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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Arthur Lev 522 Fifth Avenue, New York, New York 10036 | ||||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | 201-830-8894 |
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Date of fiscal year end: | July 31, 2012 |
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Date of reporting period: | Juley 31, 2012 |
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Item 1 - Report to Shareholders
Trustees
Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid
Officers
Michael E. Nugent
Chairperson of the Board
Arthur Lev
President and Principal Executive Officer
Mary Ann Picciotto
Chief Compliance Officer
Stefanie V. Chang Yu
Vice President
Francis J. Smith
Treasurer and Principal Financial Officer
Mary E. Mullin
Secretary
Transfer Agent
Morgan Stanley Services Company, Inc.
P.O. Box 219886
Kansas City, Missouri 64121
Custodian
State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
Independent Registered Public Accounting Firm
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
Legal Counsel
Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
Counsel to the Independent Trustees
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
Adviser
Morgan Stanley Investment Management Inc.
522 Fifth Avenue
New York, New York 10036
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. Please read the Prospectus carefully before investing.
Morgan Stanley Distribution Inc., member FINRA.
© 2012 Morgan Stanley
INVESTMENT MANAGEMENT
Morgan Stanley
Global Strategist Fund
Annual Report
July 31, 2012
SRTANN
IU12-01966P-Y07/12
Morgan Stanley Global Strategist Fund
Table of Contents
Welcome Shareholder | 3 | ||||||
Fund Report | 4 | ||||||
Performance Summary | 8 | ||||||
Expense Example | 10 | ||||||
Investment Advisory Agreement Approval | 11 | ||||||
Portfolio of Investments | 14 | ||||||
Statement of Assets and Liabilities | 58 | ||||||
Statement of Operations | 59 | ||||||
Statements of Changes in Net Assets | 60 | ||||||
Notes to Financial Statements | 61 | ||||||
Financial Highlights | 79 | ||||||
Report of Independent Registered Public Accounting Firm | 83 | ||||||
U.S. Privacy Policy | 84 | ||||||
Trustee and Officer Information | 89 | ||||||
2
Welcome Shareholder,
We are pleased to provide this annual report, in which you will learn how your investment in Morgan Stanley Global Strategist Fund performed during the latest twelve-month period. It includes an overview of the market conditions and discusses some of the factors that affected performance during the reporting period. In addition, the report contains financial statements and a list of portfolio holdings.
Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.
As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.
This material must be preceded or accompanied by a prospectus for the fund being offered.
Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the Fund will achieve its investment objective. The Fund is subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.
3
Fund Report (unaudited)
For the year ended July 31, 2012
Total Return for the 12 Months Ended July 31, 2012 | |||||||||||||||||||||||||||
Class A | Class B | Class C | Class I | MSCI All Country World Index1 | Barclays Capital U.S. Government/ Credit Index2 | Lipper Global Flexible Portfolio Funds Index3 | |||||||||||||||||||||
–0.88 | % | –1.61 | % | –1.55 | % | –0.63 | % | –3.64 | % | 8.45 | % | –2.04 | % |
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
Equity and fixed income market participants faced an inordinate number of macroeconomic risks during the past 12 months, any one of which held the potential to turn global economic growth into recession. The European debt crisis, the sharp drop in Chinese industrial production and commodity demand, uncertainty over the direction of U.S. fiscal and monetary policies, and finally, moderation in corporate profit growth around the world were all areas of intense investor focus. Meanwhile, the broader global deleveraging cycle, which entered its fourth year, showed few signs of abating — although market forces, especially in Europe, began to force policy makers to act, in an effort to develop options to "ring-fence" the eurozone periphery.
Global equities sold off sharply with the Morgan Stanley Capital International All Country World Index (the "Index") falling 21 percent from the first week of July to the first week of October 2011 (which would in fact mark the low for global equities for the period). The lack of a credible eurozone plan to stem the crisis in Greece signaled a more acute risk for Spain and Italy, as well as European banks across the continent. In a now familiar pattern, Greek, Spanish and Italian bonds and equity markets sold off, while investors sought the relative safety of the globe's most risk-averse investments.
From the October lows through the spring of 2012, global equities worked their way higher, in a choppy, low-conviction pattern of performance. While the Index did post a return of approximately 18 percent from October 4, 2011 to July 31, 2012, investors were forced to absorb two 10-plus percent corrections along the way.
Bond markets were similarly impacted by the global backdrop, as the "safest" sectors of fixed income (U.S. Treasuries, German bunds) rallied, while the bonds of weaker countries or corporate issuers perceived to be at risk suffered significant corrections. U.S. investors, eager to capture premium dividend yields, poured cash into both municipal bonds and high-yield credits. In general terms, broad fixed income indices rallied during the year, only showing signs of excessive "crowding-in" behavior or "over-bought" conditions during equity rallies (namely, in October 2011 and March 2012).
Performance Analysis
All share classes of Morgan Stanley Global Strategist Fund outperformed the MSCI All Country World Index (the "Index") and the Lipper Global Flexible Portfolio
4
Funds Index, and underperformed the Barclays Capital U.S. Government/Credit Index for the 12 months ended July 31, 2012, assuming no deduction of applicable sales charges.
The Fund's outperformance versus the all-equity Index can be attributed to asset allocation and tactical trades, as fixed income and cash holdings helped insulate the Fund from the broad equity market's more significant drawdowns, while positions in U.S. housing stocks (long) and iron ore, copper and luxury goods retailers (all short positions managed through swaps) also contributed to incremental returns. We believe that the Fund's outperformance versus the Lipper Global Flexible Portfolio Funds Index can be attributed to a slightly lower overall exposure to global equities, a slightly higher exposure to cash and the tactical trades cited above during the year, based on our analysis of average asset class exposures for peer funds throughout the year.
During the year, the Fund's asset allocation ranged from 59 to 63 percent in global equities, 27 to 31 percent in global fixed income, 2 to 4 percent in commodities, and 1 to 5 percent in cash. The Fund's asset allocation on July 31, 2012, which includes cash securities exposures, derivative instruments, and duration-adjusted fixed income values, stood at 64.1 percent global equities, 25.9 percent global fixed income, 2.5 percent diversified commodities and 7.5 percent cash (which includes both a strategic cash allocation of 5.2 percent and derivative collateral of 2.3 percent).
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 07/31/12 | |||||||
Deutsche Bank AG, Series 0003 | 2.7 | % | |||||
Japan Government Thirty Year Bond | 1.5 | ||||||
U.S. Treasury Bond | 1.4 | ||||||
U.S. Treasury Notes | 1.4 | ||||||
French Treasury Note BTAN | 1.3 | ||||||
Canadian Government Bond | 1.2 | ||||||
U.S. Treasury Notes | 1.2 | ||||||
Bundesobligation | 1.2 | ||||||
Japan Government Ten Year Bond | 1.1 | ||||||
United Kingdom Gilt | 1.1 | ||||||
PORTFOLIO COMPOSITION+ as of 07/31/12 | |||||||
Common Stocks | 45.8 | % | |||||
Sovereign | 20.1 | ||||||
Corporate Bonds | 9.6 | ||||||
Short-Term Investments | 9.3 | ||||||
U.S. Treasury Securities | 5.5 | ||||||
Agency Fixed Rate Mortgages | 4.9 | ||||||
Commodity Linked Security | 2.7 | ||||||
Investment Companies | 0.8 | ||||||
Asset-Backed Securities | 0.6 | ||||||
Commercial Mortgage Backed Securities | 0.3 | ||||||
Mortgages — Other | 0.2 | ||||||
Municipal Bonds | 0.2 | ||||||
Rights | 0.0 | ++ |
+ Does not include open long/short futures contracts with an underlying face amount of $226,035,053 with net unrealized appreciation of $1,336,260. Also does not include open swap
5
agreements with net unrealized appreciation of $1,134,352 and open foreign currency exchange contracts with net unrealized depreciation of $49,784.
++ Amount is less than 0.05%.
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.
Investment Strategy
The Fund's Adviser, Morgan Stanley Investment Management 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, floating rate securities, 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
6
quarters to shareholders, nor are the reports posted to the Morgan Stanley public web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You may also review and copy them at the SEC's public reference room in Washington, DC. Information on the operation of the SEC's public reference room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the public reference section of the SEC, Washington, DC 20549-1520.
Proxy Voting Policy and Procedures and Proxy Voting Record
You may obtain a copy of the Fund's Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 869-NEWS or by visiting the Mutual Fund Center on our web site at www.morganstanley.com. It is also available on the SEC's web site at http://www.sec.gov.
You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting the Mutual Fund Center on our web site at www.morganstanley.com. This information is also available on the SEC's web site at http://www.sec.gov.
Householding Notice
To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling (800) 869-NEWS, 8:00 a.m. to 8:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.
7
Performance Summary (unaudited)
Performance of a $10,000 Investment—Class B
8
Average Annual Total Returns—Period Ended July 31, 2012 (unaudited) | |||||||||||||||||||
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 | –0.88 –6.11 5 | %4 | –1.61 –6.19 5 | %4 | –1.55 –2.47 5 | %4 | –0.63 — | %4 | |||||||||||
5 Years | 1.38 4 0.29 5 | 0.62 4 0.33 5 | 0.64 4 0.64 5 | 1.63 4 — | |||||||||||||||
10 Years | 6.49 4 5.92 5 | 5.85 4 5.85 5 | 5.69 4 5.69 5 | 6.74 4 — | |||||||||||||||
Since Inception | 5.16 4 4.79 5 | 8.08 4 8.08 5 | 4.37 4 4.37 5 | 5.41 4 — |
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 performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends.The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.
(2) The 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 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 Lipper Global Flexible Portfolio Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global 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 Global Flexible Portfolio Funds classification as of the date of this report.
(4) Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges.
(5) 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, 2012.
9
Expense Example (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and (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 02/01/12 – 07/31/12.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). 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@ | |||||||||||||
02/01/12 | 07/31/12 | 02/01/12 – 07/31/12 | |||||||||||||
Class A | |||||||||||||||
Actual (1.80% return) | $ | 1,000.00 | $ | 1,018.00 | $ | 5.37 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,019.54 | $ | 5.37 | |||||||||
Class B | |||||||||||||||
Actual (1.45% return) | $ | 1,000.00 | $ | 1,014.50 | $ | 9.12 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,015.81 | $ | 9.12 | |||||||||
Class C | |||||||||||||||
Actual (1.41% return) | $ | 1,000.00 | $ | 1,014.10 | $ | 8.81 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,016.11 | $ | 8.82 | |||||||||
Class I | |||||||||||||||
Actual (1.93% return) | $ | 1,000.00 | $ | 1,019.30 | $ | 4.12 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,020.79 | $ | 4.12 |
@ Expenses are equal to the Fund's annualized expense ratios of 1.07%, 1.82%, 1.76% and 0.82% for Class A, Class B, Class C and Class I shares, respectively, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). If the Fund had borne all of its expenses, the annualized expense ratios would have been 1.08%, 1.83%, 1.77% and 0.83% for Class A, Class B, Class C and Class I shares, respectively.
10
Investment Advisory Agreement Approval (unaudited)
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, 2011, or since inception, 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 one- and five-year periods but below its peer group average for the three-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or 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.
11
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.
12
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.
