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 | 811-05634 | |||||||
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Morgan Stanley Global Strategist Fund | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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522 Fifth Avenue, New York, New York |
| 10036 | ||||||
(Address of principal executive offices) |
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Randy Takian | ||||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | 212-296-6990 |
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Date of fiscal year end: | July 31, 2010 |
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Date of reporting period: | July 31, 2010 |
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Item 1 - Report to Shareholders
INVESTMENT MANAGEMENT
Welcome, Shareholder:
In this report, you'll learn about how your investment in Morgan Stanley Global Strategist Fund (formerly Morgan Stanley Strategist Fund*) performed during the annual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Fund's financial statements and a list of Fund investments.
This material must be preceded or accompanied by a prospectus for the fund being offered.
Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the Fund will achieve its investment objective. The Fund is subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.
*The Fund's name change was effective March 31, 2010.
Fund Report
For the year ended July 31, 2010
Total Return for the 12 Months Ended July 31, 2010 | |||||||||||||||||||||||||||||||
Class A | Class B | Class C | Class I | Morgan Stanley Capital Inter- national (MSCI) All Country World Index1 | S&P 500® Index2 | Barclays Capital U.S. Govern- ment/ Credit Index3 | Lipper Flexible Portfolio Funds Index4 | ||||||||||||||||||||||||
8.52 | % | 7.74 | % | 7.76 | % | 8.84 | % | 11.08 | % | 13.83 | % | 8.94 | % | 12.52 | % |
The performance of the Fund's four share classes varies because each has different expenses. The Fund's total returns assume the reinvestment of all distributions but do not reflect the deduction of any applicable sales charges. Such costs would lower performance. See Performance Summary for standardized performance and benchmark information.
Market Conditions
The 12-month period ended July 31, 2010 demonstrated both the positive and negative behavior common to markets during recoveries from severe recessions. Global equity markets rallied sharply on renewed growth expectations during the third and fourth quarters of 2009, only to consolidate in a broad trading range during the first half of 2010.
More recently, the sovereign debt crisis in the Euro-zone and weakening global economic data (particularly in the U.S. and in China) contributed to increased market volatility. Amidst these developments, the European Union and the International Monetary Fund announced a $1 trillion intervention in an effort to quell market fears. Despite these assurances, financial markets remained jittery as global economic data continued to surprise on the downside and political risks loomed. Although central banks maintained strongly accommodative monetary policies, traditional mechanisms to stimulate investment and spending appeared ineffective.
Labor and housing statistics, critical factors in measuring the health of the U.S. economy, continued to disappoint, while manufacturing surveys turned lower during the second quarter of 2010. This caused global equities to sell off and Treasury and sovereign debt to rally.
After a solid and somewhat typical global equity rally in response to recovering macroeconomic conditions early in the Fund's fiscal year, the period ended on an unsettled note, as market participants appeared more focused on risk-aversion than long-term total return.
Performance Analysis
All share classes of Morgan Stanley Global Strategist Fund (formerly Morgan Stanley Strategist Fund) underperformed the MSCI All Country World Index (the "Index"), the S&P 500® Index, the Barclays Capital U.S. Government/Credit Index and the Lipper Flexible Portfolio Funds Index for the 12 months ended July 31, 2010, assuming no deduction of applicable sales charges.
The Fund's underperformance versus all benchmarks can be directly attributed to its defensive asset allocation stance following 2008's and early 2009's equity market correction. Managed primarily as a U.S. fund until April 2010, the Fund's portfolio reflected the management team's concerns regarding the sustainability of the market's recovery in light of challenging global business conditions, a dysfunctional
2
credit market, capital-starved banks and unprecedented structural unemployment in the U.S. and developed nations around the world.
By the latter part of the first quarter of 2010, the management team believed that the Fund would benefit from greater global and asset class diversification. The addition of larger allowed exposures to non-U.S. equities and bonds, plus the addition of commodities, provides a broader mix from which to construct a global portfolio. We believe that opportunities in countries with much different economic characteristics than the U.S. could provide the growth opportunities unavailable in the developed world, while an exposure to commodities could potentially provide a hedge against future inflationary risks. The broader allocation opportunities afforded in the Fund are viewed by the management team as tools to manage risk more effectively while seeking total return opportunities more broadly.
Accordingly, while the Fund maintained a defensive stance during the first eight months of the 2010 fiscal year, the broader, global allocation mandate put into effect in early April allowed the management team to invest in a more diverse pool of assets during the latter months of the period under review. The Fund exited the fiscal year with global equity exposures at approximately 60 percent of total Fund assets, fixed income exposures of approximately 28 percent of total assets, diversified commodity exposures of approximately 4 percent of total assets and cash equivalents (approximately 8 percent of total assets) rounding out the portfolio's allocation.
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 07/31/10 | |||||||
U.S. Treasury Bonds/Notes | 3.7 | % | |||||
Deutsche Bank UBS Commodity Linked Note | 3.5 | ||||||
Federal National Mortgage Assoc. | 2.5 | ||||||
French Treasury Note | 0.7 | ||||||
Bundesrepublik Deutschland (Series 03) | 0.7 | ||||||
Bundesrepublik Deutschland (Series 07) | 0.6 | ||||||
Japan Government Thirty Year Bond (Series 11) | 0.6 | ||||||
Federal Home Loan Mortgage Corp. (PC) Gold | 0.6 | ||||||
Japan Government Ten Year Bond (Series 272) | 0.6 | ||||||
United Kingdom Gilt | 0.6 | ||||||
PORTFOLIO COMPOSITION+ as of 07/31/10 | |||||||
Common Stocks | 46.8 | % | |||||
Short-Term Investments | 21.4 | ||||||
Foreign Government Obligations | 11.4 | ||||||
Corporate Bonds | 7.8 | ||||||
US Government Agencies and Obligations | 4.2 | ||||||
US Government Agencies — Mortgage Backed Securities | 3.7 | ||||||
Commodity-Linked Securities | 3.4 | ||||||
Preferred Stocks | 0.9 | ||||||
Asset-Backed Securities | 0.3 | ||||||
Municipal Bonds | 0.1 |
+ Does not include open long/short futures contracts with an underlying face amount of $152,561,972 and net unrealized appreciation of $1,244,392. Also does not include open swap contracts with net unrealized depreciation of $1,621,764 and open forward foreign currency contracts with net unrealized appreciation of $2,187,235.
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 are as a percentage of net assets and portfolio composition are as a percentage of total investments. 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.
3
Investment Strategy
The Fund's Investment Adviser, Morgan Stanley Investment Advisors, Inc., seeks to achieve the Fund's investment objective by investing primarily in a blend of equity and fixed-income securities of U.S. and non-U.S. issuers. Equity securities may include common and preferred stocks, depositary receipts, convertible securities, equity-linked securities, real estate investment trusts ("REITs"), and rights and warrants to purchase equity securities. Fixed income securities may include mortgage-related or mortgage-backed securities (including collateralized mortgage obligations), asset backed securities, floating rate securities, inverse floating obligations, inflation-linked fixed income securities, securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, securities issued or guaranteed by non-U.S. governments, their agencies, or instrumentalities, corporate bonds and notes issued by U.S. and non - -U.S. entities.
For More Information About Portfolio Holdings
Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley also delivers the semiannual and annual reports to fund shareholders and makes these reports available on its public web site, www.morganstanley.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by access ing the SEC's web site, http://www.sec.gov. You may also review and copy them at the SEC's public reference room in Washington, DC. Information on the operation of the SEC's public reference room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the public reference section of the SEC, Washington, DC 20549-1520.
4
Proxy Voting Policy and Procedures and Proxy Voting Record
You may obtain a copy of the Fund's Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 869-NEWS or by visiting the Mutual Fund Center on our web site at www.morganstanley.com. It is also available on the SEC's web site at http://www.sec.gov.
You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting the Mutual Fund Center on our web site at www.morganstanley.com. This information is also available on the SEC's web site at http://www.sec.gov.
Householding Notice
To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling (800) 869-NEWS, 8:00 a.m. to 8:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.
5
Performance Summary
Performance of $10,000 Investment — Class B
Over 10 Years
6
Average Annual Total Returns—Period Ended July 31, 2010 | |||||||||||||||||||
Symbol | Class A Shares* (since 07/28/97) SRTAX | Class B Shares** (since 10/31/88) SRTBX | Class C Shares† (since 07/28/97) SRTCX | Class I Shares†† (since 07/28/97) SRTDX | |||||||||||||||
1 Year | 8.52%5 2.82 6 | 7.74%5 2.74 6 | 7.76%5 6.76 6 | 8.84%5 — | |||||||||||||||
5 Years | 3.47 5 2.36 6 | 2.69 5 2.34 6 | 2.72 5 2.72 6 | 3.73 5 — | |||||||||||||||
10 Years | 2.78 5 2.22 6 | 2.14 5 2.14 6 | 2.00 5 2.00 6 | 3.02 5 — | |||||||||||||||
Since Inception | 5.05 5 4.62 6 | 8.29 5 8.29 6 | 4.26 5 4.26 6 | 5.30 5 — |
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 graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class A, Class B, Class C, and Class I 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.
* 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 (beginning April 2005).
† 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.
(1) The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. 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 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. The Fund's primary benchmark was changed in March 2010 from the S&P 500® Index to the MSCI All Country World Index to more accurately reflect the Fund's investable universe.
(2) The Standard & Poor's 500® Index (S&P 500®) measures the performance of the large cap segment of the U.S. equities market, covering approximately 75% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. 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.
(3) The Barclays Capital U.S. Government/Credit Index tracks the performance of government and corporate obligations, including U.S. government agency and Treasury securities and corporate and Yankee bonds. The Index is unmanged 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.
(4) The Lipper Flexible Portfolio Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Flexible Portfolio 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 Flexible Portfolio Funds classification as of the date of this report.
(5) Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges.
(6) Figure shown assumes reinvestment of all distributions and the deduction of the maximum applicable sales charge. See the Fund's current prospectus for complete details on fees and sales charges.
‡ Ending value assuming a complete redemption on July 31, 2010.
7
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and (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 02/01/10 – 07/31/10.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). 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@ | |||||||||||||
02/01/10 | 07/31/10 | 02/01/10 – 07/31/10 | |||||||||||||
Class A | |||||||||||||||
Actual (3.56% return) | $ | 1,000.00 | $ | 1,035.60 | $ | 4.64 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,020.23 | $ | 4.61 | |||||||||
Class B | |||||||||||||||
Actual (3.19% return) | $ | 1,000.00 | $ | 1,031.90 | $ | 8.41 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,016.51 | $ | 8.35 | |||||||||
Class C | |||||||||||||||
Actual (3.20% return) | $ | 1,000.00 | $ | 1,032.00 | $ | 8.41 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,016.51 | $ | 8.35 | |||||||||
Class I | |||||||||||||||
Actual (3.69% return) | $ | 1,000.00 | $ | 1,036.90 | $ | 3.38 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,021.47 | $ | 3.36 |
@ Expenses are equal to the Fund's annualized expense ratios of 0.92%, 1.67%, 1.67% and 0.67% for Class A, Class B, Class C and Class I shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). If the Fund had borne all of its expenses, the annualized expense ratios would have been 0.95%, 1.70%, 1.70% and 0.70% for Class A, Class B, Class C and Class I shares, respectively.
8
Investment Advisory Agreement Approval
Nature, Extent and Quality of Services
The Board reviewed and considered the nature and extent of the investment advisory services provided by the Investment Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Fund's Administrator (as defined herein) under the administration agreement, including accounting, clerical, bookkeeping, compliance, business management and planning, and the provision of supplies, office space and utilities at the Investment Adviser's expense. (The Investment Adviser and the Administrator together are referred to as the "Adviser" and the advisory and administration agreements together are referred to as the "Management Agreement.") The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as reported to the Board by Lipper, Inc. ("Lipper").
The Board reviewed and considered the qualifications of the portfolio managers, the senior administrative managers and other key personnel of the Adviser who provide the advisory and administrative services to the Fund. The Board determined that the Adviser's portfolio managers and key personnel are well qualified by education and/or training and experience to perform the services in an efficient and professional manner. The Board concluded that the nature and extent of the advisory and administrative services provided were necessary and appropriate for the conduct of the business and investment activities of the Fund and supported its decision to approve the Management Agreement.
Performance, Fees and Expenses of the Fund
The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Fund. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2009, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Fund's performance was better than its peer group average for the five-year period but below its peer group average for the one- and three-year periods. The Board discussed with the Adv iser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds advised by the Adviser and compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group average. After discussion, the Board concluded that the Fund's management fee, total expense ratio and performance were competitive with its peer group average.
9
Economies of Scale
The Board considered the size and growth prospects of the Fund and how that relates to the Fund's total expense ratio and particularly the Fund's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Fund and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and potential economies of scale of the Fund support its decision to approve the Management Agreement.
Profitability of the Adviser and Affiliates
The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the Fund and during the last two years from their relationship with the Morgan Stanley Fund Complex and reviewed with the Adviser the cost allocation methodology used to determine the profitability of the Adviser and affiliates. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.
Other Benefits of the Relationship
The Board considered other benefits to the Adviser and its affiliates derived from their relationship with the Fund and other funds advised by the Adviser. These benefits may include, among other things, "float" benefits derived from handling of checks for purchases and sales, research received by the Adviser generated from commission dollars spent on funds' portfolio trading and fees for distribution and/or shareholder servicing. The Board reviewed with the Adviser each of these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.
Resources of the Adviser and Historical Relationship Between the Fund and the Adviser
The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund's operations and the Board's confidence in the competence and integrity of the senior managers and key personnel of the Adviser. The Board concluded that the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the Fund to continue its relationship with the Adviser.
10
Other Factors and Current Trends
The Board considered the controls and procedures adopted and implemented by the Adviser and monitored by the Fund's Chief Compliance Officer and concluded that the conduct of business by the Adviser indicates a good faith effort on its part to adhere to high ethical standards in the conduct of the Fund's business.
General Conclusion
After considering and weighing all of the above factors, the Board concluded that it would be in the best interest of the Fund and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single factor referenced above. The Board considered these factors over the course of numerous meetings, some of which were in executive session with only the Independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors differently in reaching their individual decisions to approve the Management Agreement.
11
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010
NUMBER OF SHARES | VALUE | ||||||||||
Common Stocks (47.9%) | |||||||||||
Australia (2.1%) | |||||||||||
Air Freight & Logistics | |||||||||||
10,824 | Toll Holdings Ltd. | $ | 58,167 | ||||||||
Beverages | |||||||||||
8,808 | Coca-Cola Amatil Ltd. | 91,400 | |||||||||
42,869 | Foster's Group Ltd. | 223,393 | |||||||||
314,793 | |||||||||||
Biotechnology | |||||||||||
8,567 | CSL Ltd. | 256,853 | |||||||||
Capital Markets | |||||||||||
5,106 | Macquarie Group Ltd. | 171,841 | |||||||||
Chemicals | |||||||||||
6,321 | DuluxGroup Ltd. (a) | 14,182 | |||||||||
25,937 | Incitec Pivot Ltd. | 76,262 | |||||||||
6,321 | Orica Ltd. | 144,109 | |||||||||
234,553 | |||||||||||
Commercial Banks | |||||||||||
38,959 | Australia & New Zealand Banking Group Ltd. | 812,424 | |||||||||
21,794 | Commonwealth Bank of Australia | 1,036,326 | |||||||||
32,464 | National Australia Bank Ltd. | 738,072 | |||||||||
42,901 | Westpac Banking Corp. | 931,112 | |||||||||
3,517,934 | |||||||||||
Commercial Services & Supplies | |||||||||||
21,087 | Brambles Ltd. | 103,018 | |||||||||
Construction & Engineering | |||||||||||
2,526 | Leighton Holdings Ltd. | 67,393 | |||||||||
Containers & Packaging | |||||||||||
19,058 | Amcor Ltd. | 113,106 | |||||||||
Diversified Financial Services | |||||||||||
2,891 | ASX Ltd. | 75,588 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
74,883 | Telstra Corp. Ltd. | $ | 218,144 | ||||||||
Electric Utilities | |||||||||||
25,259 | RusHydro (ADR) (a) | 131,852 | |||||||||
Energy Equipment & Services | |||||||||||
3,060 | WorleyParsons Ltd. | 64,060 | |||||||||
Food & Staples Retailing | |||||||||||
5,769 | Magnit OJSC (Registered GDR) (a) | 122,015 | |||||||||
15,794 | Wesfarmers Ltd. | 444,239 | |||||||||
2,975 | Wesfarmers Ltd. (PPS) | 83,947 | |||||||||
19,351 | Woolworths Ltd. | 451,501 | |||||||||
1,101,702 | |||||||||||
Health Care Equipment & Supplies | |||||||||||
963 | Cochlear Ltd. | 61,578 | |||||||||
Health Care Providers & Services | |||||||||||
5,936 | Sonic Healthcare Ltd. | 55,314 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
11,102 | Crown Ltd. | 79,950 | |||||||||
10,695 | TABCORP Holdings Ltd. | 66,376 | |||||||||
146,326 | |||||||||||
Information Technology Services | |||||||||||
8,106 | Computershare Ltd. | 74,142 | |||||||||
Insurance | |||||||||||
35,818 | AMP Ltd. | 171,744 | |||||||||
16,910 | AXA Asia Pacific Holdings Ltd. | 83,071 | |||||||||
38,253 | Insurance Australia Group Ltd. | 118,011 | |||||||||
19,757 | QBE Insurance Group Ltd. | 298,498 | |||||||||
19,706 | Suncorp-Metway Ltd. | 149,220 | |||||||||
820,544 |
See Notes to Financial Statements
12
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Media | |||||||||||
48,903 | Fairfax Media Ltd. | $ | 65,258 | ||||||||
Metals & Mining | |||||||||||
55,519 | Alumina Ltd. | 77,853 | |||||||||
50,465 | BHP Billiton Ltd. | 1,831,704 | |||||||||
32,591 | BlueScope Steel Ltd. (a) | 69,880 | |||||||||
20,937 | Fortescue Metals Group Ltd. (a) | 81,260 | |||||||||
7,192 | Newcrest Mining Ltd. | 212,831 | |||||||||
21,424 | OneSteel Ltd. | 57,953 | |||||||||
6,652 | Rio Tinto Ltd. | 424,935 | |||||||||
2,756,416 | |||||||||||
Multi-Utilities | |||||||||||
6,836 | AGL Energy Ltd. | 91,345 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
13,584 | Origin Energy Ltd. | 189,749 | |||||||||
13,674 | Santos Ltd. | 164,532 | |||||||||
8,789 | Woodside Petroleum Ltd. | 330,778 | |||||||||
685,059 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
81,393 | Dexus Property Group (Stapled Securities) (b) | 60,014 | |||||||||
100,489 | Goodman Group (Stapled Securities) (b) | 55,911 | |||||||||
33,564 | GPT Group (Stapled Securities) (b) | 86,844 | |||||||||
48,193 | Mirvac Group (Stapled Securities) (b)(c) | 57,770 | |||||||||
35,586 | Stockland (Stapled Securities) (b)(c) | 122,018 | |||||||||
32,351 | Westfield Group (Stapled Securities) (b)(c) | 357,361 | |||||||||
739,918 |
NUMBER OF SHARES | VALUE | ||||||||||
Real Estate Management & Development | |||||||||||
11,065 | Lend Lease Corp., Ltd. (Stapled Securities) (b)(c) | $ | 72,976 | ||||||||
Road & Rail | |||||||||||
45,245 | Asciano Group (Stapled Securities) (a)(b)(c) | 69,177 | |||||||||
Transportation Infrastructure | |||||||||||
19,502 | Transurban Group (Stapled Securities) (b)(c) | 79,043 | |||||||||
Total Australia | 12,146,100 | ||||||||||
Austria (0.0%) | |||||||||||
Commercial Banks | |||||||||||
1,951 | Erste Group Bank AG | 78,295 | |||||||||
Real Estate Management & Development | |||||||||||
3,664 | Immofinanz AG (a) | 12,056 | |||||||||
Total Austria | 90,351 | ||||||||||
Belgium (0.2%) | |||||||||||
Beverages | |||||||||||
11,225 | Anheuser-Busch InBev N.V. | 594,404 | |||||||||
Commercial Banks | |||||||||||
1,673 | KBC Groep (a) | 73,908 | |||||||||
Diversified Financial Services | |||||||||||
2,046 | Groupe Bruxelles Lambert SA | 159,015 | |||||||||
Food & Staples Retailing | |||||||||||
3,196 | Delhaize Group SA | 236,023 | |||||||||
Insurance | |||||||||||
21,102 | Ageas | 58,106 | |||||||||
Total Belgium | 1,121,456 |
See Notes to Financial Statements
13
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Bermuda (0.1%) | |||||||||||
Capital Markets | |||||||||||
5,499 | Invesco Ltd. | $ | 107,450 | ||||||||
Energy Equipment & Services | |||||||||||
5,865 | Seadrill Ltd. | 136,116 | |||||||||
Food Products | |||||||||||
1,000 | Bunge Ltd. | 49,650 | |||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
3,900 | Marvell Technology Group Ltd. (a) | 58,188 | |||||||||
Total Bermuda | 351,404 | ||||||||||
Brazil (0.5%) | |||||||||||
Commercial Banks | |||||||||||
9,500 | Banco do Brasil SA | 163,879 | |||||||||
9,300 | Banco Santander Brasil SA (Units) (c) | 121,934 | |||||||||
285,813 | |||||||||||
Diversified Financial Services | |||||||||||
22,200 | BM&F Bovespa SA | 164,089 | |||||||||
Food Products | |||||||||||
11,400 | BRF - Brasil Foods SA | 159,709 | |||||||||
Household Durables | |||||||||||
4,300 | Cyrela Brazil Realty SA | 60,143 | |||||||||
6,600 | PDG Realty SA Empreendimentos e Participacoes | 69,835 | |||||||||
129,978 | |||||||||||
Information Technology Services | |||||||||||
10,400 | Companhia Brasileira de Meios de Pagamento | 94,078 | |||||||||
6,300 | Redecard SA | 96,355 | |||||||||
190,433 |
NUMBER OF SHARES | VALUE | ||||||||||
Metals & Mining | |||||||||||
16,100 | Cia Siderurgica Nacional SA | $ | 266,930 | ||||||||
2,500 | Usinas Siderurgicas de Minas Gerais SA | 72,535 | |||||||||
22,200 | Vale SA | 612,179 | |||||||||
951,644 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
20,900 | OGX Petroleo e Gas Participacoes SA (a) | 220,075 | |||||||||
38,200 | Petroleo Brasileiro SA | 693,282 | |||||||||
913,357 | |||||||||||
Personal Products | |||||||||||
4,700 | Natura Cosmeticos SA | 122,925 | |||||||||
Road & Rail | |||||||||||
6,800 | All America Latina Logistica SA (c) | 63,832 | |||||||||
Transportation Infrastructure | |||||||||||
4,600 | Cia de Concessoes Rodoviarias | 105,297 | |||||||||
Total Brazil | 3,087,077 | ||||||||||
Canada (2.3%) | |||||||||||
Aerospace & Defense | |||||||||||
19,400 | Bombardier, Inc. | 87,937 | |||||||||
Auto Components | |||||||||||
1,700 | Magna International, Inc. (Class A) | 126,551 | |||||||||
Capital Markets | |||||||||||
2,800 | IGM Financial, Inc. | 110,142 | |||||||||
Chemicals | |||||||||||
2,200 | Agrium, Inc. | 138,456 | |||||||||
3,800 | Potash Corp. of Saskatchewan, Inc. | 397,761 | |||||||||
536,217 |
See Notes to Financial Statements
14
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Commercial Banks | |||||||||||
7,100 | Bank of Montreal | $ | 434,198 | ||||||||
12,400 | Bank of Nova Scotia | 622,262 | |||||||||
5,200 | Canadian Imperial Bank of Commerce | 357,103 | |||||||||
2,100 | National Bank of Canada | 120,499 | |||||||||
17,100 | Royal Bank of Canada | 893,548 | |||||||||
11,300 | Toronto-Dominion Bank (The) | 804,151 | |||||||||
3,231,761 | |||||||||||
Communications Equipment | |||||||||||
6,300 | Research In Motion Ltd. (a) | 362,478 | |||||||||
Construction & Engineering | |||||||||||
