1,112,458 | 1.2 | |||||||||
Software | 1,111,307 | 1.2 | |||||||||
Electric Utilities | 1,086,015 | 1.2 | |||||||||
Specialty Retail | 904,339 | 1.0 | |||||||||
Auto Components | 901,411 | 1.0 | |||||||||
Construction & Engineering | 900,511 | 1.0 | |||||||||
Hotels, Restaurants & Leisure | 880,463 | 0.9 | |||||||||
Commercial Services & Supplies | 812,503 | 0.9 | |||||||||
Diversified Financial Services | 800,249 | 0.8 | |||||||||
Multi-Utilities | 772,562 | 0.8 | |||||||||
Health Care Equipment & Supplies | 723,429 | 0.8 | |||||||||
Road & Rail | 721,321 | 0.8 | |||||||||
Household Durables | 696,130 | 0.7 | |||||||||
Communications Equipment | 649,124 | 0.7 | �� |
INDUSTRY | VALUE | PERCENT OF TOTAL INVESTMENTS | |||||||||
Household Products | $ | 625,207 | 0.7 | % | |||||||
Energy Equipment & Services | 621,730 | 0.7 | |||||||||
Aerospace & Defense | 595,413 | 0.6 | |||||||||
Building Products | 478,812 | 0.5 | |||||||||
Computers & Peripherals | 471,399 | 0.5 | |||||||||
Paper & Forest Products | 411,461 | 0.4 | |||||||||
Multiline Retail | 355,005 | 0.4 | |||||||||
Office Electronics | 349,727 | 0.4 | |||||||||
Construction Materials | 313,510 | 0.3 | |||||||||
Textiles, Apparel & Luxury Goods | 287,723 | 0.3 | |||||||||
Marine | 283,309 | 0.3 | |||||||||
Air Freight & Logistics | 281,505 | 0.3 | |||||||||
Professional Services | 251,947 | 0.3 | |||||||||
Leisure Equipment & Products | 250,866 | 0.3 | |||||||||
Information Technology Services | 223,748 | 0.2 | |||||||||
Health Care Providers & Services | 182,781 | 0.2 | |||||||||
Water Utilities | 155,923 | 0.2 | |||||||||
Containers & Packaging | 129,870 | 0.1 | |||||||||
Independent Power Producers & Energy Traders | 111,805 | 0.1 | |||||||||
Personal Products | 103,814 | 0.1 | |||||||||
Airlines | 98,840 | 0.1 | |||||||||
Gas Utilities | 92,011 | 0.1 | |||||||||
Internet Software & Services | 79,848 | 0.1 | |||||||||
Diversified Consumer Services | 42,358 | 0.0 | + | ||||||||
Transportation Infrastructure | 39,445 | 0.0 | + | ||||||||
Consumer Finance | 34,549 | 0.0 | + | ||||||||
Biotechnology | 19,519 | 0.0 | + | ||||||||
Life Sciences Tools & Services | 18,083 | 0.0 | + | ||||||||
Distributors | 1,182 | 0.0 | + | ||||||||
$ | 94,206,355 | ++ | 100.0 | % |
+ Value is less than 0.05%.
++ Does not reflect the value of securities held as collateral on loaned securities. Also does not include open long futures contracts with an underlying face amount of $12,230,750 with net unrealized depreciation of $48,896 and open foreign currency exchange contracts with net unrealized appreciation of $77,418.
See Notes to Financial Statements
35
Morgan Stanley International Fund
Financial Statements
Statement of Assets and Liabilities
April 30, 2012 (unaudited)
Assets: | |||||||
Investments in securities, at value (cost $84,844,539) (including $6,932,948 for securities loaned) | $ | 84,893,512 | |||||
Investment in affiliate, at value (cost $16,827,330) | 16,494,950 | �� | |||||
Total investments in securities, at value (cost $101,671,869) | 101,388,462 | ||||||
Unrealized appreciation on open foreign currency exchange contracts | 93,727 | ||||||
Foreign currency (cost of $615,871) | 618,891 | ||||||
Receivable for: | |||||||
Variation margin | 796,074 | ||||||
Investments sold | 516,859 | ||||||
Dividends | 516,191 | ||||||
Foreign withholding taxes reclaimed | 119,802 | ||||||
Interest and dividends from affiliates | 7,144 | ||||||
Shares of beneficial interest sold | 1,519 | ||||||
Prepaid expenses and other assets | 25,170 | ||||||
Total Assets | 104,083,839 | ||||||
Liabilities: | |||||||
Collateral on securities loaned, at value | 7,182,107 | ||||||
Unrealized depreciation on open foreign currency exchange contracts | 16,309 | ||||||
Payable for: | |||||||
Shares of beneficial interest redeemed | 149,365 | ||||||
Transfer agent fee | 83,870 | ||||||
Advisory fee | 51,834 | ||||||
Distribution fee | 30,879 | ||||||
Administration fee | 6,536 | ||||||
Investments purchased | 2,726 | ||||||
Deferred Capital Gain Country Tax | 7,863 | ||||||
Accrued expenses and other payables | 102,320 | ||||||
Total Liabilities | 7,633,809 | ||||||
Net Assets | $ | 96,450,030 | |||||
Composition of Net Assets: | |||||||
Paid-in-capital | $ | 113,614,628 | |||||
Net unrealized depreciation (Net of $7,863 Deferred Capital Gain Country Tax) | (249,793 | ) | |||||
Accumulated undistributed net investment income | 116,305 | ||||||
Accumulated net realized loss | (17,031,110 | ) | |||||
Net Assets | $ | 96,450,030 | |||||
Class A Shares: | |||||||
Net Assets | $ | 79,225,543 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 6,978,865 | ||||||
Net Asset Value Per Share | $ | 11.35 | |||||
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value) | $ | 11.98 | |||||
Class B Shares: | |||||||
Net Assets | $ | 5,195,338 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 461,071 | ||||||
Net Asset Value Per Share | $ | 11.27 | |||||
Class C Shares: | |||||||
Net Assets | $ | 11,171,070 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 1,006,115 | ||||||
Net Asset Value Per Share | $ | 11.10 | |||||
Class I Shares: | |||||||
Net Assets | $ | 691,138 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 60,512 | ||||||
Net Asset Value Per Share | $ | 11.42 | |||||
Class R Shares: | |||||||
Net Assets | $ | 80,829 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 7,150 | ||||||
Net Asset Value Per Share | $ | 11.30 | |||||
Class W Shares: | |||||||
Net Assets | $ | 86,112 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 7,604 | ||||||
Net Asset Value Per Share | $ | 11.32 |
See Notes to Financial Statements
36
Morgan Stanley International Fund
Financial Statements continued
Statement of Operations
For the six months ended April 30, 2012 (unaudited)
Net Investment Income: Income | |||||||
Dividends (net of $130,824 foreign withholding tax) | $ | 1,488,262 | |||||
Income from securities loaned - net | 24,749 | ||||||
Dividends from affiliates (Note 6) | 13,037 | ||||||