13
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012
NUMBER OF SHARES | VALUE | ||||||||||
Common Stocks (46.1%) | |||||||||||
Australia (2.4%) | |||||||||||
Air Freight & Logistics | |||||||||||
9,328 | Toll Holdings Ltd. | $ | 39,407 | ||||||||
Beverages | |||||||||||
7,069 | Coca-Cola Amatil Ltd. | 103,483 | |||||||||
11,468 | Treasury Wine Estates Ltd. | 53,269 | |||||||||
156,752 | |||||||||||
Biotechnology | |||||||||||
6,876 | CSL Ltd. | 308,550 | |||||||||
Capital Markets | |||||||||||
4,098 | Macquarie Group Ltd. | 107,579 | |||||||||
Chemicals | |||||||||||
6,321 | DuluxGroup Ltd. | 20,460 | |||||||||
20,816 | Incitec Pivot Ltd. | 68,033 | |||||||||
5,073 | Orica Ltd. | 132,694 | |||||||||
221,187 | |||||||||||
Commercial Banks | |||||||||||
35,934 | Australia & New Zealand Banking Group Ltd. | 888,942 | |||||||||
17,491 | Commonwealth Bank of Australia | 1,057,476 | |||||||||
30,317 | National Australia Bank Ltd. | 795,867 | |||||||||
34,431 | Westpac Banking Corp. | 839,458 | |||||||||
3,581,743 | |||||||||||
Commercial Services & Supplies | |||||||||||
17,604 | Brambles Ltd. | 115,255 | |||||||||
Construction & Engineering | |||||||||||
2,027 | Leighton Holdings Ltd. | 36,447 | |||||||||
Containers & Packaging | |||||||||||
15,296 | Amcor Ltd. | 121,202 | |||||||||
Diversified Financial Services | |||||||||||
2,386 | ASX Ltd. | 78,282 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
60,099 | Telstra Corp, Ltd. | $ | 252,632 | ||||||||
Energy Equipment & Services | |||||||||||
2,456 | WorleyParsons Ltd. | 67,339 | |||||||||
Food & Staples Retailing | |||||||||||
12,676 | Wesfarmers Ltd. | 434,139 | |||||||||
2,388 | Wesfarmers Ltd. (PPS) | 85,149 | |||||||||
15,531 | Woolworths Ltd. | 466,306 | |||||||||
985,594 | |||||||||||
Health Care Equipment & Supplies | |||||||||||
773 | Cochlear Ltd. | 53,566 | |||||||||
Health Care Providers & Services | |||||||||||
4,764 | Sonic Healthcare Ltd. | 63,332 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
8,910 | Crown Ltd. | 79,122 | |||||||||
10,695 | Echo Entertainment Group Ltd. | 46,981 | |||||||||
9,646 | TABCORP Holdings Ltd. | 32,945 | |||||||||
159,048 | |||||||||||
Information Technology Services | |||||||||||
6,506 | Computershare Ltd. | 52,441 | |||||||||
Insurance | |||||||||||
43,381 | AMP Ltd. | 182,812 | |||||||||
30,701 | Insurance Australia Group Ltd. | 121,634 | |||||||||
18,269 | QBE Insurance Group Ltd. | 269,553 | |||||||||
15,816 | Suncorp Group Ltd. | 141,113 | |||||||||
715,112 |
See Notes to Financial Statements
14
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Media | |||||||||||
39,248 | Fairfax Media Ltd. | $ | 21,654 | ||||||||
Metals & Mining | |||||||||||
44,558 | Alumina Ltd. | 31,842 | |||||||||
17,194 | Arrium Ltd. | 13,010 | |||||||||
40,502 | BHP Billiton Ltd. | 1,359,054 | |||||||||
26,754 | BlueScope Steel Ltd. (a) | 7,451 | |||||||||
16,804 | Fortescue Metals Group Ltd. | 72,933 | |||||||||
5,772 | Newcrest Mining Ltd. | 142,546 | |||||||||
5,339 | Rio Tinto Ltd. | 298,492 | |||||||||
1,925,328 | |||||||||||
Multi-Utilities | |||||||||||
5,838 | AGL Energy Ltd. | 96,322 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
13,338 | Origin Energy Ltd. | 165,540 | |||||||||
11,359 | Santos Ltd. | 128,325 | |||||||||
7,458 | Woodside Petroleum Ltd. | 264,519 | |||||||||
558,384 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
65,324 | Dexus Property Group REIT (Stapled Securities) (b) | 67,963 | |||||||||
16,130 | Goodman Group REIT (Stapled Securities) (b) | 63,736 | |||||||||
26,937 | GPT Group REIT (Stapled Securities) (b) | 97,097 | |||||||||
38,679 | Mirvac Group REIT (Stapled Securities) (b)(c) | 55,687 | |||||||||
28,561 | Stockland REIT (Stapled Securities) (b)(c) | 100,549 |
NUMBER OF SHARES | VALUE | ||||||||||
25,964 | Westfield Group REIT (Stapled Securities) (b)(c) | $ | 272,856 | ||||||||
25,951 | Westfield Retail Trust REIT | 83,179 | |||||||||
741,067 | |||||||||||
Road & Rail | |||||||||||
12,104 | Asciano Ltd. | 55,205 | |||||||||
Transportation Infrastructure | |||||||||||
16,094 | Transurban Group (Stapled Securities) (b) | 103,509 | |||||||||
Total Australia | 10,616,937 | ||||||||||
Austria (0.0%) | |||||||||||
Metals & Mining | |||||||||||
1,329 | Voestalpine AG | 36,220 | |||||||||
Real Estate Management & Development | |||||||||||
3,664 | Immofinanz AG (a) | 11,996 | |||||||||
Total Austria | 48,216 | ||||||||||
Belgium (0.2%) | |||||||||||
Beverages | |||||||||||
7,130 | Anheuser-Busch InBev N.V. | 562,948 | |||||||||
Chemicals | |||||||||||
1,567 | Umicore SA | 69,506 | |||||||||
Commercial Banks | |||||||||||
3,024 | KBC Groep N.V. | 63,401 | |||||||||
Diversified Financial Services | |||||||||||
1,540 | Groupe Bruxelles Lambert SA | 100,899 |
See Notes to Financial Statements
15
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Food & Staples Retailing | |||||||||||
905 | Colruyt SA | $ | 41,133 | ||||||||
3,434 | Delhaize Group SA | 122,974 | |||||||||
164,107 | |||||||||||
Insurance | |||||||||||
30,051 | Ageas | 59,936 | |||||||||
Total Belgium | 1,020,797 | ||||||||||
Canada (2.9%) | |||||||||||
Aerospace & Defense | |||||||||||
19,400 | Bombardier, Inc. | 69,835 | |||||||||
Auto Components | |||||||||||
3,400 | Magna International, Inc. | 136,292 | |||||||||
Capital Markets | |||||||||||
2,800 | IGM Financial, Inc. | 109,699 | |||||||||
Chemicals | |||||||||||
2,200 | Agrium, Inc. | 209,262 | |||||||||
11,400 | Potash Corp. of Saskatchewan, Inc. | 504,721 | |||||||||
713,983 | |||||||||||
Commercial Banks | |||||||||||
7,100 | Bank of Montreal | 406,665 | |||||||||
12,400 | Bank of Nova Scotia | 647,295 | |||||||||
5,200 | Canadian Imperial Bank of Commerce | 380,336 | |||||||||
2,100 | National Bank of Canada | 156,382 | |||||||||
17,100 | Royal Bank of Canada | 876,101 | |||||||||
11,300 | Toronto-Dominion Bank (The) | 889,262 | |||||||||
3,356,041 | |||||||||||
Communications Equipment | |||||||||||
6,300 | Research In Motion Ltd. (a) | 45,105 | |||||||||
Construction & Engineering | |||||||||||
2,800 | SNC-Lavalin Group, Inc. | 110,453 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
7,200 | BCE, Inc. | $ | 306,423 | ||||||||
Electric Utilities | |||||||||||
2,000 | Fortis, Inc. | 66,889 | |||||||||
Food & Staples Retailing | |||||||||||
3,500 | Shoppers Drug Mart Corp. | 144,314 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
4,300 | Tim Hortons, Inc. | 228,667 | |||||||||
Independent Power Producers & Energy Traders | |||||||||||
3,400 | TransAlta Corp. | 53,059 | |||||||||
Insurance | |||||||||||
300 | Fairfax Financial Holdings Ltd. | 112,928 | |||||||||
6,200 | Great-West Lifeco, Inc. | 134,034 | |||||||||
1,900 | Intact Financial Corp. | 122,202 | |||||||||
24,700 | Manulife Financial Corp. | 265,263 | |||||||||
5,500 | Power Corp. of Canada | 126,360 | |||||||||
5,200 | Power Financial Corp. | 128,178 | |||||||||
8,000 | Sun Life Financial, Inc. | 173,745 | |||||||||
1,062,710 | |||||||||||
Media | |||||||||||
5,200 | Shaw Communications, Inc. | 101,475 | |||||||||
5,100 | Thomson Reuters Corp. | 144,632 | |||||||||
246,107 | |||||||||||
Metals & Mining | |||||||||||
2,300 | Agnico-Eagle Mines Ltd. | 100,935 | |||||||||
13,100 | Barrick Gold Corp. | 431,202 | |||||||||
7,400 | Eldorado Gold Corp. | 80,062 |
See Notes to Financial Statements
16
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
7,000 | First Quantum Minerals Ltd. | $ | 127,108 | ||||||||
9,800 | Goldcorp, Inc. | 353,752 | |||||||||
11,900 | Kinross Gold Corp. | 98,889 | |||||||||
4,800 | Silver Wheaton Corp. | 132,295 | |||||||||
6,500 | Teck Resources Ltd. | 182,325 | |||||||||
10,100 | Yamana Gold, Inc. | 149,760 | |||||||||
1,656,328 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
5,600 | Cameco Corp. | 117,266 | |||||||||
14,400 | Canadian Natural Resources Ltd. | 392,721 | |||||||||
3,500 | Canadian Oil Sands Ltd. | 70,429 | |||||||||
10,000 | Cenovus Energy, Inc. | 305,629 | |||||||||
2,700 | Crescent Point Energy Corp. | 107,316 | |||||||||
11,600 | Enbridge, Inc. | 474,595 | |||||||||
10,500 | Encana Corp. | 233,903 | |||||||||
3,600 | Husky Energy, Inc. | 89,421 | |||||||||
3,500 | Imperial Oil Ltd. | 149,933 | |||||||||
8,200 | Nexen, Inc. | 208,342 | |||||||||
5,700 | Penn West Petroleum Ltd. | 77,754 | |||||||||
1,400 | Petrobank Energy & Resources Ltd. (a) | 16,264 | |||||||||
859 | Petrominerales Ltd. | 7,949 | |||||||||
19,800 | Suncor Energy, Inc. | 605,343 | |||||||||
14,200 | Talisman Energy, Inc. | 175,580 | |||||||||
8,800 | TransCanada Corp. | 400,754 | |||||||||
3,433,199 | |||||||||||
Real Estate Management & Development | |||||||||||
7,500 | Brookfield Asset Management, Inc., Class A | 254,425 | |||||||||
5,800 | Brookfield Office Properties, Inc. | 99,187 | |||||||||
353,612 |
NUMBER OF SHARES | VALUE | ||||||||||
Road & Rail | |||||||||||
6,100 | Canadian National Railway Co. | $ | 538,134 | ||||||||
2,300 | Canadian Pacific Railway Ltd. | 186,940 | |||||||||
725,074 | |||||||||||
Wireless Telecommunication Services | |||||||||||
5,400 | Rogers Communications, Inc. | 211,671 | |||||||||
Total Canada | 13,029,461 | ||||||||||
Chile (0.0%) | |||||||||||
Metals & Mining | |||||||||||
2,716 | Antofagasta PLC | 45,649 | |||||||||
China (1.4%) | |||||||||||
Insurance | |||||||||||
67,200 | AIA Group Ltd. (d) | 236,140 | |||||||||
Real Estate Management & Development | |||||||||||
241,263 | Agile Property Holdings Ltd. (d) | 287,162 | |||||||||
569,915 | China Overseas Land & Investment Ltd. (d) | 1,347,859 | |||||||||
408,070 | China Resources Land Ltd. (d) | 828,275 | |||||||||
1,205,674 | Country Garden Holdings Co., Ltd. (a)(d) | 457,101 | |||||||||
1,042,249 | Evergrande Real Estate Group Ltd. (d) | 486,536 | |||||||||