2,800 | SNC-Lavalin Group, Inc. | 126,566 | |||||||||
Diversified Telecommunication Services | |||||||||||
7,200 | BCE, Inc. | 220,262 | |||||||||
Electric Utilities | |||||||||||
2,000 | Fortis, Inc. | 56,904 | |||||||||
Food & Staples Retailing | |||||||||||
3,500 | Shoppers Drug Mart Corp. | 119,396 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
4,300 | Tim Hortons, Inc. | 146,728 | |||||||||
Independent Power Producers & Energy Traders | |||||||||||
3,400 | TransAlta Corp. | 68,923 | |||||||||
Insurance | |||||||||||
300 | Fairfax Financial Holdings Ltd. | 119,498 | |||||||||
6,200 | Great-West Lifeco, Inc. | 151,495 | |||||||||
1,900 | Intact Financial Corp. | 86,568 | |||||||||
24,700 | Manulife Financial Corp. | 392,586 | |||||||||
5,500 | Power Corp. of Canada | 142,843 | |||||||||
5,200 | Power Financial Corp. | 142,538 | |||||||||
8,000 | Sun Life Financial, Inc. | 225,047 | |||||||||
1,260,575 |
NUMBER OF SHARES | VALUE | ||||||||||
Media | |||||||||||
5,200 | Shaw Communications, Inc. | $ | 102,073 | ||||||||
5,100 | Thomson Reuters Corp. | 190,695 | |||||||||
292,768 | |||||||||||
Metals & Mining | |||||||||||
2,300 | Agnico-Eagle Mines Ltd. | 128,485 | |||||||||
13,100 | Barrick Gold Corp. | 538,501 | |||||||||
7,400 | Eldorado Gold Corp. | 120,208 | |||||||||
1,400 | First Quantum Minerals Ltd. | 87,727 | |||||||||
9,800 | Goldcorp, Inc. | 384,164 | |||||||||
11,900 | Kinross Gold Corp. | 195,041 | |||||||||
4,800 | Silver Wheaton Corp. (a) | 90,533 | |||||||||
6,500 | Teck Resources Ltd. | 228,817 | |||||||||
10,100 | Yamana Gold, Inc. | 95,002 | |||||||||
1,868,478 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
5,600 | Cameco Corp. | 142,608 | |||||||||
14,400 | Canadian Natural Resources Ltd. | 495,851 | |||||||||
3,500 | Canadian Oil Sands Trust (Units) (c) | 91,786 | |||||||||
10,000 | Cenovus Energy, Inc. | 281,601 | |||||||||
2,700 | Crescent Point Energy Corp. | 99,512 | |||||||||
5,800 | Enbridge, Inc. | 282,313 | |||||||||
10,500 | EnCana Corp. | 321,011 | |||||||||
3,600 | Husky Energy, Inc. | 88,455 | |||||||||
3,500 | Imperial Oil Ltd. | 136,929 | |||||||||
8,200 | Nexen, Inc. | 170,293 | |||||||||
5,700 | Penn West Energy Trust (Units) (c) | 110,557 | |||||||||
1,400 | Petrobank Energy & Resources Ltd. (a) | 57,672 | |||||||||
19,800 | Suncor Energy, Inc. | 652,713 | |||||||||
14,200 | Talisman Energy, Inc. | 242,410 | |||||||||
8,800 | TransCanada Corp. | 310,981 | |||||||||
1,900 | Ultra Petroleum Corp. (a) | 80,503 | |||||||||
3,565,195 |
See Notes to Financial Statements
15
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Real Estate Management & Development | |||||||||||
7,500 | Brookfield Asset Management, Inc. (Class A) | $ | 188,075 | ||||||||
5,800 | Brookfield Properties Corp. | 87,447 | |||||||||
275,522 | |||||||||||
Road & Rail | |||||||||||
6,100 | Canadian National Railway Co. | 383,724 | |||||||||
2,300 | Canadian Pacific Railway Ltd. | 137,344 | |||||||||
521,068 | |||||||||||
Wireless Telecommunication Services | |||||||||||
5,400 | Rogers Communications, Inc. (Class B) | 187,783 | |||||||||
Total Canada | 13,165,254 | ||||||||||
Denmark (0.2%) | |||||||||||
Beverages | |||||||||||
1,866 | Carlsberg A/S (Class B) | 165,452 | |||||||||
Commercial Banks | |||||||||||
8,225 | Danske Bank A/S (a) | 193,756 | |||||||||
Electrical Equipment | |||||||||||
3,437 | Vestas Wind Systems A/S (a) | 167,100 | |||||||||
Marine | |||||||||||
29 | A P Moller - Maersk A/S (Class B) | 244,555 | |||||||||
Pharmaceuticals | |||||||||||
5,684 | Novo Nordisk A/S (Class B) | 486,188 | |||||||||
Total Denmark | 1,257,051 | ||||||||||
Finland (0.1%) | |||||||||||
Communications Equipment | |||||||||||
34,208 | Nokia Oyj | 316,283 |
NUMBER OF SHARES | VALUE | ||||||||||
Electric Utilities | |||||||||||
6,150 | Fortum Oyj | $ | 143,057 | ||||||||
Insurance | |||||||||||
4,615 | Sampo Oyj (Class A) | 112,763 | |||||||||
Machinery | |||||||||||
2,965 | Kone Oyj (Class B) | 135,312 | |||||||||
Paper & Forest Products | |||||||||||
5,979 | UPM-Kymmene Oyj | 86,798 | |||||||||
Total Finland | 794,213 | ||||||||||
France (1.8%) | |||||||||||
Auto Components | |||||||||||
3,013 | Compagnie Generale des Etablissements Michelin (Class B) | 229,537 | |||||||||
Automobiles | |||||||||||
6,412 | Renault SA (a) | 286,061 | |||||||||
Beverages | |||||||||||
2,972 | Pernod-Ricard SA | 232,610 | |||||||||
Building Products | |||||||||||
4,271 | Compagnie de Saint-Gobain | 181,806 | |||||||||
Chemicals | |||||||||||
4,915 | Air Liquide SA | 553,199 | |||||||||
Commercial Banks | |||||||||||
8,560 | BNP Paribas | 587,979 | |||||||||
5,591 | Credit Agricole SA | 76,575 | |||||||||
7,534 | Societe Generale | 434,297 | |||||||||
1,098,851 | |||||||||||
Construction & Engineering | |||||||||||
1,977 | Bouygues SA | 83,473 | |||||||||
4,929 | Vinci SA | 238,623 | |||||||||
322,096 | |||||||||||
Construction Materials | |||||||||||
3,304 | Lafarge SA | 179,975 |
See Notes to Financial Statements
16
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
24,239 | France Telecom SA | $ | 507,605 | ||||||||
Electric Utilities | |||||||||||
4,207 | EDF SA | 178,835 | |||||||||
Electrical Equipment | |||||||||||
4,808 | Alstom SA | 251,625 | |||||||||
2,889 | Schneider Electric SA | 333,185 | |||||||||
584,810 | |||||||||||
Energy Equipment & Services | |||||||||||
1,518 | Technip SA | 101,085 | |||||||||
Food & Staples Retailing | |||||||||||
6,488 | Carrefour SA | 298,668 | |||||||||
Food Products | |||||||||||
7,967 | Danone SA | 446,851 | |||||||||
Health Care Equipment & Supplies | |||||||||||
2,087 | Cie Generale d'Optique Essilor International SA | 130,545 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
1,670 | Sodexo | 105,211 | |||||||||
Information Technology Services | |||||||||||
2,410 | Cap Gemini SA | 114,695 | |||||||||
Insurance | |||||||||||
14,047 | AXA SA | 258,930 | |||||||||
Machinery | |||||||||||
2,322 | Vallourec SA | 226,066 | |||||||||
Media | |||||||||||
1,726 | Publicis Groupe SA | 77,790 | |||||||||
4,073 | SES SA (FDR) | 100,608 | |||||||||
14,367 | Vivendi | 345,335 | |||||||||
523,733 |
NUMBER OF SHARES | VALUE | ||||||||||
Multi-Utilities | |||||||||||
12,812 | GDF Suez | $ | 425,581 | ||||||||
5,269 | Suez Environnement Co. | 98,051 | |||||||||
5,360 | Veolia Environnement | 142,317 | |||||||||
665,949 | |||||||||||
Multiline Retail | |||||||||||
1,334 | PPR | 178,447 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
18,657 | Total SA | 941,153 | |||||||||
Personal Products | |||||||||||
3,359 | L'Oreal SA | 352,459 | |||||||||
Pharmaceuticals | |||||||||||
14,191 | Sanofi-Aventis SA | 824,235 | |||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
86 | ICADE | 8,177 | |||||||||
1,623 | Unibail-Rodamco SE | 320,213 | |||||||||
328,390 | |||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
1,194 | Christian Dior SA | 129,394 | |||||||||
583 | Hermes International | 100,019 | |||||||||
3,495 | LVMH Moet Hennessy Louis Vuitton SA | 426,394 | |||||||||
655,807 | |||||||||||
Total France | 10,507,609 | ||||||||||
Germany (1.5%) | |||||||||||
Air Freight & Logistics | |||||||||||
13,041 | Deutsche Post AG (Registered Shares) | 226,450 | |||||||||
Automobiles | |||||||||||
5,954 | Bayerische Motoren Werke AG | 320,523 | |||||||||
17,290 | Daimler AG (a) | 932,241 | |||||||||
1,252,764 |
See Notes to Financial Statements
17
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Capital Markets | |||||||||||
6,444 | Deutsche Bank AG (Registered Shares) | $ | 450,107 | ||||||||
Chemicals | |||||||||||
9,638 | BASF SE | 562,804 | |||||||||
3,522 | K+S AG | 186,984 | |||||||||
3,485 | Linde AG | 408,507 | |||||||||
1,158,295 | |||||||||||
Commercial Banks | |||||||||||
15,152 | Commerzbank AG (a) | 137,033 | |||||||||
Construction Materials | |||||||||||
2,541 | HeidelbergCement AG | 127,966 | |||||||||
Diversified Financial Services | |||||||||||
3,196 | Deutsche Boerse AG | 223,737 | |||||||||
Diversified Telecommunication Services | |||||||||||
39,519 | Deutsche Telecom AG (Registered Shares) | 530,957 | |||||||||
Electric Utilities | |||||||||||
20,333 | E.ON AG | 606,649 | |||||||||
Health Care Providers & Services | |||||||||||
2,506 | Fresenius Medical Care AG & Co. KGaA | 137,502 | |||||||||
Household Products | |||||||||||
2,337 | Henkel AG & Co. KGaA | 96,907 | |||||||||
Industrial Conglomerates | |||||||||||
10,540 | Siemens AG (Registered Shares) | 1,027,257 | |||||||||
Insurance | |||||||||||
4,237 | Allianz SE (Registered Shares) | 491,962 | |||||||||
1,773 | Muenchener Rueckversicherungs AG (Registered Shares) | 245,605 | |||||||||
737,567 |
NUMBER OF SHARES | VALUE | ||||||||||
Machinery | |||||||||||
1,517 | MAN SE | $ | 140,813 | ||||||||
Metals & Mining | |||||||||||
4,639 | ThyssenKrupp AG | 137,652 | |||||||||
Multi-Utilities | |||||||||||
4,103 | RWE AG | 289,745 | |||||||||
Personal Products | |||||||||||
1,257 | Beiersdorf AG | 74,450 | |||||||||
Pharmaceuticals | |||||||||||
10,469 | Bayer AG | 601,848 | |||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
16,493 | Infineon Technologies AG (a) | 111,312 | |||||||||
Software | |||||||||||
15,855 | SAP AG | 723,978 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
3,334 | Adidas AG | 180,566 | |||||||||
Total Germany | 8,973,555 | ||||||||||
Indonesia (0.6%) | |||||||||||
Automobiles | |||||||||||
88,000 | Astra International Tbk PT | 498,586 | |||||||||
Commercial Banks | |||||||||||
511,000 | Bank Central Asia Tbk PT | 339,772 | |||||||||
140,000 | Bank Danamon Indonesia Tbk PT | 83,701 | |||||||||
312,500 | Bank Mandiri Tbk PT | 209,532 | |||||||||
211,500 | Bank Negara Indonesia Persero Tbk PT | 71,497 | |||||||||
243,000 | Bank Rakyat Indonesia | 268,838 | |||||||||
973,340 | |||||||||||
Construction Materials | |||||||||||
62,500 | Indocement Tunggal Prakarsa Tbk PT | 118,037 | |||||||||
169,000 | Semen Gresik Persero Tbk PT | 174,694 | |||||||||
292,731 |
See Notes to Financial Statements
18
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
395,500 | Telekomunikasi Indonesia Tbk PT | $ | 373,468 | ||||||||
Food Products | |||||||||||
208,500 | Indofood Sukses Makmur Tbk PT | 107,762 | |||||||||
Gas Utilities | |||||||||||
481,000 | Perusahaan Gas Negara PT | 217,696 | |||||||||
Household Products | |||||||||||
57,500 | Unilever Indonesia Tbk PT | 108,915 | |||||||||
Machinery | |||||||||||
69,500 | United Tractors Tbk PT | 156,498 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
465,000 | Adaro Energy Tbk PT | 103,928 | |||||||||
778,500 | Bumi Resources Tbk PT | 149,636 | |||||||||
18,000 | Indo Tambangraya Megah PT | 75,432 | |||||||||
37,500 | Tambang Batubara Bukit Asam Tbk PT | 69,984 | |||||||||
398,980 | |||||||||||
Tobacco | |||||||||||
28,000 | Gudang Garam Tbk PT | 109,516 | |||||||||
Total Indonesia | 3,237,492 | ||||||||||
Ireland (0.1%) | |||||||||||
Construction Materials | |||||||||||
10,525 | CRH PLC | 219,862 | |||||||||
Health Care Equipment & Supplies | |||||||||||
3,030 | Covidien PLC | 113,080 | |||||||||
Information Technology Services | |||||||||||
6,400 | Accenture Ltd. (Class A) | 253,696 | |||||||||
Machinery | |||||||||||
2,200 | Ingersoll-Rand PLC | 82,412 | |||||||||
Total Ireland | 669,050 |
NUMBER OF SHARES | VALUE | ||||||||||
Israel (0.1%) | |||||||||||
Pharmaceuticals | |||||||||||
13,000 | Teva Pharmaceutical Industries Ltd. (ADR) | $ | 635,050 | ||||||||
Italy (0.5%) | |||||||||||
Automobiles | |||||||||||
13,836 | Fiat SpA | 177,239 | |||||||||
Commercial Banks | |||||||||||
84,720 | Intesa Sanpaolo SpA | 280,424 | |||||||||
188,353 | UniCredit SpA | 527,723 | |||||||||
10,196 | Unione di Banche Italiane ScpA | 109,418 | |||||||||
917,565 | |||||||||||
Diversified Telecommunication Services | |||||||||||
162,075 | Telecom Italia SpA | 206,456 | |||||||||
144,704 | Telecom Italia SpA | 150,386 | |||||||||
356,842 | |||||||||||
Electric Utilities | |||||||||||
82,166 | Enel SpA | 403,404 | |||||||||
Energy Equipment & Services | |||||||||||
4,984 | Saipem SpA | 179,260 | |||||||||
Gas Utilities | |||||||||||
44,463 | Snam Rete Gas SpA | 208,736 | |||||||||
Insurance | |||||||||||
17,077 | Assicurazioni Generali SpA | 344,046 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
28,700 | Eni SpA | 586,813 | |||||||||
Total Italy | 3,173,905 | ||||||||||
Japan (5.3%) | |||||||||||
Air Freight & Logistics | |||||||||||
500 | Kintetsu World Express, Inc. | 12,402 | |||||||||
9,000 | Yamato Holdings Co., Ltd. | 111,673 | |||||||||
124,075 |
See Notes to Financial Statements
19
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Auto Components | |||||||||||
3,700 | Aisin Seiki Co., Ltd. | $ | 103,426 | ||||||||
2,000 | Akebono Brake Industry Co., Ltd. | 9,190 | |||||||||
9,000 | Bridgestone Corp. | 161,155 | |||||||||
8,500 | Denso Corp. | 243,701 | |||||||||
700 | Exedy Corp. | 20,256 | |||||||||
700 | FCC Co., Ltd. | 13,563 | |||||||||
4,000 | Kayaba Industry Co., Ltd. | 15,788 | |||||||||
1,000 | Keihin Corp. | 18,091 | |||||||||
600 | Musashi Seimitsu Industry Co., Ltd. | 12,418 | |||||||||
900 | Nifco, Inc. | 20,480 | |||||||||
1,000 | Nippon Seiki Co., Ltd. | 10,996 | |||||||||
3,000 | Nissan Shatai Co., Ltd. | 21,321 | |||||||||
1,000 | Nissin Kogyo Co., Ltd. | 14,573 | |||||||||
900 | Takata Corp. | 17,803 | |||||||||
1,100 | Tokai Rika Co., Ltd. | 18,678 | |||||||||
1,100 | Tokai Rubber Industries, Inc. | 13,114 | |||||||||
4,000 | Toyo Tire & Rubber Co., Ltd. | 9,306 | |||||||||
3,600 | Toyota Industries Corp. | 97,089 | |||||||||
1,300 | TS Tech Co., Ltd. | 20,509 | |||||||||
5,000 | Yokohama Rubber Co., Ltd. (The) | 26,738 | |||||||||
868,195 | |||||||||||
Automobiles | |||||||||||
20,695 | Honda Motor Co., Ltd. (ADR) | 657,480 | |||||||||
24,000 | Mazda Motor Corp. | 58,059 | |||||||||
97,000 | Mitsubishi Motors Corp. (a) | 126,871 | |||||||||
33,300 | Nissan Motor Co., Ltd. (a) | 255,931 | |||||||||
5,600 | Suzuki Motor Corp. | 117,322 | |||||||||
38,200 | Toyota Motor Corp. | 1,348,573 | |||||||||
2,564,236 | |||||||||||
Beverages | |||||||||||
4,800 | Asahi Breweries Ltd. | 85,061 | |||||||||
13,000 | Kirin Holdings Co., Ltd. | 173,644 | |||||||||
2,000 | Takara Holdings, Inc. | 10,811 | |||||||||
269,516 |
NUMBER OF SHARES | VALUE | ||||||||||
Building Products | |||||||||||
1,300 | Aica Kogyo Co., Ltd. | $ | 14,866 | ||||||||
15,000 | Asahi Glass Co., Ltd. | 152,787 | |||||||||
4,000 | Central Glass Co., Ltd. | 15,510 | |||||||||
3,500 | Daikin Industries Ltd. | 129,840 | |||||||||
5,300 | JS Group Corp. | 106,926 | |||||||||
6,000 | Nitto Boseki Co., Ltd. | 13,820 | |||||||||
6,000 | Sanwa Holdings Corp. | 19,307 | |||||||||
2,000 | Takara Standard Co., Ltd. | 12,894 | |||||||||
1,100 | Takasago Thermal Engineering Co., Ltd. | 9,473 | |||||||||
475,423 | |||||||||||
Capital Markets | |||||||||||
31,000 | Daiwa Securities Group, Inc. | 134,198 | |||||||||
2,200 | kabu.com Securities Co., Ltd. | 10,186 | |||||||||
1,600 | Marusan Securities Co., Ltd. | 8,982 | |||||||||
16,000 | Mizuho Investors Securities Co., Ltd. (a) | 16,297 | |||||||||
30 | Monex Group, Inc. | 12,414 | |||||||||
49,000 | Nomura Holdings, Inc. | 272,805 | |||||||||
4,000 | Okasan Securities Group, Inc. | 15,140 | |||||||||
5,000 | Tokai Tokyo Financial Holdings | 18,172 | |||||||||
488,194 | |||||||||||
Chemicals | |||||||||||
2,000 | ADEKA Corp. | 19,584 | |||||||||
26,000 | Asahi Kasei Corp. | 136,026 | |||||||||
11,000 | DIC Corp. | 18,207 | |||||||||
800 | Earth Chemical Co., Ltd. | 24,761 | |||||||||
3,000 | JSR Corp. | 52,572 | |||||||||
5,000 | Kuraray Co., Ltd. | 62,735 | |||||||||
4,000 | KUREHA Corp. | 20,094 | |||||||||
1,100 | Lintec Corp. | 21,276 | |||||||||
20,000 | Mitsubishi Chemical Holdings Corp. | 103,247 | |||||||||
1,000 | Nihon Parkerizing Co., Ltd. | 12,871 |
See Notes to Financial Statements
20
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
3,000 | Nippon Kayaku Co., Ltd. | $ | 27,015 | ||||||||
5,000 | Nippon Paint Co., Ltd. | 29,400 | |||||||||
2,000 | Nippon Shokubai Co., Ltd. | 20,765 | |||||||||
3,000 | Nippon Soda Co., Ltd. | 10,660 | |||||||||
2,000 | Nippon Synthetic Chemical Industry Co., Ltd. (The) | 12,200 | |||||||||
2,200 | Nitto Denko Corp. | 76,241 | |||||||||
3,000 | NOF Corp. | 12,362 | |||||||||
3,000 | Sakai Chemical Industry Co., Ltd. | 12,084 | |||||||||
4,300 | Shin-Etsu Chemical Co., Ltd. | 214,266 | |||||||||
200 | Stella Chemifa Corp. | 7,917 | |||||||||
4,000 | Sumitomo Bakelite Co., Ltd. | 20,881 | |||||||||
22,000 | Sumitomo Chemical Co., Ltd. | 95,492 | |||||||||
300 | Taiyo Ink Manufacturing Co., Ltd. | 8,254 | |||||||||
2,000 | Takasago International Corp. | 9,144 | |||||||||
5,000 | Toagosei Co., Ltd. | 22,166 | |||||||||
4,000 | Tokai Carbon Co., Ltd. | 21,112 | |||||||||
900 | Tokyo Ohka Kogyo Co., Ltd. | 15,459 | |||||||||
26,000 | Toray Industries, Inc. | 139,337 | |||||||||
3,000 | Toyo Ink Manufacturing Co., Ltd. | 11,598 | |||||||||
4,000 | Zeon Corp. | 28,798 | |||||||||
1,266,524 | |||||||||||
Commercial Banks | |||||||||||
200 | Aichi Bank Ltd. (The) | 12,686 | |||||||||
5,000 | Akita Bank Ltd. (The) | 16,725 | |||||||||
3,000 | Aomori Bank Ltd. (The) | 7,292 | |||||||||
3,000 | Awa Bank Ltd. (The) | 18,334 | |||||||||
400 | Bank of Iwate Ltd. (The) | 22,270 | |||||||||
2,000 | Bank of Nagoya Ltd. (The) | 6,991 | |||||||||
400 | Bank of Okinawa Ltd. (The) | 12,913 | |||||||||
6,000 | Bank of Saga Ltd. (The) | 17,570 | |||||||||
900 | Bank of the Ryukyus Ltd. | 10,053 |
NUMBER OF SHARES | VALUE | ||||||||||
22,000 | Bank of Yokohama Ltd. (The) | $ | 101,603 | ||||||||
14,000 | Chiba Bank Ltd. (The) | 85,561 | |||||||||
7,000 | Daishi Bank Ltd. (The) | 24,226 | |||||||||
6,000 | Ehime Bank Ltd. (The) | 15,487 | |||||||||
3,000 | Eighteenth Bank Ltd. (The) | 8,438 | |||||||||
5,000 | Fukui Bank Ltd. (The) | 15,915 | |||||||||
5,000 | Higo Bank Ltd. (The) | 27,374 | |||||||||
5,000 | Hokkoku Bank Ltd. (The) | 19,677 | |||||||||
8,000 | Hokuetsu Bank Ltd. (The) | 13,242 | |||||||||
5,000 | Hyakugo Bank Ltd. (The) | 21,992 | |||||||||
5,000 | Hyakujushi Bank Ltd. (The) | 18,809 | |||||||||
6,000 | Juroku Bank Ltd. (The) | 20,557 | |||||||||
4,000 | Kagoshima Bank Ltd. (The) | 25,001 | |||||||||
6,000 | Kansai Urban Banking Corp. | 9,445 | |||||||||
5,000 | Keiyo Bank Ltd. (The) | 25,059 | |||||||||
10,000 | Kiyo Holdings, Inc. | 13,311 | |||||||||
4,000 | Miyazaki Bank Ltd. (The) | 10,880 | |||||||||
193,500 | Mizuho Financial Group, Inc. | 315,800 | |||||||||
600 | Musashino Bank Ltd. (The) | 16,925 | |||||||||
4,000 | Nanto Bank Ltd. (The) | 20,835 | |||||||||
7,000 | Ogaki Kyoritsu Bank Ltd. (The) | 22,281 | |||||||||
3,000 | Oita Bank Ltd. (The) | 9,410 | |||||||||
7,600 | Resona Holdings, Inc. | 83,482 | |||||||||
3,000 | San-In Godo Bank Ltd. (The) | 22,050 | |||||||||
6,000 | Shiga Bank Ltd. (The) | 36,599 | |||||||||
4,000 | Shikoku Bank Ltd. (The) | 12,779 | |||||||||
12,000 | Shizuoka Bank Ltd. (The) | 100,006 | |||||||||
18,100 | Sumitomo Mitsui Financial Group, Inc. | 560,630 | |||||||||
25,000 | Sumitomo Trust & Banking Co., Ltd (The) | 139,186 | |||||||||
4,000 | Tochigi Bank Ltd. (The) | 16,482 | |||||||||
3,000 | Toho Bank Ltd. (The) | 8,820 | |||||||||
800 | Tokyo Tomin Bank Ltd. (The) | 8,769 | |||||||||
4,000 | Yamagata Bank Ltd. (The) | 18,751 |
See Notes to Financial Statements
21
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
2,000 | Yamanashi Chuo Bank Ltd. (The) | $ | 8,079 | ||||||||
1,982,295 | |||||||||||
Commercial Services & Supplies | |||||||||||
500 | Asahi Holdings, Inc. | 10,365 | |||||||||
11,000 | Dai Nippon Printing Co., Ltd. | 133,052 | |||||||||
700 | Daiseki Co., Ltd. | 14,309 | |||||||||
1,800 | Duskin Co., Ltd. | 31,981 | |||||||||
2,500 | Kokuyo Co., Ltd. | 20,198 | |||||||||
650 | Moshi Moshi Hotline, Inc. | 13,580 | |||||||||
1,800 | Park24 Co., Ltd. | 19,313 | |||||||||
2,800 | Secom Co., Ltd. | 128,503 | |||||||||
2,000 | Sohgo Security Services Co., Ltd. | 20,232 | |||||||||
1,000 | Toppan Forms Co., Ltd. | 9,642 | |||||||||
11,000 | Toppan Printing Co., Ltd. | 90,781 | |||||||||
491,956 | |||||||||||
Communications Equipment | |||||||||||
1,000 | Hitachi Kokusai Electric, Inc. | 8,056 | |||||||||
Computers & Peripherals | |||||||||||
25,000 | Fujitsu Ltd. | 177,962 | |||||||||
58,000 | Toshiba Corp. (a) | 303,443 | |||||||||
8 | Wacom Co., Ltd. | 11,260 | |||||||||
492,665 | |||||||||||
Construction & Engineering | |||||||||||
1,500 | Chudenko Corp. | 16,928 | |||||||||
2,100 | COMSYS Holdings Corp. | 20,151 | |||||||||
3,000 | JGC Corp. | 49,621 | |||||||||
2,000 | Kandenko Co., Ltd. | 11,876 | |||||||||
1,800 | Kyowa Exeo Corp. | 16,709 | |||||||||
4,000 | Maeda Corp. | 10,695 | |||||||||
2,000 | Maeda Road Construction Co., Ltd. | 16,158 | |||||||||
2,000 | Nippo Corp. | 13,936 | |||||||||
6,000 | Nishimatsu Construction Co., Ltd. | 7,431 |
NUMBER OF SHARES | VALUE | ||||||||||
4,000 | Okumura Corp. | $ | 14,306 | ||||||||
700 | Taikisha Ltd. | 11,092 | |||||||||
5,000 | Toda Corp. | 16,089 | |||||||||
1,000 | Toshiba Plant Systems & Services Corp. | 11,899 | |||||||||
4,000 | Toyo Engineering Corp. | 12,547 | |||||||||
229,438 | |||||||||||
Construction Materials | |||||||||||
10,000 | Sumitomo Osaka Cement Co., Ltd. | 18,751 | |||||||||
Consumer Finance | |||||||||||
1,300 | Hitachi Capital Corp. | 17,274 | |||||||||
1,380 | ORIX Corp. | 108,617 | |||||||||
1,550 | Promise Co., Ltd. | 12,343 | |||||||||
2,140 | Takefuji Corp. | 6,193 | |||||||||
144,427 | |||||||||||
Containers & Packaging | |||||||||||
300 | FP Corp. | 15,973 | |||||||||
500 | Fuji Seal International, Inc. | 10,973 | |||||||||
3,000 | Rengo Co., Ltd. | 19,411 | |||||||||
46,357 | |||||||||||
Diversified Financial Services | |||||||||||
1,200 | Century Tokyo Leasing Corp. | 14,417 | |||||||||
500 | Fuyo General Lease Co., Ltd. | 11,488 | |||||||||
2,100 | Japan Securities Finance Co., Ltd. | 12,299 | |||||||||
4 | Osaka Securities Exchange Co., Ltd. | 19,909 | |||||||||
58,113 | |||||||||||
Diversified Telecommunication Services | |||||||||||
8,000 | Nippon Telegraph & Telephone Corp. | 332,427 | |||||||||
Electric Utilities | |||||||||||
7,800 | Chubu Electric Power Co., Inc. | 193,386 |
See Notes to Financial Statements
22
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
3,700 | Chugoku Electric Power Co., Inc. (The) | $ | 76,788 | ||||||||
4,200 | Hokkaido Electric Power Co., Inc | 90,033 | |||||||||
3,900 | Hokuriku Electric Power Co. | 86,356 | |||||||||
4 | Japan Wind Development Co., Ltd. (a) | 6,482 | |||||||||
6,200 | Kansai Electric Power Co., Inc. (The) | 150,272 | |||||||||
3,900 | Kyushu Electric Power Co., Inc. | 88,252 | |||||||||
200 | Okinawa Electric Power Co., Inc. (The) | 10,244 | |||||||||
5,800 | Shikoku Electric Power Co. | 171,123 | |||||||||
6,600 | Tohoku Electric Power Co., Inc. | 142,626 | |||||||||
13,700 | Tokyo Electric Power Co., Inc. (The) | 376,296 | |||||||||
1,391,858 | |||||||||||
Electrical Equipment | |||||||||||
2,000 | Daihen Corp. | 8,519 | |||||||||
8,000 | Fujikura Ltd. | 37,595 | |||||||||
900 | Futaba Corp. | 16,272 | |||||||||
6,000 | Hitachi Cable Ltd. | 16,459 | |||||||||
27,000 | Mitsubishi Electric Corp. | 235,326 | |||||||||
1,400 | Nidec Corp. | 131,419 | |||||||||
1,400 | Nippon Signal Co., Ltd. | 10,517 | |||||||||
8,000 | Panasonic Electric Works Co., Ltd. | 101,765 | |||||||||
23,800 | Sumitomo Electric Industries Ltd. | 278,234 | |||||||||
200 | Toyo Tanso Co., Ltd. | 10,105 | |||||||||
846,211 | |||||||||||
Electronic Equipment, Instruments & Components | |||||||||||
3,500 | Alps Electric Co., Ltd. (a) | 31,680 | |||||||||
7,800 | FUJIFILM Holdings Corp. | 243,764 | |||||||||
1,300 | Hamamatsu Photonics KK | 38,099 | |||||||||
66,000 | Hitachi Ltd. (a) | 268,904 |
NUMBER OF SHARES | VALUE | ||||||||||
600 | Horiba Ltd. | $ | 16,216 | ||||||||
1,300 | Hosiden Corp. | 13,874 | |||||||||
5,000 | Hoya Corp. | 118,988 | |||||||||
2,000 | Ibiden Co., Ltd. | 59,749 | |||||||||
600 | Keyence Corp. | 138,202 | |||||||||
2,100 | Kyocera Corp. | 187,407 | |||||||||
2,900 | Murata Manufacturing Co., Ltd. | 143,330 | |||||||||
1,300 | Nichicon Corp. | 16,853 | |||||||||
3,000 | Nippon Chemi-Con Corp. (a) | 14,897 | |||||||||
6,000 | Nippon Electric Glass Co., Ltd. | 76,463 | |||||||||
15,000 | Oki Electric Industry Co., Ltd. (a) | 11,980 | |||||||||
2,800 | Omron Corp. | 67,541 | |||||||||
700 | Ryosan Co., Ltd. | 17,866 | |||||||||
3,000 | SMK Corp. | 14,654 | |||||||||
1,200 | Star Micronics Co., Ltd. | 12,765 | |||||||||
2,000 | Taiyo Yuden Co., Ltd. | 25,603 | |||||||||
1,400 | TDK Corp. | 84,426 | |||||||||
1,300 | Yamatake Corp. | 33,224 | |||||||||
1,636,485 | |||||||||||
Food & Staples Retailing | |||||||||||
11,600 | Aeon Co., Ltd. | 124,197 | |||||||||
800 | Arcs Co., Ltd. | 10,751 | |||||||||
1,200 | Circle K Sunkus Co., Ltd. | 16,084 | |||||||||
1,300 | Heiwado Co., Ltd. | 16,206 | |||||||||
3,000 | Izumiya Co., Ltd. | 13,160 | |||||||||
1,000 | Matsumotokiyoshi Holdings Co., Ltd. | 22,316 | |||||||||
11,300 | Seven & I Holdings Co., Ltd. | 270,614 | |||||||||
800 | Sugi Holdings Co., Ltd. | 17,529 | |||||||||
700 | Sundrug Co., Ltd. | 18,125 | |||||||||
600 | Tsuruha Holdings, Inc. | 23,126 | |||||||||
532,108 | |||||||||||
Food Products | |||||||||||
15,000 | Ajinomoto Co., Inc. | 142,196 | |||||||||
2,000 | Ezaki Glico Co., Ltd. | 23,751 |
See Notes to Financial Statements
23
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
1,200 | Fuji Oil Co., Ltd. | $ | 17,723 | ||||||||
600 | Hokuto Corp. | 11,827 | |||||||||
1,700 | House Foods Corp. | 24,872 | |||||||||
3,000 | Itoham Foods, Inc. | 11,112 | |||||||||
1,600 | Kagome Co., Ltd. | 28,446 | |||||||||
2,200 | Kewpie Corp. | 26,407 | |||||||||
8,000 | Maruha Nichiro Holdings, Inc. | 12,778 | |||||||||
6,000 | Morinaga & Co., Ltd. | 13,751 | |||||||||
3,000 | Morinaga Milk Industry Co., Ltd. | 11,424 | |||||||||
4,000 | Nichirei Corp. | 17,269 | |||||||||
3,000 | Nippon Flour Mills Co., Ltd. | 15,626 | |||||||||
4,600 | Nippon Suisan Kaisha Ltd. | 15,654 | |||||||||
2,000 | Nisshin Oillio Group Ltd. (The) | 10,001 | |||||||||
1,000 | Sakata Seed Corp. | 13,473 | |||||||||
396,310 | |||||||||||
Gas Utilities | |||||||||||
38,000 | Osaka Gas Co., Ltd. | 140,309 | |||||||||
9,000 | Saibu Gas Co., Ltd. | 25,001 | |||||||||
34,000 | Tokyo Gas Co., Ltd. | 154,662 | |||||||||
319,972 | |||||||||||
Health Care Equipment & Supplies | |||||||||||
300 | Hogy Medical Co., Ltd. | 14,359 | |||||||||
700 | Nihon Kohden Corp. | 12,931 | |||||||||
2,000 | Nikkiso Co., Ltd. | 15,580 | |||||||||
1,200 | Nipro Corp. | 23,362 | |||||||||
3,500 | Olympus Corp. | 93,825 | |||||||||
2,900 | Terumo Corp. | 152,225 | |||||||||
312,282 | |||||||||||