Interest | 118 | ||||||
Total Income | 1,526,166 | ||||||
Expenses | |||||||
Advisory fee (Note 4) | 317,555 | ||||||
Distribution fee (Class A shares) (Note 5) | 99,242 | ||||||
Distribution fee (Class B shares) (Note 5) | 31,668 | ||||||
Distribution fee (Class C shares) (Note 5) | 55,655 | ||||||
Distribution fee (Class R shares) (Note 5) | 195 | ||||||
Distribution fee (Class W shares) (Note 5) | 146 | ||||||
Transfer agent fees and expenses | 132,449 | ||||||
Custodian fees | 75,084 | ||||||
Administration fee (Note 4) | 39,096 | ||||||
Shareholder reports and notices | 36,620 | ||||||
Registration fees | 36,011 | ||||||
Professional fees | 35,105 | ||||||
Trustees' fees and expenses | 1,822 | ||||||
Other | 45,016 | ||||||
Total Expenses | 905,664 | ||||||
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6) | (8,441 | ) | |||||
Net Expenses | 897,223 | ||||||
Net Investment Income | 628,943 | ||||||
Realized and Unrealized Gain (Loss): Realized Gain (Loss) on: | |||||||
Investments | 1,176,861 | ||||||
Futures contracts | 831,348 | ||||||
Foreign currency exchange contracts | (468,238 | ) | |||||
Foreign currency translation | 149 | ||||||
Net Realized Gain | 1,540,120 | ||||||
Change in Unrealized Appreciation/Depreciation on: | |||||||
Investments (Net of Increase in Deferred Capital Gain Country tax accruals of $7,319) | 561,529 | ||||||
Investments in affiliates (Note 6) | 37,739 | ||||||
Futures contracts | (501,682 | ) | |||||
Foreign currency exchange contracts | (32,719 | ) | |||||
Foreign currency translation | 23,163 | ||||||
Net Change in Unrealized Appreciation/Depreciation | 88,030 | ||||||
Net Gain | 1,628,150 | ||||||
Net Increase | $ | 2,257,093 |
See Notes to Financial Statements
37
Morgan Stanley International Fund
Financial Statements continued
Statements of Changes in Net Assets
FOR THE SIX MONTHS ENDED | FOR THE YEAR ENDED | ||||||||||
APRIL 30, 2012 | OCTOBER 31, 2011 | ||||||||||
(unaudited) | |||||||||||
Increase (Decrease) in Net Assets: Operations: | |||||||||||
Net investment income | $ | 628,943 | $ | 1,457,488 | |||||||
Net realized gain | 1,540,120 | 3,725,183 | |||||||||
Net change in unrealized appreciation/depreciation | 88,030 | (14,190,118 | ) | ||||||||
Net Increase (Decrease) | 2,257,093 | (9,007,447 | ) | ||||||||
Dividends to Shareholders from Net Investment Income: | |||||||||||
Class A shares | (887,405 | ) | (1,252,005 | ) | |||||||
Class B shares | — | (29,130 | ) | ||||||||
Class C shares | (18,007 | ) | (73,316 | ) | |||||||
Class I shares | (8,073 | ) | (9,843 | ) | |||||||
Class R shares | (666 | ) | (921 | ) | |||||||
Class W shares | (857 | ) | (1,057 | ) | |||||||
Total Dividends | (915,008 | ) | (1,366,272 | ) | |||||||
Net decrease from transactions in shares of beneficial interest | (10,292,472 | ) | (22,590,414 | ) | |||||||
Net Decrease | (8,950,387 | ) | (32,964,133 | ) | |||||||
Net Assets: | |||||||||||
Beginning of period | 105,400,417 | 138,364,550 | |||||||||
End of Period (Including accumulated undistributed net investment income of $116,305 and $402,370, respectively) | $ | 96,450,030 | $ | 105,400,417 |
See Notes to Financial Statements
38
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (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. These fees, if any, are included in the Statements of Changes in Net Assets.
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 domestic 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 domestic securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and ask price. In cases where a security is traded on more than one domestic 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 Management Inc. (the "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 fair value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and
39
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
under the general supervision of the Fund's Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the 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 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 mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (9) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost, which approximates fair 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. Foreign Currency Translation — 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 foreign currency exchange 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 foreign currency exchange 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 for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities held.
40
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
E. 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.
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, 2012 were $6,932,948 and $7,371,334, respectively. The Fund received cash collateral of which $7,182,107 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. The remaining collateral of $189,227 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.
F. Dividends and Distributions to Shareholders — Dividends and distributions to shareholders are recorded on the ex-dividend date.
G. 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.
H. Indemnifications — The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
2. Fair Valuation Measurements
Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures ("ASC 820"), defines fair value as the value 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. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs
41
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
that reflect the assumptions market participants would use in valuing 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 valuing 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.
• 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. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances
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 a summary of the inputs used to value the Fund's investments as of April 30, 2012.