628,045 | Franshion Properties China Ltd. (d) | 194,373 | |||||||||
112,043 | Greentown China Holdings Ltd. (d) | 118,332 | |||||||||
226,837 | Guangzhou R&F Properties Co., Ltd., H Shares (d) | 289,298 |
See Notes to Financial Statements
17
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
213,784 | KWG Property Holding Ltd. (d) | $ | 118,544 | ||||||||
359,721 | Longfor Properties Co., Ltd. (d) | 530,673 | |||||||||
251,479 | Poly Hong Kong Investments Ltd. (a)(d) | 131,987 | |||||||||
1,567,701 | Renhe Commercial Holdings Co., Ltd. (a)(d) | 64,692 | |||||||||
243,052 | Shimao Property Holdings Ltd. (d) | 349,156 | |||||||||
405,126 | Shui On Land Ltd. (d) | 167,176 | |||||||||
395,682 | Sino-Ocean Land Holdings Ltd. (d) | 193,384 | |||||||||
363,620 | Soho China Ltd. (d) | 270,557 | |||||||||
646,106 | Yuexiu Property Co., Ltd. (d) | 146,640 | |||||||||
5,981,745 | |||||||||||
Total China | 6,217,885 | ||||||||||
Denmark (0.2%) | |||||||||||
Chemicals | |||||||||||
2,530 | Novozymes A/S, Series B | 62,454 | |||||||||
Commercial Banks | |||||||||||
5,744 | Danske Bank A/S (a) | 85,474 | |||||||||
Electrical Equipment | |||||||||||
3,486 | Vestas Wind Systems A/S (a) | 16,692 | |||||||||
Marine | |||||||||||
5 | AP Moller - Maersk A/S | 32,952 | |||||||||
10 | AP Moller - Maersk A/S, Series B | 69,377 | |||||||||
102,329 | |||||||||||
Pharmaceuticals | |||||||||||
3,710 | Novo Nordisk A/S, Series B | 573,232 |
NUMBER OF SHARES | VALUE | ||||||||||
Road & Rail | |||||||||||
3,265 | DSV A/S | $ | 70,124 | ||||||||
Total Denmark | 910,305 | ||||||||||
Finland (0.1%) | |||||||||||
Auto Components | |||||||||||
1,401 | Nokian Renkaat Oyj | 56,006 | |||||||||
Communications Equipment | |||||||||||
36,768 | Nokia Oyj | 88,217 | |||||||||
Electric Utilities | |||||||||||
6,439 | Fortum Oyj | 107,905 | |||||||||
Insurance | |||||||||||
3,785 | Sampo Oyj, Class A | 100,593 | |||||||||
Machinery | |||||||||||
2,681 | Kone Oyj, Class B | 166,584 | |||||||||
Paper & Forest Products | |||||||||||
12,324 | UPM-Kymmene Oyj | 132,225 | |||||||||
Total Finland | 651,530 | ||||||||||
France (1.9%) | |||||||||||
Aerospace & Defense | |||||||||||
1,262 | Thales SA | 39,572 | |||||||||
Auto Components | |||||||||||
1,960 | Cie Generale des Etablissements Michelin, Class B | 133,650 | |||||||||
Automobiles | |||||||||||
1,221 | Peugeot SA (a) | 9,514 | |||||||||
1,898 | Renault SA | 83,113 | |||||||||
92,627 | |||||||||||
Beverages | |||||||||||
1,960 | Pernod-Ricard SA | 211,038 | |||||||||
Building Products | |||||||||||
2,371 | Cie de St-Gobain | 71,648 | |||||||||
Chemicals | |||||||||||
2,949 | Air Liquide SA | 330,116 |
See Notes to Financial Statements
18
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Commercial Banks | |||||||||||
10,548 | BNP Paribas SA | $ | 391,554 | ||||||||
8,087 | Credit Agricole SA (a) | 34,736 | |||||||||
7,308 | Societe Generale SA (a) | 161,942 | |||||||||
588,232 | |||||||||||
Commercial Services & Supplies | |||||||||||
1,823 | Edenred | 48,158 | |||||||||
Communications Equipment | |||||||||||
32,733 | Alcatel-Lucent (a) | 36,247 | |||||||||
Construction & Engineering | |||||||||||
2,699 | Bouygues SA | 68,160 | |||||||||
5,057 | Vinci SA | 214,975 | |||||||||
283,135 | |||||||||||
Construction Materials | |||||||||||
4,727 | Lafarge SA | 217,697 | |||||||||
Diversified Telecommunication Services | |||||||||||
20,519 | France Telecom SA | 274,935 | |||||||||
17,156 | Vivendi SA | 326,341 | |||||||||
601,276 | |||||||||||
Electric Utilities | |||||||||||
3,256 | Electricite de France SA | 67,584 | |||||||||
Electrical Equipment | |||||||||||
4,351 | Alstom SA | 144,758 | |||||||||
Energy Equipment & Services | |||||||||||
1,748 | Cie Generale de Geophysique- Veritas (a) | 50,359 | |||||||||
986 | Technip SA | 103,945 | |||||||||
154,304 | |||||||||||
Food & Staples Retailing | |||||||||||
5,854 | Carrefour SA | 105,052 |
NUMBER OF SHARES | VALUE | ||||||||||
Food Products | |||||||||||
7,049 | Danone SA | $ | 429,144 | ||||||||
Health Care Equipment & Supplies | |||||||||||
1,615 | Cie Generale d'Optique Essilor International SA | 140,766 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
1,422 | Accor SA | 47,354 | |||||||||
1,292 | Sodexo | 97,654 | |||||||||
145,008 | |||||||||||
Information Technology Services | |||||||||||
1,918 | Cap Gemini SA | 70,231 | |||||||||
Insurance | |||||||||||
17,841 | AXA SA | 218,418 | |||||||||
Machinery | |||||||||||
2,554 | Vallourec SA | 106,089 | |||||||||
Media | |||||||||||
799 | Eutelsat Communications SA | 24,164 | |||||||||
651 | JCDecaux SA | 13,176 | |||||||||
1,047 | Publicis Groupe SA | 51,665 | |||||||||
2,416 | SES SA | 58,175 | |||||||||
1,176 | Societe Television Francaise 1 | 9,929 | |||||||||
157,109 | |||||||||||
Multi-Utilities | |||||||||||
12,930 | GDF Suez | 289,306 | |||||||||
4,193 | Suez Environnement Co. | 46,107 | |||||||||
5,613 | Veolia Environnement SA | 63,365 | |||||||||
398,778 | |||||||||||
Multi-line Retail | |||||||||||
1,434 | PPR | 215,256 |
See Notes to Financial Statements
19
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
22,144 | Total SA | $ | 1,024,585 | ||||||||
Personal Products | |||||||||||
2,543 | L'Oreal SA | 305,444 | |||||||||
Pharmaceuticals | |||||||||||
12,246 | Sanofi | 1,001,535 | |||||||||
Professional Services | |||||||||||
581 | Bureau Veritas SA | 51,384 | |||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
86 | ICADE REIT | 6,599 | |||||||||
1,708 | Unibail-Rodamco SE REIT | 328,678 | |||||||||
335,277 | |||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
750 | Christian Dior SA | 103,861 | |||||||||
2,427 | LVMH Moet Hennessy Louis Vuitton SA | 365,957 | |||||||||
469,818 | |||||||||||
Transportation Infrastructure | |||||||||||
480 | Aeroports de Paris (ADP) | 37,254 | |||||||||
7,563 | Groupe Eurotunnel SA | 53,879 | |||||||||
91,133 | |||||||||||
Total France | 8,285,069 | ||||||||||
Germany (1.9%) | |||||||||||
Air Freight & Logistics | |||||||||||
6,209 | Deutsche Post AG (Registered) | 111,843 | |||||||||
Airlines | |||||||||||
4,169 | Deutsche Lufthansa AG (Registered) | 52,578 | |||||||||
Auto Components | |||||||||||
611 | Continental AG | 55,466 |
NUMBER OF SHARES | VALUE | ||||||||||
Automobiles | |||||||||||
3,519 | Bayerische Motoren Werke AG | $ | 263,120 | ||||||||
7,768 | Daimler AG (Registered) | 389,096 | |||||||||
898 | Porsche Automobil Holding SE (Preference) | 46,428 | |||||||||
372 | Volkswagen AG | 59,411 | |||||||||
1,855 | Volkswagen AG (Preference) | 317,252 | |||||||||
1,075,307 | |||||||||||
Chemicals | |||||||||||
13,289 | BASF SE | 972,545 | |||||||||
1,526 | K+S AG (Registered) | 75,507 | |||||||||
1,060 | Lanxess AG | 73,689 | |||||||||
1,655 | Linde AG | 246,495 | |||||||||
1,368,236 | |||||||||||
Commercial Banks | |||||||||||
49,404 | Commerzbank AG (a) | 77,017 | |||||||||
11,735 | Deutsche Bank AG (Registered) | 359,163 | |||||||||
436,180 | |||||||||||
Diversified Financial Services | |||||||||||
1,392 | Deutsche Boerse AG | 69,305 | |||||||||
Diversified Telecommunication Services | |||||||||||
33,454 | Deutsche Telekom AG (Registered) | 377,742 | |||||||||
Electric Utilities | |||||||||||
20,521 | E.ON AG | 438,071 | |||||||||
Food & Staples Retailing | |||||||||||
1,362 | Metro AG | 37,546 | |||||||||
Food Products | |||||||||||
526 | Suedzucker AG | 18,160 |
See Notes to Financial Statements
20
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Health Care Providers & Services | |||||||||||
1,940 | Fresenius Medical Care AG & Co. KGaA | $ | 140,951 | ||||||||
1,321 | Fresenius SE & Co. KGaA | 141,081 | |||||||||
282,032 | |||||||||||
Hotels, Restaurants & Leisure | |||||||||||
1,926 | TUI AG (a) | 12,463 | |||||||||
Household Products | |||||||||||
1,808 | Henkel AG & Co. KGaA | 107,024 | |||||||||
2,044 | Henkel AG & Co. KGaA (Preference) | 147,124 | |||||||||
254,148 | |||||||||||
Industrial Conglomerates | |||||||||||
9,791 | Siemens AG (Registered) | 832,437 | |||||||||
Insurance | |||||||||||
5,186 | Allianz SE (Registered) | 517,423 | |||||||||
2,202 | Muenchener Rueckversicherungs AG (Registered) | 313,200 | |||||||||
830,623 | |||||||||||
Life Sciences Tools & Services | |||||||||||
3,223 | QIAGEN N.V. (a) | 57,481 | |||||||||
Media | |||||||||||
300 | Axel Springer AG | 13,429 | |||||||||
474 | Kabel Deutschland Holding AG (a) | 29,749 | |||||||||
686 | ProSiebenSat.1 Media AG | 14,433 | |||||||||
57,611 | |||||||||||
Metals & Mining | |||||||||||
6,637 | ThyssenKrupp AG | 122,247 |
NUMBER OF SHARES | VALUE | ||||||||||
Multi-Utilities | |||||||||||
4,297 | RWE AG | $ | 169,185 | ||||||||
Personal Products | |||||||||||
1,091 | Beiersdorf AG | 72,380 | |||||||||
Pharmaceuticals | |||||||||||
8,620 | Bayer AG (Registered) | 656,620 | |||||||||
672 | Merck KGaA | 67,701 | |||||||||
724,321 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
12,761 | Infineon Technologies AG | 93,092 | |||||||||
Software | |||||||||||
11,826 | SAP AG | 754,600 | |||||||||
Specialty Retail | |||||||||||
8,221 | Esprit Holdings Ltd. (d) | 9,997 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
2,170 | Adidas AG | 163,162 | |||||||||
Transportation Infrastructure | |||||||||||
344 | Fraport AG Frankfurt Airport Services Worldwide | 19,544 | |||||||||
Total Germany | 8,495,757 | ||||||||||
Greece (0.0%) | |||||||||||
Commercial Banks | |||||||||||
14,355 | National Bank of Greece SA (a) | 22,431 | |||||||||
Hong Kong (0.5%) | |||||||||||
Commercial Banks | |||||||||||
15,965 | Bank of East Asia Ltd. | 55,689 | |||||||||
36,500 | BOC Hong Kong Holdings Ltd. | 112,258 | |||||||||
11,500 | Hang Seng Bank Ltd. | 160,013 | |||||||||
327,960 |