Health Care Providers & Services | |||||||||||
1,000 | Miraca Holdings, Inc. | 29,770 | |||||||||
1,100 | Nichii Gakkan Co. | 9,498 | |||||||||
1,000 | Toho Holdings Co., Ltd. | 14,955 | |||||||||
54,223 |
NUMBER OF SHARES | VALUE | ||||||||||
Health Care Technology | |||||||||||
2 | M3, Inc. | $ | 9,051 | ||||||||
Hotels, Restaurants & Leisure | |||||||||||
900 | Doutor Nichires Holdings Co., Ltd. | 11,772 | |||||||||
400 | HIS Co., Ltd. | 9,176 | |||||||||
900 | MOS Food Services, Inc. | 15,459 | |||||||||
800 | Resorttrust, Inc. | 11,491 | |||||||||
600 | Saizeriya Co., Ltd. | 11,292 | |||||||||
4,000 | Tokyo Dome Corp. | 10,603 | |||||||||
600 | WATAMI Co., Ltd. | 11,577 | |||||||||
14 | Yoshinoya Holdings Co., Ltd. | 16,059 | |||||||||
1,300 | Zensho Co., Ltd. | 12,113 | |||||||||
109,542 | |||||||||||
Household Durables | |||||||||||
1,200 | Alpine Electronics, Inc. (a) | 14,404 | |||||||||
400 | Chofu Seisakusho Co., Ltd. | 8,621 | |||||||||
500 | Foster Electric Co., Ltd. | 13,531 | |||||||||
400 | Funai Electric Co., Ltd. | 14,283 | |||||||||
21,000 | Haseko Corp. (a) | 17,015 | |||||||||
1,000 | Hitachi Koki Co., Ltd. | 8,913 | |||||||||
2,000 | PanaHome Corp. | 12,269 | |||||||||
25,300 | Panasonic Corp. | 334,424 | |||||||||
4,400 | Pioneer Corp. (a) | 16,093 | |||||||||
700 | Sangetsu Co., Ltd. | 15,402 | |||||||||
12,000 | Sekisui House Ltd. | 106,534 | |||||||||
15,000 | Sharp Corp. | 164,419 | |||||||||
13,635 | Sony Corp. (ADR) | 425,685 | |||||||||
3,000 | Sumitomo Forestry Co., Ltd. | 23,092 | |||||||||
1,174,685 | |||||||||||
Household Products | |||||||||||
5,000 | Lion Corp. | 25,349 | |||||||||
300 | Pigeon Corp. | 11,059 | |||||||||
800 | Unicharm Corp. | 95,191 | |||||||||
131,599 |
See Notes to Financial Statements
24
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Independent Power Producers & Energy Traders | |||||||||||
2,700 | Electric Power Development Co., Ltd. | $ | 83,692 | ||||||||
Industrial Conglomerates | |||||||||||
31,000 | Hankyu Hanshin Holdings, Inc. | 140,298 | |||||||||
Information Technology Services | |||||||||||
1,300 | IT Holdings Corp. | 15,529 | |||||||||
10 | NET One Systems Co., Ltd. | 12,281 | |||||||||
1,700 | Nihon Unisys Ltd. | 12,121 | |||||||||
30 | NTT Data Corp. | 109,034 | |||||||||
148,965 | |||||||||||
Insurance | |||||||||||
5,000 | Mitsui Sumitomo Insurance Group Holdings, Inc. | 111,176 | |||||||||
4,200 | T&D Holdings, Inc. | 92,026 | |||||||||
6,500 | Tokio Marine Holdings, Inc. | 178,008 | |||||||||
381,210 | |||||||||||
Internet & Catalog Retail | |||||||||||
139 | Rakuten, Inc. | 106,509 | |||||||||
Internet Software & Services | |||||||||||
5 | Access Co., Ltd. | 6,858 | |||||||||
25 | eAccess Ltd. | 16,205 | |||||||||
4 | Kakaku.com, Inc. | 18,635 | |||||||||
2 | Mixi, Inc. | 10,672 | |||||||||
276 | Yahoo! Japan Corp. | 106,221 | |||||||||
158,591 | |||||||||||
Leisure Equipment & Products | |||||||||||
1,100 | Heiwa Corp. | 12,274 | |||||||||
3,000 | Mizuno Corp. | 13,543 | |||||||||
4,600 | Nikon Corp. | 79,972 | |||||||||
1,400 | Tomy Co., Ltd. | 11,165 | |||||||||
400 | Universal Entertainment Corp. (a) | 7,051 | |||||||||
124,005 |
NUMBER OF SHARES | VALUE | ||||||||||
Machinery | |||||||||||
1,800 | Amano Corp. | $ | 14,772 | ||||||||
1,000 | Asahi Diamond Industrial Co., Ltd. | 15,985 | |||||||||
2,100 | CKD Corp. | 13,879 | |||||||||
2,500 | Daifuku Co., Ltd. | 14,671 | |||||||||
8,000 | Ebara Corp. (a) | 30,465 | |||||||||
2,500 | Fanuc Ltd. | 295,445 | |||||||||
1,000 | Fuji Machine Manufacturing Co., Ltd. | 15,487 | |||||||||
3,000 | Fujitec Co., Ltd. | 15,626 | |||||||||
12,000 | Furukawa Co., Ltd. (a) | 12,779 | |||||||||
1,300 | Glory Ltd. | 30,260 | |||||||||
19,000 | Hitachi Zosen Corp. | 27,050 | |||||||||
4,000 | Iseki & Co., Ltd. (a) | 10,417 | |||||||||
5,000 | Japan Steel Works Ltd. (The) | 48,267 | |||||||||
38,000 | Kawasaki Heavy Industries Ltd. | 95,005 | |||||||||
2,000 | Kitz Corp. | 10,047 | |||||||||
13,600 | Komatsu Ltd. | 285,868 | |||||||||
2,000 | Komori Corp. | 20,696 | |||||||||
18,000 | Kubota Corp. | 142,717 | |||||||||
3,000 | Makino Milling Machine Co., Ltd. (a) | 18,057 | |||||||||
1,600 | Makita Corp. | 46,225 | |||||||||
1,000 | Max Co., Ltd. | 11,934 | |||||||||
4,000 | Meidensha Corp. | 12,454 | |||||||||
49,000 | Mitsubishi Heavy Industries Ltd. | 183,761 | |||||||||
700 | Miura Co., Ltd. | 16,513 | |||||||||
2,500 | Mori Seiki Co., Ltd. | 24,567 | |||||||||
2,000 | Nabtesco Corp. | 31,668 | |||||||||
7,000 | Nachi-Fujikoshi Corp. | 20,823 | |||||||||
5,000 | NGK Insulators Ltd. | 84,611 | |||||||||
3,000 | Nippon Sharyo Ltd. | 13,959 | |||||||||
2,000 | Nippon Thompson Co., Ltd. | 13,218 | |||||||||
10,000 | NSK Ltd. | 71,185 | |||||||||
600 | Oiles Corp. | 9,896 | |||||||||
3,000 | OKUMA Corp. (a) | 18,057 | |||||||||
2,100 | OSG Corp. | 23,213 |
See Notes to Financial Statements
25
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
600 | Shima Seiki Manufacturing Ltd. | $ | 13,237 | ||||||||
800 | SMC Corp. | 105,932 | |||||||||
5,000 | Tadano Ltd. | 24,596 | |||||||||
2,000 | Toshiba Machine Co., Ltd. | 7,269 | |||||||||
4,000 | Tsubakimoto Chain Co. | 16,760 | |||||||||
1,867,371 | |||||||||||
Marine | |||||||||||
1,900 | Iino Kaiun Kaisha Ltd. | 9,611 | |||||||||
18,000 | Mitsui O.S.K. Lines Ltd. | 121,882 | |||||||||
34,000 | Nippon Yusen KK | 144,036 | |||||||||
275,529 | |||||||||||
Media | |||||||||||
500 | Asatsu-DK, Inc. | 12,015 | |||||||||
9 | CyberAgent, Inc. | 13,230 | |||||||||
1,400 | Daiichikosho Co., Ltd. | 20,774 | |||||||||
3,200 | Dentsu, Inc. | 79,745 | |||||||||
400 | Kadokawa Group Holdings, Inc. | 8,357 | |||||||||
3,000 | Shochiku Co., Ltd. | 20,453 | |||||||||
100 | SKY Perfect JSAT Holdings, Inc. | 35,361 | |||||||||
189,935 | |||||||||||
Metals & Mining | |||||||||||
4,000 | Aichi Steel Corp. | 17,038 | |||||||||
5,800 | JFE Holdings, Inc. | 179,582 | |||||||||
73,000 | Kobe Steel Ltd. | 152,937 | |||||||||
2,000 | Nippon Denko Co., Ltd. | 11,899 | |||||||||
14,000 | Nippon Light Metal Co., Ltd. (a) | 20,580 | |||||||||
74,000 | Nippon Steel Corp. | 252,677 | |||||||||
5,000 | Nippon Yakin Kogyo Co., Ltd. (a) | 15,973 | |||||||||
500 | OSAKA Titanium Technologies Co. | 21,413 | |||||||||
3,000 | Pacific Metals Co., Ltd. | 21,564 | |||||||||
3,000 | Sanyo Special Steel Co., Ltd. (a) | 15,522 |
NUMBER OF SHARES | VALUE | ||||||||||
49,000 | Sumitomo Metal Industries Ltd. | $ | 118,537 | ||||||||
8,000 | Sumitomo Metal Mining Co., Ltd. | 106,488 | |||||||||
800 | Toho Titanium Co., Ltd. | 22,001 | |||||||||
4,000 | Toho Zinc Co., Ltd. | 14,584 | |||||||||
3,000 | Tokyo Rope Manufacturing Co., Ltd. | 7,605 | |||||||||
4,000 | Topy Industries Ltd. | 9,028 | |||||||||
4,000 | Yodogawa Steel Works Ltd. | 16,806 | |||||||||
1,004,234 | |||||||||||
Multiline Retail | |||||||||||
900 | Don Quijote Co., Ltd. | 23,439 | |||||||||
3,000 | H2O Retailing Corp. | 18,612 | |||||||||
5,400 | Isetan Mitsukoshi Holdings Ltd. | 51,003 | |||||||||
1,300 | Izumi Co., Ltd. | 16,868 | |||||||||
2,000 | Parco Co., Ltd. | 14,561 | |||||||||
500 | Ryohin Keikaku Co., Ltd. | 18,462 | |||||||||
142,945 | |||||||||||
Office Electronics | |||||||||||
14,400 | Canon, Inc. | 627,536 | |||||||||
5,000 | Konica Minolta Holdings, Inc. | 52,665 | |||||||||
11,000 | Ricoh Co., Ltd. | 152,405 | |||||||||
5,000 | Toshiba TEC Corp. | 18,230 | |||||||||
850,836 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
12 | INPEX Corp. | 58,614 | |||||||||
1,900 | Itochu Enex Co., Ltd. | 9,545 | |||||||||
1,000 | Nippon Gas Co., Ltd. | 14,885 | |||||||||
83,044 | |||||||||||
Paper & Forest Products | |||||||||||
2,000 | Daio Paper Corp. | 16,043 | |||||||||
2,000 | Hokuetsu Kishu Paper Co., Ltd. | 9,862 | |||||||||
7,000 | Mitsubishi Paper Mills Ltd. (a) | 8,102 |
See Notes to Financial Statements
26
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
13,000 | OJI Paper Co., Ltd. | $ | 62,897 | ||||||||
96,904 | |||||||||||
Personal Products | |||||||||||
800 | Aderans Holdings Co., Ltd. (a) | 9,806 | |||||||||
1,000 | Fancl Corp. | 15,036 | |||||||||
8,100 | Kao Corp. | 191,636 | |||||||||
600 | Kobayashi Pharmaceutical Co., Ltd. | 25,314 | |||||||||
800 | Kose Corp. | 18,575 | |||||||||
500 | Mandom Corp. | 13,890 | |||||||||
6,500 | Shiseido Co., Ltd. | 145,506 | |||||||||
419,763 | |||||||||||
Pharmaceuticals | |||||||||||
5,100 | Astellas Pharma, Inc. | 173,020 | |||||||||
4,900 | Chugai Pharmaceutical Co., Ltd. | 85,755 | |||||||||
9,700 | Daiichi Sankyo Co., Ltd. | 180,650 | |||||||||
3,800 | Eisai Co., Ltd. | 129,665 | |||||||||
2,000 | Kaken Pharmaceutical Co., Ltd. | 19,770 | |||||||||
600 | Kissei Pharmaceutical Co., Ltd. | 11,487 | |||||||||
1,000 | Kyorin Co., Ltd. | 13,982 | |||||||||
2,000 | Mochida Pharmaceutical Co., Ltd. | 20,094 | |||||||||
500 | Nichi-iko Pharmaceutical Co., Ltd | 18,028 | |||||||||
1,000 | Nippon Shinyaku Co., Ltd. | 12,258 | |||||||||
1,500 | Ono Pharmaceutical Co., Ltd. | 62,069 | |||||||||
2,000 | Rohto Pharmaceutical Co., Ltd. | 24,562 | |||||||||
300 | Sawai Pharmaceutical Co., Ltd. | 26,668 | |||||||||
800 | Seikagaku Corp. | 8,084 | |||||||||
6,400 | Shionogi & Co., Ltd. | 130,526 | |||||||||
10,200 | Takeda Pharmaceutical Co., Ltd. | 468,117 |
NUMBER OF SHARES | VALUE | ||||||||||
200 | Towa Pharmaceutical Co., Ltd. | $ | 11,783 | ||||||||
1,396,518 | |||||||||||
Professional Services | |||||||||||
800 | Meitec Corp. | 13,482 | |||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
5 | DA Office Investment Corp. | 12,327 | |||||||||
3 | Frontier Real Estate Investment Corp. | 21,633 | |||||||||
2 | Fukuoka REIT Co. | 12,640 | |||||||||
3 | Global One Real Estate Investment Corp. | 22,432 | |||||||||
3 | Japan Excellent, Inc. | 14,706 | |||||||||
3 | Japan Logistics Fund, Inc. | 24,619 | |||||||||
8 | Japan Real Estate Investment Corp. | 70,837 | |||||||||
5 | Kenedix Realty Investment Corp. | 16,424 | |||||||||
2 | Mori Trust Sogo Reit, Inc. | 15,742 | |||||||||
4 | Nippon Accommodations Fund, Inc. | 22,154 | |||||||||
8 | Nippon Building Fund, Inc. | 68,152 | |||||||||
4 | Nippon Commercial Investment Corp. | 4,389 | |||||||||
3 | Nomura Real Estate Residential Fund, Inc. | 12,015 | |||||||||
5 | Orix JREIT, Inc. | 24,509 | |||||||||
3 | Premier Investment Corp. | 11,563 | |||||||||
4 | Tokyu REIT, Inc. | 22,108 | |||||||||
2 | Top REIT, Inc. | 10,626 | |||||||||
4 | United Urban Investment Corp. | 26,576 | |||||||||
413,452 | |||||||||||
Real Estate Management & Development | |||||||||||
1,300 | Daibiru Corp. | 9,750 | |||||||||
6,000 | Daikyo, Inc. (a) | 10,001 | |||||||||
1,400 | Daito Trust Construction Co., Ltd. | 76,162 |
See Notes to Financial Statements
27
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
11,000 | Daiwa House Industry Co., Ltd. | $ | 108,478 | ||||||||
310 | Goldcrest Co., Ltd. | 6,337 | |||||||||
5,500 | Heiwa Real Estate Co., Ltd. | 13,178 | |||||||||
29 | Kenedix, Inc. (a) | 4,860 | |||||||||
2,400 | Leopalace21 Corp. (a) | 5,306 | |||||||||
16,000 | Mitsubishi Estate Co., Ltd. | 225,569 | |||||||||
12,000 | Mitsui Fudosan Co., Ltd. | 177,788 | |||||||||
7,000 | Sumitomo Realty & Development Co., Ltd. | 126,072 | |||||||||
763,501 | |||||||||||
Road & Rail | |||||||||||
23 | Central Japan Railway Co. | 187,418 | |||||||||
4,800 | East Japan Railway Co. | 309,462 | |||||||||
6,000 | Fukuyama Transporting Co., Ltd. | 28,960 | |||||||||
1,200 | Hitachi Transport System Ltd. | 17,418 | |||||||||
10,000 | Keihin Electric Express Railway Co., Ltd. | 93,292 | |||||||||
10,000 | Keio Corp. | 67,365 | |||||||||
41,000 | Kintetsu Corp. | 132,404 | |||||||||
22,000 | Nippon Express Co., Ltd. | 89,635 | |||||||||
2,000 | Nippon Konpo Unyu Soko Co., Ltd. | 23,844 | |||||||||
7,000 | Nishi-Nippon Railroad Co., Ltd. | 29,168 | |||||||||
16,000 | Odakyu Electric Railway Co., Ltd. | 146,120 | |||||||||
5,000 | Sankyu, Inc. | 21,124 | |||||||||
3,000 | Seino Holdings Corp. | 20,175 | |||||||||
18,000 | Sotetsu Holdings, Inc. | 82,921 | |||||||||
33,000 | Tobu Railway Co., Ltd. | 189,455 | |||||||||
18,000 | Tokyu Corp. | 77,505 | |||||||||
28 | West Japan Railway Co. | 103,710 | |||||||||
1,619,976 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
2,300 | Advantest Corp. | 49,703 |
NUMBER OF SHARES | VALUE | ||||||||||
5,000 | Dainippon Screen Manufacturing Co., Ltd. (a) | $ | 25,291 | ||||||||
400 | Disco Corp. | 24,214 | |||||||||
1,200 | Rohm Co., Ltd. | 75,699 | |||||||||
3,000 | Sanken Electric Co., Ltd. (a) | 11,771 | |||||||||
2,000 | Tokyo Electron Ltd. | 107,414 | |||||||||
1,000 | Tokyo Seimitsu Co., Ltd. (a) | 13,589 | |||||||||
800 | Ulvac, Inc. | 15,742 | |||||||||
323,423 | |||||||||||
Software | |||||||||||
1,100 | Capcom Co., Ltd. | 16,870 | |||||||||
1,300 | Nintendo Co., Ltd. | 363,539 | |||||||||
900 | NSD Co., Ltd. | 9,751 | |||||||||
1,800 | Trend Micro, Inc. | 53,128 | |||||||||
443,288 | |||||||||||
Specialty Retail | |||||||||||
1,200 | Aoyama Trading Co., Ltd. | 18,960 | |||||||||
600 | Autobacs Seven Co., Ltd. | 22,328 | |||||||||
1,900 | Culture Convenience Club Co., Ltd. | 8,027 | |||||||||
1,700 | DCM Japan Holdings Co., Ltd. | 8,776 | |||||||||
1,300 | EDION Corp. | 9,946 | |||||||||
600 | Fast Retailing Co., Ltd. | 89,797 | |||||||||
500 | Hikari Tsushin, Inc. | 9,057 | |||||||||
800 | K's Holdings Corp. | 17,622 | |||||||||
500 | Komeri Co., Ltd. | 11,777 | |||||||||
1,200 | Nishimatsuya Chain Co., Ltd. | 11,209 | |||||||||
240 | Point, Inc. | 12,084 | |||||||||
1,000 | Sanrio Co., Ltd. | 14,746 | |||||||||
800 | Shimachu Co., Ltd. | 14,621 | |||||||||
700 | Xebio Co., Ltd. | 13,887 | |||||||||
1,370 | Yamada Denki Co., Ltd. | 92,607 | |||||||||
355,444 | |||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
5,000 | Daiwabo Holdings Co., Ltd. | 10,359 |
See Notes to Financial Statements
28
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
4,000 | Gunze Ltd. | $ | 12,455 | ||||||||
1,000 | Japan Wool Textile Co., Ltd. (The) | 7,489 | |||||||||
7,000 | Kurabo Industries Ltd. | 11,181 | |||||||||
2,000 | Onward Holdings Co., Ltd. | 15,047 | |||||||||
2,000 | Tokyo Style Co., Ltd. | 15,719 | |||||||||
20,000 | Toyobo Co., Ltd. | 34,261 | |||||||||
16,000 | Unitika Ltd. (a) | 13,890 | |||||||||
2,000 | Wacoal Holdings Corp. | 26,182 | |||||||||
146,583 | |||||||||||
Tobacco | |||||||||||
82 | Japan Tobacco, Inc. | 263,858 | |||||||||
Trading Companies & Distributors | |||||||||||
5,000 | Hanwa Co., Ltd. | 20,198 | |||||||||
22,000 | ITOCHU Corp. | 171,630 | |||||||||
5,000 | Iwatani Corp. | 14,063 | |||||||||
4,000 | JFE Shoji Holdings, Inc. | 16,436 | |||||||||
30,000 | Marubeni Corp. | 161,120 | |||||||||
1,200 | MISUMI Group, Inc. | 23,085 | |||||||||
17,700 | Mitsubishi Corp. | 382,908 | |||||||||
27,100 | Mitsui & Co., Ltd. | 347,553 | |||||||||
3,000 | Nagase & Co., Ltd. | 32,988 | |||||||||
16,000 | Sumitomo Corp. | 170,010 | |||||||||
1,339,991 | |||||||||||
Transportation Infrastructure | |||||||||||
1,100 | Japan Airport Terminal Co., Ltd. | 16,972 | |||||||||
3,000 | Mitsui-Soko Co., Ltd. | 10,556 | |||||||||
4,000 | Sumitomo Warehouse Co., Ltd (The) | 19,214 | |||||||||
46,742 | |||||||||||
Wireless Telecommunication Services | |||||||||||
53 | KDDI Corp. | 257,961 | |||||||||
202 | NTT DoCoMo, Inc. | 321,488 | |||||||||
10,200 | Softbank Corp. | 305,191 | |||||||||
884,640 | |||||||||||
Total Japan | 30,859,703 |
NUMBER OF SHARES | VALUE | ||||||||||
Luxembourg (0.1%) | |||||||||||
Energy Equipment & Services | |||||||||||
12,959 | Tenaris SA | $ | 258,886 | ||||||||
Metals & Mining | |||||||||||
9,196 | ArcelorMittal | 280,301 | |||||||||
Wireless Telecommunication Services | |||||||||||
1,810 | Millicom International Cellular SA (Class B) (SDR) | 167,471 | |||||||||
Total Luxembourg | 706,658 | ||||||||||
Netherlands (0.6%) | |||||||||||
Aerospace & Defense | |||||||||||
5,764 | European Aeronautic Defence and Space Co., N.V. (a) | 136,557 | |||||||||
Air Freight & Logistics | |||||||||||
6,488 | TNT N.V. | 193,616 | |||||||||
Beverages | |||||||||||
5,636 | Heineken N.V. | 255,077 | |||||||||
Chemicals | |||||||||||
3,054 | Akzo Nobel N.V. | 179,908 | |||||||||
2,836 | Koninklijke DSM N.V. | 134,580 | |||||||||
314,488 | |||||||||||
Diversified Financial Services | |||||||||||
43,633 | ING Groep N.V. (Share Certificates) (a) | 419,630 | |||||||||
Diversified Telecommunication Services | |||||||||||
7,763 | Koninklijke KPN N.V. | 108,043 | |||||||||
Food & Staples Retailing | |||||||||||
15,733 | Koninklijke Ahold N.V. | 201,950 |
See Notes to Financial Statements
29
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Food Products | |||||||||||
23,927 | Unilever N.V. (Share Certificates) | $ | 703,900 | ||||||||
Industrial Conglomerates | |||||||||||
13,644 | Koninklijke Philips Electronics N.V. | 425,125 | |||||||||
Insurance | |||||||||||
20,931 | Aegon N.V. (a) | 125,907 | |||||||||
Life Sciences Tools & Services | |||||||||||
5,250 | QIAGEN N.V. (a) | 97,526 | |||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
5,752 | ASML Holding N.V. | 183,421 | |||||||||
11,052 | STMicroelectronics N.V. | 91,153 | |||||||||
274,574 | |||||||||||
Total Netherlands | 3,256,393 | ||||||||||
Netherlands Antilles (0.1%) | |||||||||||
Energy Equipment & Services | |||||||||||
10,200 | Schlumberger Ltd. | 608,532 | |||||||||
Norway (0.1%) | |||||||||||
Chemicals | |||||||||||
3,242 | Yara International ASA | 122,200 | |||||||||
Commercial Banks | |||||||||||
10,813 | DnB NOR ASA | 134,285 | |||||||||
Diversified Telecommunication Services | |||||||||||
21,759 | Telenor ASA | 335,762 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
14,016 | Statoil ASA | 283,298 | |||||||||
Total Norway | 875,545 |
NUMBER OF SHARES | VALUE | ||||||||||
Panama (0.0%) | |||||||||||
Hotels, Restaurants & Leisure | |||||||||||
4,000 | Carnival Corp. (Units) (c) | $ | 138,720 | ||||||||
Portugal (0.0%) | |||||||||||
Diversified Telecommunication Services | |||||||||||
15,302 | Portugal Telecom SGPS SA | 168,420 | |||||||||
Russia (0.5%) | |||||||||||
Commercial Banks | |||||||||||
1,234 | Sberbank of Russian Federation (Registered GDR) | 355,388 | |||||||||
21,129 | VTB Bank OJSC (Registered GDR) | 114,519 | |||||||||
469,907 | |||||||||||
Metals & Mining | |||||||||||
14,737 | MMC Norilsk Nickel (ADR) | 242,277 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
41,499 | Gazprom OAO (ADR) | 895,548 | |||||||||
7,518 | LUKOIL OAO (ADR) | 428,526 | |||||||||
1,289 | NovaTek OAO (Registered GDR) | 96,675 | |||||||||
30,601 | Rosneft Oil Co. (Registered GDR) (a) | 204,415 | |||||||||
15,300 | Surgutneftegaz (ADR) | 155,142 | |||||||||
5,189 | Tatneft (ADR) | 160,392 | |||||||||
1,940,698 | |||||||||||
Wireless Telecommunication Services | |||||||||||
9,300 | Mobile Telesystems OJSC (ADR) | 206,460 | |||||||||
Total Russia | 2,859,342 |
See Notes to Financial Statements
30
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Spain (0.5%) | |||||||||||
Commercial Banks | |||||||||||
36,362 | Banco Bilbao Vizcaya Argentaria SA | $ | 489,726 | ||||||||
11,989 | Banco Popular Espanol SA | 79,680 | |||||||||
83,762 | Banco Santander SA | 1,088,163 | |||||||||
1,657,569 | |||||||||||
Construction & Engineering | |||||||||||
3,882 | ACS Actividades de Construccion y Servicios SA | 168,409 | |||||||||
Electric Utilities | |||||||||||
39,905 | Iberdrola SA | 281,592 | |||||||||
1,668 | Red Electrica Corp. SA | 73,035 | |||||||||
354,627 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
10,564 | Repsol YPF SA | 249,242 | |||||||||
Specialty Retail | |||||||||||
3,017 | Inditex SA | 199,529 | |||||||||
Transportation Infrastructure | |||||||||||
5,780 | Abertis Infraestructuras SA | 97,693 | |||||||||
Total Spain | 2,727,069 | ||||||||||
Sweden (0.6%) | |||||||||||
Building Products | |||||||||||
3,724 | Assa Abloy AB (B Shares) | 82,376 | |||||||||
Commercial Banks | |||||||||||
20,644 | Nordea Bank AB | 206,450 | |||||||||
5,144 | Svenska Handelsbanken AB (Class A) | 147,630 | |||||||||
354,080 | |||||||||||
Communications Equipment | |||||||||||
49,480 | Telefonaktiebolaget LM Ericsson (Class B) | 546,225 | |||||||||
Construction & Engineering | |||||||||||
6,462 | Skanska AB (Class B) | 109,286 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Financial Services | |||||||||||
11,860 | Investor AB (Class B) | $ | 223,577 | ||||||||
Diversified Telecommunication Services | |||||||||||
38,660 | TeliaSonera AB | 279,790 | |||||||||
Household Durables | |||||||||||
3,400 | Electrolux AB (Series B) | 75,821 | |||||||||
Machinery | |||||||||||
11,595 | Atlas Copco AB (Class A) | 189,673 | |||||||||
8,381 | Atlas Copco AB (Class B) | 125,141 | |||||||||
17,868 | Sandvik AB | 230,785 | |||||||||
5,881 | Scania AB (Class B) | 108,421 | |||||||||
7,356 | SKF AB (Class B) | 140,504 | |||||||||
17,178 | Volvo AB (Class B) (a) | 214,022 | |||||||||
1,008,546 | |||||||||||
Paper & Forest Products | |||||||||||
6,340 | Svenska Cellulosa AB (Class B) | 91,504 | |||||||||
Specialty Retail | |||||||||||
13,546 | Hennes & Mauritz AB (Class B) | 426,663 | |||||||||
Tobacco | |||||||||||
6,736 | Swedish Match AB | 159,078 | |||||||||
Total Sweden | 3,356,946 | ||||||||||
Switzerland (2.2%) | |||||||||||
Biotechnology | |||||||||||
433 | Actelion Ltd. (Registered Shares) (a) | 17,512 | |||||||||
Building Products | |||||||||||
1,014 | Geberit AG (Registered Shares) | 165,772 | |||||||||
Capital Markets | |||||||||||
16,018 | Credit Suisse Group AG (Registered Shares) | 729,475 | |||||||||
5,494 | Julius Baer Group Ltd. | 192,240 |
See Notes to Financial Statements
31
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
70,257 | UBS AG (Registered Shares) (a) | $ | 1,200,513 | ||||||||
2,122,228 | |||||||||||
Chemicals | |||||||||||
200 | Givaudan SA | 184,314 | |||||||||
1,909 | Syngenta AG (Registered Shares) | 421,494 | |||||||||
605,808 | |||||||||||
Construction Materials | |||||||||||
4,590 | Holcim Ltd. | 306,676 | |||||||||
Diversified Telecommunication Services | |||||||||||
921 | Swisscom AG (Registered Shares) | 344,811 | |||||||||
Electrical Equipment | |||||||||||
44,114 | ABB Ltd. (Registered Shares) (a) | 890,157 | |||||||||
Electronic Equipment, Instruments & Components | |||||||||||
7,300 | Tyco Electronics Ltd. | 197,100 | |||||||||
Energy Equipment & Services | |||||||||||
3,000 | Transocean Ltd. (a) | 138,630 | |||||||||
9,110 | Weatherford International Ltd. (a) | 147,582 | |||||||||
286,212 | |||||||||||
Food Products | |||||||||||
60,240 | Nestle SA (Registered Shares) | 2,978,170 | |||||||||
Health Care Equipment & Supplies | |||||||||||
1,247 | Sonova Holding AG | 151,311 | |||||||||
Industrial Conglomerates | |||||||||||
2,500 | Tyco International Ltd. | 95,700 | |||||||||
Insurance | |||||||||||
2,500 | ACE Ltd. | 132,700 |
NUMBER OF SHARES | VALUE | ||||||||||
3,987 | Swiss Reinsurance Co., Ltd. (Registered Shares) | $ | 183,638 | ||||||||
2,159 | Zurich Financial Services AG | 504,050 | |||||||||
820,388 | |||||||||||
Marine | |||||||||||
1,155 | Kuehne & Nagel International AG (Registered Shares) | 123,849 | |||||||||
Pharmaceuticals | |||||||||||
33,458 | Novartis AG (Registered Shares) | 1,623,598 | |||||||||
11,330 | Roche Holding AG | 1,473,759 | |||||||||
3,097,357 | |||||||||||
Professional Services | |||||||||||
457 | Adecco SA (Registered Shares) | 23,295 | |||||||||
114 | SGS SA (Registered Shares) | 160,106 | |||||||||
183,401 | |||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
13,541 | Compagnie Financiere Richemont SA | 528,407 | |||||||||
743 | Swatch Group AG (The) | 230,097 | |||||||||
758,504 | |||||||||||
Total Switzerland | 13,144,956 | ||||||||||
Turkey (0.5%) | |||||||||||
Beverages | |||||||||||
11,542 | Anadolu Efes Biracilik Ve Malt Sanayii | 145,500 | |||||||||
Commercial Banks | |||||||||||
57,223 | Akbank TAS | 317,020 | |||||||||
23,702 | Asya Katilim Bankasi | 59,129 | |||||||||
98,205 | Turkiye Garanti Bankasi | 508,226 | |||||||||
16,371 | Turkiye Halk Bankasi | 132,515 | |||||||||
74,556 | Turkiye Is Bankasi | 279,486 |
See Notes to Financial Statements
32
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
35,583 | Turkiye Vakiflar Bankasi Tao | $ | 96,323 | ||||||||
45,261 | Yapi ve Kredi Bankasi AS (a) | 137,537 | |||||||||
1,530,236 | |||||||||||
Diversified Financial Services | |||||||||||
29,925 | Haci Omer Sabanci Holding | 138,983 | |||||||||
Diversified Telecommunication Services | |||||||||||
28,329 | Turk Telekomunikasyon | 106,196 | |||||||||
Food & Staples Retailing | |||||||||||
4,562 | BIM Birlesik Magazalar | 139,990 | |||||||||
Industrial Conglomerates | |||||||||||
16,737 | Enka Insaat ve Sanayi | 61,631 | |||||||||
29,158 | KOC Holding | 115,108 | |||||||||
176,739 | |||||||||||
Metals & Mining | |||||||||||
20,022 | Eregli Demir ve Celik Fabrikalari TAS (a) | 55,794 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
6,477 | Tupras Turkiye Petrol Rafine | 147,185 | |||||||||
Wireless Telecommunication Services | |||||||||||
39,511 | Turkcell Iletisim Hizmet | 232,001 | |||||||||
Total Turkey | 2,672,624 | ||||||||||
United Kingdom (4.5%) | |||||||||||
Aerospace & Defense | |||||||||||
68,212 | BAE Systems PLC | 334,376 | |||||||||
38,998 | Rolls-Royce Group PLC (a) | 354,922 | |||||||||
689,298 |
NUMBER OF SHARES | VALUE | ||||||||||
Beverages | |||||||||||
37,940 | Diageo PLC | $ | 659,034 | ||||||||
13,972 | SABMiller PLC | 424,012 | |||||||||
1,083,046 | |||||||||||
Chemicals | |||||||||||
5,536 | Johnson Matthey PLC | 146,893 | |||||||||
Commercial Banks | |||||||||||
284,319 | Barclays PLC | 1,484,746 | |||||||||
175,547 | HSBC Holdings PLC | 1,779,463 | |||||||||
659,159 | Lloyds Banking Group PLC (a) | 716,367 | |||||||||
70,458 | Royal Bank of Scotland Group PLC (a) | 55,235 | |||||||||
30,402 | Standard Chartered PLC | 878,728 | |||||||||
4,914,539 | |||||||||||
Commercial Services & Supplies | |||||||||||
4,665 | Aggreko PLC | 112,143 | |||||||||
22,069 | G4S PLC | 89,552 | |||||||||
201,695 | |||||||||||
Diversified Telecommunication Services | |||||||||||
113,271 | BT Group PLC | 252,744 | |||||||||
4,732 | Inmarsat PLC | 54,724 | |||||||||
307,468 | |||||||||||
Electric Utilities | |||||||||||
20,329 | Scottish & Southern Energy PLC | 353,442 | |||||||||
Food & Staples Retailing | |||||||||||
23,743 | J Sainsbury PLC | 128,012 | |||||||||
123,705 | Tesco PLC | 758,295 | |||||||||
31,338 | WM Morrison Supermarkets PLC | 130,311 | |||||||||
1,016,618 | |||||||||||
Food Products | |||||||||||
20,254 | Unilever PLC | 575,562 |
See Notes to Financial Statements
33
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Health Care Equipment & Supplies | |||||||||||
13,997 | Smith & Nephew PLC | $ | 121,787 | ||||||||
Hotels, Restaurants & Leisure | |||||||||||