INVESTMENT TYPE | LEVEL 1 UNADJUSTED QUOTED PRICES | LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS | LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS | TOTAL | |||||||||||||||
Assets: | |||||||||||||||||||
Common Stocks | |||||||||||||||||||
Aerospace & Defense | $ | 592,591 | $ | — | $ | — | $ | 592,591 | |||||||||||
Air Freight & Logistics | 281,505 | — | — | 281,505 | |||||||||||||||
Airlines | 98,840 | — | — | 98,840 | |||||||||||||||
Auto Components | 901,411 | — | — | 901,411 | |||||||||||||||
Automobiles | 2,941,875 | — | — | 2,941,875 | |||||||||||||||
Beverages | 1,722,596 | — | — | 1,722,596 | |||||||||||||||
Biotechnology | 19,519 | — | — | 19,519 | |||||||||||||||
Building Products | 478,812 | — | — | 478,812 |
42
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
INVESTMENT TYPE | LEVEL 1 UNADJUSTED QUOTED PRICES | LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS | LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS | TOTAL | |||||||||||||||
Capital Markets | $ | 1,347,098 | $ | — | $ | — | $ | 1,347,098 | |||||||||||
Chemicals | 3,726,472 | — | — | 3,726,472 | |||||||||||||||
Commercial Banks | 9,438,642 | 125,334 | — | 9,563,976 | |||||||||||||||
Commercial Services & Supplies | 812,503 | — | — | 812,503 | |||||||||||||||
Communications Equipment | 649,124 | — | — | 649,124 | |||||||||||||||
Computers & Peripherals | 471,399 | — | — | 471,399 | |||||||||||||||
Construction & Engineering | 900,511 | — | — | 900,511 | |||||||||||||||
Construction Materials | 313,510 | — | — | 313,510 | |||||||||||||||
Consumer Finance | 34,549 | — | — | 34,549 | |||||||||||||||
Containers & Packaging | 129,870 | — | — | 129,870 | |||||||||||||||
Distributors | 1,182 | — | — | 1,182 | |||||||||||||||
Diversified Consumer Services | 42,358 | — | — | 42,358 | |||||||||||||||
Diversified Financial Services | 800,249 | — | — | 800,249 | |||||||||||||||
Diversified Telecommunication Services | 2,438,349 | — | — | 2,438,349 | |||||||||||||||
Electric Utilities | 1,086,015 | — | — | 1,086,015 | |||||||||||||||
Electrical Equipment | 1,442,570 | — | — | 1,442,570 | |||||||||||||||
Electronic Equipment, Instruments & Components | 1,557,295 | — | — | 1,557,295 | |||||||||||||||
Energy Equipment & Services | 621,730 | — | — | 621,730 | |||||||||||||||
Food & Staples Retailing | 1,138,587 | — | — | 1,138,587 | |||||||||||||||
Food Products | 3,524,043 | — | — | 3,524,043 | |||||||||||||||
Gas Utilities | 92,011 | — | — | 92,011 | |||||||||||||||
Health Care Equipment & Supplies | 723,429 | — | — | 723,429 | |||||||||||||||
Health Care Providers & Services | 182,781 | — | — | 182,781 | |||||||||||||||
Hotels, Restaurants & Leisure | 880,463 | — | — | 880,463 | |||||||||||||||
Household Durables | 696,130 | — | — | 696,130 | |||||||||||||||
Household Products | 625,207 | — | — | 625,207 | |||||||||||||||
Independent Power Producers & Energy Traders | 111,805 | — | — | 111,805 | |||||||||||||||
Industrial Conglomerates | 2,207,090 | — | — | 2,207,090 | |||||||||||||||
Information Technology Services | 223,748 | — | — | 223,748 | |||||||||||||||
Insurance | 3,215,413 | — | — | 3,215,413 | |||||||||||||||
Internet Software & Services | 79,848 | — | — | 79,848 | |||||||||||||||
Leisure Equipment & Products | 250,866 | — | — | 250,866 | |||||||||||||||
Life Sciences Tools & Services | 18,083 | — | — | 18,083 | |||||||||||||||
Machinery | 2,888,559 | — | — | 2,888,559 | |||||||||||||||
Marine | 283,309 | — | — | 283,309 | |||||||||||||||
Media | 1,697,864 | — | — | 1,697,864 | |||||||||||||||
Metals & Mining | 4,346,841 | — | — | 4,346,841 | |||||||||||||||
Multi-Utilities | 772,562 | — | — | 772,562 | |||||||||||||||
Multiline Retail | 355,005 | — | — | 355,005 |
43
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
INVESTMENT TYPE | LEVEL 1 UNADJUSTED QUOTED PRICES | LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS | LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS | TOTAL | |||||||||||||||
Office Electronics | $ | 349,727 | $ | — | $ | — | $ | 349,727 | |||||||||||
Oil, Gas & Consumable Fuels | 5,656,567 | — | — | 5,656,567 | |||||||||||||||
Paper & Forest Products | 411,461 | — | — | 411,461 | |||||||||||||||
Personal Products | 103,814 | — | — | 103,814 | |||||||||||||||
Pharmaceuticals | 7,444,253 | — | — | 7,444,253 | |||||||||||||||
Professional Services | 251,947 | — | — | 251,947 | |||||||||||||||
Real Estate Investment Trusts (REITs) | 1,142,304 | — | — | 1,142,304 | |||||||||||||||
Real Estate Management & Development | 1,486,447 | — | — | 1,486,447 | |||||||||||||||
Road & Rail | 721,321 | — | — | 721,321 | |||||||||||||||
Semiconductors & Semiconductor Equipment | 1,484,261 | — | — | 1,484,261 | |||||||||||||||
Software | 1,111,307 | — | — | 1,111,307 | |||||||||||||||
Specialty Retail | 904,339 | — | — | 904,339 | |||||||||||||||
Textiles, Apparel & Luxury Goods | 287,723 | — | — | 287,723 | |||||||||||||||
Tobacco | 1,197,514 | — | — | 1,197,514 | |||||||||||||||
Trading Companies & Distributors | 1,112,458 | — | — | 1,112,458 | |||||||||||||||
Transportation Infrastructure | 39,445 | — | — | 39,445 | |||||||||||||||
Water Utilities | 155,923 | — | — | 155,923 | |||||||||||||||
Wireless Telecommunication Services | 2,150,535 | — | — | 2,150,535 | |||||||||||||||
Total Common Stocks | 83,175,565 | 125,334 | — | 83,300,899 | |||||||||||||||
Preferred Stock | — | 2,822 | — | 2,822 | |||||||||||||||
Rights | — | 16 | — | 16 | |||||||||||||||
Short-Term Investments | |||||||||||||||||||
Repurchase Agreements | — | 1,944,880 | — | 1,944,880 | |||||||||||||||
Investment Company | 16,139,845 | — | — | 16,139,845 | |||||||||||||||
Total Short-Term Investments | 16,139,845 | 1,944,880 | — | 18,084,725 | |||||||||||||||
Foreign Currency Exchange Contracts | — | 93,727 | — | 93,727 | |||||||||||||||
Futures Contracts | 130,215 | — | — | 130,215 | |||||||||||||||
Total Assets | 99,445,625 | 2,166,779 | — | 101,612,404 | |||||||||||||||
Liabilities: | |||||||||||||||||||
Foreign Currency Exchange Contracts | — | (16,309 | ) | — | (16,309 | ) | |||||||||||||
Futures Contracts | (179,111 | ) | — | — | (179,111 | ) | |||||||||||||
Total Liabilities | (179,111 | ) | (16,309 | ) | — | (195,420 | ) | ||||||||||||
Total | $ | 99,266,514 | $ | 2,150,470 | $ | — | $ | 101,416,984 |
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of April 30, 2012, securities with a total value of $81,152,258 transferred from
44
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
Level 2 to Level 1. At October 31, 2011, the fair market value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.