See Notes to Financial Statements
21
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Financial Services | |||||||||||
10,139 | Hong Kong Exchanges and Clearing Ltd. | $ | 136,238 | ||||||||
Electric Utilities | |||||||||||
19,000 | CLP Holdings Ltd. | 164,158 | |||||||||
14,500 | Power Assets Holdings Ltd. | 114,060 | |||||||||
278,218 | |||||||||||
Gas Utilities | |||||||||||
43,560 | Hong Kong & China Gas Co., Ltd. | 100,886 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
28,400 | Sands China Ltd. | 84,050 | |||||||||
Industrial Conglomerates | |||||||||||
21,000 | Hutchison Whampoa Ltd. | 189,292 | |||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
19,851 | Link REIT (The) | 87,035 | |||||||||
Real Estate Management & Development | |||||||||||
14,000 | Cheung Kong Holdings Ltd. | 184,327 | |||||||||
8,000 | Hang Lung Group Ltd. | 51,891 | |||||||||
22,000 | Hang Lung Properties Ltd. | 78,301 | |||||||||
11,419 | Henderson Land Development Co., Ltd. | 66,558 | |||||||||
7,000 | Kerry Properties Ltd. | 32,180 | |||||||||
27,633 | New World Development Co., Ltd. | 35,384 | |||||||||
20,687 | Sino Land Co., Ltd. | 35,427 | |||||||||
13,436 | Sun Hung Kai Properties Ltd. | 167,978 |
NUMBER OF SHARES | VALUE | ||||||||||
6,500 | Swire Pacific Ltd., Class A | $ | 77,995 | ||||||||
4,550 | Swire Properties Ltd. | 13,583 | |||||||||
13,200 | Wharf Holdings Ltd. | 76,599 | |||||||||
10,000 | Wheelock & Co., Ltd. | 39,267 | |||||||||
859,490 | |||||||||||
Road & Rail | |||||||||||
15,242 | MTR Corp., Ltd. | 53,265 | |||||||||
Total Hong Kong | 2,116,434 | ||||||||||
India (0.0%) | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
6,451 | Cairn Energy PLC (a) | 29,018 | |||||||||
Italy (0.5%) | |||||||||||
Aerospace & Defense | |||||||||||
4,799 | Finmeccanica SpA (a) | 17,596 | |||||||||
Automobiles | |||||||||||
8,670 | Fiat SpA (a) | 42,670 | |||||||||
Commercial Banks | |||||||||||
120,612 | Intesa Sanpaolo SpA | 153,298 | |||||||||
17,827 | UniCredit SpA (a) | 60,715 | |||||||||
214,013 | |||||||||||
Diversified Telecommunication Services | |||||||||||
269,442 | Telecom Italia SpA | 205,372 | |||||||||
Electric Utilities | |||||||||||
82,927 | Enel SpA | 237,330 | |||||||||
Energy Equipment & Services | |||||||||||
2,576 | Saipem SpA | 119,015 | |||||||||
Gas Utilities | |||||||||||
45,529 | Snam SpA | 183,182 | |||||||||
Insurance | |||||||||||
20,105 | Assicurazioni Generali SpA | 253,061 |
See Notes to Financial Statements
22
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Machinery | |||||||||||
5,967 | Fiat Industrial SpA | $ | 58,734 | ||||||||
Oil, Gas & Consumable Fuels | |||||||||||
31,745 | ENI SpA | 657,754 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
1,567 | Luxottica Group SpA | 54,081 | |||||||||
Transportation Infrastructure | |||||||||||
4,381 | Atlantia SpA | 57,677 | |||||||||
Total Italy | 2,100,485 | ||||||||||
Japan (5.2%) | |||||||||||
Air Freight & Logistics | |||||||||||
8,600 | Yamato Holdings Co., Ltd. | 141,673 | |||||||||
Auto Components | |||||||||||
3,700 | Aisin Seiki Co., Ltd. | 113,901 | |||||||||
8,600 | Bridgestone Corp. | 196,052 | |||||||||
8,100 | Denso Corp. | 261,170 | |||||||||
3,600 | Toyota Industries Corp. | 96,814 | |||||||||
667,937 | |||||||||||
Automobiles | |||||||||||
19,795 | Honda Motor Co., Ltd. ADR | 623,542 | |||||||||
24,000 | Mazda Motor Corp. (a) | 29,184 | |||||||||
93,000 | Mitsubishi Motors Corp. (a) | 89,280 | |||||||||
31,800 | Nissan Motor Co., Ltd. | 302,838 | |||||||||
5,600 | Suzuki Motor Corp. | 103,291 | |||||||||
36,500 | Toyota Motor Corp. | 1,410,944 | |||||||||
2,559,079 | |||||||||||
Beverages | |||||||||||
4,800 | Asahi Group Holdings Ltd. | 108,257 | |||||||||
13,000 | Kirin Holdings Co., Ltd. | 148,429 | |||||||||
256,686 |
NUMBER OF SHARES | VALUE | ||||||||||
Building Products | |||||||||||
15,000 | Asahi Glass Co., Ltd. | $ | 88,896 | ||||||||
3,500 | Daikin Industries Ltd. | 96,051 | |||||||||
5,100 | LIXIL Group Corp. | 107,386 | |||||||||
292,333 | |||||||||||
Capital Markets | |||||||||||
31,000 | Daiwa Securities Group, Inc. | 117,056 | |||||||||
46,800 | Nomura Holdings, Inc. | 166,533 | |||||||||
283,589 | |||||||||||
Chemicals | |||||||||||
25,000 | Asahi Kasei Corp. | 133,760 | |||||||||
3,000 | JSR Corp. | 53,376 | |||||||||
5,000 | Kuraray Co., Ltd. | 59,008 | |||||||||
20,000 | Mitsubishi Chemical Holdings Corp. | 85,248 | |||||||||
2,200 | Nitto Denko Corp. | 95,603 | |||||||||
4,100 | Shin-Etsu Chemical Co., Ltd. | 208,871 | |||||||||
22,000 | Sumitomo Chemical Co., Ltd. | 61,670 | |||||||||
25,000 | Toray Industries, Inc. | 157,760 | |||||||||
855,296 | |||||||||||
Commercial Banks | |||||||||||
22,000 | Bank of Yokohama Ltd. (The) | 100,249 | |||||||||
14,000 | Chiba Bank Ltd. (The) | 82,074 | |||||||||
184,800 | Mizuho Financial Group, Inc. | 305,142 | |||||||||
7,600 | Resona Holdings, Inc. | 31,227 | |||||||||
12,000 | Shizuoka Bank Ltd. (The) | 121,344 | |||||||||
17,300 | Sumitomo Mitsui Financial Group, Inc. | 550,943 | |||||||||
37,000 | Sumitomo Mitsui Trust Holdings, Inc. | 107,033 | |||||||||
1,298,012 |
See Notes to Financial Statements
23
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Commercial Services & Supplies | |||||||||||
11,000 | Dai Nippon Printing Co., Ltd. | $ | 84,339 | ||||||||
2,800 | Secom Co., Ltd. | 130,458 | |||||||||
11,000 | Toppan Printing Co., Ltd. | 68,710 | |||||||||
283,507 | |||||||||||
Computers & Peripherals | |||||||||||
25,000 | Fujitsu Ltd. | 99,200 | |||||||||
55,000 | Toshiba Corp. | 184,448 | |||||||||
283,648 | |||||||||||
Construction & Engineering | |||||||||||
3,000 | JGC Corp. | 92,698 | |||||||||
Diversified Financial Services | |||||||||||
1,380 | ORIX Corp. | 131,950 | |||||||||
Diversified Telecommunication Services | |||||||||||
7,600 | Nippon Telegraph & Telephone Corp. | 353,613 | |||||||||
Electric Utilities | |||||||||||
7,400 | Chubu Electric Power Co., Inc. (a) | 79,280 | |||||||||
3,700 | Chugoku Electric Power Co., Inc. (The) | 47,360 | |||||||||
4,200 | Hokkaido Electric Power Co., Inc. | 38,761 | |||||||||
3,900 | Hokuriku Electric Power Co. | 39,886 | |||||||||
6,200 | Kansai Electric Power Co., Inc. (The) | 46,664 | |||||||||
3,900 | Kyushu Electric Power Co., Inc. | 30,601 | |||||||||
5,500 | Shikoku Electric Power Co., Inc. | 84,973 |
NUMBER OF SHARES | VALUE | ||||||||||
6,600 | Tohoku Electric Power Co., Inc. (a) | $ | 42,747 | ||||||||
13,700 | Tokyo Electric Power Co., Inc. (The) (a) | 22,972 | |||||||||
433,244 | |||||||||||
Electrical Equipment | |||||||||||
26,000 | Mitsubishi Electric Corp. | 208,000 | |||||||||
1,400 | Nidec Corp. | 110,925 | |||||||||
22,700 | Sumitomo Electric Industries Ltd. | 270,221 | |||||||||
589,146 | |||||||||||
Electronic Equipment, Instruments & Components | |||||||||||
7,400 | FUJIFILM Holdings Corp. | 133,555 | |||||||||
63,000 | Hitachi Ltd. | 374,976 | |||||||||
5,000 | Hoya Corp. | 111,744 | |||||||||
2,000 | Ibiden Co., Ltd. | 32,870 | |||||||||
600 | Keyence Corp. | 150,605 | |||||||||
2,000 | Kyocera Corp. | 160,000 | |||||||||
2,800 | Murata Manufacturing Co., Ltd. | 140,672 | |||||||||
6,000 | Nippon Electric Glass Co., Ltd. | 31,949 | |||||||||
2,800 | Omron Corp. | 56,412 | |||||||||
1,400 | TDK Corp. | 53,760 | |||||||||
1,246,543 | |||||||||||
Food & Staples Retailing | |||||||||||
11,100 | Aeon Co., Ltd. | 134,124 | |||||||||
10,800 | Seven & I Holdings Co., Ltd. | 343,526 | |||||||||
477,650 | |||||||||||
Food Products | |||||||||||
15,000 | Ajinomoto Co., Inc. | 213,120 | |||||||||
Gas Utilities | |||||||||||
38,000 | Osaka Gas Co., Ltd. | 156,134 |
See Notes to Financial Statements
24
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
34,000 | Tokyo Gas Co., Ltd. | $ | 175,821 | ||||||||
331,955 | |||||||||||
Health Care Equipment & Supplies | |||||||||||
3,500 | Olympus Corp. (a) | 66,304 | |||||||||
2,900 | Terumo Corp. | 119,526 | |||||||||
185,830 | |||||||||||
Household Durables | |||||||||||
24,200 | Panasonic Corp. | 169,129 | |||||||||
12,000 | Sekisui House Ltd. | 115,507 | |||||||||
15,000 | Sharp Corp. | 51,840 | |||||||||
13,035 | Sony Corp. ADR | 158,375 | |||||||||
494,851 | |||||||||||
Household Products | |||||||||||
2,400 | Unicharm Corp. | 132,403 | |||||||||
Independent Power Producers & Energy Traders | |||||||||||
2,700 | Electric Power Development Co., Ltd. | 63,763 | |||||||||
Industrial Conglomerates | |||||||||||
31,000 | Hankyu Hanshin Holdings, Inc. | 166,656 | |||||||||
Information Technology Services | |||||||||||
30 | NTT Data Corp. | 91,392 | |||||||||
Insurance | |||||||||||
5,000 | MS&AD Insurance Group Holdings | 81,728 | |||||||||
8,400 | T&D Holdings, Inc. | 86,446 | |||||||||
6,200 | Tokio Marine Holdings, Inc. | 143,800 | |||||||||
311,974 | |||||||||||
Internet & Catalog Retail | |||||||||||
13,300 | Rakuten, Inc. | 132,617 |
NUMBER OF SHARES | VALUE | ||||||||||
Internet Software & Services | |||||||||||
276 | Yahoo! Japan Corp. | $ | 100,967 | ||||||||
Leisure Equipment & Products | |||||||||||
4,600 | Nikon Corp. | 128,594 | |||||||||
Machinery | |||||||||||
2,400 | FANUC Corp. | 375,092 | |||||||||
5,000 | Japan Steel Works Ltd. (The) | 27,520 | |||||||||
38,000 | Kawasaki Heavy Industries Ltd. | 91,443 | |||||||||
13,000 | Komatsu Ltd. | 292,531 | |||||||||
17,000 | Kubota Corp. | 162,547 | |||||||||
1,600 | Makita Corp. | 54,190 | |||||||||
47,000 | Mitsubishi Heavy Industries Ltd. | 191,309 | |||||||||
5,000 | NGK Insulators Ltd. | 58,048 | |||||||||
10,000 | NSK Ltd. | 61,184 | |||||||||
800 | SMC Corp. | 135,680 | |||||||||
1,449,544 | |||||||||||
Marine | |||||||||||
18,000 | Mitsui OSK Lines Ltd. | 55,066 | |||||||||
34,000 | Nippon Yusen KK | 76,160 | |||||||||