6,154 | Carnival PLC | 222,100 | |||||||||
24,405 | Compass Group PLC | 202,963 | |||||||||
425,063 | |||||||||||
Household Products | |||||||||||
8,126 | Reckitt Benckiser Group PLC | 398,465 | |||||||||
Industrial Conglomerates | |||||||||||
7,276 | Smiths Group PLC | 127,415 | |||||||||
Insurance | |||||||||||
26,765 | Aviva PLC | 150,101 | |||||||||
53,760 | Legal & General Group PLC | 75,542 | |||||||||
73,169 | Old Mutual PLC | 138,694 | |||||||||
24,463 | Prudential PLC | 212,850 | |||||||||
66,386 | RSA Insurance Group PLC | 132,920 | |||||||||
15,475 | Standard Life PLC | 49,099 | |||||||||
759,206 | |||||||||||
Media | |||||||||||
12,476 | British Sky Broadcasting Group PLC | 139,190 | |||||||||
17,825 | Pearson PLC | 276,763 | |||||||||
24,236 | WPP PLC | 257,652 | |||||||||
673,605 | |||||||||||
Metals & Mining | |||||||||||
19,617 | Anglo American PLC (a) | 777,089 | |||||||||
32,911 | BHP Billiton PLC | 1,007,796 | |||||||||
1,188 | Randgold Resources Ltd. | 106,815 | |||||||||
21,786 | Rio Tinto PLC | 1,129,656 | |||||||||
2,336 | Vedanta Resources PLC | 89,475 | |||||||||
32,235 | Xstrata PLC | 513,654 | |||||||||
3,624,485 | |||||||||||
Multi-Utilities | |||||||||||
67,893 | Centrica PLC | 323,757 | |||||||||
35,287 | National Grid PLC | 282,112 | |||||||||
605,869 |
NUMBER OF SHARES | VALUE | ||||||||||
Multiline Retail | |||||||||||
2,459 | Next PLC | $ | 82,958 | ||||||||
Oil, Gas & Consumable Fuels | |||||||||||
49,875 | BG Group PLC | 799,437 | |||||||||
178,725 | BP PLC | 1,138,468 | |||||||||
40,299 | Cairn Energy PLC (a) | 295,181 | |||||||||
33,376 | Royal Dutch Shell PLC (Class A) | 918,862 | |||||||||
26,407 | Royal Dutch Shell PLC (Class B) | 695,924 | |||||||||
16,348 | Tullow Oil PLC | 315,781 | |||||||||
4,163,653 | |||||||||||
Pharmaceuticals | |||||||||||
18,046 | AstraZeneca PLC | 916,897 | |||||||||
63,774 | GlaxoSmithKline PLC | 1,111,784 | |||||||||
9,118 | Shire PLC | 208,174 | |||||||||
2,236,855 | |||||||||||
Professional Services | |||||||||||
6,107 | Capita Group PLC (The) | 68,900 | |||||||||
11,085 | Experian PLC | 109,147 | |||||||||
178,047 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
12,748 | British Land Co., PLC | 92,376 | |||||||||
12,228 | Land Securities Group PLC | 117,523 | |||||||||
209,899 | |||||||||||
Software | |||||||||||
3,445 | Autonomy Corp. PLC (a) | 88,924 | |||||||||
Specialty Retail | |||||||||||
29,048 | Kingfisher PLC | 98,135 | |||||||||
Tobacco | |||||||||||
30,396 | British American Tobacco PLC | 1,046,444 | |||||||||
16,231 | Imperial Tobacco Group PLC | 459,457 | |||||||||
1,505,901 |
See Notes to Financial Statements
34
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Trading Companies & Distributors | |||||||||||
4,071 | Wolseley PLC (a) | $ | 91,859 | ||||||||
Wireless Telecommunication Services | |||||||||||
717,812 | Vodafone Group PLC | 1,675,447 | |||||||||
Total United Kingdom | 26,356,134 | ||||||||||
United States (22.8%) | |||||||||||
Aerospace & Defense | |||||||||||
2,470 | Boeing Co. (The) | 168,306 | |||||||||
1,200 | General Dynamics Corp. | 73,500 | |||||||||
13,300 | Honeywell International, Inc. | 570,038 | |||||||||
4,100 | ITT Corp. | 193,192 | |||||||||
500 | L-3 Communications Holdings, Inc. | 36,520 | |||||||||
3,900 | Lockheed Martin Corp. | 293,085 | |||||||||
23,100 | Northrop Grumman Corp. | 1,354,584 | |||||||||
2,400 | Precision Castparts Corp. | 293,256 | |||||||||
24,870 | Raytheon Co. | 1,150,735 | |||||||||
2,300 | Rockwell Collins, Inc. | 131,468 | |||||||||
3,300 | United Technologies Corp. | 234,630 | |||||||||
4,499,314 | |||||||||||
Air Freight & Logistics | |||||||||||
1,400 | C.H. Robinson Worldwide, Inc. | 91,280 | |||||||||
3,000 | Expeditors International of Washington, Inc. | 127,920 | |||||||||
2,000 | FedEx Corp. | 165,100 | |||||||||
5,200 | United Parcel Service, Inc. (Class B) | 338,000 | |||||||||
722,300 | |||||||||||
Auto Components | |||||||||||
10,500 | Johnson Controls, Inc. | 302,505 | |||||||||
Automobiles | |||||||||||
35,200 | Ford Motor Co. (a) | 449,504 | |||||||||
Beverages | |||||||||||
27,400 | Coca-Cola Co. (The) | 1,510,014 |
NUMBER OF SHARES | VALUE | ||||||||||
4,300 | Coca-Cola Enterprises, Inc. | $ | 123,410 | ||||||||
2,800 | Dr Pepper Snapple Group, Inc. | 105,140 | |||||||||
32,200 | PepsiCo, Inc. | 2,090,102 | |||||||||
3,828,666 | |||||||||||
Biotechnology | |||||||||||
6,745 | Amgen, Inc. (a) | 367,805 | |||||||||
2,200 | Biogen Idec, Inc. (a) | 122,936 | |||||||||
2,670 | Celgene Corp. (a) | 147,251 | |||||||||
1,800 | Genzyme Corp. (a) | 125,208 | |||||||||
6,810 | Gilead Sciences, Inc. (a) | 226,909 | |||||||||
990,109 | |||||||||||
Capital Markets | |||||||||||
2,700 | Ameriprise Financial, Inc. | 114,453 | |||||||||
7,100 | Bank of New York Mellon Corp. (The) | 177,997 | |||||||||
10,200 | Charles Schwab Corp. (The) | 150,858 | |||||||||
3,800 | Franklin Resources, Inc. | 382,204 | |||||||||
2,875 | Goldman Sachs Group, Inc. (The) | 433,608 | |||||||||
2,300 | Northern Trust Corp. | 108,077 | |||||||||
5,000 | State Street Corp. | 194,600 | |||||||||
2,900 | T. Rowe Price Group, Inc. | 139,867 | |||||||||
1,701,664 | |||||||||||
Chemicals | |||||||||||
100 | Air Products & Chemicals, Inc. | 7,258 | |||||||||
500 | Dow Chemical Co. (The) | 13,665 | |||||||||
5,800 | Ecolab, Inc. | 283,678 | |||||||||
46,490 | EI Du Pont de Nemours & Co. | 1,890,748 | |||||||||
6,000 | Monsanto Co. | 347,040 | |||||||||
200 | PPG Industries, Inc. | 13,894 | |||||||||
5,000 | Praxair, Inc. | 434,100 | |||||||||
2,990,383 | |||||||||||
Commercial Banks | |||||||||||
3,900 | BB&T Corp. | 96,837 | |||||||||
4,300 | Fifth Third Bancorp | 54,653 |
See Notes to Financial Statements
35
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
2,600 | PNC Financial Services Group, Inc. | $ | 154,414 | ||||||||
6,600 | Regions Financial Corp. | 48,378 | |||||||||
2,800 | SunTrust Banks, Inc. | 72,660 | |||||||||
22,100 | US Bancorp | 528,190 | |||||||||
24,830 | Wells Fargo & Co. | 688,536 | |||||||||
1,643,668 | |||||||||||
Commercial Services & Supplies | |||||||||||
2,500 | Republic Services, Inc. | 79,650 | |||||||||
53,400 | Waste Management, Inc. | 1,812,930 | |||||||||
1,892,580 | |||||||||||
Communications Equipment | |||||||||||
100,370 | Cisco Systems, Inc. (a) | 2,315,536 | |||||||||
7,600 | Juniper Networks, Inc. (a) | 211,128 | |||||||||
35,100 | Motorola, Inc. (a) | 262,899 | |||||||||
16,500 | QUALCOMM, Inc. | 628,320 | |||||||||
3,417,883 | |||||||||||
Computers & Peripherals | |||||||||||
7,935 | Apple, Inc. (a) | 2,041,279 | |||||||||
18,200 | Dell, Inc. (a) | 240,968 | |||||||||
21,450 | EMC Corp. (a) | 424,495 | |||||||||
23,200 | Hewlett-Packard Co. | 1,068,128 | |||||||||
23,080 | International Business Machines Corp. | 2,963,472 | |||||||||
3,500 | NetApp, Inc. (a) | 148,050 | |||||||||
2,400 | SanDisk Corp. (a) | 104,880 | |||||||||
29,800 | Western Digital Corp. (a) | 786,422 | |||||||||
7,777,694 | |||||||||||
Construction & Engineering | |||||||||||
4,100 | Fluor Corp. | 197,989 | |||||||||
Consumer Finance | |||||||||||
17,340 | American Express Co. | 774,058 | |||||||||
3,500 | Capital One Financial Corp. | 148,155 | |||||||||
4,500 | Discover Financial Services | 68,715 | |||||||||
990,928 | |||||||||||
Distributors | |||||||||||
27,900 | Genuine Parts Co. | 1,194,957 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Consumer Services | |||||||||||
1,700 | Apollo Group, Inc. (Class A) (a) | $ | 78,421 | ||||||||
Diversified Financial Services | |||||||||||
57,635 | Bank of America Corp. | 809,195 | |||||||||
142,400 | Citigroup, Inc. (See Note 6) (a) | 583,840 | |||||||||
600 | CME Group, Inc. | 167,280 | |||||||||
600 | IntercontinentalExchange, Inc. (a) | 63,372 | |||||||||
65,135 | JPMorgan Chase & Co. | 2,623,638 | |||||||||
4,247,325 | |||||||||||
Diversified Telecommunication Services | |||||||||||
35,550 | AT&T, Inc. | 922,167 | |||||||||
2,200 | CenturyTel, Inc. | 78,364 | |||||||||
4,512 | Frontier Communications Corp. | 34,472 | |||||||||
74,590 | Verizon Communications, Inc. | 2,167,585 | |||||||||
3,202,588 | |||||||||||
Electric Utilities | |||||||||||
7,580 | American Electric Power Co., Inc. | 272,728 | |||||||||
18,600 | Duke Energy Corp. | 318,060 | |||||||||
5,000 | Edison International | 165,750 | |||||||||
2,100 | Entergy Corp. | 162,771 | |||||||||
11,000 | Exelon Corp. | 460,130 | |||||||||
3,800 | FirstEnergy Corp. | 143,260 | |||||||||
6,000 | NextEra Energy, Inc. | 313,800 | |||||||||
7,900 | PPL Corp. | 215,591 | |||||||||
5,300 | Progress Energy, Inc. | 223,183 | |||||||||
15,000 | Southern Co. | 529,950 | |||||||||
2,805,223 | |||||||||||
Electrical Equipment | |||||||||||
19,030 | Emerson Electric Co. | 942,746 |
See Notes to Financial Statements
36
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Electronic Equipment, Instruments & Components | |||||||||||
3,000 | Agilent Technologies, Inc. (a) | $ | 83,790 | ||||||||
3,100 | Amphenol Corp. (Class A) | 138,880 | |||||||||
71,150 | Corning, Inc. | 1,289,238 | |||||||||
1,511,908 | |||||||||||
Energy Equipment & Services | |||||||||||
4,000 | Baker Hughes, Inc. | 193,080 | |||||||||
3,100 | Cameron International Corp. (a) | 122,729 | |||||||||
41,285 | Halliburton Co. | 1,233,596 | |||||||||
2,100 | National Oilwell Varco, Inc. | 82,236 | |||||||||
3,200 | Smith International, Inc. | 132,736 | |||||||||
1,764,377 | |||||||||||
Food & Staples Retailing | |||||||||||
2,910 | Costco Wholesale Corp. | 165,026 | |||||||||
10,700 | CVS Caremark Corp. | 328,383 | |||||||||
3,100 | Kroger Co. (The) | 65,658 | |||||||||
3,700 | Safeway, Inc. | 75,998 | |||||||||
4,100 | Sysco Corp. | 126,977 | |||||||||
24,600 | Wal-Mart Stores, Inc. | 1,259,274 | |||||||||
7,100 | Walgreen Co. | 202,705 | |||||||||
2,224,021 | |||||||||||
Food Products | |||||||||||
56,400 | Archer-Daniels-Midland Co. | 1,543,104 | |||||||||
45,100 | Campbell Soup Co. | 1,619,090 | |||||||||
4,300 | ConAgra Foods, Inc. | 100,964 | |||||||||
3,600 | General Mills, Inc. | 123,120 | |||||||||
2,500 | HJ Heinz Co. | 111,200 | |||||||||
3,850 | Kellogg Co. | 192,693 | |||||||||
11,830 | Kraft Foods, Inc. (Class A) | 345,554 | |||||||||
1,400 | Mead Johnson Nutrition Co. | 74,396 | |||||||||
4,500 | Sara Lee Corp. | 66,555 | |||||||||
4,176,676 | |||||||||||
Gas Utilities | |||||||||||
300 | EQT Corp. | 11,004 | |||||||||
200 | Questar Corp. | 3,290 | |||||||||
14,294 |
NUMBER OF SHARES | VALUE | ||||||||||
Health Care Equipment & Supplies | |||||||||||
7,400 | Baxter International, Inc. | $ | 323,898 | ||||||||
2,800 | Becton Dickinson and Co. | 192,640 | |||||||||
13,800 | Boston Scientific Corp. (a) | 77,280 | |||||||||
600 | C.R. Bard, Inc. | 47,118 | |||||||||
2,800 | Hospira, Inc. (a) | 145,880 | |||||||||
500 | Intuitive Surgical, Inc. (a) | 164,185 | |||||||||
12,100 | Medtronic, Inc. | 447,337 | |||||||||
4,700 | St Jude Medical, Inc. (a) | 172,819 | |||||||||
3,800 | Stryker Corp. | 176,966 | |||||||||
921 | Synthes, Inc. | 105,919 | |||||||||
4,700 | Zimmer Holdings, Inc. (a) | 249,053 | |||||||||
2,103,095 | |||||||||||
Health Care Providers & Services | |||||||||||
2,800 | Aetna, Inc. | 77,980 | |||||||||
7,600 | AmerisourceBergen Corp. | 227,772 | |||||||||
2,000 | Cardinal Health, Inc. | 64,540 | |||||||||
2,000 | CIGNA Corp. | 61,520 | |||||||||
5,400 | Express Scripts, Inc. (a) | 243,972 | |||||||||
400 | Laboratory Corp. of America Holdings (a) | 29,192 | |||||||||
3,500 | McKesson Corp. | 219,870 | |||||||||
3,200 | Medco Health Solutions, Inc. (a) | 153,600 | |||||||||
1,200 | Quest Diagnostics, Inc. | 56,388 | |||||||||
6,900 | UnitedHealth Group, Inc. | 210,105 | |||||||||
2,900 | WellPoint, Inc. (a) | 147,088 | |||||||||
1,492,027 | |||||||||||
Hotels, Restaurants & Leisure | |||||||||||
5,900 | Las Vegas Sands Corp. (a) | 158,474 | |||||||||
8,600 | Marriott International, Inc. (Class A) | 291,626 | |||||||||
30,980 | McDonald's Corp. | 2,160,235 | |||||||||
8,100 | Starbucks Corp. | 201,285 | |||||||||
40,000 | Yum! Brands, Inc. | 1,652,000 | |||||||||
4,463,620 |
See Notes to Financial Statements
37
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Household Durables | |||||||||||
800 | Stanley Black & Decker, Inc. | $ | 46,416 | ||||||||
Household Products | |||||||||||
300 | Clorox Co. | 19,464 | |||||||||
3,475 | Colgate-Palmolive Co. | 274,456 | |||||||||
300 | Kimberly-Clark Corp. | 19,236 | |||||||||
16,400 | Procter & Gamble Co. (The) | 1,003,024 | |||||||||
1,316,180 | |||||||||||
Independent Power Producers & Energy Traders | |||||||||||
9,000 | AES Corp. (The) (a) | 92,790 | |||||||||
500 | Calpine Corp. (a) | 6,750 | |||||||||
99,540 | |||||||||||
Industrial Conglomerates | |||||||||||
10,400 | 3M Co. | 889,616 | |||||||||
135,800 | General Electric Co. | 2,189,096 | |||||||||
3,078,712 | |||||||||||
Information Technology Services | |||||||||||
43,000 | Automatic Data Processing, Inc. | 1,774,610 | |||||||||
4,200 | Cognizant Technology Solutions Corp. (Class A) (a) | 229,152 | |||||||||
1,600 | Fidelity National Information Services, Inc. | 45,872 | |||||||||
2,200 | Fiserv, Inc. (a) | 110,220 | |||||||||
1,200 | Mastercard, Inc. (Class A) | 252,048 | |||||||||
3,400 | Paychex, Inc. | 88,366 | |||||||||
19,000 | Visa, Inc. (Class A) | 1,393,650 | |||||||||
10,900 | Western Union Co. (The) | 176,907 | |||||||||
4,070,825 | |||||||||||
Insurance | |||||||||||
7,700 | Aflac, Inc. | 378,763 | |||||||||
6,200 | Allstate Corp. (The) | 175,088 | |||||||||
2,400 | AON Corp. | 90,408 |
NUMBER OF SHARES | VALUE | ||||||||||
3,700 | Berkshire Hathaway, Inc. (Class B) (a) | $ | 289,044 | ||||||||
33,865 | Chubb Corp. | 1,782,315 | |||||||||
3,400 | Genworth Financial, Inc. (Class A) (a) | 46,172 | |||||||||
2,900 | Hartford Financial Services Group, Inc. | 67,889 | |||||||||
2,800 | Lincoln National Corp. | 72,912 | |||||||||
3,500 | Loews Corp. | 130,025 | |||||||||
4,400 | Marsh & McLennan Cos., Inc. | 103,488 | |||||||||
5,400 | MetLife, Inc. | 227,124 | |||||||||
2,400 | Principal Financial Group, Inc. | 61,464 | |||||||||
12,000 | Progressive Corp. (The) | 235,680 | |||||||||
6,400 | Prudential Financial, Inc. | 366,656 | |||||||||
2,900 | Travelers Cos., Inc. (The) | 146,305 | |||||||||
4,173,333 | |||||||||||
Internet & Catalog Retail | |||||||||||
2,300 | Amazon.com, Inc. (a) | 271,147 | |||||||||
25,900 | Expedia, Inc. | 587,412 | |||||||||
300 | NetFlix, Inc. (a) | 30,765 | |||||||||
300 | Priceline.com, Inc. (a) | 67,320 | |||||||||
956,644 | |||||||||||
Internet Software & Services | |||||||||||
2,900 | Akamai Technologies, Inc. (a) | 111,244 | |||||||||
13,500 | eBay, Inc. (a) | 282,285 | |||||||||
3,608 | Google, Inc. (Class A) (a) | 1,749,339 | |||||||||
13,800 | Yahoo!, Inc. (a) | 191,544 | |||||||||
2,334,412 | |||||||||||
Leisure Equipment & Products | |||||||||||
1,500 | Mattel, Inc. | 31,740 | |||||||||
Life Sciences Tools & Services | |||||||||||
1,900 | Life Technologies Corp. (a) | 81,681 | |||||||||
3,190 | Thermo Fisher Scientific, Inc. (a) | 143,103 | |||||||||
224,784 |
See Notes to Financial Statements
38
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Machinery | |||||||||||
29,100 | Caterpillar, Inc. | $ | 2,029,725 | ||||||||
15,200 | Danaher Corp. | 583,832 | |||||||||
4,400 | Deere & Co. | 293,392 | |||||||||
800 | Eaton Corp. | 62,768 | |||||||||
2,100 | Illinois Tool Works, Inc. | 91,350 | |||||||||
5,300 | PACCAR, Inc. | 242,846 | |||||||||
3,303,913 | |||||||||||
Media | |||||||||||
6,900 | CBS Corp. (Class B) | 101,982 | |||||||||
15,000 | Comcast Corp. (Class A) | 292,050 | |||||||||
8,300 | Comcast Corp. (Special Class A) | 153,218 | |||||||||
9,000 | DirecTV (Class A) (a) | 334,440 | |||||||||
2,400 | McGraw-Hill Cos., Inc. (The) | 73,656 | |||||||||
12,900 | News Corp. (Class A) | 168,345 | |||||||||
9,900 | Omnicom Group, Inc. | 368,874 | |||||||||
2,200 | Time Warner Cable, Inc. | 125,774 | |||||||||
9,800 | Time Warner, Inc. | 308,308 | |||||||||
3,300 | Viacom, Inc. (Class B) | 109,032 | |||||||||
12,400 | Walt Disney Co. (The) | 417,756 | |||||||||
2,453,435 | |||||||||||
Metals & Mining | |||||||||||
85,000 | Alcoa, Inc. | 949,450 | |||||||||
7,200 | Cliffs Natural Resources, Inc. | 407,304 | |||||||||
11,500 | Freeport-McMoRan Copper & Gold, Inc. | 822,710 | |||||||||
300 | Nucor Corp. | 11,742 | |||||||||
2,191,206 | |||||||||||
Multi-Utilities | |||||||||||
105,700 | Centerpoint Energy, Inc. | 1,504,111 | |||||||||
6,400 | Consolidated Edison, Inc. | 295,168 | |||||||||
7,200 | Dominion Resources, Inc. | 302,328 | |||||||||
30,000 | Integrys Energy Group, Inc. | 1,420,500 | |||||||||
4,300 | PG&E Corp. | 190,920 | |||||||||
9,100 | Public Service Enterprise Group, Inc. | 299,390 | |||||||||
3,800 | Sempra Energy | 189,050 |
NUMBER OF SHARES | VALUE | ||||||||||
9,500 | Xcel Energy, Inc. | $ | 208,905 | ||||||||
4,410,372 | |||||||||||
Multiline Retail | |||||||||||
800 | Dollar General Corp. (a) | 23,344 | |||||||||
900 | Dollar Tree, Inc. (a) | 39,888 | |||||||||
20,900 | Family Dollar Stores, Inc. | 864,215 | |||||||||
14,800 | Kohl's Corp. (a) | 705,812 | |||||||||
1,500 | Nordstrom, Inc. | 51,000 | |||||||||
4,700 | Target Corp. | 241,204 | |||||||||
1,925,463 | |||||||||||
Office Electronics | |||||||||||
8,200 | Xerox Corp. | 79,868 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
5,100 | Anadarko Petroleum Corp. | 250,716 | |||||||||
1,900 | Apache Corp. | 181,602 | |||||||||
4,100 | Chesapeake Energy Corp. | 86,223 | |||||||||
31,800 | Chevron Corp. | 2,423,478 | |||||||||
38,500 | ConocoPhillips | 2,125,970 | |||||||||
2,700 | Consol Energy, Inc. | 101,196 | |||||||||
2,300 | Devon Energy Corp. | 143,727 | |||||||||
12,000 | El Paso Corp. | 147,840 | |||||||||
2,100 | EOG Resources, Inc. | 204,750 | |||||||||
33,980 | Exxon Mobil Corp. | 2,027,926 | |||||||||
51,400 | Marathon Oil Corp. | 1,719,330 | |||||||||
6,600 | Noble Energy, Inc. | 442,596 | |||||||||
3,300 | Occidental Petroleum Corp. | 257,169 | |||||||||
13,100 | Peabody Energy Corp. | 591,465 | |||||||||
1,100 | Pioneer Natural Resources Co. | 63,712 | |||||||||
200 | QEP Resources, Inc. (a) | 6,884 | |||||||||
1,400 | Range Resources Corp. | 51,968 | |||||||||
3,100 | Southwestern Energy Co. (a) | 112,995 | |||||||||
6,600 | Spectra Energy Corp. | 137,214 | |||||||||
3,900 | Valero Energy Corp. | 66,261 | |||||||||
4,200 | Williams Cos., Inc. (The) | 81,522 | |||||||||
11,224,544 |
See Notes to Financial Statements
39
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Personal Products | |||||||||||
43,700 | Avon Products, Inc. | $ | 1,360,381 | ||||||||
1,400 | Estee Lauder Cos., Inc. (The) (Class A) | 87,150 | |||||||||
1,447,531 | |||||||||||
Pharmaceuticals | |||||||||||
59,800 | Abbott Laboratories | 2,934,984 | |||||||||
9,000 | Allergan, Inc. | 549,540 | |||||||||
66,600 | Bristol-Myers Squibb Co. | 1,659,672 | |||||||||
4,900 | Eli Lilly & Co. | 174,440 | |||||||||
2,200 | Forest Laboratories, Inc. (a) | 61,050 | |||||||||
42,000 | Johnson & Johnson | 2,439,780 | |||||||||
11,920 | Merck & Co., Inc. | 410,763 | |||||||||
3,500 | Mylan, Inc. (a) | 60,900 | |||||||||
36,880 | Pfizer, Inc. | 553,200 | |||||||||
14,800 | Watson Pharmaceuticals, Inc. (a) | 599,400 | |||||||||
9,443,729 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
30,300 | Health Care REIT, Inc. | 1,372,893 | |||||||||
34,200 | Plum Creek Timber Co., Inc. | 1,227,096 | |||||||||
500 | Public Storage | 49,060 | |||||||||
500 | Simon Property Group, Inc. | 44,610 | |||||||||
2,693,659 | |||||||||||
Road & Rail | |||||||||||
13,100 | CSX Corp. | 690,632 | |||||||||
10,600 | Norfolk Southern Corp. | 596,462 | |||||||||
3,800 | Union Pacific Corp. | 283,746 | |||||||||
1,570,840 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
4,400 | Altera Corp. | 121,968 | |||||||||
76,320 | Applied Materials, Inc. | 900,576 | |||||||||
2,500 | Broadcom Corp. (Class A) | 90,075 | |||||||||
600 | Cree, Inc. (a) | 42,504 | |||||||||
132,660 | Intel Corp. | 2,732,796 |
NUMBER OF SHARES | VALUE | ||||||||||
8,600 | Micron Technology, Inc. (a) | $ | 62,608 | ||||||||
4,500 | Nvidia Corp. (a) | 41,355 | |||||||||
3,600 | Texas Instruments, Inc. | 88,884 | |||||||||
5,100 | Xilinx, Inc. | 142,392 | |||||||||
4,223,158 | |||||||||||
Software | |||||||||||
5,600 | Adobe Systems, Inc. (a) | 160,832 | |||||||||
2,700 | BMC Software, Inc. (a) | 96,066 | |||||||||
5,900 | CA, Inc. | 115,404 | |||||||||
2,000 | Citrix Systems, Inc. (a) | 110,040 | |||||||||
4,200 | Intuit, Inc. (a) | 166,950 | |||||||||
126,450 | Microsoft Corp. | 3,263,674 | |||||||||
37,790 | Oracle Corp. | 893,356 | |||||||||
1,200 | Salesforce.com, Inc. (a) | 118,740 | |||||||||
9,400 | Symantec Corp. (a) | 121,918 | |||||||||
5,046,980 | |||||||||||
Specialty Retail | |||||||||||
600 | Abercrombie & Fitch Co. (Class A) | 22,164 | |||||||||
500 | Advance Auto Parts Inc | 26,765 | |||||||||
200 | AutoZone, Inc. (a) | 42,314 | |||||||||
1,800 | Bed Bath & Beyond, Inc. (a) | 68,184 | |||||||||
18,200 | Best Buy Co., Inc. | 630,812 | |||||||||
1,900 | CarMax, Inc. (a) | 40,090 | |||||||||
1,200 | GameStop Corp. (Class A) (a) | 24,060 | |||||||||
2,200 | Gap, Inc. (The) | 39,842 | |||||||||
2,100 | Limited Brands, Inc. | 53,844 | |||||||||
9,600 | Lowe's Cos., Inc. | 199,104 | |||||||||
900 | O'Reilly Automotive, Inc. (a) | 44,352 | |||||||||
800 | PetSmart, Inc. | 24,840 | |||||||||
800 | Ross Stores, Inc. | 42,128 | |||||||||
5,100 | Staples, Inc. | 103,683 | |||||||||
1,000 | Tiffany & Co. | 42,070 | |||||||||
2,900 | TJX Cos., Inc. | 120,408 | |||||||||
900 | Urban Outfitters, Inc. (a) | 28,944 | |||||||||
1,553,604 |
See Notes to Financial Statements
40
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES | VALUE | ||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
3,800 | Coach, Inc. | $ | 140,486 | ||||||||
4,900 | NIKE, Inc. (Class B) | 360,836 | |||||||||
501,322 | |||||||||||
Tobacco | |||||||||||
12,180 | Altria Group, Inc. | 269,909 | |||||||||
1,000 | Lorillard, Inc. | 76,240 | |||||||||
42,780 | Philip Morris International, Inc. | 2,183,491 | |||||||||
1,400 | Reynolds American, Inc. | 80,948 | |||||||||
2,610,588 | |||||||||||
Wireless Telecommunication Services | |||||||||||
5,500 | American Tower Corp. (Class A) (a) | 254,320 | |||||||||
5,000 | Crown Castle International Corp. (a) | 197,550 | |||||||||
18,500 | Sprint Nextel Corp. (a) | 84,545 | |||||||||
536,415 | |||||||||||
Total United States | 133,175,678 | ||||||||||
Total Common Stocks (Cost $270,919,580) | 280,116,287 | ||||||||||
Preferred Stocks (0.9%) | |||||||||||
Brazil (0.8%) | |||||||||||
Beverages | |||||||||||
3,100 | Cia de Bebidas das Americas | 333,654 | |||||||||
Commercial Banks | |||||||||||
34,738 | Banco Bradesco SA | 635,981 | |||||||||
49,743 | Investimentos Itau SA | 367,953 | |||||||||
35,045 | Itau Unibanco Holding SA | 784,468 | |||||||||
1,788,402 | |||||||||||
Diversified Telecommunication Services | |||||||||||
7,008 | Tele Norte Leste Participacoes SA | 102,921 |
NUMBER OF SHARES | VALUE | ||||||||||
Electric Utilities | |||||||||||
14,278 | Centrais Eletricas Brasileiras SA | $ | 219,836 | ||||||||
11,298 | Cia Energetica de Minas Gerais | 168,237 | |||||||||
388,073 | |||||||||||
Metals & Mining | |||||||||||
5,637 | Bradespar SA | 117,977 | |||||||||
11,453 | Gerdau SA | 165,921 | |||||||||
5,485 | Metalurgica Gerdau SA | 96,833 | |||||||||
4,866 | Usinas Siderurgicas de Minas Gerais SA | 136,673 | |||||||||
35,993 | Vale SA | 873,630 | |||||||||
1,391,034 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
53,204 | Petroleo Brasileiro SA | 842,467 | |||||||||
2,000 | Ultrapar Participacoes SA | 102,513 | |||||||||
944,980 | |||||||||||
Wireless Telecommunication Services | |||||||||||
2,832 | Vivo Participacoes SA | 75,760 | |||||||||
Total Brazil | 5,024,824 | ||||||||||
Germany (0.1%) | |||||||||||
Automobiles | |||||||||||
1,083 | Volkswagen AG | 114,754 | |||||||||
Health Care Equipment & Supplies | |||||||||||
1,708 | Fresenius SE | 121,327 | |||||||||
Household Products | |||||||||||
2,642 | Henkel AG & Co. KGaA | 131,124 | |||||||||
Total Germany | 367,205 | ||||||||||
Total Preferred Stocks (Cost $5,817,004) | 5,392,029 |
See Notes to Financial Statements
41
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Corporate Bonds (8.0%) | |||||||||||
Australia (0.4%) | |||||||||||
Capital Markets | |||||||||||
$ | 385 | Macquarie Group Ltd. (144A) (d) 6.00% 01/14/20 | $ | 405,334 | |||||||
Commercial Banks | |||||||||||
500 | Commonwealth Bank of Australia (144A) (d) 2.90% 09/17/14 | 518,266 | |||||||||
355 | Commonwealth Bank of Australia (144A) (d) 5.00% 10/15/19 | 376,961 | |||||||||
245 | Westpac Banking Corp. 4.20% 02/27/15 | 260,872 | |||||||||
1,156,099 | |||||||||||
Diversified Minerals | |||||||||||
405 | Rio Tinto Finance USA Ltd. 9.00% 05/01/19 | 543,071 | |||||||||
Total Australia | 2,104,504 | ||||||||||
Bermuda (0.1%) | |||||||||||
Multi-line Insurance | |||||||||||
245 | Catlin Insurance Co. Ltd. (144A) (d) 7.249% (e) 01/19/17 (f) | 198,450 | |||||||||
Satellite Telecommunication | |||||||||||
155 | Intelsat Subsidiary Holding Co., Ltd. 8.50% 01/15/13 | 158,100 | |||||||||
Total Bermuda | 356,550 | ||||||||||
Canada (0.3%) | |||||||||||
Aerospace & Defense | |||||||||||
65 | Bombardier, Inc. (144A) (d) 7.50% 03/15/18 | 69,388 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
$ | 135 | Bombardier, Inc. (144A) (d) 7.75% 03/15/20 | $ | 146,137 | |||||||
215,525 | |||||||||||
Commercial Banks | |||||||||||
615 | Bank of Montreal (144A) (d) 2.85% 06/09/15 | 635,510 | |||||||||
Diversified Minerals | |||||||||||
220 | Teck Resources Ltd. 10.25% 05/15/16 | 266,500 | |||||||||
Pipelines | |||||||||||
425 | Kinder Morgan Finance Co., ULC 5.70% 01/05/16 | 426,062 | |||||||||
Real Estate Management & Development | |||||||||||
260 | Brookfield Asset Management, Inc. 5.80% 04/25/17 | 267,665 | |||||||||
Total Canada | 1,811,262 | ||||||||||
Cayman Islands (0.2%) | |||||||||||
Aerospace & Defense | |||||||||||
249 | Systems 2001 Asset Trust (144A) (d) 6.664% 09/15/13 | 268,559 | |||||||||
Diversified Minerals | |||||||||||
185 | Vale Overseas Ltd. 5.625% 09/15/19 | 201,955 | |||||||||
50 | Vale Overseas Ltd. 6.875% 11/10/39 | 55,370 | |||||||||
257,325 | |||||||||||
Oil Company - Integrated | |||||||||||
255 | Petrobras International Finance Co. 5.75% 01/20/20 | 272,384 |
See Notes to Financial Statements
42
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Telecommunication Services | |||||||||||
$ | 330 | Sable International Finance Ltd. (144A) (d) 7.75% 02/15/17 | $ | 336,600 | |||||||
Total Cayman Islands | 1,134,868 | ||||||||||
France (0.1%) | |||||||||||
Electronic Parts Distribution | |||||||||||
EUR | 200 | Rexel SA 8.25% 12/15/16 | 277,572 | ||||||||