3. Derivatives
The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based on the value of an underlying asset, interest rate, index or financial instrument. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which they relate, and risks that the transactions may not be liquid. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Fund's 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.
Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.
Following is a description of the derivative instruments and techniques that the Fund used during the period and their associated risks:
Foreign Currency Exchange Contracts In connection with its investments in foreign securities, the Fund entered into contracts with banks, brokers or dealers to purchase or sell foreign currencies at a future date. A foreign currency exchange contract ("currency contracts") is a negotiated agreement between two parties to exchange specified amounts of two or more currencies at a specified future time at a specified rate. The rate specified by the currency contract can be higher or lower than the spot rate between the currencies that are the subject of the currency contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain
45
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
or modify exposure to a particular currency. In addition, the Fund may use cross currency hedging or proxy hedging with respect to currencies in which the Fund has or expects to have portfolio or currency exposure. Cross currency hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies. Hedging the Fund's currency risks involves the risk of mismatching the Fund's objectives under a currency contract with the value of securities denominated in a particular currency. Furthermore, such transactions reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is an additional risk to the effect that currency contracts create exposure to currencies in which the Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund than if it had not entered into such contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the term of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Fund as unrealized gain or (loss). The Fund records realized gains (losses) when the currency contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.
Futures A futures contract is a standardized agreement between two parties to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Fund's initial investment in such contracts.
FASB ASC 815, Derivatives and Hedging: Overall ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.
46
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of April 30, 2012.
PRIMARY RISK EXPOSURE | ASSET DERIVATIVES STATEMENT OF ASSETS AND LIABILITIES LOCATION | FAIR VALUE | LIABILITY DERIVATIVES STATEMENT OF ASSETS AND LIABILITIES LOCATION | FAIR VALUE | |||||||||||||||
Equity Risk | Variation margin | $ | 130,215 | † | Variation margin | $ | (179,111 | )† | |||||||||||
Foreign Currency Risk | Unrealized appreciation on open foreign currency exchange contracts | 93,727 | Unrealized depreciation on open foreign currency exchange contracts | (16,309 | ) | ||||||||||||||
$ | 223,942 | $ | (195,420 | ) |
† Includes cumulative appreciation/depreciation of futures contracts as reported in the Portfolio of Investments. Only current day's net 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 appreciation (depreciation) by type of derivative contract for the six months ended April 30, 2012 in accordance with ASC 815.
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVE CONTRACTS
PRIMARY RISK EXPOSURE | FUTURES | FOREIGN CURRENCY EXCHANGE | |||||||||
Equity Risk | $ | 831,348 | — | ||||||||
Foreign Currency Risk | — | $ | (468,238 | ) | |||||||
Total | $ | 831,348 | $ | (468,238 | ) |
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVE CONTRACTS
PRIMARY RISK EXPOSURE | FUTURES | FOREIGN CURRENCY EXCHANGE | |||||||||
Equity Risk | $ | (501,682 | ) | — | |||||||
Foreign Currency Risk | — | $ | (32,719 | ) | |||||||
Total | $ | (501,682 | ) | $ | (32,719 | ) |
For the six months ended April 30, 2012, the average monthly original value of futures contracts was $10,728,892 and the average monthly principal amount of foreign currency exchange contracts was $18,592,579.
4. Advisory/Administration Agreements
Pursuant to an Investment Advisory Agreement, the Fund pays the Adviser an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund
47
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
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 Adviser, the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.08% to the Fund's daily net assets.
Under a Sub-Administration 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 Distribution, Inc. (the "Distributor"), an affiliate of the 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 1.00% of the average daily net assets of Class B shares; and (iii) Class C — up to 1.00% 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 $18,125,772 at April 30, 2012.
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 Smith Barney 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, 2012, the distribution fee was accrued for Class A, Class C, Class R and Class W shares at the annual rate of 0.25%, 0.99%, 0.50% and 0.35%, respectively.
48
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
The Distributor has informed the Fund that for the six months ended April 30, 2012, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C shares of $2,822 and $426, respectively, and received $2,087 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.
6. Security Transactions and Transactions with Affiliates
The cost of purchases and proceeds from sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 aggregated $8,896,727 and $20,475,983, respectively.
The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly, and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended April 30, 2012, advisory fees paid were reduced by $8,441 relating to the Fund's investment in the Liquidity Funds.