131,226 | |||||||||||
Media | |||||||||||
3,200 | Dentsu, Inc. | 85,565 | |||||||||
Metals & Mining | |||||||||||
5,800 | JFE Holdings, Inc. | 77,135 | |||||||||
70,000 | Kobe Steel Ltd. | 66,304 | |||||||||
71,000 | Nippon Steel Corp. | 143,591 | |||||||||
49,000 | Sumitomo Metal Industries Ltd. | 72,755 | |||||||||
8,000 | Sumitomo Metal Mining Co., Ltd. | 86,426 | |||||||||
446,211 | |||||||||||
Multi-line Retail | |||||||||||
5,400 | Isetan Mitsukoshi Holdings Ltd. | 57,301 |
See Notes to Financial Statements
25
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Office Electronics | |||||||||||
13,800 | Canon, Inc. | $ | 468,096 | ||||||||
5,000 | Konica Minolta Holdings, Inc. | 35,712 | |||||||||
11,000 | Ricoh Co., Ltd. | 76,173 | |||||||||
579,981 | |||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
12 | Inpex Corp. | 67,430 | |||||||||
Paper & Forest Products | |||||||||||
13,000 | OJI Paper Co., Ltd. | 43,597 | |||||||||
Personal Products | |||||||||||
7,700 | Kao Corp. | 209,046 | |||||||||
6,500 | Shiseido Co., Ltd. | 93,517 | |||||||||
302,563 | |||||||||||
Pharmaceuticals | |||||||||||
4,900 | Astellas Pharma, Inc. | 233,946 | |||||||||
4,900 | Chugai Pharmaceutical Co., Ltd. | 94,770 | |||||||||
9,300 | Daiichi Sankyo Co., Ltd. | 153,800 | |||||||||
3,800 | Eisai Co., Ltd. | 168,781 | |||||||||
1,500 | Ono Pharmaceutical Co., Ltd. | 94,848 | |||||||||
6,400 | Shionogi & Co., Ltd. | 91,586 | |||||||||
9,700 | Takeda Pharmaceutical Co., Ltd. | 446,976 | |||||||||
1,284,707 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
8 | Japan Real Estate Investment Corp. REIT | 75,776 | |||||||||
8 | Nippon Building Fund, Inc. REIT | 77,926 | |||||||||
153,702 |
NUMBER OF SHARES | VALUE | ||||||||||
Real Estate Management & Development | |||||||||||
1,400 | Daito Trust Construction Co., Ltd. | $ | 135,296 | ||||||||
11,000 | Daiwa House Industry Co., Ltd. | 157,414 | |||||||||
16,000 | Mitsubishi Estate Co., Ltd. | 289,997 | |||||||||
12,000 | Mitsui Fudosan Co., Ltd. | 234,394 | |||||||||
7,000 | Sumitomo Realty & Development Co., Ltd. | 176,691 | |||||||||
993,792 | |||||||||||
Road & Rail | |||||||||||
22 | Central Japan Railway Co. | 182,477 | |||||||||
4,600 | East Japan Railway Co. | 295,578 | |||||||||
10,000 | Keikyu Corp. | 93,568 | |||||||||
10,000 | Keio Corp. | 73,728 | |||||||||
39,000 | Kintetsu Corp. | 155,251 | |||||||||
22,000 | Nippon Express Co., Ltd. | 90,112 | |||||||||
16,000 | Odakyu Electric Railway Co., Ltd. | 164,659 | |||||||||
33,000 | Tobu Railway Co., Ltd. | 179,098 | |||||||||
18,000 | Tokyu Corp. | 86,630 | |||||||||
2,800 | West Japan Railway Co. | 121,139 | |||||||||
1,442,240 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
2,300 | Advantest Corp. | 29,676 | |||||||||
1,200 | Rohm Co., Ltd. | 43,407 | |||||||||
2,000 | Tokyo Electron Ltd. | 94,080 | |||||||||
167,163 |
See Notes to Financial Statements
26
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Software | |||||||||||
1,300 | Nintendo Co., Ltd. | $ | 145,600 | ||||||||
1,800 | Trend Micro, Inc. | 53,822 | |||||||||
199,422 | |||||||||||
Specialty Retail | |||||||||||
600 | Fast Retailing Co., Ltd. | 124,032 | |||||||||
1,370 | Yamada Denki Co., Ltd. | 71,459 | |||||||||
195,491 | |||||||||||
Tobacco | |||||||||||
15,600 | Japan Tobacco, Inc. | 492,012 | |||||||||
Trading Companies & Distributors | |||||||||||
21,000 | ITOCHU Corp. | 219,609 | |||||||||
29,000 | Marubeni Corp. | 195,994 | |||||||||
16,900 | Mitsubishi Corp. | 338,757 | |||||||||
25,900 | Mitsui & Co., Ltd. | 386,884 | |||||||||
15,300 | Sumitomo Corp. | 216,599 | |||||||||
1,357,843 | |||||||||||
Wireless Telecommunication Services | |||||||||||
51 | KDDI Corp. | 353,165 | |||||||||
193 | NTT DoCoMo, Inc. | 324,363 | |||||||||
9,700 | Softbank Corp. | 373,101 | |||||||||
1,050,629 | |||||||||||
Total Japan | 23,101,145 | ||||||||||
Kazakhstan (0.0%) | |||||||||||
Metals & Mining | |||||||||||
2,888 | Kazakhmys PLC | 31,922 | |||||||||
Netherlands (0.6%) | |||||||||||
Air Freight & Logistics | |||||||||||
4,381 | PostNL N.V. | 17,842 | |||||||||
4,151 | TNT Express N.V. | 45,017 | |||||||||
62,859 |
NUMBER OF SHARES | VALUE | ||||||||||
Beverages | |||||||||||
2,000 | DE Master Blenders 1753 N.V. (a) | $ | 23,178 | ||||||||
3,715 | Heineken N.V. | 201,373 | |||||||||
224,551 | |||||||||||
Chemicals | |||||||||||
4,370 | Akzo Nobel N.V. | 236,070 | |||||||||
3,367 | Koninklijke DSM N.V. | 165,835 | |||||||||
401,905 | |||||||||||
Diversified Financial Services | |||||||||||
48,287 | ING Groep N.V. CVA (a) | 319,698 | |||||||||
Diversified Telecommunication Services | |||||||||||
6,177 | Koninklijke KPN N.V. | 50,701 | |||||||||
Energy Equipment & Services | |||||||||||
657 | Fugro N.V. CVA | 43,046 | |||||||||
Food & Staples Retailing | |||||||||||
12,173 | Koninklijke Ahold N.V. | 148,204 | |||||||||
Food Products | |||||||||||
15,199 | Unilever N.V. CVA | 528,392 | |||||||||
Industrial Conglomerates | |||||||||||
12,069 | Koninklijke Philips Electronics N.V. | 265,512 | |||||||||
Metals & Mining | |||||||||||
12,867 | ArcelorMittal | 206,839 | |||||||||
Professional Services | |||||||||||
1,207 | Randstad Holding N.V. | 36,637 | |||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
3,267 | ASML Holding N.V. | 189,811 |
See Notes to Financial Statements
27
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Transportation Infrastructure | |||||||||||
1,006 | Koninklijke Vopak N.V. | $ | 63,795 | ||||||||
Total Netherlands | 2,541,950 | ||||||||||
Norway (0.2%) | |||||||||||
Chemicals | |||||||||||
1,863 | Yara International ASA | 88,304 | |||||||||
Commercial Banks | |||||||||||
11,497 | DnB NOR ASA | 121,121 | |||||||||
Diversified Telecommunication Services | |||||||||||
16,466 | Telenor ASA | 279,189 | |||||||||
Energy Equipment & Services | |||||||||||
1,677 | Aker Solutions ASA | 24,706 | |||||||||
1,677 | Kvaerner ASA | 3,895 | |||||||||
2,860 | Subsea 7 SA | 60,118 | |||||||||
286 | Veripos, Inc. (a) | 550 | |||||||||
89,269 | |||||||||||
Industrial Conglomerates | |||||||||||
9,524 | Orkla ASA | 68,165 | |||||||||
Metals & Mining | |||||||||||
12,763 | Norsk Hydro ASA | 52,089 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
12,789 | Statoil ASA | 305,321 | |||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
6,482 | Renewable Energy Corp., ASA (a) | 2,258 | |||||||||
Total Norway | 1,005,716 |
NUMBER OF SHARES | VALUE | ||||||||||
Poland (0.0%) | |||||||||||
Food & Staples Retailing | |||||||||||
3,072 | Jeronimo Martins SGPS SA | $ | 48,192 | ||||||||
Portugal (0.0%) | |||||||||||
Diversified Telecommunication Services | |||||||||||
11,841 | Portugal Telecom SGPS SA (Registered) | 50,264 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
2,866 | Galp Energia SGPS SA, Class B | 38,789 | |||||||||
Total Portugal | 89,053 | ||||||||||
South Africa (0.1%) | |||||||||||
Beverages | |||||||||||
9,819 | SABMiller PLC | 424,433 | |||||||||
Spain (0.4%) | |||||||||||
Airlines | |||||||||||
13,928 | International Consolidated Airlines Group SA (a) | 34,891 | |||||||||
Commercial Banks | |||||||||||
45,352 | Banco Bilbao Vizcaya Argentaria SA | 297,085 | |||||||||
15,764 | Banco Popular Espanol SA | 29,656 | |||||||||
90,268 | Banco Santander SA | 549,775 | |||||||||
11,821 | CaixaBank | 38,747 | |||||||||
915,263 | |||||||||||
Construction & Engineering | |||||||||||
3,511 | ACS Actividades de Construccion y Servicios SA | 55,511 |
See Notes to Financial Statements
28
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Electric Utilities | |||||||||||
40,863 | Iberdrola SA | $ | 148,320 | ||||||||
1,327 | Red Electrica Corp., SA | 52,615 | |||||||||
200,935 | |||||||||||
Food & Staples Retailing | |||||||||||
6,563 | Distribuidora Internacional de Alimentacion SA | 32,462 | |||||||||
Oil, Gas & Consumable Fuels | |||||||||||
3,053 | Repsol YPF SA | 48,852 | |||||||||
Specialty Retail | |||||||||||
2,368 | Inditex SA | 244,246 | |||||||||
Transportation Infrastructure | |||||||||||
4,000 | Abertis Infraestructuras SA | 49,487 | |||||||||
Total Spain | 1,581,647 | ||||||||||
Sweden (0.8%) | |||||||||||
Building Products | |||||||||||
3,465 | Assa Abloy AB, Class B | 105,163 | |||||||||
Commercial Banks | |||||||||||
27,526 | Nordea Bank AB | 257,424 | |||||||||
14,986 | Skandinaviska Enskilda Banken AB | 110,291 | |||||||||
5,789 | Svenska Handelsbanken AB, Class A | 201,404 | |||||||||
4,898 | Swedbank AB, Class A | 85,419 | |||||||||
654,538 | |||||||||||
Communications Equipment | |||||||||||
27,294 | Telefonaktiebolaget LM Ericsson, Class B | 254,452 |
NUMBER OF SHARES | VALUE | ||||||||||
Construction & Engineering | |||||||||||
3,281 | Skanska AB, Class B | $ | 49,645 | ||||||||
Diversified Financial Services | |||||||||||
12,458 | Investor AB, Class B | 260,127 | |||||||||
Diversified Telecommunication Services | |||||||||||
33,207 | TeliaSonera AB | 219,975 | |||||||||
Household Durables | |||||||||||
2,950 | Electrolux AB | 67,019 | |||||||||
5,449 | Husqvarna AB, Class B | 27,884 | |||||||||
94,903 | |||||||||||
Machinery | |||||||||||
10,488 | Atlas Copco AB, Class A | 236,266 | |||||||||
7,581 | Atlas Copco AB, Class B | 152,163 | |||||||||
16,163 | Sandvik AB | 225,191 | |||||||||
5,471 | Scania AB, Class B | 94,446 | |||||||||
6,655 | SKF AB, Class B | 137,882 | |||||||||
8,741 | Volvo AB, Class B | 108,160 | |||||||||
954,108 | |||||||||||
Media | |||||||||||
443 | Modern Times Group AB, Class B | 20,337 | |||||||||
Paper & Forest Products | |||||||||||
9,071 | Svenska Cellulosa AB, Class B | 154,459 | |||||||||
Specialty Retail | |||||||||||
10,949 | Hennes & Mauritz AB, Class B | 405,235 | |||||||||
Tobacco | |||||||||||
4,439 | Swedish Match AB | 187,138 |