Multimedia | |||||||||||
$ | 145 | Vivendi SA (144A) (d) 6.625% 04/04/18 | 163,459 | ||||||||
Rental Auto/Equipment | |||||||||||
EUR | 250 | Europcar Groupe SA (Series REGS) 4.183% (e) 05/15/13 | 296,467 | ||||||||
Total France | 737,498 | ||||||||||
Germany (0.1%) | |||||||||||
Construction Materials | |||||||||||
$ | 250 | HeidelbergCement AG 7.50% 04/03/20 | 320,087 | ||||||||
Ireland (0.1%) | |||||||||||
Containers - Metal & Glass | |||||||||||
250 | Ardagh Glass Finance PLC (Series REGS) 8.75% 02/01/20 | 338,819 | |||||||||
Paper & Related Products | |||||||||||
200 | Smurfit Kappa Acquisitions (Series REGS) 7.75% 11/15/19 | 271,056 | |||||||||
Total Ireland | 609,875 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Luxembourg (0.5%) | |||||||||||
Building Product - Cement/ Aggregation | |||||||||||
$ | 105 | Holcim US Finance Sarl & Cie SCS (144A) (d) 6.00% 12/30/19 | $ | 114,177 | |||||||
Diversified Manufactured Operation | |||||||||||
575 | Tyco Electronics Group SA 5.95% 01/15/14 | 635,670 | |||||||||
Electric - Integrated | |||||||||||
500 | Enel Finance International SA (144A) (d) 5.125% 10/07/19 | 522,788 | |||||||||
Metals & Mining | |||||||||||
390 | ArcelorMittal 9.85% 06/01/19 | 504,695 | |||||||||
Oil Company - Exploration & Production | |||||||||||
100 | Gaz Capital SA (144A) (d) 6.51% 03/07/22 | 101,130 | |||||||||
Telecommunication Services | |||||||||||
EUR | 200 | Wind Acquisition Finance SA (Series REGS) 11.75% 07/15/17 | 273,662 | ||||||||
Telephone - Integrated | |||||||||||
$ | 255 | Telecom Italia Capital SA 6.999% 06/04/18 | 286,767 | ||||||||
225 | Telecom Italia Capital SA 7.175% 06/18/19 | 254,842 | |||||||||
541,609 | |||||||||||
Total Luxembourg | 2,693,731 | ||||||||||
Netherlands (0.4%) | |||||||||||
Commercial Banks | |||||||||||
600 | ING Bank N.V. (144A) (d) 3.90% 03/19/14 | 649,331 |
See Notes to Financial Statements
43
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Containers - Metal & Glass | |||||||||||
EUR | 250 | Impress Holdings BV (Series REGS) 3.96%(e) 09/15/13 | $ | 314,793 | |||||||
200 | OI European Group BV (Series REGS) 6.875% 03/31/17 | 265,843 | |||||||||
580,636 | |||||||||||
Multi-line Insurance | |||||||||||
$ | 250 | Aegon N.V. 4.625% 12/01/15 | 259,998 | ||||||||
Telephone - Integrated | |||||||||||
150 | Deutsche Telekom International Finance BV 8.75% 06/15/30 | 202,818 | |||||||||
415 | Telefonica Europe BV 8.25% 09/15/30 | 531,711 | |||||||||
734,529 | |||||||||||
Total Netherlands | 2,224,494 | ||||||||||
Spain (0.0%) | |||||||||||
Food - Meat Products | |||||||||||
EUR | 200 | Campofrio Food Group SA (Series REGS) 8.25% 10/31/16 | 271,381 | ||||||||
Sweden (0.0%) | |||||||||||
Commercial Banks | |||||||||||
$ | 260 | Nordea Bank AB (144A) (d) 4.875% 01/27/20 | 275,443 | ||||||||
Switzerland (0.1%) | |||||||||||
Capital Markets | |||||||||||
250 | UBS AG/Stamford CT (Series DPNT) 3.875% 01/15/15 | 256,944 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
$ | 195 | UBS AG/Stamford CT (MTN) 5.875% 12/20/17 | $ | 214,061 | |||||||
471,005 | |||||||||||
Commercial Banks - Non-U.S. | |||||||||||
170 | Credit Suisse 5.30% 08/13/19 | 186,770 | |||||||||
Commercial Banks | |||||||||||
90 | Credit Suisse 6.00% 02/15/18 | 97,968 | |||||||||
110 | Credit Suisse AG 5.40% 01/14/20 | 116,183 | |||||||||
214,151 | |||||||||||
Total Switzerland | 871,926 | ||||||||||
United Kingdom (0.7%) | |||||||||||
Advertising Services | |||||||||||
100 | WPP Finance 8.00% 09/15/14 | 118,733 | |||||||||
Building Societies | |||||||||||
525 | Nationwide Building Society (144A) (d) 6.25% 02/25/20 | 562,737 | |||||||||
Commercial Banks | |||||||||||
440 | Barclays Bank PLC 6.75% 05/22/19 | 509,324 | |||||||||
385 | HBOS PLC (144A) (d) 6.75% 05/21/18 | 370,712 | |||||||||
450 | Royal Bank of Scotland PLC (The) 4.875% 03/16/15 | 465,624 | |||||||||
160 | Standard Chartered PLC (144A) (d) 3.85% 04/27/15 | 165,080 | |||||||||
1,510,740 |
See Notes to Financial Statements
44
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Containers - Metal & Glass | |||||||||||
EUR | 250 | Rexam PLC 6.75% (e) 06/29/67 | $ | 311,121 | |||||||
Diversified Minerals | |||||||||||
$ | 390 | Anglo American Capital PLC (144A) (d) 9.375% 04/08/19 | 516,947 | ||||||||
Finance - Auto Loans | |||||||||||
EUR | 200 | FCE Bank PLC Series E 7.125% 01/15/13 | 267,798 | ||||||||
Money Center Banks | |||||||||||
$ | 150 | Lloyds TSB Bank PLC (144A) (d) 5.80% 01/13/20 | 153,030 | ||||||||
Mortgage Banks | |||||||||||
265 | Abbey National Treasury Services PLC (144A) (d) 3.875% 11/10/14 | 267,095 | |||||||||
Paper & Related Products | |||||||||||
EUR | 200 | Mondi Finance PLC 5.75% 04/03/17 | 255,464 | ||||||||
Tobacco | |||||||||||
$ | 155 | BAT International Finance PLC (144A) (d) 9.50% 11/15/18 | 206,893 | ||||||||
Total United Kingdom | 4,170,558 | ||||||||||
United States (5.0%) | |||||||||||
Agricultural Operations (0.0%) | |||||||||||
115 | Bunge Ltd. Finance Corp. 8.50% 06/15/19 | 139,228 | |||||||||
Airlines (0.1%) | |||||||||||
420 | America West Airlines LLC (Series 011G) (AMBAC Insd) 7.10% 04/02/21 | 394,833 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Auto - Cars/Light Trucks (0.0%) | |||||||||||
$ | 190 | Daimler Finance North America LLC 7.30% 01/15/12 | $ | 205,457 | |||||||
45 | Daimler Finance North America LLC 8.50% 01/18/31 | 58,567 | |||||||||
264,024 | |||||||||||
Beverages (0.1%) | |||||||||||
45 | Anheuser-Busch InBev Worldwide, Inc. (144A) (d) 5.375% 11/15/14 | 49,978 | |||||||||
185 | Anheuser-Busch InBev Worldwide, Inc. (144A) (d) 7.20% 01/15/14 | 214,353 | |||||||||
264,331 | |||||||||||
Beverages - Wine/ Spirits (0.0%) | |||||||||||
75 | Constellation Brands, Inc. 7.25% 09/01/16 | 78,563 | |||||||||
Building Product - Cement/ Aggregation (0.1%) | |||||||||||
EUR | 200 | Cemex Finance LLC (Series REGS) 9.625% 12/14/17 | 250,484 | ||||||||
$ | 240 | CRH America, Inc. 6.00% 09/30/16 | 266,942 | ||||||||
517,426 | |||||||||||
Cable/Satellite TV (0.1%) | |||||||||||
145 | CSC Holdings LLC 7.625% 07/15/18 | 152,250 | |||||||||
95 | DirecTV Holdings LLC / DirecTV Financing Co., Inc. 5.875% 10/01/19 | 105,826 | |||||||||
90 | DirecTV Holdings LLC / Financing Co., Inc. 7.625% 05/15/16 | 100,018 |
See Notes to Financial Statements
45
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
$ | 230 | DISH DBS Corp. 7.125% 02/01/16 | $ | 237,475 | |||||||
595,569 | |||||||||||
Capital Markets (0.2%) | |||||||||||
775 | Goldman Sachs Group, Inc. (The) 6.15% 04/01/18 | 837,332 | |||||||||
255 | Goldman Sachs Group, Inc. (The) 6.75% 10/01/37 | 260,585 | |||||||||
1,097,917 | |||||||||||
Casino Gaming (0.0%) | |||||||||||
180 | MGM Mirage 13.00% 11/15/13 | 210,600 | |||||||||
Chemicals (0.1%) | |||||||||||
280 | Mosaic Co. (The) (144A) (d) 7.625% 12/01/16 | 302,689 | |||||||||
Commercial Banks (0.1%) | |||||||||||
330 | PNC Funding Corp. 5.125% 02/08/20 | 350,266 | |||||||||
190 | PNC Funding Corp. 6.70% 06/10/19 | 223,029 | |||||||||
573,295 | |||||||||||
Commercial Services & Supplies (0.1%) | |||||||||||
195 | Republic Services, Inc. (144A) (d) 5.50% 09/15/19 | 214,147 | |||||||||
250 | Waste Management, Inc. 6.125% 11/30/39 | 268,583 | |||||||||
482,730 | |||||||||||
Containers - Paper/ Plastic (0.0%) | |||||||||||
95 | Sealed Air Corp. (144A) (d) 7.875% 06/15/17 | 101,066 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Diversified Financial Services (0.5%) | |||||||||||
$ | 350 | Bank of America Corp. (Series L) 5.65% 05/01/18 | $ | 366,962 | |||||||
245 | Citigroup, Inc. (See Note 6) 6.125% 05/15/18 | 262,521 | |||||||||
720 | Citigroup, Inc. (See Note 6) 8.50% 05/22/19 | 876,369 | |||||||||
465 | General Electric Capital Corp. 5.625% 05/01/18 | 507,913 | |||||||||
635 | General Electric Capital Corp. (Series G) 6.00% 08/07/19 | 704,117 | |||||||||
75 | JPMorgan Chase & Co. 6.00% 01/15/18 | 84,780 | |||||||||
2,802,662 | |||||||||||
Diversified Telecommunication Services (0.2%) | |||||||||||
50 | AT&T, Inc. 6.15% 09/15/34 | 54,648 | |||||||||
570 | AT&T, Inc. 6.30% 01/15/38 | 636,627 | |||||||||
70 | AT&T, Inc. 6.55% 02/15/39 | 80,721 | |||||||||
60 | Verizon Communications, Inc. 5.85% 09/15/35 | 63,497 | |||||||||
205 | Verizon Communications, Inc. 6.35% 04/01/19 | 242,884 | |||||||||
225 | Verizon Communications, Inc. 8.95% 03/01/39 | 325,332 | |||||||||
1,403,709 |
See Notes to Financial Statements
46
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Electric - Integrated (0.2%) | |||||||||||
$ | 385 | CMS Energy Corp. 6.25% 02/01/20 | $ | 385,372 | |||||||
350 | NiSource Finance Corp. 6.125% 03/01/22 | 386,053 | |||||||||
205 | NiSource Finance Corp. 6.80% 01/15/19 | 231,922 | |||||||||
1,003,347 | |||||||||||
Electronic Equipment, Instruments & Components (0.1%) | |||||||||||
155 | Agilent Technologies, Inc. 5.50% 09/14/15 | 171,497 | |||||||||
95 | Corning, Inc. 6.625% 05/15/19 | 110,362 | |||||||||
281,859 | |||||||||||
Electronics - Military (0.1%) | |||||||||||
310 | L-3 Communications Corp. 4.75% 07/15/20 | 317,352 | |||||||||
Finance - Auto Loans (0.0%) | |||||||||||
110 | Nissan Motor Acceptance Corp. (144A) (d) 4.50% 01/30/15 | 114,988 | |||||||||
Finance - Consumer Loans (0.0%) | |||||||||||
245 | SLM Corp. (Series A) 5.00% 10/01/13 | 231,901 | |||||||||
Finance - Credit Card (0.2%) | |||||||||||
345 | American Express Credit Corp. (Series C) 7.30% 08/20/13 | 395,724 | |||||||||
455 | Capital One Bank USA NA 8.80% 07/15/19 | 580,125 | |||||||||
100 | MBNA Capital (Series A) 8.278% 12/01/26 | 102,875 | |||||||||
1,078,724 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Finance - Investment Banker/Broker (0.3%) | |||||||||||
$ | 180 | Bear Stearns Cos. LLC (The) 6.40% 10/02/17 | $ | 204,758 | |||||||
305 | Bear Stearns Cos. LLC (The) 7.25% 02/01/18 | 363,932 | |||||||||
680 | Merrill Lynch & Co., Inc. (MTN) 6.875% 04/25/18 | 759,812 | |||||||||
335 | TD Ameritrade Holding Corp. 5.60% 12/01/19 | 359,206 | |||||||||
1,687,708 | |||||||||||
Finance - Other Services (0.0%) | |||||||||||
255 | NASDAQ OMX Group, Inc. (The) 5.55% 01/15/20 | 261,598 | |||||||||
Food - Meat Products (0.0%) | |||||||||||
180 | JBS Finance II Ltd. (144A) (d) 8.25% 01/29/18 | 182,250 | |||||||||
Food - Miscellaneous/ Diversified (0.0%) | |||||||||||
135 | ConAgra Foods, Inc. 8.25% 09/15/30 | 173,860 | |||||||||
Food Products (0.1%) | |||||||||||
65 | Kraft Foods, Inc. 5.375% 02/10/20 | 71,234 | |||||||||
300 | Kraft Foods, Inc. 7.00% 08/11/37 | 363,168 | |||||||||
434,402 | |||||||||||
Health Care Equipment & Supplies (0.1%) | |||||||||||
395 | Boston Scientific Corp. 6.00% 01/15/20 | 409,828 |
See Notes to Financial Statements
47
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Health Care Providers & Services (0.1%) | |||||||||||
$ | 380 | Medco Health Solutions, Inc. 7.125% 03/15/18 | $ | 455,194 | |||||||
Independent Power Producer (0.0%) | |||||||||||
135 | NRG Energy, Inc. 8.50% 06/15/19 | 142,425 | |||||||||
Industrial Conglomerates (0.1%) | |||||||||||
255 | General Electric Co. 5.25% 12/06/17 | 281,522 | |||||||||
Insurance (0.1%) | |||||||||||
55 | MetLife, Inc. 7.717% 02/15/19 | 67,524 | |||||||||
150 | Principal Financial Group, Inc. 8.875% 05/15/19 | 187,661 | |||||||||
265 | Prudential Financial, Inc. (MTN) 4.75% 09/17/15 | 281,316 | |||||||||
150 | Prudential Financial, Inc. (MTN) 6.625% 12/01/37 | 161,337 | |||||||||
45 | Prudential Financial, Inc. (Series D) 7.375% 06/15/19 | 53,286 | |||||||||
751,124 | |||||||||||
Life/Health Insurance (0.0%) | |||||||||||
200 | Pacific LifeCorp (144A) (d) 6.00% 02/10/20 | 212,080 | |||||||||
Media (0.2%) | |||||||||||
205 | CBS Corp. 8.875% 05/15/19 | 263,661 | |||||||||
115 | Comcast Corp. 5.15% 03/01/20 | 123,424 | |||||||||
325 | Comcast Corp. 5.70% 05/15/18 | 365,724 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
$ | 50 | Comcast Corp. 6.45% 03/15/37 | $ | 55,528 | |||||||
105 | Time Warner Cable, Inc. 6.75% 06/15/39 | 119,989 | |||||||||
250 | Viacom, Inc. 6.875% 04/30/36 | 288,181 | |||||||||
1,216,507 | |||||||||||
Medical - Biomedical/ Genetics (0.0%) | |||||||||||
220 | Genzyme Corp. (144A) (d) 3.625% 06/15/15 | 231,522 | |||||||||
Medical - Drugs (0.1%) | |||||||||||
305 | Teva Pharmaceutical Finance II BV / Teva Pharmaceutical Finance III LLC 3.00% 06/15/15 | 316,306 | |||||||||
Medical - Hospitals (0.0%) | |||||||||||
140 | HCA, Inc. 8.50% 04/15/19 | 155,400 | |||||||||
Metals & Mining (0.0%) | |||||||||||
80 | Freeport-McMoRan Copper & Gold, Inc. 8.375% 04/01/17 | 89,516 | |||||||||
Multimedia (0.1%) | |||||||||||
260 | NBC Universal, Inc. (144A) (d) 5.15% 04/30/20 | 276,884 | |||||||||
310 | News America, Inc. 7.85% 03/01/39 | 390,181 | |||||||||
667,065 | |||||||||||
Office Electronics (0.0%) | |||||||||||
55 | Xerox Corp. 5.625% 12/15/19 | 58,677 | |||||||||
145 | Xerox Corp. 6.35% 05/15/18 | 163,325 | |||||||||
222,002 |
See Notes to Financial Statements
48
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Oil Companies - Exploration & Production (0.1%) | |||||||||||
$ | 85 | Pioneer Natural Resources Co. 6.65% 03/15/17 | $ | 89,070 | |||||||
305 | Questar Market Resources, Inc. 6.80% 04/01/18 | 307,656 | |||||||||
396,726 | |||||||||||
Paper & Related Products (0.1%) | |||||||||||
60 | Georgia-Pacific LLC (144A) (d) 8.25% 05/01/16 | 65,400 | |||||||||
90 | International Paper Co. 7.30% 11/15/39 | 103,486 | |||||||||
250 | International Paper Co. 7.95% 06/15/18 | 302,223 | |||||||||
471,109 | |||||||||||
Pipelines (0.3%) | |||||||||||
145 | CenterPoint Energy Resources Corp. 6.25% 02/01/37 | 154,758 | |||||||||
89 | Colorado Interstate Gas Co. 6.80% 11/15/15 | 104,201 | |||||||||
145 | El Paso Corp. (MTN) 8.25% 02/15/16 | 158,413 | |||||||||
275 | Energy Transfer Partners LP 8.50% 04/15/14 | 324,402 | |||||||||
125 | Kinder Morgan Energy Partners LP 5.95% 02/15/18 | 140,005 | |||||||||
190 | Plains All American Pipeline LP / PAA Finance Corp. 6.70% 05/15/36 | 200,228 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
$ | 190 | Plains All American Pipeline LP / PAA Finance Corp. 8.75% 05/01/19 | $ | 237,102 | |||||||
150 | Spectra Energy Capital LLC 7.50% 09/15/38 | 176,319 | |||||||||
170 | Texas Eastern Transmission LP 7.00% 07/15/32 | 200,446 | |||||||||
1,695,874 | |||||||||||
Property Trust (0.0%) | |||||||||||
225 | WEA Finance LLC / WT Finance Aust Pty Ltd. (144A) (d) 6.75% 09/02/19 | 258,541 | |||||||||
Real Estate Investment Trusts (REITs) (0.0%) | |||||||||||
225 | Boston Properties LP 5.875% 10/15/19 | 245,878 | |||||||||
Reinsurance (0.1%) | |||||||||||
185 | Platinum Underwriters Finance, Inc. (Series B) 7.50% 06/01/17 | 200,062 | |||||||||
200 | Reinsurance Group of America, Inc. 6.45% 11/15/19 | 216,978 | |||||||||
417,040 | |||||||||||
REIT - Diversified (0.1%) | |||||||||||
250 | Duke Realty LP 6.75% 03/15/20 | 271,397 | |||||||||
195 | Vornado Realty LP 4.25% 04/01/15 | 197,278 | |||||||||
468,675 | |||||||||||
REIT - Health Care (0.0%) | |||||||||||
240 | Health Care, Inc. 6.125% 04/15/20 | 254,266 |
See Notes to Financial Statements
49
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
REIT - Regional Malls (0.1%) | |||||||||||
$ | 25 | Simon Property Group LP 5.65% 02/01/20 | $ | 27,536 | |||||||
250 | Simon Property Group LP 6.75% 05/15/14 | 284,548 | |||||||||
312,084 | |||||||||||
Retail - Drug Store (0.1%) | |||||||||||
429 | CVS Pass-Through Trust 6.036% 12/10/28 | 446,038 | |||||||||
Retail - Mail Order (0.1%) | |||||||||||
265 | QVC, Inc. (144A) (d) 7.125% 04/15/17 | 272,950 | |||||||||
Retail - Regional Department Store (0.0%) | |||||||||||
90 | JC Penney Co., Inc. 5.65% 06/01/20 | 90,900 | |||||||||
151 | JC Penney Corp., Inc. 6.375% 10/15/36 | 145,337 | |||||||||
236,237 | |||||||||||
Semiconductor Equipment (0.0%) | |||||||||||
145 | KLA-Tencor Corp. 6.90% 05/01/18 | 162,521 | |||||||||
Special Purpose Entity (0.3%) | |||||||||||
450 | AIG SunAmerica Global Financing VI (144A) (d) 6.30% 05/10/11 | 461,250 | |||||||||
235 | Farmers Exchange Capital (144A) (d) 7.05% 07/15/28 | 219,929 | |||||||||
200 | Harley-Davidson Funding Corp. (144A) (d) 6.80% 06/15/18 | 213,352 | |||||||||
380 | New Communications Holdings, Inc. (144A) (d) 8.50% 04/15/20 | 407,550 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
$ | 465 | Xlliac Global Funding (144A) (d) 4.80% 08/10/10 | $ | 465,199 | |||||||
1,767,280 | |||||||||||
Super-Regional Banks - U.S. (0.1%) | |||||||||||
305 | KeyCorp (MTN) 6.50% 05/14/13 | 335,340 | |||||||||
Telecommunication Services (0.1%) | |||||||||||
155 | Qwest Corp. 6.50% 06/01/17 | 162,750 | |||||||||
125 | Qwest Corp. 6.875% 09/15/33 | 120,937 | |||||||||
145 | SBA Telecommunications, Inc. 8.25% 08/15/19 | 159,500 | |||||||||
443,187 | |||||||||||
Telephone - Integrated (0.0%) | |||||||||||
65 | CenturyTel, Inc. (Series Q) 6.15% 09/15/19 | 64,406 | |||||||||
Tobacco (0.1%) | |||||||||||
85 | Altria Group, Inc. 4.125% 09/11/15 | 89,519 | |||||||||
185 | Altria Group, Inc. 9.25% 08/06/19 | 238,413 | |||||||||
235 | Philip Morris International, Inc. 5.65% 05/16/18 | 265,392 | |||||||||
593,324 | |||||||||||
Transport - Rail (0.0%) | |||||||||||
75 | CSX Corp. 6.15% 05/01/37 | 82,847 | |||||||||
Total United States | 29,071,445 | ||||||||||
Total Corporate Bonds (Cost $43,481,569) | 46,653,622 |
See Notes to Financial Statements
50
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Foreign Government Obligations (11.7%) | |||||||||||
Australia (0.4%) | |||||||||||
$ | 400 | National Australia Bank Ltd. (144A) (d) 3.375% 07/08/14 | $ | 422,817 | |||||||
AUD | 2,000 | Queensland Treasury Corp. (Series 15G) 6.00% 10/14/15 | 1,872,562 | ||||||||
Total Australia | 2,295,379 | ||||||||||
Bermuda (0.0%) | |||||||||||
$ | 240 | Bermuda Government International Bond (144A) (d) 5.603% 07/20/20 | 250,627 | ||||||||
Canada (0.9%) | |||||||||||
EUR | 600 | Canada Government International Bond 3.50% 01/13/20 | 839,125 | ||||||||
CAD | 2,800 | Canadian Government Bond 4.25% 06/01/18 | 2,983,952 | ||||||||
$ | 600 | Province of Ontario Canada 4.00% 10/07/19 | 629,500 | ||||||||
EUR | 600 | Province of Ontario Canada Series E 4.00% 12/03/19 | 834,920 | ||||||||
Total Canada | 5,287,497 | ||||||||||
Croatia (0.1%) | |||||||||||
$ | 300 | Croatia Government International Bond (Series REGS) 6.75% 11/05/19 | 323,895 | ||||||||
Denmark (0.1%) | |||||||||||
DKK | 3,300 | Denmark Government Bond 4.00% 11/15/17 | 636,766 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
France (0.9%) | |||||||||||
EUR | 800 | France Government Bond OAT 5.50% 04/25/29 | $ | 1,322,233 | |||||||
3,000 | French Treasury Note BTAN 4.50% 07/12/12 | 4,179,252 | |||||||||
Total France | 5,501,485 | ||||||||||
Germany (1.6%) | |||||||||||
2,400 | Bundesrepublik Deutschland (Series 03) 4.75% 07/04/34 | 3,837,348 | |||||||||
2,500 | Bundesrepublik Deutschland (Series 07) 4.00% 01/04/18 | 3,623,995 | |||||||||
1,100 | Bundesrepublik Deutschland (Series 08) 4.25% 07/04/18 | 1,620,948 | |||||||||
Total Germany | 9,082,291 | ||||||||||
Hungary (0.2%) | |||||||||||
HUF | 100,000 | Hungary Government Bond (Series 12/C) 6.00% 10/24/12 | 451,957 | ||||||||
100,000 | Hungary Government Bond (Series 17/B) 6.75% 02/24/17 | 449,593 | |||||||||
EUR | 400 | Republic of Hungary 5.75% 06/11/18 | 515,506 | ||||||||
Total Hungary | 1,417,056 | ||||||||||
Indonesia (0.1%) | |||||||||||
$ | 250 | Indonesia Government International Bond (REGS) 11.625% 03/04/19 | 377,500 | ||||||||
Italy (1.6%) | |||||||||||
EUR | 2,400 | Buoni Poliennali del Tesoro 2.50% 07/01/12 | 3,173,966 |
See Notes to Financial Statements
51
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
EUR | 1,100 | Buoni Poliennali del Tesoro 3.50% 06/01/14 | $ | 1,491,361 | |||||||
1,100 | Italy Buoni Poliennali Del Tesoro 4.00% 02/01/17 | 1,505,825 | |||||||||
1,100 | Italy Buoni Poliennali Del Tesoro 4.50% 02/01/18 | 1,532,466 | |||||||||
800 | Italy Buoni Poliennali Del Tesoro 5.00% 08/01/39 | 1,073,165 | |||||||||
$ | 330 | Republic of Italy 6.875% 09/27/23 | 389,703 | ||||||||
Total Italy | 9,166,486 | ||||||||||
Japan (3.0%) | |||||||||||
JPY | 110,000 | Japan Finance Organization for Municipalities 1.90% 06/22/18 | 1,378,440 | ||||||||
140,000 | Japan Government Ten Year Bond (Series 257) 1.30% 12/20/13 | 1,680,167 | |||||||||
240,000 | Japan Government Ten Year Bond (Series 267) 1.30% 12/20/14 | 2,895,698 | |||||||||
280,000 | Japan Government Ten Year Bond (Series 272) 1.40% 09/20/15 | 3,408,750 | |||||||||
120,000 | Japan Government Ten Year Bond (Series 280) 1.90% 06/20/16 | 1,505,916 | |||||||||
240,000 | Japan Government Ten Year Bond (Series 294) 1.70% 06/20/18 | 2,983,989 | |||||||||
320,000 | Japan Government Thirty Year Bond (Series 11) 1.70% 06/20/33 | 3,610,276 | |||||||||
Total Japan | 17,463,236 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Luxembourg (0.3%) | |||||||||||
$ | 145,000 | European Investment Bank 2.15% 01/18/27 | $ | 1,721,547 | |||||||
Mexico (0.2%) | |||||||||||
MXN | 13,400 | Mexican Bonos (Series M 20) 10.00% 12/05/24 | 1,365,330 | ||||||||
Netherlands (0.4%) | |||||||||||
EUR | 1,600 | Netherlands Government Bond 3.75% 07/15/14 | 2,263,546 | ||||||||
Norway (0.1%) | |||||||||||
NOK | 3,500 | Norway Government Bond 6.50% 05/15/13 | 640,485 | ||||||||
Peru (0.1%) | |||||||||||
$ | 390 | Peruvian Government International Bond 7.125% 03/30/19 | 478,920 | ||||||||
Poland (0.4%) | |||||||||||
PLN | 6,100 | Poland Government Bond (Series 0413) 5.25% 04/25/13 | 2,007,656 | ||||||||
South Africa (0.1%) | |||||||||||
ZAR | 6,500 | South Africa Government Bond (Series R207) 7.25% 01/15/20 | 835,075 | ||||||||
South Korea (0.1%) | |||||||||||
$ | 100 | Export-Import Bank of Korea 4.125% 09/09/15 | 104,283 | ||||||||
200 | Korea Development Bank 4.375% 08/10/15 | 210,129 | |||||||||
150 | Republic of Korea 7.125% 04/16/19 | 182,824 | |||||||||
Total South Korea | 497,236 |
See Notes to Financial Statements
52
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Sweden (0.2%) | |||||||||||
SEK | 8,300 | Sweden Government Bond (Series 1049) 4.50% 08/12/15 | $ | 1,273,571 | |||||||
United Kingdom (0.9%) | |||||||||||
GBP | 500 | United Kingdom Gilt 4.00% 09/07/16 | 848,832 | ||||||||
2,150 | United Kingdom Gilt 4.25% 06/07/32 | 3,376,302 | |||||||||
750 | United Kingdom Gilt 4.50% 03/07/13 | 1,276,584 | |||||||||
Total United Kingdom | 5,501,718 | ||||||||||
Total Foreign Government Obligations (Cost $66,161,484) | 68,387,302 | ||||||||||
Municipal Bonds (0.1%) | |||||||||||
California (0.0%) | |||||||||||
$ | 135 | State of California - Various Purpose 5.95% 04/01/16 | 147,797 | ||||||||
Georgia (0.1%) | |||||||||||
295 | Municipal Electric Authority of Georgia Plant Vogtle 6.655% 04/01/57 | 290,218 | |||||||||
160 | Municipal Electric Authority of Georgia Plant Vogtle Units 3 & 4 Ser 2010 J 6.637% 04/01/57 | 161,043 | |||||||||
Total Georgia | 451,261 | ||||||||||
Illinois (0.0%) | |||||||||||
145 | Illinois State Toll Highway Authority (The) 2009 (Series A) 6.184% 01/01/34 | 148,693 | |||||||||
Total Municipal Bonds (Cost $739,388) | 747,751 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
U.S. Government Agencies - Mortgage- Backed Securities (3.7%) | |||||||||||
Federal Home Loan Mortgage Corp. (ARM) | |||||||||||
$ | 1 | 6.50% 07/01/29 | $ | 1,310 | |||||||
Federal Home Loan Mortgage Corp. (PC) Gold | |||||||||||
1,600 | 4.50% (h) | 1,666,250 | |||||||||
1,050 | 5.00% (h) | 1,114,805 | |||||||||
250 | 6.00% 08/01/38 (i) | 271,554 | |||||||||
378 | 6.50% 05/01/32 - 09/01/32 | 420,368 | |||||||||
3,472,977 | |||||||||||
Federal National Mortgage Assoc. | |||||||||||
325 | 4.00% (h) | 338,863 | |||||||||
3,375 | 5.00% (h) | 3,585,411 | |||||||||
5,250 | 5.50% (h) | 5,657,694 | |||||||||
2,283 | 6.00% 12/01/36 - 10/01/38 (i) | 2,487,038 | |||||||||
1,406 | 6.50% 12/01/29 - 10/01/38 (i) | 1,545,805 | |||||||||
1,019 | 7.00% 12/01/17 - 02/01/31 | 1,156,734 | |||||||||
14,771,545 | |||||||||||
Federal National Mortgage Assoc. Strip | |||||||||||
1,475 | 4.50% (h) | 1,536,996 | |||||||||
Government National Mortgage Assoc. | |||||||||||
1,500 | 4.50% (h) | 1,582,032 | |||||||||
450 | 5.50% (h) | 489,094 | |||||||||
2,071,126 | |||||||||||
Total U.S. Government Agencies - Mortgage- Backed Securities (Cost $21,679,582) | 21,853,954 |
See Notes to Financial Statements
53
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
Asset-Backed Securities (0.3%) | |||||||||||
$ | 207 | ARI Fleet Lease Trust 2010-A A (144A) (d) 1.791% (e) 08/15/18 | $ | 206,711 | |||||||
240 | Chesapeake Funding LLC 2009-1 A (144A) (d) 2.341% (e) 12/15/20 | 240,699 | |||||||||
525 | Ford Credit Floorplan Master Owner Trust 2010-3 A2 (144A) (d) 2.041% (e) 02/15/17 | 538,227 | |||||||||
325 | GE Dealer Floorplan Master Note Trust 2009-2A A (144A) (d) 1.888% (e) 10/20/14 | 325,249 | |||||||||
123 | Harley-Davidson Motorcycle Trust 2005-3 A2 4.41% 06/15/12 | 123,187 | |||||||||
Total Asset-Backed Securities (Cost $1,421,030) | 1,434,073 | ||||||||||
U.S. Government Agencies & Obligations (4.3%) | |||||||||||
Diversified Financial Services - FDIC Guaranteed | |||||||||||
600 | Ally Financial, Inc. 2.20% 12/19/12 | 619,675 | |||||||||
1,300 | Citigroup Funding, Inc. (See Note 6) 2.25% 12/10/12 | 1,343,434 | |||||||||
1,300 | General Electric Capital Corp. (Series G) 2.625% 12/28/12 | 1,355,759 | |||||||||
3,318,868 |
PRINCIPAL AMOUNT IN THOUSANDS | VALUE | ||||||||||
U.S. Treasury Bonds | |||||||||||
$ | 1,100 | 3.50% 02/15/39 | $ | 1,010,282 | |||||||
2,900 | 6.875% 08/15/25 | 4,045,952 | |||||||||
3,430 | 7.50% 11/15/24 | 5,001,904 | |||||||||
U.S. Treasury Notes | |||||||||||
1,500 | 2.375% 10/31/14 | 1,565,274 | |||||||||
2,600 | 3.375% 11/15/19 | 2,710,905 | |||||||||
7,100 | 3.625% 02/15/20 | 7,537,651 | |||||||||
21,871,968 | |||||||||||
Total U.S. Government Agencies & Obligations (Cost $23,610,877) | 25,190,836 | ||||||||||
Commodity-Linked Securities (3.5%) | |||||||||||
211 | Deutsche Bank UBS Commodity Linked Note (g) 0.00% 12/23/10 (Cost $20,884,630) | 20,514,363 | |||||||||
Short-Term Investments (21.9%) | |||||||||||
U.S. Government Obligation (2.2%) | |||||||||||
12,770 | U.S. Treasury Bills 0.05-0.11% 08/26/10 - 10/28/10 (Cost $12,767,178)(j)(k) | 12,767,551 |
See Notes to Financial Statements
54
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF SHARES (OOO) | VALUE | ||||||||||
Investment Company (19.7%) | |||||||||||
115,269 | Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $115,269,385) | $ | 115,269,385 | ||||||||
Total Short-Term Investments (Cost $128,036,563) | 128,036,936 | ||||||||||
Total Investments (Cost $582,751,707) (l)(m) | 102.3 | % | 598,327,153 | ||||||||
Liabilities in Excess of Other Assets | (2.3 | ) | (13,358,034 | ) | |||||||
Net Assets | 100.0 | % | $ | 584,969,119 |
ADR American Depositary Receipt.