A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended April 30, 2012 is as follows:
VALUE OCTOBER 31, 2011 | PURCHASES AT COST | SALES | DIVIDEND INCOME | VALUE APRIL 30, 2012 | |||||||||||||||
$ | 15,467,818 | $ | 20,440,799 | $ | 19,768,772 | $ | 8,103 | $ | 16,139,845 |
For the six months ended April 30, 2012, the Fund had transactions with Mitsubishi UFJ Financial Group, Inc., an affiliate of the Adviser, Administrator and Distributor:
VALUE OCTOBER 31, 2011 | PURCHASES AT COST | SALES | REALIZED LOSS | DIVIDEND INCOME | VALUE APRIL 30, 2012 | ||||||||||||||||||
$ | 317,366 | — | — | — | $ | 4,934 | $ | 355,105 |
For the six months ended April 30, 2012, the Fund incurred brokerage commissions of $792 with Citigroup, Inc., and its affiliated broker-dealers, which may be deemed affiliates of the Adviser, Administrator and Distributor under Section 17 of the Act, for portfolio transactions executed on behalf of the Fund.
49
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
Morgan Stanley Services Company Inc., an affiliate of the Adviser 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.
7. Federal Income Tax Status
It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.
Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recognized on an accrual basis. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.
The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.
FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the 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. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended October 31, 2011, remains subject to examination by taxing authorities.
50
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal 2011 and 2010 was as follows:
2011 DISTRIBUTIONS PAID FROM: ORDINARY INCOME | 2010 DISTRIBUTIONS PAID FROM: ORDINARY INCOME | ||||||
$ | 1,366,272 | $ | 2,728,292 |
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.
Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.
Permanent differences, primarily due to foreign currency losses, tax adjustments on passive foreign investment companies ("PFICs") sold by the Fund and an expired capital loss carryforward, resulted in the following reclassifications among the Fund's components of net assets at October 31, 2011:
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME | ACCUMULATED NET REALIZED LOSS | PAID-IN-CAPITAL | |||||||||
$ | (719,196 | ) | $ | 7,892,953 | $ | (7,173,757 | ) |
At October 31, 2011, the components of distributable earnings for the Fund on a tax basis were as follows:
UNDISTRIBUTED ORDINARY INCOME | UNDISTRIBUTED LONG-TERM CAPITAL GAINS | ||||||
$ | 602,089 | — |
At April 30, 2012, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $10,549,511 and the aggregate gross unrealized depreciation is $10,832,918 resulting in net unrealized depreciation of $283,407.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the "Modernization Act") was signed into law. The Modernization Act modernizes several tax provisions
51
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
related to Regulated Investment Companies ("RICs") and their shareholders. One key change made by the Modernization Act is that capital losses will generally retain their character as short-term or long-term and may be carried forward indefinitely to offset future gains. These losses are utilized before other capital loss carryforwards that expire. Generally, the Modernization Act is effective for taxable years beginning after December 22, 2010.
At October 31, 2011, the Fund had available for Federal income tax purposes capital loss carryforwards, which will expire on the indicated dates:
AMOUNT | EXPIRATION | ||||||
$ | 14,780,909 | October 31, 2017 | |||||
798,093 | October 31, 2018 |
To the extent that capital loss carryforwards are used to offset any future capital gains realized during the carryover period as provided by U.S. Federal income tax regulations, no capital gains tax liability will be incurred by a Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders. During the year ended October 31, 2011, the Fund utilized capital loss carryforwards for U.S. Federal income tax purposes of $3,584,030.
8. Expense Offset
The Fund has entered into an arrangement with State Street (the "Custodian"), whereby credits realized on uninvested cash balances were used to offset a portion of the Fund's expenses. If applicable, these custodian credits are shown as "expense offset" in the Statement of Operations.
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, 2012, investments in securities of issuers in United Kingdom and the Japan represented 22.4% and 20.9%, 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, 2012, the Fund's cash balance consisted of interest bearing deposits with State Street, the Fund's Custodian.
52
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
10. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:
FOR THE SIX MONTHS ENDED APRIL 30, 2012 | FOR THE YEAR ENDED OCTOBER 31, 2011 | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
SHARES | AMOUNT | SHARES | AMOUNT | ||||||||||||||||
CLASS A SHARES | |||||||||||||||||||
Sold | 66,049 | $ | 717,006 | 239,164 | $ | 2,966,253 | |||||||||||||
Conversion from Class B | 124,217 | 1,391,587 | 229,694 | 2,845,003 | |||||||||||||||
Reinvestment of dividends | 82,823 | 860,534 | 97,533 | 1,212,331 | |||||||||||||||
Redeemed | (900,618 | ) | (9,866,194 | ) | (1,674,626 | ) | (20,588,427 | ) | |||||||||||
Net decrease — Class A | (627,529 | ) | (6,897,067 | ) | (1,108,235 | ) | (13,564,840 | ) | |||||||||||
CLASS B SHARES | |||||||||||||||||||
Sold | 4,048 | 44,753 | 14,781 | 181,764 | |||||||||||||||
Conversion to Class A | (125,079 | ) | (1,391,587 | ) | (232,571 | ) | (2,845,003 | ) | |||||||||||
Reinvestment of dividends | — | — | 2,214 | 27,271 | |||||||||||||||
Redeemed | (93,771 | ) | (1,026,331 | ) | (281,682 | ) | (3,434,191 | ) | |||||||||||
Net decrease — Class B | (214,802 | ) | (2,373,165 | ) | (497,258 | ) | (6,070,159 | ) | |||||||||||
CLASS C SHARES | |||||||||||||||||||
Sold | 3,768 | 40,620 | 14,747 | 175,873 | |||||||||||||||
Reinvestment of dividends | 1,707 | 17,391 | 5,832 | 70,914 | |||||||||||||||
Redeemed | (107,233 | ) | (1,138,668 | ) | (264,764 | ) | (3,201,181 | ) | |||||||||||
Net decrease — Class C | (101,758 | ) | (1,080,657 | ) | (244,185 | ) | (2,954,394 | ) | |||||||||||
CLASS I SHARES | |||||||||||||||||||
Sold | 14,363 | 158,343 | 1,843 | 24,048 | |||||||||||||||
Reinvestment of dividends | 657 | 6,863 | 676 | 8,456 | |||||||||||||||
Redeemed | (9,697 | ) | (106,855 | ) | (2,364 | ) | (28,785 | ) | |||||||||||
Net increase — Class I | 5,323 | 58,351 | 155 | 3,719 | |||||||||||||||
CLASS R SHARES | |||||||||||||||||||
Sold | — | — | 141 | 1,804 | |||||||||||||||
Reinvestment of dividends | 1 | 7 | 5 | 57 | |||||||||||||||
Redeemed | — | — | (512 | ) | (6,673 | ) | |||||||||||||
Net increase (decrease) — Class R | 1 | 7 | (366 | ) | (4,812 | ) | |||||||||||||
CLASS W SHARES | |||||||||||||||||||
Reinvestment of dividends | 6 | 59 | 5 | 72 | |||||||||||||||
Net increase — Class W | 6 | 59 | 5 | 72 | |||||||||||||||
Net decrease in Fund | (938,759 | ) | $ | (10,292,472 | ) | (1,849,884 | ) | $ | (22,590,414 | ) |
53
Morgan Stanley International Fund
Notes to Financial Statements n April 30, 2012 (unaudited) continued
11. Accounting Pronouncement
In May 2011, FASB issued Accounting Standards Update ("ASU") 2011-04. The amendments in this update are the results of the work of FASB and the International Accounting Standards Board to develop common requirements for measuring fair value and for disclosing information about fair value measurements, which are effective during interim and annual periods beginning after December 15, 2011. Consequently, these amendments improve the comparability of fair value measurements presented and disclosed in the financial statements prepared in accordance with GAAP and International Financial Reporting Standards. At this time, the Fund's management is evaluating the implications of ASU 2011-04.