See Notes to Financial Statements
29
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Wireless Telecommunication Services | |||||||||||
1,401 | Millicom International Cellular SA SDR | $ | 126,902 | ||||||||
Total Sweden | 3,486,982 | ||||||||||
Switzerland (1.8%) | |||||||||||
Biotechnology | |||||||||||
971 | Actelion Ltd. (Registered) (a) | 44,408 | |||||||||
Building Products | |||||||||||
814 | Geberit AG (Registered) (a) | 160,082 | |||||||||
Capital Markets | |||||||||||
14,383 | Credit Suisse Group AG (Registered) (a) | 245,437 | |||||||||
2,123 | Julius Baer Group Ltd. (a) | 76,109 | |||||||||
321,546 | |||||||||||
Chemicals | |||||||||||
82 | Givaudan SA (Registered) (a) | 79,833 | |||||||||
791 | Syngenta AG (Registered) | 270,364 | |||||||||
350,197 | |||||||||||
Commercial Banks | |||||||||||
25,821 | UBS AG (Registered) (a) | 272,148 | |||||||||
Diversified Telecommunication Services | |||||||||||
691 | Swisscom AG (Registered) | 277,023 | |||||||||
Electrical Equipment | |||||||||||
34,134 | ABB Ltd. (Registered) (a) | 597,161 |
NUMBER OF SHARES | VALUE | ||||||||||
Energy Equipment & Services | |||||||||||
2,790 | Transocean Ltd. | $ | 132,827 | ||||||||
Food Products | |||||||||||
33,962 | Nestle SA (Registered) | 2,088,926 | |||||||||
Health Care Equipment & Supplies | |||||||||||
880 | Sonova Holding AG (Registered) (a) | 83,331 | |||||||||
Insurance | |||||||||||
836 | Swiss Re AG (a) | 52,533 | |||||||||
2,309 | Zurich Insurance Group AG (a) | 514,872 | |||||||||
567,405 | |||||||||||
Life Sciences Tools & Services | |||||||||||
481 | Lonza Group AG (Registered) (a) | 21,757 | |||||||||
Marine | |||||||||||
673 | Kuehne & Nagel International AG (Registered) | 76,723 | |||||||||
Pharmaceuticals | |||||||||||
20,737 | Novartis AG (Registered) | 1,217,075 | |||||||||
5,581 | Roche Holding AG (Genusschein) | 990,666 | |||||||||
2,207,741 | |||||||||||
Professional Services | |||||||||||
1,264 | Adecco SA (Registered) (a) | 55,672 | |||||||||
52 | SGS SA (Registered) | 104,181 | |||||||||
159,853 | |||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
4,550 | Cie Financiere Richemont SA | 258,422 |
See Notes to Financial Statements
30
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
300 | Swatch Group AG (The) | $ | 119,441 | ||||||||
377,863 | |||||||||||
Total Switzerland | 7,738,991 | ||||||||||
United Kingdom (5.0%) | |||||||||||
Aerospace & Defense | |||||||||||
50,134 | BAE Systems PLC | 242,803 | |||||||||
34,001 | Rolls-Royce Holdings PLC (a) | 453,389 | |||||||||
696,192 | |||||||||||
Beverages | |||||||||||
24,100 | Diageo PLC | 644,993 | |||||||||
Capital Markets | |||||||||||
17,668 | 3i Group PLC | 57,728 | |||||||||
9,538 | Investec PLC | 56,362 | |||||||||
15,236 | Man Group PLC | 19,027 | |||||||||
133,117 | |||||||||||
Chemicals | |||||||||||
2,447 | Johnson Matthey PLC | 83,636 | |||||||||
Commercial Banks | |||||||||||
126,770 | Barclays PLC | 333,911 | |||||||||
154,689 | HSBC Holdings PLC | 1,294,863 | |||||||||
378,183 | Lloyds Banking Group PLC (a) | 179,985 | |||||||||
20,621 | Royal Bank of Scotland Group PLC (a) | 69,091 | |||||||||
20,828 | Standard Chartered PLC | 478,235 | |||||||||
2,356,085 | |||||||||||
Commercial Services & Supplies | |||||||||||
2,555 | Aggreko PLC | 81,800 | |||||||||
4,000 | Babcock International Group PLC | 53,840 | |||||||||
14,808 | G4S PLC | 57,554 | |||||||||
5,878 | Serco Group PLC | 53,129 | |||||||||
246,323 |
NUMBER OF SHARES | VALUE | ||||||||||
Diversified Telecommunication Services | |||||||||||
97,290 | BT Group PLC | $ | 331,461 | ||||||||
4,106 | Inmarsat PLC | 31,647 | |||||||||
363,108 | |||||||||||
Electric Utilities | |||||||||||
17,803 | SSE PLC | 366,490 | |||||||||
Energy Equipment & Services | |||||||||||
3,969 | AMEC PLC | 69,571 | |||||||||
3,181 | Petrofac Ltd. | 74,361 | |||||||||
143,932 | |||||||||||
Food & Staples Retailing | |||||||||||
76,742 | Tesco PLC | 382,738 | |||||||||
20,218 | WM Morrison Supermarkets PLC | 87,901 | |||||||||
470,639 | |||||||||||
Food Products | |||||||||||
1,859 | Associated British Foods PLC | 36,579 | |||||||||
12,866 | Unilever PLC | 462,139 | |||||||||
498,718 | |||||||||||
Health Care Equipment & Supplies | |||||||||||
10,831 | Smith & Nephew PLC | 110,973 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
18,884 | Compass Group PLC | 202,958 | |||||||||
15,728 | TUI Travel PLC | 45,052 | |||||||||
248,010 | |||||||||||
Household Products | |||||||||||
6,704 | Reckitt Benckiser Group PLC | 368,616 | |||||||||
Industrial Conglomerates | |||||||||||
6,582 | Smiths Group PLC | 110,110 |
See Notes to Financial Statements
31
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Insurance | |||||||||||
3,778 | Admiral Group PLC | $ | 64,683 | ||||||||
33,991 | Aviva PLC | 155,402 | |||||||||
68,276 | Legal & General Group PLC | 136,484 | |||||||||
81,310 | Old Mutual PLC | 201,039 | |||||||||
30,382 | Prudential PLC | 363,451 | |||||||||
84,310 | RSA Insurance Group PLC | 143,950 | |||||||||
18,540 | Standard Life PLC | 70,315 | |||||||||
1,135,324 | |||||||||||
Media | |||||||||||
8,709 | British Sky Broadcasting Group PLC | 97,288 | |||||||||
32,244 | ITV PLC | 38,168 | |||||||||
12,346 | Pearson PLC | 231,506 | |||||||||
3,587 | Reed Elsevier PLC | 30,257 | |||||||||
28,419 | WPP PLC | 360,018 | |||||||||
757,237 | |||||||||||
Metals & Mining | |||||||||||
11,920 | Anglo American PLC | 355,087 | |||||||||
20,282 | BHP Billiton PLC | 594,326 | |||||||||
1,989 | Lonmin PLC | 21,767 | |||||||||
976 | Randgold Resources Ltd. | 88,753 | |||||||||
13,195 | Rio Tinto PLC | 609,565 | |||||||||
1,623 | Vedanta Resources PLC | 24,835 | |||||||||
19,195 | Xstrata PLC | 255,235 | |||||||||
1,949,568 | |||||||||||
Multi-Utilities | |||||||||||
51,376 | Centrica PLC | 255,343 | |||||||||
32,023 | National Grid PLC | 332,623 | |||||||||
587,966 | |||||||||||
Multi-line Retail | |||||||||||
10,082 | Marks & Spencer Group PLC | 52,748 | |||||||||
2,073 | Next PLC | 104,623 | |||||||||
157,371 |
NUMBER OF SHARES | VALUE | ||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
31,796 | BG Group PLC | $ | 629,125 | ||||||||
185,959 | BP PLC | 1,239,258 | |||||||||
35,351 | Royal Dutch Shell PLC, Class A | 1,204,387 | |||||||||
26,772 | Royal Dutch Shell PLC, Class B | 944,216 | |||||||||
8,594 | Tullow Oil PLC | 173,816 | |||||||||
4,190,802 | |||||||||||
Pharmaceuticals | |||||||||||
16,103 | AstraZeneca PLC | 754,004 | |||||||||
58,487 | GlaxoSmithKline PLC | 1,346,598 | |||||||||
5,377 | Shire PLC | 155,793 | |||||||||
2,256,395 | |||||||||||
Professional Services | |||||||||||
6,586 | Capita PLC | 73,417 | |||||||||
10,516 | Experian PLC | 156,466 | |||||||||
1,847 | Intertek Group PLC | 79,172 | |||||||||
309,055 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
13,703 | British Land Co., PLC REIT | 114,834 | |||||||||
13,142 | Land Securities Group PLC REIT | 162,777 | |||||||||
277,611 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
15,586 | ARM Holdings PLC | 134,768 | |||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
4,434 | Burberry Group PLC | 87,176 | |||||||||
Tobacco | |||||||||||
19,308 | British American Tobacco PLC | 1,028,493 |
See Notes to Financial Statements
32
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
10,310 | Imperial Tobacco Group PLC | $ | 400,719 | ||||||||
1,429,212 | |||||||||||
Trading Companies & Distributors | |||||||||||
3,683 | Wolseley PLC | 132,984 | |||||||||
Wireless Telecommunication Services | |||||||||||
607,663 | Vodafone Group PLC | 1,739,675 | |||||||||
Total United Kingdom | 21,986,086 | ||||||||||
United States (20.0%) | |||||||||||
Aerospace & Defense | |||||||||||
3,281 | Boeing Co. (The) | 242,499 | |||||||||
663 | General Dynamics Corp. | 42,061 | |||||||||
3,895 | Honeywell International, Inc. | 226,105 | |||||||||
663 | Lockheed Martin Corp. | 59,186 | |||||||||
663 | Northrop Grumman Corp. | 43,890 | |||||||||
841 | Precision Castparts Corp. | 130,826 | |||||||||
11,527 | Raytheon Co. | 639,518 | |||||||||
796 | Rockwell Collins, Inc. | 40,254 | |||||||||
1,503 | Textron, Inc. | 39,153 | |||||||||
1,457 | United Technologies Corp. | 108,459 | |||||||||
1,571,951 | |||||||||||
Air Freight & Logistics | |||||||||||
1,055 | C.H. Robinson Worldwide, Inc. | 55,757 | |||||||||
515 | Expeditors International of Washington, Inc. | 18,319 | |||||||||
1,413 | FedEx Corp. | 127,594 | |||||||||
2,876 | United Parcel Service, Inc., Class B | 217,454 | |||||||||
419,124 |
NUMBER OF SHARES | VALUE | ||||||||||
Auto Components | |||||||||||
15,480 | Johnson Controls, Inc. | $ | 381,582 | ||||||||
1,200 | TRW Automotive Holdings Corp. (a) | 47,160 | |||||||||
428,742 | |||||||||||
Automobiles | |||||||||||
9,230 | Ford Motor Co. | 85,285 | |||||||||
Beverages | |||||||||||
9,527 | Coca-Cola Co. (The) | 769,781 | |||||||||
1,313 | Coca-Cola Enterprises, Inc. | 38,497 | |||||||||
670 | Dr. Pepper Snapple Group, Inc. | 30,539 | |||||||||
1,100 | Molson Coors Brewing Co. | 46,552 | |||||||||
6,226 | PepsiCo, Inc. | 452,817 | |||||||||
1,338,186 | |||||||||||
Biotechnology | |||||||||||
1,134 | Alexion Pharmaceuticals, Inc. (a) | 118,900 | |||||||||
5,173 | Amgen, Inc. | 427,290 | |||||||||
1,213 | Biogen Idec, Inc. (a) | 176,892 | |||||||||
2,472 | Celgene Corp. (a) | 169,233 | |||||||||
3,980 | Gilead Sciences, Inc. (a) | 216,233 | |||||||||
700 | Vertex Pharmaceuticals, Inc. (a) | 33,957 | |||||||||
1,142,505 | |||||||||||
Building Products | |||||||||||
21,800 | Masco Corp. | 262,254 | |||||||||
7,500 | Owens Corning (a) | 201,450 | |||||||||
1,200 | Universal Forest Products, Inc. | 38,316 | |||||||||
502,020 | |||||||||||
Capital Markets | |||||||||||