ARM Adjustable Rate Mortgage. Interest rate in effect as of July 31, 2010.
FDIC Federal Deposit Insurance Corporation.
FDR Finnish Depositary Receipt.
GDR Global Depositary Receipt.
MTN Medium Term Note.
PC Participation Certificate.
PPS Price Protected Share.
REGS Security registered under Regulation S.
REIT Real Estate Investment Trust.
SDR Swedish Depositary Receipt.
(a) Non-income producing security.
(b) Comprised of securities in separate entities that are traded as a single stapled security.
(c) Consists of one or more class of securities traded together as a unit; stocks with attached warrants.
(d) Resale is restricted to qualified institutional investors.
(e) Floating rate security. Rate shown is the rate in effect at July 31, 2010.
(f) Security issued with perpetual maturity.
(g) Security is linked to the Dow Jones UBS Commodities Index Total Return. The index is currently comprised of futures contracts on nineteen physical commodities traded on U.S. exchanges, with the exception of aluminum, nickel and zinc, which trade on the London Metal Exchange.
(h) Security was purchased on a forward commitment basis with an approximate principal amount and no definite maturity date; the actual principal amount and maturity date will be determined upon settlement.
(i) Security purchased on a when-issued basis.
(j) Purchased on a discount basis. The interest rates shown have been adjusted to reflect a money market equivalent yield.
(k) A portion of this security has been physically segregated in connection with open futures and swap contracts.
(l) Securities have been designated as collateral in connection with securities purchased on a forward commitment and when-issued basis, open futures, swap, and forward foreign currency contracts.
(m) The aggregate cost for federal income tax purposes is $588,098,856. The aggregate gross unrealized appreciation is $24,909,584 and the aggregate gross unrealized depreciation is $14,681,287 resulting in net unrealized appreciation $10,228,297.
Bond Insurance:
AMBAC AMBAC Assurance Corporation.
See Notes to Financial Statements
55
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
Forward Foreign Currency Contracts Open at July 31, 2010:
COUNTERPARTY CONTRACTS TO DELIVER | IN EXCHANGE FOR | DELIVERY DATE | UNREALIZED APPRECIATION (DEPRECIATION) | ||||||||||||
UBS AG $3,633,802 | INR | 171,079,420 | 08/18/2010 | $ | 41,716 | ||||||||||
UBS AG $453,002 | AUD | 517,930 | 08/19/2010 | 14,366 | |||||||||||
UBS AG $3,709,835 | BRL | 6,583,844 | 08/19/2010 | 15,657 | |||||||||||
UBS AG $2,925,143 | CAD | 3,015,530 | 08/19/2010 | 7,397 | |||||||||||
UBS AG $16,952,737 | EUR | 13,412,294 | 08/19/2010 | 525,396 | |||||||||||
UBS AG $3,986,997 | GBP | 2,631,837 | 08/19/2010 | 142,350 | |||||||||||
UBS AG $11,945,441 | HKD | 92,820,137 | 08/19/2010 | 6,037 | |||||||||||
UBS AG $4,316,159 | JPY | 381,827,699 | 08/19/2010 | 104,129 | |||||||||||
UBS AG $4,889,999 | KRW | 5,903,695,653 | 08/19/2010 | 95,310 | |||||||||||
UBS AG $2,456,137 | RUB | 75,254,821 | 08/19/2010 | 26,343 | |||||||||||
UBS AG $2,506,067 | SGD | 3,454,388 | 08/19/2010 | 34,342 | |||||||||||
UBS AG $5,097,813 | TWD | 163,446,092 | 08/19/2010 | 6,614 | |||||||||||
UBS AG AUD908,374 | $ | 809,000 | 08/19/2010 | (10,696 | ) | ||||||||||
UBS AG BRL8,377,871 | $ | 4,720,459 | 08/19/2010 | (20,190 | ) | ||||||||||
UBS AG CHF1,597,506 | $ | 1,513,306 | 08/19/2010 | (20,572 | ) | ||||||||||
UBS AG EUR1,987,008 | $ | 2,589,034 | 08/19/2010 | (321 | ) | ||||||||||
UBS AG JPY196,536,068 | $ | 2,223,183 | 08/19/2010 | (52,047 | ) | ||||||||||
Credit Suisse $1,071,399 | CAD | 1,100,000 | 09/15/2010 | (2,108 | ) | ||||||||||
Credit Suisse $484,707 | CAD | 500,000 | 09/15/2010 | 1,334 | |||||||||||
State Street $1,106,872 | CHF | 1,175,000 | 09/15/2010 | 21,632 | |||||||||||
Credit Suisse $797,336 | EUR | 650,000 | 09/15/2010 | 49,671 | |||||||||||
Credit Suisse $1,323,436 | EUR | 1,050,000 | 09/15/2010 | 44,806 | |||||||||||
Credit Suisse $491,069 | EUR | 390,000 | 09/15/2010 | 17,136 | |||||||||||
Credit Suisse $835,530 | EUR | 650,000 | 09/15/2010 | 11,477 | |||||||||||
Credit Suisse $519,396 | EUR | 400,000 | 09/15/2010 | 1,839 | |||||||||||
Credit Suisse $523,210 | EUR | 400,000 | 09/15/2010 | (1,975 | ) | ||||||||||
Credit Suisse $4,907,600 | EUR | 3,990,000 | 09/15/2010 | 291,718 | |||||||||||
UBS AG $748,200 | GBP | 500,000 | 09/15/2010 | 36,199 | |||||||||||
UBS AG $832,095 | GBP | 550,000 | 09/15/2010 | 30,743 | |||||||||||
UBS AG $3,096,450 | GBP | 2,100,000 | 09/15/2010 | 198,024 | |||||||||||
UBS AG $728,373 | JPY | 65,000,000 | 09/15/2010 | 24,297 | |||||||||||
UBS AG $656,926 | JPY | 58,000,000 | 09/15/2010 | 14,687 | |||||||||||
UBS AG $10,987,688 | JPY | 1,004,000,000 | 09/15/2010 | 638,173 | |||||||||||
State Street $1,572,935 | KRW | 1,790,000,000 | 09/15/2010 | (63,255 | ) | ||||||||||
UBS AG $144,289 | KRW | 180,000,000 | 09/15/2010 | 7,523 | |||||||||||
Goldman Sachs $723,630 | KRW | 885,000,000 | 09/15/2010 | 22,776 | |||||||||||
UBS AG $54,913 | MXN | 700,000 | 09/15/2010 | 112 | |||||||||||
UBS AG $666,515 | MXN | 8,500,000 | 09/15/2010 | 1,643 | |||||||||||
State Street $627,165 | MYR | 2,064,000 | 09/15/2010 | 19,704 | |||||||||||
UBS AG $456,830 | MYR | 1,500,000 | 09/15/2010 | 13,278 |
See Notes to Financial Statements
56
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
COUNTERPARTY CONTRACTS TO DELIVER | IN EXCHANGE FOR | DELIVERY DATE | UNREALIZED APPRECIATION (DEPRECIATION) | ||||||||||||
Credit Suisse $1,016,591 | NOK | 6,550,000 | 09/15/2010 | $ | 58,737 | ||||||||||
Credit Suisse $310,590 | NZD | 450,000 | 09/15/2010 | 14,710 | |||||||||||
Bank of America $528,324 | PLN | 1,800,000 | 09/15/2010 | 55,298 | |||||||||||
Credit Suisse $325,595 | PLN | 1,000,000 | 09/15/2010 | (1,361 | ) | ||||||||||
UBS AG $1,147,754 | SEK | 9,000,000 | 09/15/2010 | 98,398 | |||||||||||
Credit Suisse $513,790 | SGD | 700,000 | 09/15/2010 | 1,041 | |||||||||||
UBS AG $779,260 | TWD | 24,960,000 | 09/15/2010 | 1,328 | |||||||||||
Credit Suisse AUD280,000 | $ | 239,177 | 09/15/2010 | (12,669 | ) | ||||||||||
Credit Suisse CAD320,000 | $ | 308,710 | 09/15/2010 | (2,356 | ) | ||||||||||
Credit Suisse EUR700,000 | $ | 865,214 | 09/15/2010 | (46,947 | ) | ||||||||||
UBS AG GBP300,000 | $ | 449,976 | 09/15/2010 | (20,663 | ) | ||||||||||
UBS AG GBP200,000 | $ | 301,550 | 09/15/2010 | (12,209 | ) | ||||||||||
Bank of America HUF172,600,000 | $ | 733,688 | 09/15/2010 | (54,134 | ) | ||||||||||
UBS AG JPY90,000,000 | $ | 1,010,782 | 09/15/2010 | (31,377 | ) | ||||||||||
UBS AG KRW600,000,000 | $ | 494,136 | 09/15/2010 | (11,902 | ) | ||||||||||
Credit Suisse NOK6,550,000 | $ | 1,019,090 | 09/15/2010 | (56,238 | ) | ||||||||||
UBS AG NOK3,200,000 | $ | 495,740 | 09/15/2010 | (29,611 | ) | ||||||||||
Bank of America PLN1,800,000 | $ | 525,547 | 09/15/2010 | (58,075 | ) | ||||||||||
Net Unrealized Appreciation | $ | 2,187,235 |
Currency Abbreviations:
AUD Australian Dollar.
BRL Brazilian Real.
CAD Canadian Dollar.
CHF Swiss Franc.
DKK Danish Krone.
EUR Euro.
GBP British Pound.
HKD Hong Kong Dollar.
HUF Hungarian Forint.
INR Indian Rupee.
JPY Japanese Yen.
KRW South Korean Won.
MXN Mexican New Peso.
MYR Malaysian Ringgit.
NOK Norwegian Krone.
NZD New Zealand Dollar.
PLN Polish Zloty.
RUB Russian Ruble.
SEK Swedish Krona.
SGD Singapore Dollar.
TWD Taiwan Dollar.
ZAR South African Rand.
See Notes to Financial Statements
57
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
Futures Contracts Open at July 31, 2010:
NUMBER OF CONTRACTS | LONG/SHORT | DESCRIPTION, DELIVERY MONTH AND YEAR | UNDERLYING FACE AMOUNT AT VALUE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
343 | Long | S&P 500 E-mini, September 2010 | $18,835,845 | $498,515 | |||||||||||||||
132 | Long | U.S. Treasury Notes 10 Year, September 2010 | 16,343,250 | 231,598 | |||||||||||||||
90 | Long | U.S. Treasury Notes 5 Year, September 2010 | 10,784,532 | 259,042 | |||||||||||||||
277 | Long | Dow Jones Euro Stoxx 50 Index, September 2010 | 9,908,714 | 734,644 | |||||||||||||||
115 | Long | H-SHARES Index, August 2010 | 8,791,374 | (47,246) | |||||||||||||||
70 | Long | KOSPI2 Index, September 2010 | 6,810,219 | 468,424 | |||||||||||||||
42 | Long | Euro-Bobl, September 2010 | 6,569,530 | (40,814) | |||||||||||||||
170 | Long | MSCI Taiwan Index, August 2010 | 4,629,100 | (10,113) | |||||||||||||||
382 | Long | SGX CNX NIFTY Index, August 2010 | 4,103,444 | (58,976) | |||||||||||||||
103 | Long | FTSE/JSE Top 40, September 2010 | 3,561,320 | 49,823 | |||||||||||||||
42 | Long | FTSE 100 Index, September 2010 | 3,456,668 | 37,920 | |||||||||||||||
2 | Long | JPN 10 Year Bond, September 2010 | 3,283,523 | 28,114 | |||||||||||||||
116 | Long | MEX BOLSA Index, September 2010 | 2,976,357 | (16,745) | |||||||||||||||
19 | Long | S&P/TSX 60 Index, September 2010 | 2,526,803 | (9,728) | |||||||||||||||
48 | Long | MSCI Singapore Index, August 2010 | 2,481,541 | 11,177 | |||||||||||||||
18 | Long | Hang Seng Index, August 2010 | 2,429,855 | (9,412) | |||||||||||||||
15 | Long | TOPIX Index, September 2010 | 1,470,571 | (25,178) | |||||||||||||||
2 | Long | DAX Index, September 2010 | 401,827 | 5,760 |
See Notes to Financial Statements
58
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
NUMBER OF CONTRACTS | LONG/SHORT | DESCRIPTION, DELIVERY MONTH AND YEAR | UNDERLYING FACE AMOUNT AT VALUE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
1 | Long | SPI 200 F, September 2010 | $100,942 | $(591) | |||||||||||||||
8 | Long | Euro Bund, September 2010 | (1,340,162) | (8,413) | |||||||||||||||
8 | Short | U.S. Treasury Notes 2 Year, September 2010 | (1,753,000) | (10,142) | |||||||||||||||
26 | Short | Euro-Bund, September 2010 | (4,355,526) | 19,568 | |||||||||||||||
74 | Short | S&P Mid 400 E-mini, September 2010 | (5,615,120) | (78,013) | |||||||||||||||
90 | Short | U.S. Treasury Bonds 30 Year, September 2010 | (11,584,687) | (353,540) | |||||||||||||||
149 | Short | U.S. Treasury Notes 10 Year, September 2010 | (18,448,062) | (431,282) | |||||||||||||||
Net Unrealized Appreciation | $ | 1,244,392 |
Credit Default Swap Contracts Open at July 31, 2010: | |||||||||||||||||||||||||||||||||||
SWAP COUNTERPARTY & REFERENCE OBLIGATION | BUY/SELL PROTECTION | NOTIONAL AMOUNT (000'S) | INTEREST RATE | TERMINATION DATE | UNREALIZED APPRECIATION (DEPRECIATION) | UPFRONT PAYMENTS | VALUE | CREDIT RATING OF REFERENCE OBLIGATION† | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||
Bank of America, N.A. Tyco Electronics Ltd. | Buy | $ | 465 | 5.00 | % | June 20, 2014 | $ | (55,420 | ) | $ | (19,354 | ) | $ | (74,774 | ) | BBB- | |||||||||||||||||||
Bank of America, N.A., Sealed Air Corp. | Buy | 90 | 1.12 | March 20, 2018 | 3,772 | — | 3,772 | BB+ | |||||||||||||||||||||||||||
Net Credit Default Swap Contracts | $ | (51,648 | ) | $ | (19,354 | ) | $ | (71,002 | ) |
† Credit Rating as issued by Standard and Poor's.
See Notes to Financial Statements
59
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2010 continued
Interest Rate Swap Contracts Open at July 31, 2010:
SWAP COUNTERPARTY | NOTIONAL AMOUNT (000) | FLOATING RATE INDEX | PAY/RECEIVE FLOATING RATE | FIXED RATE | TERMINATION DATE | UNREALIZED DEPRECIATION | |||||||||||||||||||||
Credit Suisse Group | $ | 4,200 | 3 Month LIBOR | Receive | 2.625 | % | 03/11/15 | $ | (185,094 | ) | |||||||||||||||||
UBS AG | 640 | 3 Month LIBOR | Receive | 2.841 | 01/08/15 | (34,816 | ) | ||||||||||||||||||||
Total Unrealized Depreciation | $ | (219,910 | ) |
LIBOR London Interbank Offered Rate.
Zero Coupon Swap Contracts Open at July 31, 2010:
SWAP COUNTERPARTY | NOTIONAL AMOUNT (000) | FLOATING RATE INDEX | PAY/RECEIVE FLOATING RATE | TERMINATION DATE | UNREALIZED APPRECIATION (DEPRECIATION) | ||||||||||||||||||
Barclays Bank PLC^ | $ | 4,320 | 3 Month LIBOR | Receive | 11/15/19 | $ | (606,713 | ) | |||||||||||||||
Barclays Bank PLC^ | 3,685 | 3 Month LIBOR | Receive | 11/15/21 | (500,093 | ) | |||||||||||||||||
Barclays Bank PLC^^ | 4,320 | 3 Month LIBOR | Pay | 11/15/19 | 152,018 | ||||||||||||||||||
JPMorgan Chase Bank N.A. New York^ | 2,790 | 3 Month LIBOR | Receive | 05/15/21 | (395,418 | ) | |||||||||||||||||
Net Unrealized Depreciation | $ | (1,350,206 | ) |
^ Fund will make payments of $1,675,253, $1,650,364, and $1,221,824, respectively, on termination date.
^^ Fund will receive payment of $1,186,272 on termination date.
LIBOR London Interbank Offered Rate.
See Notes to Financial Statements
60
Morgan Stanley Global Strategist Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2010
Assets: | |||||||
Investments in securities, at value (cost $464,711,133) | $ | 479,991,604 | |||||
Investments in affiliates, at value (cost $118,040,574) | 118,335,549 | ||||||
Unrealized appreciation on open swap contracts | 155,790 | ||||||
Unrealized appreciation on open forward foreign currency contracts | 2,695,941 | ||||||
Cash (including foreign currency valued at $327,898 with a cost of $321,614 and $4,835,077 in segregation) | 5,162,974 | ||||||
Receivable for: | |||||||
Investments sold | 22,315,638 | ||||||
Interest | 1,640,771 | ||||||
Variation margin | 715,897 | ||||||
Dividends | 389,420 | ||||||
Shares of beneficial interest sold | 222,972 | ||||||
Foreign withholding taxes reclaimed | 202,157 | ||||||
Interest and dividends from affiliates | 40,736 | ||||||
Periodic interest on open swap contracts | 3,337 | ||||||
Principal paydowns | 1,362 | ||||||
Prepaid expenses and other assets | 59,856 | ||||||
Total Assets | 631,934,004 | ||||||
Liabilities: | |||||||
Unrealized depreciation on open swap contracts | 1,777,554 | ||||||
Unrealized depreciation on open forward foreign currency contracts | 508,706 | ||||||
Payable for: | |||||||
Investments purchased | 43,379,836 | ||||||
Shares of beneficial interest redeemed | 416,153 | ||||||
Transfer agent fee | 204,200 | ||||||
Distribution fee | 178,950 | ||||||
Investment advisory fee | 177,893 | ||||||
Periodic interest on open swap contracts | 46,622 | ||||||
Administration fee | 38,945 | ||||||
Premium received on open swap contracts | 19,534 | ||||||
Accrued expenses and other payables | 216,492 | ||||||
Total Liabilities | 46,964,885 | ||||||
Net Assets | $ | 584,969,119 | |||||
Composition of Net Assets: | |||||||
Paid-in-capital | $ | 497,986,140 | |||||
Net unrealized appreciation | 17,430,535 | ||||||
Dividends in excess of net investment income | (2,419,594 | ) | |||||
Accumulated undistributed net realized gain | 71,972,038 | ||||||
Net Assets | $ | 584,969,119 | |||||
Class A Shares: | |||||||
Net Assets | $ | 459,742,335 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 26,535,827 | ||||||
Net Asset Value Per Share | $ | 17.33 | |||||
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value) | $ | 18.29 | |||||
Class B Shares: | |||||||
Net Assets | $ | 57,558,986 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 3,305,023 | ||||||
Net Asset Value Per Share | $ | 17.42 | |||||
Class C Shares: | |||||||
Net Assets | $ | 41,439,394 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 2,403,247 | ||||||
Net Asset Value Per Share | $ | 17.24 | |||||
Class I Shares: | |||||||
Net Assets | $ | 26,228,404 | |||||
Shares Outstanding (unlimited shares authorized, $.01 par value) | 1,511,466 | ||||||
Net Asset Value Per Share | $ | 17.35 |
See Notes to Financial Statements
61
Morgan Stanley Global Strategist Fund
Financial Statements continued
Statement of Operations
For the year ended July 31, 2010
Net Investment Income: Income | |||||||
Dividends (net of $240,634 foreign withholding tax) | $ | 7,647,825 | |||||
Interest (net of $21,002 foreign withholding tax) | 5,158,455 | ||||||
Interest and dividends from affiliates | 356,171 | ||||||
Total Income | 13,162,451 | ||||||
Expenses | |||||||
Investment advisory fee | 2,570,125 | ||||||
Distribution fee (Class A shares) | 1,169,561 | ||||||
Distribution fee (Class B shares) | 758,792 | ||||||
Distribution fee (Class C shares) | 413,664 | ||||||
Transfer agent fees and expenses | 694,152 | ||||||
Administration fee | 489,548 | ||||||
Shareholder reports and notices | 153,120 | ||||||
Professional fees | 88,769 | ||||||
Custodian fees | 82,125 | ||||||
Registration fees | 59,429 | ||||||
Trustees' fees and expenses | 20,076 | ||||||
Other | 84,725 | ||||||
Total Expenses | 6,584,086 | ||||||
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6) | (167,133 | ) | |||||
Net Expenses | 6,416,953 | ||||||
Net Investment Income | 6,745,498 | ||||||
Realized and Unrealized Gain (Loss): Realized Gain (Loss) on: | |||||||
Investments | 127,098,531 | ||||||
Investments in affiliates | 1,417,848 | ||||||
Futures contracts | (5,091,728 | ) | |||||
Options written | 17,624 | ||||||
Swap contracts | 1,424,694 | ||||||
Forward foreign currency contracts | (692,317 | ) | |||||
Foreign currency translation | (1,781,367 | ) | |||||
Net Realized Gain | 122,393,285 | ||||||
Change in Unrealized Appreciation/Depreciation on: | |||||||
Investments | (82,807,897 | ) | |||||
Investments in affiliates | 614,786 | ||||||
Futures contracts | 1,385,219 | ||||||
Options written | (19,137 | ) | |||||
Swap contracts | (974,911 | ) | |||||
Forward foreign currency contracts | 2,187,235 | ||||||
Foreign currency translation | 45,226 | ||||||
Net Change in Unrealized Appreciation/Depreciation | (79,569,479 | ) | |||||
Net Gain | 42,823,806 | ||||||
Net Increase | $ | 49,569,304 |
See Notes to Financial Statements
62
Morgan Stanley Global Strategist Fund
Financial Statements continued
Statements of Changes in Net Assets
FOR THE YEAR ENDED JULY 31, 2010 | FOR THE YEAR ENDED JULY 31, 2009 | ||||||||||
Increase (Decrease) in Net Assets: Operations: | |||||||||||
Net investment income | $ | 6,745,498 | $ | 8,844,433 | |||||||
Net realized gain (loss) | 122,393,285 | (44,030,039 | ) | ||||||||
Net change in unrealized appreciation/depreciation | (79,569,479 | ) | (32,334,650 | ) | |||||||
Net Increase (Decrease) | 49,569,304 | (67,520,256 | ) | ||||||||
Dividends and Distributions to Shareholders from: | |||||||||||
Net investment income | |||||||||||
Class A shares | (7,592,642 | ) | (8,324,189 | ) | |||||||
Class B shares | (595,284 | ) | (1,353,335 | ) | |||||||
Class C shares | (368,480 | ) | (449,403 | ) | |||||||
Class I shares | (504,638 | ) | (559,959 | ) | |||||||
Net realized gain | |||||||||||
Class A shares | — | (1,409,212 | ) | ||||||||
Class B shares | — | (400,944 | ) | ||||||||
Class C shares | — | (120,457 | ) | ||||||||
Class I shares | — | (90,001 | ) | ||||||||
Total Dividends and Distributions | (9,061,044 | ) | (12,707,500 | ) | |||||||
Net decrease from transactions in shares of beneficial interest | (70,662,343 | ) | (56,896,515 | ) | |||||||
Net Decrease | (30,154,083 | ) | (137,124,271 | ) | |||||||
Net Assets: | |||||||||||
Beginning of period | 615,123,202 | 752,247,473 | |||||||||
End of Period (Including dividends in excess of net investment income of $2,419,594 and accumulated undistributed net investment income of $3,546,486, respectively) | $ | 584,969,119 | $ | 615,123,202 |
See Notes to Financial Statements
63
Morgan Stanley Global Strategist Fund
Notes to Financial Statements n July 31, 2010
1. Organization and Accounting Policies
Morgan Stanley Global Strategist Fund (the "Fund"), formally Morgan Stanley Strategist Fund (the Fund's name changed effective March 31, 2010), 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 to maximize the total return of its investments. The Fund was organized as a Massachusetts business trust on August 5, 1988 and commenced operations on October 31, 1988. On July 28, 1997, the Fund converted to a multiple class share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class I shares. The four classes are substantially the same except that most Class A shares are subject to a sales charge imposed at the time of purchase and some Class A shares, and most Class B shares and Class C shares are subject to a contingent deferred sales charge imposed on shares redeemed within eighteen months, six years and one year, respectively. Class I shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses.
The following is a summary of significant accounting policies:
A. Valuation of Investments — (1) An equity portfolio security listed or traded on the New York Stock Exchange ("NYSE") or American Stock Exchange or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and ask price; (2) 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; (3) all other portfolio 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 exchange, the security is valued on the exchange design ated as the primary market; (4) 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; (5) futures are valued at the latest price published by the commodities exchange on which they trade; (6) listed options are valued at the latest sale price on the exchange on which they are listed unless no sales of such options have taken place that day, in which case they are valued at the mean between their latest bid and ask price; (7) commodity-linked notes and swaps are marked-to-market daily based upon quotations from market makers; (8) when market quotations are not readily available including circumstances under which Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") determines that the latest sale price, the bid price or the mean between the last reported bid and ask price do not reflect a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined
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(that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund's Trustees or by the Investment Adviser using a pricing service and/or procedures approved by the Trustees of the Fund; (9) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees; (10) investments in open-end mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (11) 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 market value.
B. Accounting for Investments — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Dividend income and other distributions are recorded on the ex-dividend date. Discounts are accreted and premiums are amortized over the life of the respective securities and are included in interest income. Interest income is accrued daily as earned.
C. Multiple Class Allocations — Investment income, expenses (other than distribution fees), and realized and unrealized gains and losses are allocated to each class of shares based upon the relative net asset value on the date such items are recognized. Distribution fees are charged directly to the respective class.
D. Futures — A futures contract is an agreement between two parties to buy and sell financial instruments or contracts based on financial indices at a set price on a future date. Upon entering into such a contract, the Fund is required to pledge to the broker: cash, U.S. Government securities or other liquid portfolio securities equal to the minimum initial margin requirements of the applicable futures exchange. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments known as variation margin are recorded by the Fund as unrealized gains and losses. Upon closing of the contract, the Fund realizes a gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
E. Options — When the Fund writes a call or put option, an amount equal to the premium received is included in the Fund's Statement of Assets and Liabilities as a liability which is subsequently marked-to-market to reflect the current market value of the option written. If a written option either expires or the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss without regard to any unrealized gain or loss on the underlying security or currency and the liability related to such option is
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extinguished. If a written call option is exercised, the Fund realizes a gain or loss from the sale of the underlying security or currency and the proceeds from such sale are increased by the premium originally received. If a written put option is exercised, the amount of the premium originally received reduces the cost of the security which the Fund purchases upon exercise of the option. By writing a covered call option, the Fund, in exchange for the premium, foregoes the opportunity for capital appreciation above the exercise price, should the market price of the underlying security increase. By writing a put option, the Fund, in exchange for the premium, accepts the risk of having to purchase a security at an exercise price that is above the current market price.