12. Subsequent Events
The Board of Trustees of the Fund approved an Agreement and Plan of Reorganization by and between the Fund and Morgan Stanley Institutional Fund, Inc., on behalf of its series Active International Allocation Portfolio (Active International Allocation), pursuant to which substantially all of the assets of the Fund would be combined with those of Active International Allocation and shareholders of the Fund would become shareholders of Active International Allocation, receiving shares of Active International Allocation equal to the value of their holdings in the Fund (the "Reorganization"). Each shareholder of the Fund would receive the Class of shares of Active International Allocation that corresponds to the Class of shares of the Fund currently held by that shareholder. The Reorganization is subject to the approval of shareholders of the Fund at a special meeting of shareholders scheduled to be held during the third quarter of 2012.
Effective as of the close of business on May 16, 2012, the Fund is suspending the continuous offering of its Class R shares and Class W shares and thus, no further purchases of Class R shares and Class W shares of the Fund may be made by investors. In addition, Class B shares of the Fund will be closed for purchases by new investors.
Effective as of the close of business on June 12, 2012, Class A, Class C and Class I shares of the Fund will be closed for purchases by new investors.
54
Morgan Stanley International Fund
Financial Highlights
Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | ||||||||||||||||||||||||||
MONTHS ENDED | |||||||||||||||||||||||||||
APRIL 30, 2012 | 2011 | 2010^ | 2009^ | 2008^ | 2007^ | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Class A Shares | |||||||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.19 | $ | 12.30 | $ | 11.32 | $ | 9.29 | $ | 16.94 | $ | 13.14 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income(1) | 0.08 | 0.16 | 0.11 | 0.12 | 0.24 | 0.15 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.20 | (1.12 | ) | 1.10 | 1.91 | (7.61 | ) | 3.86 | |||||||||||||||||||
Total income (loss) from investment operations | 0.28 | (0.96 | ) | 1.21 | 2.03 | (7.37 | ) | 4.01 | |||||||||||||||||||
Less dividends and distributions from net investment income | (0.12 | ) | (0.15 | ) | (0.23 | ) | — | (0.28 | ) | (0.21 | ) | ||||||||||||||||
Net asset value, end of period | $ | 11.35 | $ | 11.19 | $ | 12.30 | $ | 11.32 | $ | 9.29 | $ | 16.94 | |||||||||||||||
Total Return(2) | 2.61 | %(7) | (7.95 | )% | 10.79 | % | 21.85 | % | (44.19 | )% | 31.03 | % | |||||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||||||
Total expenses | 1.70 | %(4)(8) | 1.57 | %(4) | 1.50 | %(4) | 1.69 | %(4) | 1.36 | %(4) | 1.33 | %(4)(5) | |||||||||||||||
Net investment income | 1.42 | %(4)(8) | 1.29 | %(4) | 0.97 | %(4) | 1.30 | %(4) | 1.71 | %(4) | 1.18 | %(4)(5) | |||||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(8) | 0.01 | % | 0.02 | % | 0.01 | % | 0.01 | % | 0.00 | %(6) | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 79,226 | $ | 85,116 | $ | 107,160 | $ | 113,446 | $ | 104,619 | $ | 193,043 | |||||||||||||||
Portfolio turnover rate | 10 | %(7) | 33 | % | 15 | % | 36 | % | 31 | % | 22 | % |
^ Beginning with the year ended October 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(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 of its expenses that were waived by the 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 | % |
(6) Amount is less than 0.005%.
(7) Not annualized.
(8) Annualized.
See Notes to Financial Statements
55
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | ||||||||||||||||||||||||||
MONTHS ENDED | |||||||||||||||||||||||||||
APRIL 30, 2012 | 2011 | 2010^ | 2009^ | 2008^ | 2007^ | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Class B Shares | |||||||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.02 | $ | 12.08 | $ | 11.11 | $ | 9.19 | $ | 16.69 | $ | 12.97 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income(1) | 0.04 | 0.07 | 0.02 | 0.05 | 0.13 | 0.08 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.21 | (1.10 | ) | 1.08 | 1.87 | (7.53 | ) | 3.75 | |||||||||||||||||||
Total income (loss) from investment operations | 0.25 | (1.03 | ) | 1.10 | 1.92 | (7.40 | ) | 3.83 | |||||||||||||||||||
Less dividends from net investment income | — | (0.03 | ) | (0.13 | ) | — | (0.10 | ) | (0.11 | ) | |||||||||||||||||
Net asset value, end of period | $ | 11.27 | $ | 11.02 | $ | 12.08 | $ | 11.11 | $ | 9.19 | $ | 16.69 | |||||||||||||||
Total Return(2) | 2.27 | %(7) | (8.58 | )% | 9.95 | % | 20.89 | % | (44.49 | )% | 29.58 | % | |||||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||||||
Total expenses | 2.45 | %(4)(8) | 2.32 | %(4) | 2.25 | %(4) | 2.44 | %(4) | 2.10 | %(4) | 2.08 | %(4)(5) | |||||||||||||||
Net investment income | 0.67 | %(4)(8) | 0.54 | %(4) | 0.22 | %(4) | 0.55 | %(4) | 0.90 | %(4) | 0.43 | %(4)(5) | |||||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(8) | 0.01 | % | 0.02 | % | 0.01 | % | 0.01 | % | 0.00 | %(6) | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 5,195 | $ | 7,448 | $ | 14,175 | $ | 21,247 | $ | 30,185 | $ | 99,635 | |||||||||||||||
Portfolio turnover rate | 10 | %(7) | 33 | % | 15 | % | 36 | % | 31 | % | 22 | % |
^ Beginning with the year ended October 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(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 of its expenses that were waived by the Adviser and Administrator, the annualized expense and net investment income ratios, would have been as follows:
PERIOD ENDED | EXPENSE RATIO | INVESTMENT NET INCOME RATIO | |||||||||
October 31, 2007 | 2.09 | % | 0.42 | % |
(6) Amount is less than 0.005%.