2,377 | Ameriprise Financial, Inc. | 122,938 | |||||||||
9,760 | Bank of New York Mellon Corp. (The) | 207,693 |
See Notes to Financial Statements
33
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
903 | BlackRock, Inc. | $ | 153,745 | ||||||||
6,087 | Charles Schwab Corp. (The) | 76,879 | |||||||||
956 | Franklin Resources, Inc. | 109,892 | |||||||||
3,959 | Goldman Sachs Group, Inc. (The) | 399,463 | |||||||||
3,165 | Invesco Ltd. | 70,042 | |||||||||
1,129 | Legg Mason, Inc. | 27,683 | |||||||||
2,086 | State Street Corp. | 84,233 | |||||||||
3,123 | T. Rowe Price Group, Inc. | 189,722 | |||||||||
1,442,290 | |||||||||||
Chemicals | |||||||||||
358 | Air Products & Chemicals, Inc. | 28,794 | |||||||||
282 | Airgas, Inc. | 22,368 | |||||||||
399 | Celanese Corp., Series A | 15,214 | |||||||||
489 | CF Industries Holdings, Inc. | 95,727 | |||||||||
1,326 | Dow Chemical Co. (The) | 38,162 | |||||||||
260 | Eastman Chemical Co. | 13,593 | |||||||||
1,394 | Ecolab, Inc. | 91,237 | |||||||||
10,469 | EI du Pont de Nemours & Co. | 520,309 | |||||||||
788 | FMC Corp. | 43,104 | |||||||||
2,100 | Georgia Gulf Corp. | 68,838 | |||||||||
124 | International Flavors & Fragrances, Inc. | 6,912 | |||||||||
576 | LyondellBasell Industries N.V., Class A | 25,649 | |||||||||
2,332 | Monsanto Co. | 199,666 | |||||||||
1,466 | Mosaic Co. (The) | 85,189 | |||||||||
186 | PPG Industries, Inc. | 20,360 | |||||||||
1,499 | Praxair, Inc. | 155,536 | |||||||||
38 | Sherwin-Williams Co. (The) | 5,105 |
NUMBER OF SHARES | VALUE | ||||||||||
401 | Sigma-Aldrich Corp. | $ | 27,749 | ||||||||
1,463,512 | |||||||||||
Commercial Banks | |||||||||||
5,617 | BB&T Corp. | 176,205 | |||||||||
1,852 | CIT Group, Inc. (a) | 67,635 | |||||||||
7,990 | Fifth Third Bancorp | 110,422 | |||||||||
48,306 | JPMorgan Chase & Co. | 1,739,016 | |||||||||
9,909 | KeyCorp | 79,074 | |||||||||
900 | M&T Bank Corp. | 77,256 | |||||||||
3,685 | PNC Financial Services Group, Inc. | 217,783 | |||||||||
12,568 | Regions Financial Corp. | 87,473 | |||||||||
4,210 | SunTrust Banks, Inc. | 99,567 | |||||||||
13,148 | US Bancorp | 440,458 | |||||||||
36,765 | Wells Fargo & Co. | 1,243,025 | |||||||||
4,337,914 | |||||||||||
Commercial Services & Supplies | |||||||||||
4,032 | ACCO Brands Corp. (a) | 34,151 | |||||||||
1,225 | Avery Dennison Corp. | 37,718 | |||||||||
1,313 | Cintas Corp. | 52,034 | |||||||||
2,068 | Iron Mountain, Inc. | 66,610 | |||||||||
2,106 | Pitney Bowes, Inc. | 28,136 | |||||||||
2,726 | Republic Services, Inc. | 78,863 | |||||||||
2,662 | RR Donnelley & Sons Co. | 32,264 | |||||||||
849 | Stericycle, Inc. (a) | 78,830 | |||||||||
2,981 | Waste Management, Inc. | 102,546 | |||||||||
511,152 | |||||||||||
Communications Equipment | |||||||||||
33,647 | Cisco Systems, Inc. | 536,670 | |||||||||
4,106 | Juniper Networks, Inc. (a) | 71,978 | |||||||||
771 | Motorola Solutions, Inc. | 37,270 | |||||||||
9,904 | Qualcomm, Inc. | 591,071 | |||||||||
1,236,989 |
See Notes to Financial Statements
34
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Computers & Peripherals | |||||||||||
5,921 | Apple, Inc. (a) | $ | 3,616,310 | ||||||||
5,965 | Dell, Inc. (a) | 70,864 | |||||||||
12,770 | EMC Corp. (a) | 334,702 | |||||||||
15,882 | Hewlett-Packard Co. | 289,688 | |||||||||
2,529 | NetApp, Inc. (a) | 82,622 | |||||||||
2,310 | SanDisk Corp. (a) | 95,010 | |||||||||
4,489,196 | |||||||||||
Construction & Engineering | |||||||||||
784 | Fluor Corp. | 38,870 | |||||||||
891 | Jacobs Engineering Group, Inc. (a) | 34,366 | |||||||||
1,228 | KBR, Inc. | 32,223 | |||||||||
105,459 | |||||||||||
Construction Materials | |||||||||||
2,800 | Eagle Materials, Inc. | 97,300 | |||||||||
Consumer Finance | |||||||||||
3,055 | American Express Co. | 176,304 | |||||||||
3,340 | Capital One Financial Corp. | 188,677 | |||||||||
2,469 | Discover Financial Services | 88,785 | |||||||||
4,882 | SLM Corp. | 78,063 | |||||||||
531,829 | |||||||||||
Containers & Packaging | |||||||||||
515 | Ball Corp. | 21,404 | |||||||||
566 | Crown Holdings, Inc. (a) | 20,319 | |||||||||
282 | Owens-Illinois, Inc. (a) | 5,203 | |||||||||
299 | Sealed Air Corp. | 4,844 | |||||||||
51,770 | |||||||||||
Distributors | |||||||||||
40,000 | Li & Fung Ltd. (d) | 79,023 | |||||||||
Diversified Consumer Services | |||||||||||
715 | Apollo Group, Inc., Class A (a) | 19,448 |
NUMBER OF SHARES | VALUE | ||||||||||
2,900 | H&R Block, Inc. | $ | 46,777 | ||||||||
66,225 | |||||||||||
Diversified Financial Services | |||||||||||
79,453 | Bank of America Corp. | 583,185 | |||||||||
11,876 | Citigroup, Inc. (See Note 6) | 322,196 | |||||||||
2,353 | Leucadia National Corp. | 51,013 | |||||||||
692 | Moody's Corp. | 28,047 | |||||||||
2,695 | NASDAQ OMX Group, Inc. (The) | 61,177 | |||||||||
3,332 | NYSE Euronext | 84,899 | |||||||||
1,130,517 | |||||||||||
Diversified Telecommunication Services | |||||||||||
25,751 | AT&T, Inc. | 976,478 | |||||||||
10,888 | CenturyLink, Inc. | 452,287 | |||||||||
8,200 | Frontier Communications Corp. | 32,144 | |||||||||
26,221 | Verizon Communications, Inc. | 1,183,616 | |||||||||
2,644,525 | |||||||||||
Electric Utilities | |||||||||||
3,937 | American Electric Power Co., Inc. | 166,299 | |||||||||
4,166 | Duke Energy Corp. | 282,372 | |||||||||
3,068 | Edison International | 141,680 | |||||||||
1,317 | Entergy Corp. | 95,706 | |||||||||
6,993 | Exelon Corp. | 273,566 | |||||||||
3,156 | FirstEnergy Corp. | 158,494 | |||||||||
2,801 | NextEra Energy, Inc. | 198,591 | |||||||||
3,942 | PPL Corp. | 113,924 | |||||||||
5,166 | Southern Co. | 248,743 | |||||||||
1,679,375 | |||||||||||
Electrical Equipment | |||||||||||
675 | AMETEK, Inc. | 20,925 |
See Notes to Financial Statements
35
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
864 | Cooper Industries PLC | $ | 62,104 | ||||||||
4,535 | Emerson Electric Co. | 216,637 | |||||||||
1,519 | Rockwell Automation, Inc. | 102,320 | |||||||||
339 | Roper Industries, Inc. | 33,714 | |||||||||
435,700 | |||||||||||
Electronic Equipment, Instruments & Components | |||||||||||
2,325 | Corning, Inc. | 26,528 | |||||||||
2,080 | TE Connectivity Ltd. | 68,661 | |||||||||
95,189 | |||||||||||
Energy Equipment & Services | |||||||||||
3,230 | Baker Hughes, Inc. | 149,614 | |||||||||
1,424 | Cameron International Corp. (a) | 71,584 | |||||||||
1,762 | FMC Technologies, Inc. (a) | 79,501 | |||||||||
6,015 | Halliburton Co. | 199,277 | |||||||||
641 | Helmerich & Payne, Inc. | 29,807 | |||||||||
3,450 | National Oilwell Varco, Inc. | 249,435 | |||||||||
800 | Noble Corp. (a) | 29,600 | |||||||||
8,673 | Schlumberger Ltd. | 618,038 | |||||||||
5,654 | Tenaris SA | 110,124 | |||||||||
4,898 | Weatherford International Ltd. (a) | 59,021 | |||||||||
1,596,001 | |||||||||||
Food & Staples Retailing | |||||||||||
5,403 | Costco Wholesale Corp. | 519,661 | |||||||||
6,224 | Kroger Co. (The) | 137,986 | |||||||||
15,797 | Safeway, Inc. | 245,643 | |||||||||
6,576 | Sysco Corp. | 193,269 | |||||||||
19,964 | Wal-Mart Stores, Inc. | 1,485,920 | |||||||||
10,398 | Walgreen Co. | 378,071 |
NUMBER OF SHARES | VALUE | ||||||||||
1,769 | Whole Foods Market, Inc. | $ | 162,359 | ||||||||
3,122,909 | |||||||||||
Food Products | |||||||||||
2,801 | Archer-Daniels- Midland Co. | 73,078 | |||||||||
700 | Bunge Ltd. | 46,039 | |||||||||
21,050 | ConAgra Foods, Inc. | 519,725 | |||||||||
4,224 | General Mills, Inc. | 163,469 | |||||||||
2,034 | H.J. Heinz Co. | 112,297 | |||||||||
414 | Hershey Co. (The) | 29,700 | |||||||||
400 | Hillshire Brands Co. | 10,244 | |||||||||
700 | JM Smucker Co. (The) | 53,760 | |||||||||
1,887 | Kellogg Co. | 90,010 | |||||||||
6,947 | Kraft Foods, Inc., Class A | 275,865 | |||||||||
1,212 | Mead Johnson Nutrition Co. | 88,428 | |||||||||
2,000 | Tyson Foods, Inc., Class A | 30,020 | |||||||||
1,492,635 | |||||||||||
Gas Utilities | |||||||||||
2,812 | Oneok, Inc. | 125,162 | |||||||||
Health Care Equipment & Supplies | |||||||||||
3,838 | Baxter International, Inc. | 224,561 | |||||||||
1,678 | Becton Dickinson and Co. | 127,041 | |||||||||
9,574 | Boston Scientific Corp. (a) | 49,498 | |||||||||
2,026 | Covidien PLC | 113,213 | |||||||||
481 | CR Bard, Inc. | 46,782 | |||||||||
586 | Edwards Lifesciences Corp. (a) | 59,303 | |||||||||
1,510 | Hologic, Inc. (a) | 27,965 | |||||||||
470 | Intuitive Surgical, Inc. (a) | 226,305 | |||||||||
7,032 | Medtronic, Inc. | 277,202 | |||||||||
2,569 | St. Jude Medical, Inc. | 95,978 |
See Notes to Financial Statements
36
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
2,145 | Stryker Corp. | $ | 111,604 | ||||||||
708 | Varian Medical Systems, Inc. (a) | 38,643 | |||||||||
1,660 | Zimmer Holdings, Inc. | 97,824 | |||||||||
1,495,919 | |||||||||||
Health Care Providers & Services | |||||||||||
1,735 | Aetna, Inc. | 62,564 | |||||||||
3,022 | AmerisourceBergen Corp. | 119,973 | |||||||||
2,984 | Cardinal Health, Inc. | 128,581 | |||||||||
1,673 | CIGNA Corp. | 67,388 | |||||||||
1,105 | Coventry Health Care, Inc. | 36,830 | |||||||||
569 | DaVita, Inc. (a) | 56,001 | |||||||||
5,743 | Express Scripts Holding Co. (a) | 332,749 | |||||||||
642 | Henry Schein, Inc. (a) | 48,028 | |||||||||
757 | Humana, Inc. | 46,631 | |||||||||
526 | Laboratory Corp. of America Holdings (a) | 44,231 | |||||||||
1,739 | McKesson Corp. | 157,780 | |||||||||
972 | Quest Diagnostics, Inc. | 56,794 | |||||||||
4,540 | UnitedHealth Group, Inc. | 231,949 | |||||||||
1,689 | WellPoint, Inc. | 90,007 | |||||||||
1,479,506 | |||||||||||
Health Care Technology | |||||||||||
846 | Cerner Corp. (a) | 62,536 | |||||||||
Hotels, Restaurants & Leisure | |||||||||||
1,623 | Carnival Corp. | 54,013 | |||||||||
308 | Chipotle Mexican Grill, Inc. (a) | 90,038 | |||||||||