When the Fund purchases a call or put option, the premium paid is recorded as an investment which is subsequently marked-to-market to reflect the current market value. If a purchased option expires, the Fund will realize a loss to the extent of the premium paid. If the Fund enters into a closing sale transaction, a gain or loss is realized for the difference between the proceeds from the sale and the cost of the option. If a put option is exercised, the cost of the security or currency sold upon exercise will be increased by the premium originally paid. If a call option is exercised, the cost of the security purchased upon exercise will be increased by the premium originally paid. The maximum exposure to loss for any purchased option is limited to the premium initially paid for the option.
F. Foreign Currency Translation and Forward Foreign Currency Contracts — The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and forward foreign currency contracts ("forward contracts") are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded as realized and unrealized gains/losses on forward contracts and foreign currency translations. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gains/losses are included in or are a reduction of ordinary income f or federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities held. Forward contracts are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are recorded as unrealized foreign currency translation gains or losses. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery.
G. Swaps — A swap is a derivative in the form of an agreement to exchange the return generated by one instrument for the return generated by another instrument.
The Fund may enter into credit default swap contracts, a type of credit derivative, for hedging purposes or to gain exposure to a credit or index of credits of underlying issue in which the Fund may otherwise
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invest. A credit default swap is an agreement between two parties to exchange the credit risk of an issuer or index of issuers. A buyer of a credit default swap is said to buy protection by paying periodic fees in return for a contingent payment from the seller if the issuer has a credit event such as bankruptcy, a failure to pay outstanding obligations or deteriorating credit while the swap is outstanding. A seller of a credit default swap is said to sell protection and thus collects the periodic fees and profits if the credit of the issuer remains stable or improves while the swap is outstanding. The seller in a credit default swap contract would be required to pay an agreed-upon amount, to the buyer in the event of an adverse credit event of the issuer. This agreed-upon amount approximates the notional amount of the swap as disclosed in the table following the Portfolio of Investments and is estimated to be the maximum potent ial future payment that the seller could be required to make under the credit default swap contract. In the event of an adverse credit event, the seller generally does not have any contractual remedies against the issuer or any other third party. However, if a physical settlement is elected, the seller would receive the defaulted credit and, as a result, become a creditor of the issuer.
The current credit rating of each individual issuer is listed in the table following the Portfolio of Investments and serves as indicator of the current status of the payment/performance risk of the credit derivative. Alternatively, for credit default swaps on an index of credits, the quoted market prices and current values serve as an indicator of the current status of the payment/performance risk of the credit derivative. Generally, lower credit ratings and increasing market values, in absolute terms, represent a deterioration of the credit and a greater likelihood of an adverse credit event of the issuer.
The Fund accrues for the periodic fees on credit default swaps on a daily basis as earned with the net amount accrued recorded within realized gains/losses on swap contracts on the Statement of Operations. Net unrealized gains are recorded as an asset or net unrealized losses are reported as a liability on the Statement of Assets and Liabilities. The change in value of the swap contracts is reported as unrealized gains or losses on the Statement of Operations. Payments received or made upon entering into a credit default swap contract, if any, are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. Credit default swaps may involve greater risks than if a Fund had invested in the issuer directly. Credit default swaps are subject to general market risk, counterparty risk and credit risk.
The Fund may enter into interest rate swaps, zero coupon swaps and asset swaps (where parties combine the purchase or sale of a bond/note with an interest rate swap) primarily to preserve a return or spread on a particular investment or portion of its portfolio, as a duration management technique or to protect against any increase in the price of securities the Fund anticipates purchasing at a later date. These are contractual agreements to exchange periodic interest payment streams calculated on a predetermined notional principal amount. They generally involve one party paying a fixed interest rate and the other party paying a variable rate. The Fund will usually enter into them on a net basis, i.e., the
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two payment streams are netted out in a cash settlement on the payment date or date specified in the instrument, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. The Fund accrues the net amount with respect to each swap on a daily basis. This net amount is recorded within realized gains/losses on swap contracts on the Statement of Operations. In a zero-coupon interest rate swap, payments only occur at maturity, at which time one counterparty pays the total compounded fixed rate over the life of the swap and the other pays the total compounded floating rate that would have been earned had a series of LIBOR investments been rolled over through the life of the swap. Risk may arise as a result of the potential inability of the counterparties to meet the terms of the contracts.
The Fund may enter into total return swaps, which involve commitments to pay interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty, respectively. Periodic payments received or made at the end of each measurement period, but prior to termination, are recorded as realized gains or losses in the Statement of Operations. Risks may arise as a result of the potential inability of the counterparties to meet the terms of the contracts.
Swap agreements are not entered into or traded on exchanges and there is no central clearing or guaranty function for swaps. Therefore, swaps are subject to the risk of default or non-performance by the counterparty. If there is a default by the counterparty to a swap agreement, the Fund will have contractual remedies pursuant to the agreements related to the transaction. Counterparties are required to pledge collateral daily (based on the valuation of each swap) on behalf of the Fund with a value approximately equal to the amount of any unrealized gain. Reciprocally, when the Fund has an unrealized loss on a swap contract, the Fund has instructed the custodian to pledge cash or liquid securities as collateral with a value approximately equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate. For cash collateral received, the Fund pays a mon thly fee to the counterparty based on the effective rate for Federal Funds.
H. Treasury Inflation-Protected Securities — The Fund may invest in Treasury Inflation-Protected Securities ("TIPS"), including structured bonds in which the principal amount is adjusted daily to keep pace with inflation, as measured by the U.S. Consumer Pricing Index for Urban Consumers. The adjustments to principal due to inflation/deflation are reflected as increases/decreases to interest income with a corresponding adjustment to cost. Such adjustments may have a significant impact on the Fund's distributions and may result in a return of capital to shareholders. The repayment of the original bond principal upon maturity is guaranteed by the full faith and credit of the U.S. Government.
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I. Structured Notes — The Fund also may invest a portion of its assets in structured notes and other types of structured investments, including commodity-linked notes. A structured note is a derivative security for which the amount of principal repayment and/or interest payments is based on the movement of one or more "factors." These factors include, but are not limited to, currency exchange rates, interest rates (such as the prime lending rate or LIBOR), referenced bonds, commodities or commodity indices, and stock indices. Other types of structured investments include interests in entities organized and operated for the purpose of restructuring the investment characteristics of underlying investment interests or securities. These investment entities may be structured as trusts or other types of pooled investment vehicles.
J. Federal Income Tax Policy — It is the Fund's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. The Fund files tax returns with the U.S. Internal Revenue Service, New York State and New York City. The Fund recognizes the tax effects of a tax position taken or expected to be taken in a tax return only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of the benefit. The difference between the tax benefit recognized in the financial statements for a tax position t aken and the tax benefit claimed in the income tax return is referred to as an unrecognized tax benefit. There are no unrecognized tax benefits in the accompanying financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statement of Operations. Each of the tax years filed in the four-year period ended July 31, 2010 remains subject to examination by taxing authorities.
K. Dividends and Distributions to Shareholders — Dividends and distributions to shareholders are recorded on the ex-dividend date.
L. 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.
M. Subsequent Events — The Fund considers events or transactions that occur after the date of the Statement of Assets and Liabilities but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements.
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N. 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
Fair value is defined as the price that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. GAAP utilizes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below.
• Level 1 — unadjusted quoted prices in active markets for identical investments
• Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.
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The following is the summary of the inputs used as of July 31, 2010 in valuing the Fund's investments carried at fair value:
FAIR VALUE MEASUREMENTS AT JULY 31, 2010 USING | |||||||||||||||||||
INVESTMENT TYPE | TOTAL | UNADJUSTED QUOTED PRICES IN ACTIVE MARKET FOR IDENTICAL INVESTMENTS (LEVEL 1) | OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | |||||||||||||||
Assets: | |||||||||||||||||||
Common Stocks | |||||||||||||||||||
Aerospace & Defense | $ | 5,413,106 | $ | 5,413,106 | — | — | |||||||||||||
Air Freight & Logistics | 1,324,608 | 1,324,608 | — | — | |||||||||||||||
Auto Components | 1,526,788 | 1,526,788 | — | — | |||||||||||||||
Automobiles | 5,228,390 | 5,228,390 | — | — | |||||||||||||||
Beverages | 6,889,064 | 6,889,064 | — | — | |||||||||||||||
Biotechnology | 1,264,474 | 1,264,474 | — | — | |||||||||||||||
Building Products | 905,377 | 905,377 | — | — | |||||||||||||||
Capital Markets | 5,151,626 | 5,151,626 | — | — | |||||||||||||||
Chemicals | 7,928,560 | 7,928,560 | — | — | |||||||||||||||
Commercial Banks | 23,194,835 | 23,194,835 | — | — | |||||||||||||||
Commercial Services & Supplies | 2,689,249 | 2,689,249 | — | — | |||||||||||||||
Communications Equipment | 4,650,925 | 4,650,925 | — | — | |||||||||||||||
Computers & Peripherals | 8,270,359 | 8,270,359 | — | — | |||||||||||||||
Construction & Engineering | 1,221,177 | 1,221,177 | — | — | |||||||||||||||
Construction Materials | 1,145,961 | 1,145,961 | — | — | |||||||||||||||
Consumer Finance | 1,135,355 | 1,135,355 | — | — | |||||||||||||||
Containers & Packaging | 159,463 | 159,463 | — | — | |||||||||||||||
Distributors | 1,194,957 | 1,194,957 | — | — | |||||||||||||||
Diversified Consumer Services | 78,421 | 78,421 | — | — | |||||||||||||||
Diversified Financial Services | 5,710,057 | 5,710,057 | — | — | |||||||||||||||
Diversified Telecommunication Services | 7,392,783 | 7,392,783 | — | — | |||||||||||||||
Electric Utilities | 6,425,851 | 6,425,851 | — | — | |||||||||||||||
Electrical Equipment | 3,431,024 | 3,431,024 | — | — | |||||||||||||||
Electronic Equipment, Instruments & Components | 3,345,493 | 3,345,493 | — | — | |||||||||||||||
Energy Equipment & Services | 3,398,528 | 3,398,528 | — | — | |||||||||||||||
Food & Staples Retailing | 5,870,476 | 5,870,476 | — | — | |||||||||||||||
Food Products | 9,594,590 | 9,594,590 | — | — | |||||||||||||||
Gas Utilities | 760,698 | 760,698 | — | — | |||||||||||||||
Health Care Equipment & Supplies | 2,993,678 | 2,993,678 | — | — | |||||||||||||||
Health Care Providers & Services | 1,739,066 | 1,739,066 | — | — | |||||||||||||||
Health Care Technology | 9,051 | 9,051 | — | — | |||||||||||||||
Hotels, Restaurants & Leisure | 5,535,210 | 5,535,210 | — | — | |||||||||||||||
Household Durables | 1,426,900 | 1,426,900 | — | — | |||||||||||||||
Household Products | 2,052,066 | 2,052,066 | — | — | |||||||||||||||
Independent Power Producers & Energy Traders | 252,155 | 252,155 | — | — | |||||||||||||||
Industrial Conglomerates | 5,071,246 | 5,071,246 | — | — |
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FAIR VALUE MEASUREMENTS AT JULY 31, 2010 USING | |||||||||||||||||||
INVESTMENT TYPE | TOTAL | UNADJUSTED QUOTED PRICES IN ACTIVE MARKET FOR IDENTICAL INVESTMENTS (LEVEL 1) | OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | |||||||||||||||
Information Technology Services | $ | 4,852,756 | $ | 4,852,756 | — | — | |||||||||||||
Insurance | 9,852,575 | 9,852,575 | — | — | |||||||||||||||
Internet & Catalog Retail | 1,063,153 | 1,063,153 | — | — | |||||||||||||||
Internet Software & Services | 2,493,003 | 2,493,003 | — | — | |||||||||||||||
Leisure Equipment & Products | 155,745 | 155,745 | — | — | |||||||||||||||
Life Sciences Tools & Services | 322,310 | 322,310 | — | — | |||||||||||||||
Machinery | 6,920,931 | 6,920,931 | — | — | |||||||||||||||
Marine | 643,933 | 643,933 | — | — | |||||||||||||||
Media | 4,198,734 | 4,198,734 | — | — | |||||||||||||||
Metals & Mining | 13,112,487 | 13,112,487 | — | — | |||||||||||||||
Multi-Utilities | 6,063,280 | 6,063,280 | — | — | |||||||||||||||
Multiline Retail | 2,329,813 | 2,329,813 | — | — | |||||||||||||||
Office Electronics | 930,704 | 930,704 | — | — | |||||||||||||||
Oil, Gas & Consumable Fuels | 25,182,221 | 25,182,221 | — | — | |||||||||||||||
Paper & Forest Products | 275,206 | 275,206 | — | — | |||||||||||||||
Personal Products | 2,417,128 | 2,417,128 | — | — | |||||||||||||||
Pharmaceuticals | 18,721,780 | 18,721,780 | — | — | |||||||||||||||
Professional Services | 374,930 | 374,930 | — | — | |||||||||||||||
Real Estate Investment Trusts (REITs) | 4,385,318 | 4,385,318 | — | — | |||||||||||||||
Real Estate Management & Development | 1,124,055 | 1,124,055 | — | — | |||||||||||||||
Road & Rail | 3,844,893 | 3,844,893 | — | — | |||||||||||||||
Semiconductors & Semiconductor Equipment | 4,990,655 | 4,990,655 | — | — | |||||||||||||||
Software | 6,303,170 | 6,303,170 | — | — | |||||||||||||||
Specialty Retail | 2,633,375 | 2,633,375 | — | — | |||||||||||||||
Textiles, Apparel & Luxury Goods | 2,242,782 | 2,242,782 | — | — | |||||||||||||||
Tobacco | 4,648,941 | 4,648,941 | — | — | |||||||||||||||
Trading Companies & Distributors | 1,431,850 | 1,431,850 | — | — | |||||||||||||||
Transportation Infrastructure | 328,775 | 328,775 | — | — | |||||||||||||||
Wireless Telecommunication Services | 3,890,217 | 3,890,217 | — | — | |||||||||||||||
Total Common Stocks | 280,116,287 | 280,116,287 | — | — | |||||||||||||||
Preferred Stocks | 5,392,029 | 5,392,029 | — | — | |||||||||||||||
Corporate Bonds | 46,653,622 | — | $ | 46,653,622 | — | ||||||||||||||
Commodity-Linked Securities | 20,514,363 | — | 20,514,363 | — | |||||||||||||||
Foreign Government Obligations | 68,387,302 | — | 68,387,302 | — | |||||||||||||||
Municipal Bonds | 747,751 | — | 747,751 | — | |||||||||||||||
U.S. Government Agencies - Mortgage-Backed Securities | 21,853,954 | — | 21,853,954 | — | |||||||||||||||
Asset-Backed Securities | 1,434,073 | — | 1,434,073 | — | |||||||||||||||
U.S. Government Agencies & Obligations | 25,190,836 | — | 25,190,836 | — |
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FAIR VALUE MEASUREMENTS AT JULY 31, 2010 USING | |||||||||||||||||||
INVESTMENT TYPE | TOTAL | UNADJUSTED QUOTED PRICES IN ACTIVE MARKET FOR IDENTICAL INVESTMENTS (LEVEL 1) | OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | |||||||||||||||
Short-Term Investments | |||||||||||||||||||
U.S. Government Obligation | $ | 12,767,551 | — | $ | 12,767,551 | — | |||||||||||||
Investment Company | 115,269,385 | $ | 115,269,385 | — | — | ||||||||||||||
Total Short-Term Investments | 128,036,936 | 115,269,385 | 12,767,551 | — | |||||||||||||||
Forward Foreign Currency Contracts | 2,695,941 | — | 2,695,941 | — | |||||||||||||||
Futures | 2,344,585 | 2,344,585 | — | — | |||||||||||||||
Credit Default Swaps | 3,772 | — | 3,772 | — | |||||||||||||||
Zero Coupon Swap Contracts | 152,018 | — | 152,018 | — | |||||||||||||||
Total | $ | 603,523,469 | $ | 403,122,286 | $ | 200,401,183 | — | ||||||||||||
Liabilities: | |||||||||||||||||||
Forward Foreign Currency Contracts | (508,706 | ) | — | (508,706 | ) | — | |||||||||||||
Futures | (1,100,193 | ) | (1,100,193 | ) | — | — | |||||||||||||
Credit Default Swaps | (55,420 | ) | — | (55,420 | ) | — | |||||||||||||
Interest Rate Swaps | (219,910 | ) | — | (219,910 | ) | — | |||||||||||||
Zero Coupon Swap Contracts | (1,502,224 | ) | — | (1,502,224 | ) | — | |||||||||||||
Total | $ | (3,386,453 | ) | $ | (1,100,193 | ) | $ | (2,286,260 | ) | — |
3. Derivative Financial Instruments
A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate or index.
The Fund may use derivative instruments for a variety of reasons, such as to attempt to protect the Fund against possible changes in the market value of its portfolio or to manage the Fund's foreign currency exposure or to generate potential gain. All of the Fund's portfolio holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation/depreciation in the Statement of Operations. Upon disposition, a realized gain or loss is recognized accordingly, except when taking delivery of a security underlying a contract. In these instances, the recognition of gain or loss is postponed until the disposal of the security underlying the contract. Risk may arise as a result of the potential inability of the counterparties to meet the terms of their contracts.
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Summarized below are specific types of derivative financial instruments used by the Fund.
Forward Foreign Currency Contracts The Fund may enter into forward contracts for many purposes, including to facilitate settlement of foreign currency denominated portfolio transactions or to manage foreign currency exposure associated with foreign currency denominated securities. Forward contracts involve elements of market risk in excess of the amounts reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rates underlying the forward contracts. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.
During the year ended July 31, 2010, the value of forward foreign currency contracts opened and closed were $749,049,860 and $443,629,222, respectively.
Futures To hedge against adverse interest rate, foreign currency and market risks, and for investment purposes, the Fund may purchase and sell interest rate, currency and index futures contracts ("futures contracts"). These futures contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the value of the underlying securities. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.
Transactions in futures contracts for the year ended July 31, 2010, were as follows:
NUMBER OF CONTRACTS | |||||||
Futures, outstanding at beginning of the period | 371 | ||||||
Futures opened | 17,300 | ||||||
Futures closed | (15,329 | ) | |||||
Futures, outstanding at end of the period | 2,342 |
Options For hedging and investment purposes, the Fund may engage in transactions in listed and over-the-counter options. Risks may arise from an imperfect correlation between the change in the market value of the securities held by the Fund and the price of options relating to the securities purchased or sold by the Fund and from the possible lack of a liquid secondary market for an option.
Transactions in options for the year ended July 31, 2010, were as follows:
NUMBER OF CONTRACTS | COST | ||||||||||
Options purchased, outstanding at beginning of period | 205 | $ | 158,656 | ||||||||
Options purchased | — | — | |||||||||
Options closed | (205 | ) | (158,656 | ) | |||||||
Options purchased, outstanding at end of period | — | — |
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Notes to Financial Statements n July 31, 2010 continued
NUMBER OF CONTRACTS | PREMIUM | ||||||||||
Options written, outstanding at beginning of period | 170 | $ | 20,200 | ||||||||
Options written | — | — | |||||||||
Options closed | (170 | ) | (20,200 | ) | |||||||
Options written, outstanding at end of period | — | — |
Swaps The Fund may enter into interest rate swaps, zero coupon swaps and asset swaps (where parties combine the purchase or sale of a bond/note with an interest rate swap) ("swaps") and may purchase or sell interest rate caps, floors and collars. The Fund expects to enter into these transactions primarily to manage interest rate risk, hedge portfolio positions and preserve a return or spread on a particular investment or portion of its portfolio. The Fund may also enter into these transactions to protect against any increase in the price of securities the Fund anticipates purchasing at a later date. Swap transactions are subject to market risk, risk of default by the other party to the transaction, risk of imperfect correlation and manager risk. Such risks may exceed the related amounts shown in the Statement of Assets and Liabilities.
The Fund may enter into credit default swaps for hedging purposes, to add leverage to its portfolio or to gain exposure to a credit in which the Fund may otherwise invest. Credit default swaps may involve greater risks than if the Fund had invested in the issuer directly. Credit default swaps are subject to general market risk, counterparty risk and credit risk. If the Fund is a buyer and no credit event occurs, it will lose its investment. In addition, if the Fund is a seller and a credit event occurs, the value of the referenced obligation received by the Fund coupled with the periodic payments previously received by the Fund may be less than the maximum payout amount the Fund pays to the buyer, resulting in a loss to the Fund.
Transactions in swap contracts for the year ended July 31, 2010, were as follows:
NOTIONAL AMOUNT (000'S) | NOTIONAL AMOUNT (000'S) | ||||||||||
Swaps, outstanding at beginning of period | — | $ | 31,723 | ||||||||
Swaps opened | EUR | 16,500 | 179,318 | ||||||||
Swaps closed | EUR | (16,500 | ) | (190,531 | ) | ||||||
Swaps, outstanding at end of period | — | $ | 20,510 |
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Notes to Financial Statements n July 31, 2010 continued
The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of July 31, 2010.
PRIMARY RISK EXPOSURE | ASSET DERIVATIVES AND LIABILITIES LOCATION | STATEMENT OF ASSETS FAIR VALUE | LIABILITY DERIVATIVES AND LIABILITIES LOCATION | STATEMENT OF ASSETS FAIR VALUE | |||||||||||||||
Interest Rate Risk | Variation margin | $ | 510,208 | † | Variation margin | $ | (844,191 | )† | |||||||||||
Unrealized appreciation on open swap contracts | 152,018 | Unrealized depreciation on open swap contracts | (1,722,134 | ) | |||||||||||||||
Credit Risk | Unrealized appreciation on open swap contracts | 3,772 | Unrealized depreciation on open swap contracts | (55,420 | ) | ||||||||||||||
Foreign Currency Risk | Unrealized appreciation on open forward foreign | Unrealized depreciation on open forward foreign | |||||||||||||||||
currency contracts | 2,695,941 | currency contracts | (508,706 | ) | |||||||||||||||
Equity Risk | Variation margin | 1,834,377 | † | Variation margin | (256,002 | )† | |||||||||||||
$ | 5,196,316 | $ | (3,386,453 | ) |
† Includes cumulative appreciation/depreciation of futures contracts as reported in the Portfolio of Investments. Only the current day's variation margin is reported within the Statement of Assets and Liabilities.
The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized gains (losses) by type of derivative contract for the year ended July 31, 2010.
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVE CONTRACTS
PRIMARY RISK EXPOSURE | FUTURES | SWAPS | OPTIONS WRITTEN | OPTIONS PURCHASED†† | FORWARD FOREIGN CURRENCY | ||||||||||||||||||
Interest Rate Risk | $ | (106,329 | ) | $ | 158,404 | $ | 17,624 | $ | (151,512 | ) | — | ||||||||||||
Credit Risk | — | 158,862 | — | — | — | ||||||||||||||||||
Foreign Currency Risk | — | — | — | — | $ | (692,317 | ) | ||||||||||||||||
Equity Risk | (4,985,399 | ) | 1,107,428 | — | — | — | |||||||||||||||||
Total | $ | (5,091,728 | ) | $ | 1,424,694 | $ | 17,624 | $ | (151,512 | ) | $ | (692,317 | ) |
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON DERIVATIVE CONTRACTS
PRIMARY RISK EXPOSURE | FUTURES | SWAPS | OPTIONS WRITTEN | OPTIONS PURCHASED†† | FORWARD FOREIGN CURRENCY | ||||||||||||||||||
Interest Rate Risk | $ | 1,385,219 | $ | (814,320 | ) | $ | (19,137 | ) | $ | 150,969 | — | ||||||||||||
Credit Risk | — | (160,591 | ) | — | — | — | |||||||||||||||||
Foreign Currency Risk | — | — | — | — | $ | 2,187,235 | |||||||||||||||||
Total | $ | 1,385,219 | $ | (974,911 | ) | $ | (19,137 | ) | $ | 150,969 | $ | 2,187,235 |
†† Amounts are included in Investments in the Statement of Operations
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Notes to Financial Statements n July 31, 2010 continued
4. Investment Advisory/Administration Agreements
Pursuant to an Investment Advisory Agreement with the Investment Adviser, the Fund pays an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 0.42% to the portion of the daily net assets not exceeding $1.5 billion and 0.395% to the portion of the daily net assets exceeding $1.5 billion.
Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the "Administrator"), an affiliate of the Investment Adviser, the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.08% to the Fund's daily net assets.
Under an agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.
5. Plan of Distribution
Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser and Administrator. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A — up to 0.25% of the average daily net assets of Class A shares; (ii) Class B — up to 1.0% of the average daily net assets of Class B shares; and (iii) Class C — up to 1.0% of the average daily net assets of Class C shares.
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 $12,050,316 at July 31, 2010.
In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Financial Advisors and other authorized financial representatives at the time of sale may be reimbursed in the subsequent calendar year. For the year ended July 31, 2010, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 1.0%, respectively.
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Notes to Financial Statements n July 31, 2010 continued
The Distributor has informed the Fund that for the year ended July 31, 2010, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $401, $61,098 and $5,527, respectively and received $159,869 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 Fund invests in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class, an open-end management investment company managed by an affiliate of the Investment Adviser. Investment advisory fees paid by the Fund are reduced by an amount equal to the advisory and administrative service fees paid by Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class with respect to assets invested by the Fund in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class. For the year ended July 31, 2010, advisory fees paid were reduced by $167,133 relating to the Fund's investment in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class. Income distributions earned by the Fund are included in "interest and dividends from affiliates" in the Statement of Operations and totaled $200,031 for the year ended July 31, 2010. During the year ended July 31, 2010, the cost of purchases and sales of investments in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class aggregated $399,426,327 and $384,191,014, respectively.
The cost of purchases and proceeds from sales/maturities/prepayments of portfolio securities, excluding short-term investments, for the year ended July 31, 2010 aggregated $835,689,675 and $922,788,348 respectively. Included in the aforementioned are purchases and sales/maturities/prepayments of U.S. Government securities of $105,897,554 and $115,994,808, respectively.
For the year ended July 31, 2010, the Fund incurred brokerage commissions of $104,178 and $21,482 with Morgan Stanley & Co., Inc. and Citigroup, Inc., respectively, both affiliates of the Investment Adviser, Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.
The Fund had the following transactions with Citigroup, Inc., an affiliate of the Investment Adviser, Administrator and Distributor for the year ended July 31, 2010:
PURCHASES | SALES | NET REALIZED GAIN | INCOME | VALUE | |||||||||||||||
$ | 9,014,780 | $ | 11,083,452 | $ | 1,417,848 | $ | 156,140 | $ | 3,066,164 |
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Notes to Financial Statements n July 31, 2010 continued
Morgan Stanley Services Company Inc., an affiliate of the Investment Adviser and Distributor, is the Fund's transfer agent.
The Fund has an unfunded noncontributory defined benefit pension plan covering certain independent Trustees of the Fund who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on factors which include years of service and compensation. The Trustees voted to close the plan to new participants and eliminate the future benefits growth due to increases to compensation after July 31, 2003. Aggregate pension costs for the year ended July 31, 2010, included in "trustees' fees and expenses" in the Statement of Operations amounted to $14,079. At July 31, 2010, the Fund had an accrued pension liability of $76,865, which is included in "accrued expenses and other payables" in the Statement of Assets and Liabilities.
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. Purposes of and Risks Relating to Certain Financial Instruments
Investments in structured notes involve risks including interest rate risk, credit risk and market risk. Changes in interest rates and movement of the factor may cause significant price fluctuations and changes in the reference factor may cause the interest rate on the structured note to be reduced to zero and any further changes in the reference factor may then reduce the principal amount payable on maturity. Holders of structured investments bear risks of the underlying investment and are subject to counterparty risk. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Fund's illiquidity to the extent that the Fund, at a particular point in time, may be unable to find qualified buyers for these securities.
The Fund may invest in mortgage securities, including securities issued by Federal National Mortgage Assoc. ("FNMA") and Federal Home Loan Mortgage Corp. ("FHLMC"). These are fixed income securities that derive their value from or represent interests in a pool of mortgages or mortgage securities. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of a mortgage backed security and could result in losses to the Fund. The risk of such defaults is generally higher in the case of mortgage pools that include subprime mortgages. Subprime mortgages refer to loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their mortgages. The securities held by the Fund are not backed by sub-prime mortgages.
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Notes to Financial Statements n July 31, 2010 continued
Additionally, securities issued by FNMA and FHLMC are not backed by or entitled to the full faith and credit of the United States; rather, they are supported by the right of the issuer to borrow from the Treasury.
The Federal Housing Finance Agency ("FHFA") serves as conservator of FNMA and FHLMC and the U.S. Department of the Treasury has agreed to provide capital as needed to ensure FNMA and FHLMC continue to provide liquidity to the housing and mortgage markets.
8. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:
FOR THE YEAR ENDED JULY 31, 2010 | FOR THE YEAR ENDED JULY 31, 2009 | ||||||||||||||||||
SHARES | AMOUNT | SHARES | AMOUNT | ||||||||||||||||
CLASS A SHARES | |||||||||||||||||||
Sold | 2,666,468 | $ | 45,553,257 | 5,247,103 | $ | 78,637,176 | |||||||||||||
Conversion from Class B | 213,970 | 3,668,628 | 390,429 | 6,033,096 | |||||||||||||||
Reinvestment of dividends and distributions | 433,251 | 7,428,957 | 638,591 | 9,532,408 | |||||||||||||||
Redeemed | (4,994,013 | ) | (85,274,484 | ) | (5,969,797 | ) | (89,588,301 | ) | |||||||||||
Net increase (decrease) — Class A | (1,680,324 | ) | (28,623,642 | ) | 306,326 | 4,614,379 | |||||||||||||
CLASS B SHARES | |||||||||||||||||||
Sold | 348,022 | 5,974,962 | 888,496 | 13,419,659 | |||||||||||||||
Conversion to Class A | (212,961 | ) | (3,668,628 | ) | (388,750 | ) | (6,033,096 | ) | |||||||||||
Reinvestment of dividends and distributions | 33,064 | 570,595 | 113,415 | 1,704,755 | |||||||||||||||
Redeemed | (2,389,608 | ) | (41,014,879 | ) | (4,756,180 | ) | (72,259,864 | ) | |||||||||||
Net decrease — Class B | (2,221,483 | ) | (38,137,950 | ) | (4,143,019 | ) | (63,168,546 | ) | |||||||||||
CLASS C SHARES | |||||||||||||||||||
Sold | 360,587 | 6,110,412 | 589,303 | 8,702,062 | |||||||||||||||
Reinvestment of dividends and distributions | 21,119 | 361,046 | 37,830 | 560,478 | |||||||||||||||
Redeemed | (467,106 | ) | (7,919,714 | ) | (621,245 | ) | (9,289,850 | ) | |||||||||||
Net increase (decrease) — Class C | (85,400 | ) | (1,448,256 | ) | 5,888 | (27,310 | ) | ||||||||||||
CLASS I SHARES | |||||||||||||||||||
Sold | 99,690 | 1,697,831 | 592,861 | 8,865,168 | |||||||||||||||
Reinvestment of dividends and distributions | 29,110 | 499,590 | 43,380 | 646,114 | |||||||||||||||
Redeemed | (272,343 | ) | (4,649,916 | ) | (518,580 | ) | (7,826,320 | ) | |||||||||||
Net increase (decrease) — Class I | (143,543 | ) | (2,452,495 | ) | 117,661 | 1,684,962 | |||||||||||||
Net decrease in Fund | (4,130,750 | ) | $ | (70,662,343 | ) | (3,713,144 | ) | $ | (56,896,515 | ) |
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Notes to Financial Statements n July 31, 2010 continued
9. Federal Income Tax Status
The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in-capital.
The tax character of distributions paid was as follows:
FOR THE YEAR ENDED JULY 31, 2010 | FOR THE YEAR ENDED JULY 31, 2009 | ||||||||||
Ordinary income | $ | 9,061,044 | $ | 10,686,977 | |||||||
Long-term capital gains | — | 2,020,523 | |||||||||
Total distributions | $ | 9,061,044 | $ | 12,707,500 |
As of July 31, 2010, the tax-basis components of accumulated earnings were as follows:
Undistributed ordinary income | $ | 62,109 | |||||||||
Undistributed long-term gains | 77,033,894 | ||||||||||
Net accumulated earnings | 77,096,003 | ||||||||||
Temporary differences | (86,146 | ) | |||||||||
Net unrealized appreciation | 9,973,122 | ||||||||||
Total accumulated earnings | $ | 86,982,979 |
During the year ended July 31, 2010, the Fund utilized its net capital loss carryforward of $21,028,207.