(7) Not annualized.
(8) Annualized.
See Notes to Financial Statements
56
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | ||||||||||||||||||||||||||
MONTHS ENDED | |||||||||||||||||||||||||||
APRIL 30, 2012 | 2011 | 2010^ | 2009^ | 2008^ | 2007^ | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Class C Shares | |||||||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.88 | $ | 11.95 | $ | 11.02 | $ | 9.11 | $ | 16.63 | $ | 12.94 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income(1) | 0.04 | 0.07 | 0.02 | 0.05 | 0.13 | 0.06 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.20 | (1.08 | ) | 1.06 | 1.86 | (7.47 | ) | 3.76 | |||||||||||||||||||
Total income (loss) from investment operations | 0.24 | (1.01 | ) | 1.08 | 1.91 | (7.34 | ) | 3.82 | |||||||||||||||||||
Less dividends from net investment income | (0.02 | ) | (0.06 | ) | (0.15 | ) | — | (0.18 | ) | (0.13 | ) | ||||||||||||||||
Net asset value, end of period | $ | 11.10 | $ | 10.88 | $ | 11.95 | $ | 11.02 | $ | 9.11 | $ | 16.63 | |||||||||||||||
Total Return(2) | 2.19 | %(7) | (8.54 | )% | 9.89 | % | 20.97 | % | (44.50 | )% | 29.58 | % | |||||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||||||
Total expenses | 2.44 | %(4)(8) | 2.31 | %(4) | 2.25 | %(4) | 2.44 | %(4) | 2.07 | %(4) | 2.08 | %(4)(5) | |||||||||||||||
Net investment income | 0.68 | %(4)(8) | 0.55 | %(4) | 0.22 | %(4) | 0.55 | %(4) | 0.96 | %(4) | 0.43 | %(4)(5) | |||||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(8) | 0.01 | % | 0.02 | % | 0.01 | % | 0.01 | % | 0.00 | %(6) | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 11,171 | $ | 12,050 | $ | 16,163 | $ | 17,507 | $ | 16,660 | $ | 37,085 | |||||||||||||||
Portfolio turnover rate | 10 | %(7) | 33 | % | 15 | % | 36 | % | 31 | % | 22 | % |
^ Beginning with the year ended October 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(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 of its expenses that were waived by the Adviser and Administrator, the annualized expense and net investment income ratios, would have been as follows:
PERIOD ENDED | EXPENSE RATIO | INVESTMENT NET INCOME RATIO | |||||||||
October 31, 2007 | 2.09 | % | 0.42 | % |
(6) Amount is less than 0.005%.
(7) Not annualized.
(8) Annualized.
See Notes to Financial Statements
57
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | ||||||||||||||||||||||||||
MONTHS ENDED | |||||||||||||||||||||||||||
APRIL 30, 2012 | 2011 | 2010^ | 2009^ | 2008^ | 2007^ | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Class I Shares | |||||||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.28 | $ | 12.39 | $ | 11.40 | $ | 9.33 | $ | 17.00 | $ | 13.23 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income(1) | 0.09 | 0.19 | 0.14 | 0.16 | 0.27 | 0.21 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.21 | (1.12 | ) | 1.10 | 1.91 | (7.64 | ) | 3.83 | |||||||||||||||||||
Total income (loss) from investment operations | 0.30 | (0.93 | ) | 1.24 | 2.07 | (7.37 | ) | 4.04 | |||||||||||||||||||
Less dividends from net investment income | (0.16 | ) | (0.18 | ) | (0.25 | ) | — | (0.30 | ) | (0.27 | ) | ||||||||||||||||
Net asset value, end of period | $ | 11.42 | $ | 11.28 | $ | 12.39 | $ | 11.40 | $ | 9.33 | $ | 17.00 | |||||||||||||||
Total Return(2) | 2.75 | %(7) | (7.66 | )% | 11.05 | % | 22.19 | % | (44.16 | )% | 31.33 | % | |||||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||||||
Total expenses | 1.45 | %(4)(8) | 1.32 | %(4) | 1.25 | %(4) | 1.44 | %(4) | 1.10 | %(4) | 1.08 | %(4)(5) | |||||||||||||||
Net investment income | 1.67 | %(4)(8) | 1.54 | %(4) | 1.22 | %(4) | 1.55 | %(4) | 1.95 | %(4) | 1.43 | %(4)(5) | |||||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(8) | 0.01 | % | 0.02 | % | 0.01 | % | 0.01 | % | 0.00 | %(6) | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 691 | $ | 623 | $ | 682 | $ | 733 | $ | 10,085 | $ | 22,888 | |||||||||||||||
Portfolio turnover rate | 10 | %(7) | 33 | % | 15 | % | 36 | % | 31 | % | 22 | % |
^ Beginning with the year ended October 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(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 of its expenses that were waived by the 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 | % |
(6) Amount is less than 0.005%.
(7) Not annualized.
(8) Annualized.