As of July 31, 2010, the Fund had temporary book/tax differences primarily attributable to mark-to-market of open futures and forward foreign currency exchange contracts and passive foreign investment companies, capital loss deferrals on straddles and wash sales and book amortization of premiums on debt securities.
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Notes to Financial Statements n July 31, 2010 continued
Permanent differences, primarily due to foreign currency losses, gains on swaps and tax adjustments on debt securities sold by the Fund, resulted in the following reclassifications among the Fund's components of net assets at July 31, 2010:
DIVIDENDS IN EXCESS OF NET INVESTMENT INCOME | ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN | PAID-IN-CAPITAL | |||||||||
$ | (3,650,534 | ) | $ | 3,687,771 | $ | (37,237 | ) |
10. New Accounting Pronouncement
On January 21, 2010, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2010-06. The ASU amends Accounting Standards Codification 820 to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques in Level 2 and Level 3 fair value measurements. The application of ASU 2010-06 is required for fiscal years and interim periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements, which are required for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The impact of this new guidance on the Fund's financial stat ements and disclosures, if any, is currently being assessed by the Fund's management.
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Financial Highlights
Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE YEAR ENDED JULY 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Class A Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.23 | $ | 18.07 | $ | 20.57 | $ | 19.74 | $ | 18.31 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income(1) | 0.21 | 0.25 | 0.45 | 0.50 | 0.34 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.17 | (1.74 | ) | (1.23 | ) | 2.07 | 1.40 | ||||||||||||||||
Total income (loss) from investment operations | 1.38 | (1.49 | ) | (0.78 | ) | 2.57 | 1.74 | ||||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||
Net investment income | (0.28 | ) | (0.30 | ) | (0.49 | ) | (0.51 | ) | (0.31 | ) | |||||||||||||
Net realized gain | – | (0.05 | ) | (1.23 | ) | (1.23 | ) | – | |||||||||||||||
Total dividends and distributions | (0.28 | ) | (0.35 | ) | (1.72 | ) | (1.74 | ) | (0.31 | ) | |||||||||||||
Net asset value, end of period | $ | 17.33 | $ | 16.23 | $ | 18.07 | $ | 20.57 | $ | 19.74 | |||||||||||||
Total Return(2) | 8.52 | % | (8.06 | )% | (4.27 | )% | 13.30 | % | 9.60 | % | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Total expenses | 0.91 | %(4) | 0.95 | %(4) | 0.90 | %(4) | 0.92 | %(4) | 0.93 | % | |||||||||||||
Net investment income | 1.24 | %(4) | 1.64 | %(4) | 2.30 | %(4) | 2.44 | %(4) | 1.78 | % | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.03 | % | 0.02 | % | 0.02 | % | 0.00 | %(5) | – | ||||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 459,742 | $ | 457,914 | $ | 504,350 | $ | 553,395 | $ | 483,553 | |||||||||||||
Portfolio turnover rate | 173 | % | 83 | % | 42 | % | 42 | % | 43 | % |
(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) Amount is less than 0.005%.
See Notes to Financial Statements
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Financial Highlights continued
FOR THE YEAR ENDED JULY 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Class B Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.30 | $ | 18.14 | $ | 20.63 | $ | 19.79 | $ | 18.36 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income(1) | 0.08 | 0.14 | 0.30 | 0.35 | 0.19 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.18 | (1.75 | ) | (1.23 | ) | 2.07 | 1.41 | ||||||||||||||||
Total income (loss) from investment operations | 1.26 | (1.61 | ) | (0.93 | ) | 2.42 | 1.60 | ||||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||
Net investment income | (0.14 | ) | (0.18 | ) | (0.33 | ) | (0.35 | ) | (0.17 | ) | |||||||||||||
Net realized gain | – | (0.05 | ) | (1.23 | ) | (1.23 | ) | – | |||||||||||||||
Total dividends and distributions | (0.14 | ) | (0.23 | ) | (1.56 | ) | (1.58 | ) | (0.17 | ) | |||||||||||||
Net asset value, end of period | $ | 17.42 | $ | 16.30 | $ | 18.14 | $ | 20.63 | $ | 19.79 | |||||||||||||
Total Return(2) | 7.74 | % | (8.77 | )% | (5.02 | )% | 12.50 | % | 8.72 | % | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Total expenses | 1.66 | %(4) | 1.70 | %(4) | 1.66 | %(4) | 1.67 | %(4) | 1.68 | % | |||||||||||||
Net investment income | 0.49 | %(4) | 0.89 | %(4) | 1.54 | %(4) | 1.69 | %(4) | 1.03 | % | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.03 | % | 0.02 | % | 0.02 | % | 0.00 | %(5) | – | ||||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 57,559 | $ | 90,105 | $ | 175,410 | $ | 276,329 | $ | 302,702 | |||||||||||||
Portfolio turnover rate | 173 | % | 83 | % | 42 | % | 42 | % | 43 | % |
(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) Amount is less than 0.005%.
See Notes to Financial Statements
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Financial Highlights continued
FOR THE YEAR ENDED JULY 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Class C Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.15 | $ | 17.99 | $ | 20.48 | $ | 19.66 | $ | 18.24 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income(1) | 0.08 | 0.14 | 0.30 | 0.35 | 0.20 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.16 | (1.74 | ) | (1.22 | ) | 2.06 | 1.40 | ||||||||||||||||
Total income (loss) from investment operations | 1.24 | (1.60 | ) | (0.92 | ) | 2.41 | 1.60 | ||||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||
Net investment income | (0.15 | ) | (0.19 | ) | (0.34 | ) | (0.36 | ) | (0.18 | ) | |||||||||||||
Net realized gain | – | (0.05 | ) | (1.23 | ) | (1.23 | ) | – | |||||||||||||||
Total dividends and distributions | (0.15 | ) | (0.24 | ) | (1.57 | ) | (1.59 | ) | (0.18 | ) | |||||||||||||
Net asset value, end of period | $ | 17.24 | $ | 16.15 | $ | 17.99 | $ | 20.48 | $ | 19.66 | |||||||||||||
Total Return(2) | 7.76 | % | (8.78 | )% | (4.94 | )% | 12.47 | % | 8.79 | % | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Total expenses | 1.66 | %(4) | 1.70 | %(4) | 1.64 | %(4)(5) | 1.64 | %(4) | 1.64 | % | |||||||||||||
Net investment income | 0.49 | %(4) | 0.89 | %(4) | 1.56 | %(4)(5) | 1.72 | %(4) | 1.07 | % | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.03 | % | 0.02 | % | 0.02 | % | 0.00 | %(6) | – | ||||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 41,439 | $ | 40,203 | $ | 44,664 | $ | 48,192 | $ | 39,887 | |||||||||||||
Portfolio turnover rate | 173 | % | 83 | % | 42 | % | 42 | % | 43 | % |
(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 its expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been 1.65% and 1.55%, respectively.
(6) Amount is less than 0.005%.
See Notes to Financial Statements
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Financial Highlights continued
FOR THE YEAR ENDED JULY 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Class I Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.25 | $ | 18.10 | $ | 20.59 | $ | 19.76 | $ | 18.34 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income(1) | 0.25 | 0.29 | 0.51 | 0.55 | 0.39 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.17 | (1.75 | ) | (1.23 | ) | 2.07 | 1.39 | ||||||||||||||||
Total income (loss) from investment operations | 1.42 | (1.46 | ) | (0.72 | ) | 2.62 | 1.78 | ||||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||
Net investment income | (0.32 | ) | (0.34 | ) | (0.54 | ) | (0.56 | ) | (0.36 | ) | |||||||||||||
Net realized gain | – | (0.05 | ) | (1.23 | ) | (1.23 | ) | – | |||||||||||||||
Total dividends and distributions | (0.32 | ) | (0.39 | ) | (1.77 | ) | (1.79 | ) | (0.36 | ) | |||||||||||||
Net asset value, end of period | $ | 17.35 | $ | 16.25 | $ | 18.10 | $ | 20.59 | $ | 19.76 | |||||||||||||
Total Return(2) | 8.84 | % | (7.86 | )% | (4.02 | )% | 13.62 | % | 9.80 | % | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Total expenses | 0.66 | %(4) | 0.70 | %(4) | 0.66 | %(4) | 0.67 | %(4) | 0.68 | % | |||||||||||||
Net investment income | 1.49 | %(4) | 1.89 | %(4) | 2.54 | %(4) | 2.69 | %(4) | 2.03 | % | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.03 | % | 0.02 | % | 0.02 | % | 0.00 | %(5) | – | ||||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 26,228 | $ | 26,901 | $ | 27,823 | $ | 66,753 | $ | 58,521 | |||||||||||||
Portfolio turnover rate | 173 | % | 83 | % | 42 | % | 42 | % | 43 | % |
(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) Amount is less than 0.005%.
See Notes to Financial Statements
86
Morgan Stanley Global Strategist Fund
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of
Morgan Stanley Global Strategist Fund:
We have audited the accompanying statement of assets and liabilities of Morgan Stanley Global Strategist Fund (formerly Morgan Stanley Strategist Fund) (the "Fund"), including the portfolio of investments, as of July 31, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2010, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Morgan Stanley Global Strategist Fund as of July 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
New York, New York
September 29, 2010
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An Important Notice Concerning Our U.S. Privacy Policy (unaudited)
We are required by federal law to provide you with a copy of our privacy policy ("Policy") annually.
This Policy applies to current and former individual clients of Morgan Stanley Distributors Inc., as well as current and former individual investors in Morgan Stanley mutual funds and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, 529 Educational Savings Accounts, accounts subject to the Uniform Gifts to Minors Act, or similar accounts. We may amend this Policy at any time, and will inform you of any changes to this Policy as required by law.
We Respect Your Privacy
We appreciate that you have provided us with your personal financial information and understand your concerns about safeguarding such information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Policy describes what non-public personal information we collect about you, how we collect it, when we may share it with others, and how others may use it. It discusses the steps you may take to limit our sharing of information about you with affiliated Morgan Stanley companies ("affiliated companies"). It also discloses how you may limit our affiliates' use of shared information for marketing purposes. Throughout this Policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."
1. What Personal Information Do We Collect About You?
To better serve you and manage our business, it is important that we collect and maintain accurate information about you. We obtain this information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our websites and from third parties and other sources.
For example:
• We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through application forms you submit to us.
• We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.
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An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
• 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.
• If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." "Cookies" recognize your computer each time you return to one of our sites, and help to improve our sites' content and personalize your experience on our sites by, for example, suggesting offerings that may interest you. Please consult the Terms of Use of these sites for more details on our use of cookies.
2. When Do We Disclose Personal Information We Collect About You?
To provide you with the products and services you request, to better serve you, to manage our business and as otherwise required or permitted by law, we may disclose personal information we collect about you to other affiliated companies and to non-affiliated third parties.
a. Information We Disclose to Our Affiliated Companies. In order to manage your account(s) effectively, including servicing and processing your transactions, to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law, we may disclose personal information about you to other affiliated companies. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.
b. Information We Disclose to Third Parties. We do not disclose personal information that we collect about you to non-affiliated third parties except to enable them to provide marketing services on our behalf, to perform joint marketing agreements with other financial institutions, and as otherwise required or permitted by law. For example, some instances where we may disclose information about you to third parties include: for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be required by law.
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An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
3. How Do We Protect the Security and Confidentiality of Personal Information We Collect About You?
We maintain physical, electronic and procedural security measures to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to confidentiality standards with respect to such information.
4. How Can You Limit Our Sharing of Certain Personal Information About You With Our Affiliated Companies for Eligibility Determination?
We respect your privacy and offer you choices as to whether we share with our affiliated companies personal information that was collected to determine your eligibility for products and services such as credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Please note that, even if you direct us not to share certain eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with those companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account. We may also share certain other types of personal information with affiliated companies — such as your name, address, telephone number, e-mail address and account number(s), and information about your transactions and experiences with us.
5. How Can You Limit the Use of Certain Personal Information About You by Our Affiliated Companies for Marketing?
You may limit our affiliated companies from using certain personal information about you that we may share with them for marketing their products or services to you. This information includes our transactions and other experiences with you such as your assets and account history. Please note that, even if you choose to limit our affiliated companies from using certain personal information about you that we may share with them for marketing their products and services to you, we may still share such personal information about you with them, including our transactions and experiences with you, for other purposes as permitted under applicable law.
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An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
6. How Can You Send Us an Opt-Out Instruction?
If you wish to limit our sharing of certain personal information about you with our affiliated companies for "eligibility purposes" and for our affiliated companies' use in marketing products and services to you as described in this notice, you may do so by:
• Calling us at (800) 869-6397
Monday–Friday between 8a.m. and 8p.m. (EST)
• Writing to us at the following address:
Morgan Stanley Privacy Department
Harborside Financial Center, Plaza Two, 3rd Floor
Jersey City, NJ 07311
If you choose to write to us, your written request should include: your name, address, telephone number and account number(s) to which the opt-out applies and should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account. Please allow approximately 30 days from our receipt of your opt-out for your instructions to become effective.
Please understand that if you opt-out, you and any joint account holders may not receive certain Morgan Stanley or our affiliated companies' products and services that could help you manage your financial resources and achieve your investment objectives.
If you have more than one account with us or our affiliates, you may receive multiple privacy policies from us, and would need to follow the directions stated in each particular policy for each account you have with us.
Special Notice to Residents of Vermont
This section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.
The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information
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An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
we collect about you with non-affiliated third parties or other affiliated companies unless you provide us with your written consent to share such information ("opt-in").
If you wish to receive offers for investment products and services offered by or through other affiliated companies, please notify us in writing at the following address:
Morgan Stanley Privacy Department
Harborside Financial Center, Plaza Two, 3rd Floor
Jersey City, NJ 07311
Your authorization should include: your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third-party.
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Trustee and Officer Information (unaudited)
Independent Trustees:
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Independent Trustee** | Other Directorships Held by Independent Trustee*** | ||||||||||||||||||
Frank L. Bowman (65) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since August 2006 | President, Stategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (since February 2007); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) through November 2008; retired as Admiral, U.S. Navy in January 2005 after serving over 8 years as Director of the Naval Nuclear Propulsion Program and Deputy Administrator — Naval Reactors in the National Nuclear Security Administration at the U.S. Department of Energy (1996-2004). Served as Chief Naval Personnel (July 1994-September 1996) Knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; Awarded the Officer de l'Orde National du Mérite by the French Government. | 162 | Director of the Armed Services YMCA of the USA; member, BP America External Advisory Council (energy); member, National Academy of Engineers. | ||||||||||||||||||
Michael Bozic (69) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since April 1994 | Private investor; Chairperson of the Compliance and Insurance Committee (since October 2006); Director or Trustee of the Retail Funds (since April 1994) and Institutional Funds (since July 2003); formerly, Chairperson of the Insurance Committee (July 2006-September 2006); Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck & Co. | 164 | Director of various business organizations. | ||||||||||||||||||
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Trustee and Officer Information (unaudited) continued
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Independent Trustee** | Other Directorships Held by Independent Trustee*** | ||||||||||||||||||
Kathleen A. Dennis (57) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since August 2006 | President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); Chairperson of the Money Market and Alternatives Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006). | 162 | Director of various non-profit organizations. | ||||||||||||||||||
Dr. Manuel H. Johnson (61) c/o Johnson Smick Group, Inc. 888 16th Street, N.W. Suite 740 Washington, D.C. 20006 | Trustee | Since July 1991 | Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Investment Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury. | 164 | Director of NVR, Inc. (home construction); Director of Evergreen Energy; Director of Greenwich Capital Holdings. | ||||||||||||||||||
Joseph J. Kearns (67) c/o Kearns & Associates LLC PMB754 23852 Pacific Coast Highway Malibu, CA 90265 | Trustee | Since August 1994 | President, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of the Institutional Funds (October 2001-July 2003 and since August 1994 for certain predecessor funds); CFO of the J. Paul Getty Trust. | 165 | Director of Electro Rent Corporation (equipment leasing) and The Ford Family Foundation. | ||||||||||||||||||
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Trustee and Officer Information (unaudited) continued
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Independent Trustee** | Other Directorships Held by Independent Trustee*** | ||||||||||||||||||
Michael F. Klein (51) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since August 2006 | Managing Director, Aetos Capital, LLC (since March 2000) and Co-President, Aetos Alternatives Management, LLC (since January 2004); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management, President, Morgan Stanley Institutional Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999). | 162 | Director of certain investment funds managed or sponsored by Aetos Capital, LLC. Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals). | ||||||||||||||||||
Michael E. Nugent (74) c/o Triumph Capital, L.P. 445 Park Avenue New York, NY 10022 | Chairperson of the Board and Trustee | Chairperson of the Boards since July 2006 and Trustee since July 1991 | General Partner, Triumph Capital, L.P. (private investment partnership); Chairperson of the Boards of the Retail Funds and Institutional Funds (since July 2006); Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2001); formerly, Chairperson of the Insurance Committee (until July 2006). | 164 | None. | ||||||||||||||||||
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Trustee and Officer Information (unaudited) continued
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Independent Trustee** | Other Directorships Held by Independent Trustee*** | ||||||||||||||||||
W. Allen Reed (63) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036 | Trustee | Since August 2006 | Chairperson of the Equity Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, President and CEO of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005). | 162 | Director of Temple-Inland Industries (packaging and forest products); Director of Legg Mason, Inc. and Director of the Auburn University Foundation; formerly, Director of iShares, Inc. (2001-2006). | ||||||||||||||||||
Fergus Reid (77) c/o Joe Pietryka, Inc. 85 Charles Colman Blvd. Pawling, NY 12564 | Trustee | Since June 1992 | Chairman, Joe Pietryka, Inc.; Chairperson of the Governance Committee and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since June 1992). | 165 | Trustee and Director of certain investment companies in the JPMorgan Funds complex managed by JP Morgan Investment Management Inc. | ||||||||||||||||||
Interested Trustee:
Name, Age and Address of Interested Trustee | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Interested Trustee** | Other Directorships Held by Interested Trustee*** | ||||||||||||||||||
James F. Higgins (62) c/o Morgan Stanley Services Company Inc. Harborside Financial Center Plaza Two Jersey City, NJ 07311 | Trustee | Since June 2000 | Director or Trustee of the Retail Funds (since June 2000) and Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000). | 163 | Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services). | ||||||||||||||||||
* This is the earliest date the Trustee began serving the funds advised by Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") (the "Retail Funds") or the funds advised by Morgan Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the "Institutional Funds").
** The Fund Complex includes all open-end and closed-end funds (including all of their portfolios) advised by the Investment Adviser and any funds that have an investment adviser that is an affiliated person of the Investment Adviser (including, but not limited to, Morgan Stanley Investment Management Inc.).
*** This includes any directorships at public companies and registered investment companies held by the Trustee at any time during the past five years.
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Executive Officers:
Name, Age and Address of Executive Officer | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | ||||||||||||
Randy Takian (36) 522 Fifth Avenue New York, NY 10036 | President and Principal Executive Officer | Since September 2008 | President and Principal Executive Officer (since September 2008) of funds in the Fund Complex; Managing Director and Head of Americas distribution, product and marketing for Morgan Stanley Investment Management (since December 2009). Head of Liquidity and Bank Trust business (since July 2008) and the Latin American franchise (since July 2008) at Morgan Stanley Investment Management. Managing Director, of the Investment Adviser and various entities affiliated with the Investment Adviser. Formerly President of the Investment Adviser (July 2008-July 2010), Director and/or Officer of the Investment Adviser and various entities affiliated with the Investment Adviser (September 2008-July 2010), Head of Retail and Intermediary business, Head of Strategy and Product Development for the Alternatives Group and Senior Loan Investment Management. Formerly with Bank of America (July 1996-March 2006), most recently as Head of the Strategy, Mergers and Acquis itions team for Global Wealth and Investment Management. | ||||||||||||
Mary Ann Picciotto (37) 522 Fifth Avenue New York, NY 10036 | Chief Compliance Officer | Since May 2010 | Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Chief Compliance Officer of the Retail Funds and Institutional Funds (since May 2010); Chief Compliance Officer of the Investment Adviser and Morgan Stanley Investment Management Inc. (since April 2007). | ||||||||||||
Stefanie V. Chang Yu (43) 522 Fifth Avenue New York, NY 10036 | Vice President | Since December 1997 | Managing Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Vice President of the Retail Funds (since July 2002) and Institutional Funds (since December 1997); Formerly, Secretary of the Investment Adviser and various entities affiliated with the Investment Adviser. | ||||||||||||
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Trustee and Officer Information (unaudited) continued
Name, Age and Address of Executive Officer | Position(s) Held with Registrant | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | ||||||||||||
Francis J. Smith (44) c/o Morgan Stanley Services Company Inc. Harborside Financial Center, Plaza Two, Jersey City, NJ 07311 | Treasurer and Principal Financial Officer | Treasurer since July 2003 and Principal Financial Officer since September 2002 | Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Treasurer and Principal Financial Officer of the Retail Funds (since July 2003) and Institutional Funds (since March 2010). | ||||||||||||
Mary E. Mullin (43) 522 Fifth Avenue New York, NY 10036 | Secretary | Since June 1999 | Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Secretary of the Retail Funds (since July 2003) and Institutional Funds (since June 1999). | ||||||||||||
* This is the earliest date the Officer began serving the Retail Funds or Institutional Funds.
2010 Federal Tax Notice (unaudited)
For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended July 31, 2010. For corporate shareholders, 66.56% of the dividends qualified for the dividend received deduction. 4.13% of the Fund's dividends were attributable to qualifying U.S. Government obligations. (Please consult your tax advisor to determine if any portion of the dividends you received is exempt from state income tax.)
For Federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended July 31, 2010. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Gro wth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of $7,244,392 as taxable at this lower rate.
In January, the Fund provides tax information to shareholders for the preceding calendar year.
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Trustees
Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid
Officers
Michael E. Nugent
Chairperson of the Board
Randy Takian
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.
Harborside Financial Center, Plaza Two
Jersey City, New Jersey 07311
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
Legal Counsel
Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
Counsel to the Independent Trustees
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
Investment Adviser
Morgan Stanley Investment Advisors Inc.
522 Fifth Avenue
New York, New York 10036
This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS.
This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing.
Morgan Stanley Distributors Inc., member FINRA.
© 2010 Morgan Stanley
INVESTMENT MANAGEMENT
Morgan Stanley
Global Strategist Fund
Annual Report
July 31, 2010
SRTANN
IU10-03182P-Y07/10
Item 2. Code of Ethics.
(a) The Fund has adopted a code of ethics (the “Code of Ethics”) that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Fund or a third party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f)
(1) The Fund’s Code of Ethics is attached hereto as Exhibit 12 A.
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Fund’s Board of Trustees has determined that Joseph J. Kearns, an “independent” Trustee, is an “audit committee financial expert” serving on its audit committee. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2010
|
| Registrant |
| Covered Entities(1) |
| ||
Audit Fees |
| $ | 46,750 |
| N/A |
| |
|
|
|
|
|
| ||
Non-Audit Fees |
|
|
|
|
| ||
Audit-Related Fees |
| $ | — | (2) | $ | 6,909,000 | (2) |
Tax Fees |
| $ | 6,113 | (3) | $ | 1,013,000 | (4) |
All Other Fees |
| $ |
|
| $ |
|
|
Total Non-Audit Fees |
| $ | 6,113 |
| $ | 7,922,000 |
|
|
|
|
|
|
| ||
Total |
| $ | 52,863 |
| $ | 7,922,000 |
|
2009
|
| Registrant |
| Covered Entities(1) |
| ||
Audit Fees |
| $ | 46,750 |
| N/A |
| |
|
|
|
|
|
| ||
Non-Audit Fees |
|
|
|
|
| ||
Audit-Related Fees |
| $ | — | (2) | $ | 6,418,000 | (2) |
Tax Fees |
| $ | 6,113 | (3) | $ | 881,000 | (4) |
All Other Fees |
| $ |
|
| $ |
| (5) |
Total Non-Audit Fees |
| $ | 6,113 |
| $ | 7,299,000 |
|
|
|
|
|
|
| ||
Total |
| $ | 52,863 |
| $ | 7,299,000 |
|
N/A- Not applicable, as not required by Item 4.
(1) Covered Entities include the Adviser (excluding sub-advisors) and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Registrant.
(2) Audit-Related Fees represent assurance and related services provided that are reasonably related to the performance of the audit of the financial statements of the Covered Entities’ and funds advised by the Adviser or its affiliates, specifically data verification and agreed-upon procedures related to asset securitizations and agreed-upon procedures engagements.
(3) Tax Fees represent tax compliance, tax planning and tax advice services provided in connection with the preparation and review of the Registrant’s tax returns.
(4) Tax Fees represent tax compliance, tax planning and tax advice services provided in connection with the review of Covered Entities’ tax returns.
(5) All other fees represent project management for future business applications and improving business and operational processes.
(e)(1) The audit committee’s pre-approval policies and procedures are as follows:
APPENDIX A
AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS
AS ADOPTED AND AMENDED JULY 23, 2004,(1)
1. Statement of Principles
The Audit Committee of the Board is required to review and, in its sole discretion, pre-approve all Covered Services to be provided by the Independent Auditors to the Fund and Covered Entities in order to assure that services performed by the Independent Auditors do not impair the auditor’s independence from the Fund.
The SEC has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the audit committee’s administration of the engagement of the independent auditor. The SEC’s rules establish two different approaches to pre-approving services, which the SEC considers to be equally valid. Proposed services either: may be pre-approved without consideration of specific case-by-case services by the Audit Committee (“general pre-approval”); or require the specific pre-approval of the Audit Committee or its delegate (“specific pre-approval”). The Audit Committee believes that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the Independent Auditors. As set forth in this Policy, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee (or by any member of the Audit Committee to which pre-approval authority has been delegated) if it is to be provided by the Independent Auditors. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit Committee.
The appendices to this Policy describe the Audit, Audit-related, Tax and All Other services that have the general pre-approval of the Audit Committee. The term of any general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers and provides a different period and states otherwise. The Audit Committee will annually review and pre-approve the services that may be provided by the Independent Auditors without obtaining specific pre-approval from the Audit Committee. The Audit Committee will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.
(1) This Audit Committee Audit and Non-Audit Services Pre-Approval Policy and Procedures (the “Policy”), adopted as of the date above, supersedes and replaces all prior versions that may have been adopted from time to time.
The purpose of this Policy is to set forth the policy and procedures by which the Audit Committee intends to fulfill its responsibilities. It does not delegate the Audit Committee’s responsibilities to pre-approve services performed by the Independent Auditors to management.
The Fund’s Independent Auditors have reviewed this Policy and believes that implementation of the Policy will not adversely affect the Independent Auditors’ independence.
2. Delegation
As provided in the Act and the SEC’s rules, the Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
3. Audit Services
The annual Audit services engagement terms and fees are subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by the Independent Auditors to be able to form an opinion on the Fund’s financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund structure or other items.
In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the Independent Auditors reasonably can provide. Other Audit services may include statutory audits and services associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1. All other Audit services not listed in Appendix B.1 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).
4. Audit-related Services
Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements and, to the extent they are Covered Services, the Covered Entities or that are traditionally performed by the Independent Auditors. Because the Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor and is consistent with the SEC’s rules on auditor independence, the Audit Committee may grant general pre-approval to Audit-related services. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters
not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix B.2. All other Audit-related services not listed in Appendix B.2 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).
5. Tax Services
The Audit Committee believes that the Independent Auditors can provide Tax services to the Fund and, to the extent they are Covered Services, the Covered Entities, such as tax compliance, tax planning and tax advice without impairing the auditor’s independence, and the SEC has stated that the Independent Auditors may provide such services.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved the Tax Services in Appendix B.3. All Tax services in Appendix B.3 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).
6. All Other Services
The Audit Committee believes, based on the SEC’s rules prohibiting the Independent Auditors from providing specific non-audit services, that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC’s rules on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix B.4. Permissible All Other services not listed in Appendix B.4 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).
7. Pre-Approval Fee Levels or Budgeted Amounts
Pre-approval fee levels or budgeted amounts for all services to be provided by the Independent Auditors will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services.
8. Procedures
All requests or applications for services to be provided by the Independent Auditors that do not require specific approval by the Audit Committee will be submitted to the Fund’s Chief Financial Officer and must include a detailed description of the services to be
rendered. The Fund’s Chief Financial Officer will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by the Independent Auditors. Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the Independent Auditors and the Fund’s Chief Financial Officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence.
The Audit Committee has designated the Fund’s Chief Financial Officer to monitor the performance of all services provided by the Independent Auditors and to determine whether such services are in compliance with this Policy. The Fund’s Chief Financial Officer will report to the Audit Committee on a periodic basis on the results of its monitoring. Both the Fund’s Chief Financial Officer and management will immediately report to the chairman of the Audit Committee any breach of this Policy that comes to the attention of the Fund’s Chief Financial Officer or any member of management.
9. Additional Requirements
The Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the Independent Auditors and to assure the auditor’s independence from the Fund, such as reviewing a formal written statement from the Independent Auditors delineating all relationships between the Independent Auditors and the Fund, consistent with Independence Standards Board No. 1, and discussing with the Independent Auditors its methods and procedures for ensuring independence.
10. Covered Entities
Covered Entities include the Fund’s investment adviser(s) and any entity controlling, controlled by or under common control with the Fund’s investment adviser(s) that provides ongoing services to the Fund(s). Beginning with non-audit service contracts entered into on or after May 6, 2003, the Fund’s audit committee must pre-approve non-audit services provided not only to the Fund but also to the Covered Entities if the engagements relate directly to the operations and financial reporting of the Fund. This list of Covered Entities would include:
Morgan Stanley Retail Funds
Morgan Stanley Investment Advisors Inc.
Morgan Stanley & Co. Incorporated
Morgan Stanley DW Inc.
Morgan Stanley Investment Management Inc.
Morgan Stanley Investment Management Limited
Morgan Stanley Investment Management Private Limited
Morgan Stanley Asset & Investment Trust Management Co., Limited
Morgan Stanley Investment Management Company
Morgan Stanley Services Company, Inc.
Morgan Stanley Distributors Inc.
Morgan Stanley Trust FSB
Morgan Stanley Institutional Funds
Morgan Stanley Investment Management Inc.
Morgan Stanley Investment Advisors Inc.
Morgan Stanley Investment Management Limited
Morgan Stanley Investment Management Private Limited
Morgan Stanley Asset & Investment Trust Management Co., Limited
Morgan Stanley Investment Management Company
Morgan Stanley & Co. Incorporated
Morgan Stanley Distribution, Inc.
Morgan Stanley AIP GP LP
Morgan Stanley Alternative Investment Partners LP
(e)(2) Beginning with non-audit service contracts entered into on or after May 6, 2003, the audit committee also is required to pre-approve services to Covered Entities to the extent that the services are determined to have a direct impact on the operations or financial reporting of the Registrant. 100% of such services were pre-approved by the audit committee pursuant to the Audit Committee’s pre-approval policies and procedures (attached hereto).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees has considered whether the provision of services other than audit services performed by the auditors to the Registrant and Covered Entities is compatible with maintaining the auditors’ independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
(a) The Fund has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are:
Joseph Kearns, Michael Nugent and Allen Reed.
(b) Not applicable.
Item 6. Schedule of Investments
(a) Refer to Item 1.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Applicable only to reports filed by closed-end funds.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Applicable only to reports filed by closed-end funds.
Item 9. Closed-End Fund Repurchases
Applicable only to reports filed by closed-end funds.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
(a) The Fund’s principal executive officer and principal financial officer have concluded that the Fund’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.
(b) There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
(a) The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto.
(b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Morgan Stanley Global Strategist Fund
/s/ Randy Takian |
|
Randy Takian |
|
Principal Executive Officer |
|
September 21, 2010 |
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Randy Takian |
|
Randy Takian |
|
Principal Executive Officer |
|
September 21, 2010 |
|
|
|
/s/ Francis Smith |
|
Francis Smith |
|
Principal Financial Officer |
|
September 21, 2010 |
|