See Notes to Financial Statements
58
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | FOR THE PERIOD MARCH 31, 2008@@@ | |||||||||||||||||||||
MONTHS ENDED | THROUGH | ||||||||||||||||||||||
APRIL 30, 2012 | 2011 | 2010^ | 2009^ | OCTOBER 31, 2008^ | |||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Class R Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.13 | $ | 12.23 | $ | 11.27 | $ | 9.28 | $ | 14.14 |
Income (loss) from investment operations: |
Net investment income(1) | 0.06 | 0.13 | 0.08 | 0.10 | 0.15 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.20 | (1.11 | ) | 1.09 | 1.89 | (5.01 | ) | ||||||||||||||||
Total income (loss) from investment operations | 0.26 | (0.98 | ) | 1.17 | 1.99 | (4.86 | ) | ||||||||||||||||
Less dividends from net investment income | (0.09 | ) | (0.12 | ) | (0.21 | ) | — | — | |||||||||||||||
Net asset value, end of period | $ | 11.30 | $ | 11.13 | $ | 12.23 | $ | 11.27 | $ | 9.28 | |||||||||||||
Total Return(2) | 2.53 | %(5) | (8.10 | )% | 10.47 | % | 21.57 | % | (34.44 | )%(5) | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Total expenses | 1.95 | %(4)(6) | 1.82 | %(4) | 1.75 | %(4) | 1.94 | %(4) | 1.62 | %(4)(6) | |||||||||||||
Net investment income | 1.17 | %(4)(6) | 1.04 | %(4) | 0.72 | %(4) | 1.05 | %(4) | 1.96 | %(4)(6) | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(6) | 0.01 | % | 0.02 | % | 0.01 | % | 0.01 | %(6) | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 81 | $ | 80 | $ | 92 | $ | 83 | $ | 66 | |||||||||||||
Portfolio turnover rate | 10 | %(5) | 33 | % | 15 | % | 36 | % | 31 | %(5) |
@@@ The date shares were first issued.
^ Beginning with the year ended October 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(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
59
Morgan Stanley International Fund
Financial Highlights continued
FOR THE SIX | FOR THE YEAR ENDED OCTOBER 31, | FOR THE PERIOD MARCH 31, 2008@@@ | |||||||||||||||||||||
MONTHS ENDED | THROUGH | ||||||||||||||||||||||
APRIL 30, 2012 | 2011 | 2010^ | 2009^ | OCTOBER 31, 2008^ | |||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Class W Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.16 | $ | 12.27 | $ | 11.30 | $ | 9.28 | $ | 14.14 |
Income (loss) from investment operations: |
Net investment income(1) | 0.07 | 0.15 | 0.10 | 0.11 | 0.16 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.20 | (1.12 | ) | 1.09 | 1.91 | (5.02 | ) | ||||||||||||||||
Total income (loss) from investment operations | 0.27 | (0.97 | ) | 1.19 | 2.02 | (4.86 | ) | ||||||||||||||||
Less dividends from net investment income | (0.11 | ) | (0.14 | ) | (0.22 | ) | — | — | |||||||||||||||
Net asset value, end of period | $ | 11.32 | $ | 11.16 | $ | 12.27 | $ | 11.30 | $ | 9.28 | |||||||||||||
Total Return(2) | 2.54 | %(5) | (8.03 | )% | 10.67 | % | 21.77 | % | (34.37 | )%(5) | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Total expenses | 1.80 | %(4)(6) | 1.67 | %(4) | 1.60 | %(4) | 1.79 | %(4) | 1.47 | %(4)(6) | |||||||||||||
Net investment income | 1.32 | %(4)(6) | 1.19 | %(4) | 0.87 | %(4) | 1.20 | %(4) | 2.11 | %(4)(6) | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.02 | %(6) | 0.01 | % | 0.02 | % | 0.01 | % | 0.01 | %(6) | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 86 | $ | 85 | $ | 93 | $ | 86 | $ | 66 | |||||||||||||
Portfolio turnover rate | 10 | %(5) | 33 | % | 15 | % | 36 | % | 31 | %(5) |
@@@ The date shares were first issued.
^ Beginning with the year ended October 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(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
60
Morgan Stanley International Fund
U.S. Privacy Policy (unaudited)
An Important Notice Concerning Our U.S. Privacy Policy
This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").
We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. 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, or accounts subject to the Uniform Gifts to Minors Act.
This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our 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 your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.
This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.
Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.
61
Morgan Stanley International Fund
U.S. Privacy Policy (unaudited) continued
1. What Personal Information Do We Collect From You?
We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:
• We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other 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.
• We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.
2. When Do We Disclose Personal Information We Collect About You?
We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.
a. Information We Disclose to Affiliated Companies. We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and 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. 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 may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.
62
Morgan Stanley International Fund
U.S. Privacy Policy (unaudited) continued
When we share personal information about you with a nonaffiliated 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 permitted or 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 that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. 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 appropriate security standards with respect to such information.
4. How Can You Limit Our Sharing Certain Personal Information About You With Our Affiliated Companies For Eligibility Determination?
By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.
5. How Can You Limit the Use of Certain Personal Information About You by Our Affiliated Companies for Marketing?
By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.
63
Morgan Stanley International Fund
U.S. Privacy Policy (unaudited) continued
6. How Can You Send Us an Opt-Out Instruction?
If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:
• Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 5p.m. (EST)
• Writing to us at the following address:
Morgan Stanley Services Company Inc.
c/o Privacy Coordinator
201 Plaza Two, 3rd Floor
Jersey City, New Jersey 07311
If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests 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 understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.
If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.
7. What if an affiliated company becomes a nonaffiliated third party?
If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies,
64
Morgan Stanley International Fund
U.S. Privacy Policy (unaudited) continued
your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.
Special Notice to Residents of Vermont
The following 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 nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.
Special Notice to Residents of California
The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.
In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.
65
(This page has been left blank intentionally.)
(This page has been left blank intentionally.)
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/ Arthur Lev |
|
Arthur Lev |
|
Principal Executive Officer |
|
June 19, 2012 |
|
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/ Arthur Lev |
|
Arthur Lev |
|
Principal Executive Officer |
|
June 19, 2012 |
|
|
|
/s/ Francis Smith |
|
Francis Smith |
|
Principal Financial Officer |
|
June 19, 2012 |
|