643 | Darden Restaurants, Inc. | 32,909 | |||||||||
1,459 | International Game Technology | 16,516 |
NUMBER OF SHARES | VALUE | ||||||||||
2,019 | Las Vegas Sands Corp. | $ | 73,532 | ||||||||
1,497 | Marriott International, Inc., Class A | 54,521 | |||||||||
149 | Marriott Vacations Worldwide Corp. (a) | 4,622 | |||||||||
10,834 | McDonald's Corp. | 968,126 | |||||||||
1,732 | MGM Resorts International (a) | 16,489 | |||||||||
1,400 | Royal Caribbean Cruises Ltd. | 34,972 | |||||||||
4,216 | Starbucks Corp. | 190,900 | |||||||||
761 | Starwood Hotels & Resorts Worldwide, Inc. | 41,208 | |||||||||
678 | Wynn Resorts Ltd. | 63,562 | |||||||||
11,664 | Yum! Brands, Inc. | 756,294 | |||||||||
2,397,702 | |||||||||||
Household Durables | |||||||||||
64,200 | D.R. Horton, Inc. | 1,131,846 | |||||||||
16,100 | KB Home | 148,764 | |||||||||
36,100 | Lennar Corp., Class A | 1,054,481 | |||||||||
3,900 | M/I Homes, Inc. (a) | 64,701 | |||||||||
9,500 | MDC Holdings, Inc. | 302,670 | |||||||||
6,700 | Meritage Homes Corp. (a) | 235,170 | |||||||||
4,300 | Mohawk Industries, Inc. (a) | 285,649 | |||||||||
1,000 | NVR, Inc. (a) | 773,980 | |||||||||
77,000 | Pulte Group, Inc. (a) | 870,100 | |||||||||
8,800 | Ryland Group, Inc. (The) | 210,144 | |||||||||
69,900 | Standard Pacific Corp. (a) | 396,333 | |||||||||
32,400 | Toll Brothers, Inc. (a) | 945,108 | |||||||||
6,418,946 | |||||||||||
Household Products | |||||||||||
1,229 | Clorox Co. (The) | 89,361 | |||||||||
4,092 | Colgate-Palmolive Co. | 439,317 | |||||||||
3,162 | Kimberly-Clark Corp. | 274,809 |
See Notes to Financial Statements
37
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
18,617 | Procter & Gamble Co. (The) | $ | 1,201,541 | ||||||||
2,005,028 | |||||||||||
Industrial Conglomerates | |||||||||||
1,163 | 3M Co. | 106,100 | |||||||||
2,986 | Danaher Corp. | 157,691 | |||||||||
43,900 | General Electric Co. | 910,925 | |||||||||
12,549 | Tyco International Ltd. | 689,442 | |||||||||
1,864,158 | |||||||||||
Information Technology Services | |||||||||||
3,293 | Accenture PLC, Class A | 198,568 | |||||||||
953 | Automatic Data Processing, Inc. | 53,892 | |||||||||
2,280 | Cognizant Technology Solutions Corp., Class A (a) | 129,436 | |||||||||
823 | Fiserv, Inc. (a) | 57,717 | |||||||||
8,330 | International Business Machines Corp. | 1,632,513 | |||||||||
644 | Mastercard, Inc., Class A | 281,151 | |||||||||
1,397 | Paychex, Inc. | 45,668 | |||||||||
2,349 | Visa, Inc., Class A | 303,185 | |||||||||
4,162 | Western Union Co. (The) | 72,544 | |||||||||
2,774,674 | |||||||||||
Insurance | |||||||||||
8,955 | Chubb Corp. (The) | 650,939 | |||||||||
Internet & Catalog Retail | |||||||||||
1,224 | Amazon.com, Inc. (a) | 285,559 | |||||||||
306 | Expedia, Inc. | 17,439 | |||||||||
106 | NetFlix, Inc. (a) | 6,026 | |||||||||
303 | Priceline.com, Inc. (a) | 200,507 | |||||||||
306 | TripAdvisor, Inc. (a) | 11,448 | |||||||||
520,979 |
NUMBER OF SHARES | VALUE | ||||||||||
Internet Software & Services | |||||||||||
1,337 | Akamai Technologies, Inc. (a) | $ | 47,036 | ||||||||
5,884 | eBay, Inc. (a) | 260,661 | |||||||||
1,238 | Google, Inc., Class A (a) | 783,617 | |||||||||
4,609 | Yahoo!, Inc. (a) | 73,006 | |||||||||
1,164,320 | |||||||||||
Leisure Equipment & Products | |||||||||||
1,000 | Mattel, Inc. | 35,170 | |||||||||
Life Sciences Tools & Services | |||||||||||
2,099 | Agilent Technologies, Inc. | 80,371 | |||||||||
700 | Illumina, Inc. (a) | 29,029 | |||||||||
900 | Life Technologies Corp. (a) | 39,492 | |||||||||
2,065 | Thermo Fisher Scientific, Inc. | 114,958 | |||||||||
400 | Waters Corp. (a) | 30,992 | |||||||||
294,842 | |||||||||||
Machinery | |||||||||||
3,836 | Caterpillar, Inc. | 323,030 | |||||||||
1,165 | Cummins, Inc. | 111,724 | |||||||||
2,434 | Deere & Co. | 186,980 | |||||||||
311 | Dover Corp. | 16,940 | |||||||||
1,194 | Eaton Corp. | 52,345 | |||||||||
287 | Flowserve Corp. | 34,434 | |||||||||
10,752 | Illinois Tool Works, Inc. | 584,264 | |||||||||
971 | Ingersoll-Rand PLC | 41,180 | |||||||||
419 | Joy Global, Inc. | 21,763 | |||||||||
2,224 | PACCAR, Inc. | 88,982 | |||||||||
693 | Pall Corp. | 37,013 | |||||||||
300 | Stanley Black & Decker, Inc. | 20,067 | |||||||||
1,144 | Xylem, Inc. | 27,433 | |||||||||
1,546,155 |
See Notes to Financial Statements
38
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Media | |||||||||||
2,651 | Cablevision Systems Corp. | $ | 40,666 | ||||||||
5,878 | CBS Corp., Class B | 196,678 | |||||||||
10,072 | Comcast Corp., Class A | 327,844 | |||||||||
3,845 | Comcast Corp., Special Class A | 122,771 | |||||||||
7,134 | DIRECTV, Class A (a) | 354,274 | |||||||||
1,176 | Discovery Communications, Inc. (a) | 59,541 | |||||||||
1,229 | Discovery Communications, Inc., Class C (a) | 57,296 | |||||||||
4,650 | Interpublic Group of Cos., Inc. (The) | 45,895 | |||||||||
1,166 | Liberty Global, Inc., Series A (a) | 61,541 | |||||||||
1,140 | Liberty Global, Inc., Series C (a) | 56,818 | |||||||||
2,859 | McGraw-Hill Cos., Inc. (The) | 134,259 | |||||||||
13,607 | News Corp., Class A | 313,233 | |||||||||
3,316 | News Corp., Class B | 76,898 | |||||||||
1,839 | Omnicom Group, Inc. | 92,281 | |||||||||
632 | Scripps Networks Interactive, Inc., Class A | 34,033 | |||||||||
2,748 | Time Warner Cable, Inc. | 233,388 | |||||||||
20,835 | Time Warner, Inc. | 815,065 | |||||||||
3,043 | Viacom, Inc., Class B | 142,139 | |||||||||
2,494 | Virgin Media, Inc. | 68,286 | |||||||||
8,678 | Walt Disney Co. (The) | 426,437 | |||||||||
3,659,343 | |||||||||||
Metals & Mining | |||||||||||
3,482 | Alcoa, Inc. | 29,493 | |||||||||
402 | Allegheny Technologies, Inc. | 12,072 |
NUMBER OF SHARES | VALUE | ||||||||||
886 | Cliffs Natural Resources, Inc. | $ | 36,229 | ||||||||
1,747 | Freeport-McMoRan Copper & Gold, Inc. | 58,821 | |||||||||
2,283 | Newmont Mining Corp. | 101,525 | |||||||||
631 | Nucor Corp. | 24,735 | |||||||||
408 | United States Steel Corp. | 8,425 | |||||||||
271,300 | |||||||||||
Multi-Utilities | |||||||||||
2,453 | Ameren Corp. | 83,917 | |||||||||
4,645 | CenterPoint Energy, Inc. | 97,824 | |||||||||
2,275 | Consolidated Edison, Inc. | 146,738 | |||||||||
4,114 | Dominion Resources, Inc. | 223,431 | |||||||||
1,578 | DTE Energy Co. | 96,842 | |||||||||
8,725 | Integrys Energy Group, Inc. | 528,211 | |||||||||
2,890 | PG&E Corp. | 133,402 | |||||||||
3,937 | Public Service Enterprise Group, Inc. | 130,866 | |||||||||
2,098 | Sempra Energy | 147,720 | |||||||||
2,542 | Wisconsin Energy Corp. | 103,561 | |||||||||
3,765 | Xcel Energy, Inc. | 110,315 | |||||||||
1,802,827 | |||||||||||
Multi-line Retail | |||||||||||
274 | Dollar General Corp. (a) | 13,977 | |||||||||
548 | Dollar Tree, Inc. (a) | 27,586 | |||||||||
274 | Family Dollar Stores, Inc. | 18,106 | |||||||||
1,678 | Kohl's Corp. | 83,430 | |||||||||
512 | Nordstrom, Inc. | 27,720 | |||||||||
1,961 | Target Corp. | 118,935 | |||||||||
289,754 | |||||||||||
Office Electronics | |||||||||||
4,000 | Xerox Corp. | 27,720 |
See Notes to Financial Statements
39
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
Oil, Gas & Consumable Fuels | |||||||||||
738 | Alpha Natural Resources, Inc. (a) | $ | 5,173 | ||||||||
2,861 | Anadarko Petroleum Corp. | 198,668 | |||||||||
2,144 | Apache Corp. | 184,641 | |||||||||
843 | Arch Coal, Inc. | 6,078 | |||||||||
3,460 | Chesapeake Energy Corp. | 65,117 | |||||||||
14,456 | Chevron Corp. | 1,584,089 | |||||||||
548 | Concho Resources, Inc. (a) | 46,717 | |||||||||
14,434 | ConocoPhillips | 785,787 | |||||||||
1,194 | Consol Energy, Inc. | 34,602 | |||||||||
2,004 | Devon Energy Corp. | 118,477 | |||||||||
1,720 | EOG Resources, Inc. | 168,577 | |||||||||
908 | EQT Corp. | 51,211 | |||||||||
28,952 | Exxon Mobil Corp. | 2,514,481 | |||||||||
1,403 | Hess Corp. | 66,166 | |||||||||
3,640 | Marathon Oil Corp. | 96,351 | |||||||||
1,823 | Marathon Petroleum Corp. | 86,228 | |||||||||
799 | Murphy Oil Corp. | 42,874 | |||||||||
510 | Newfield Exploration Co. (a) | 15,570 | |||||||||
1,111 | Noble Energy, Inc. | 97,135 | |||||||||
6,522 | Occidental Petroleum Corp. | 567,610 | |||||||||
2,184 | Peabody Energy Corp. | 45,602 | |||||||||
7,217 | Phillips 66 | 271,359 | |||||||||
683 | Pioneer Natural Resources Co. | 60,534 | |||||||||
1,124 | QEP Resources, Inc. | 33,754 | |||||||||
1,224 | Range Resources Corp. | 76,622 | |||||||||
2,652 | Southwestern Energy Co. (a) | 88,179 | |||||||||
4,166 | Spectra Energy Corp. | 127,855 | |||||||||
1,336 | Ultra Petroleum Corp. (a) | 31,743 |
NUMBER OF SHARES | VALUE | ||||||||||
3,104 | Valero Energy Corp. | $ | 85,360 | ||||||||
7,502 | Williams Cos., Inc. (The) | 238,489 | |||||||||
3,456 | WPX Energy, Inc. (a) | 55,123 | |||||||||
7,850,172 | |||||||||||
Paper & Forest Products | |||||||||||
800 | Deltic Timber Corp. | 49,448 | |||||||||
455 | International Paper Co. | 14,928 | |||||||||
8,700 | Louisiana-Pacific Corp. (a) | 89,784 | |||||||||
12,224 | MeadWestvaco Corp. | 347,162 | |||||||||
501,322 | |||||||||||
Personal Products | |||||||||||
4,000 | Avon Products, Inc. | 61,960 | |||||||||
2,863 | Estee Lauder Cos., Inc. (The), Class A | 149,964 | |||||||||
211,924 | |||||||||||
Pharmaceuticals | |||||||||||
16,582 | Abbott Laboratories | 1,099,552 | |||||||||
1,610 | Allergan, Inc. | 132,133 | |||||||||
30,001 | Bristol-Myers Squibb Co. | 1,068,036 | |||||||||
4,343 | Eli Lilly & Co. | 191,222 | |||||||||
972 | Hospira, Inc. (a) | 33,777 | |||||||||
12,473 | Johnson & Johnson | 863,381 | |||||||||
12,611 | Merck & Co., Inc. | 557,028 | |||||||||
1,700 | Mylan, Inc. (a) | 39,151 | |||||||||
400 | Perrigo Co. | 45,608 | |||||||||
32,581 | Pfizer, Inc. | 783,247 | |||||||||
400 | Watson Pharmaceuticals, Inc. (a) | 31,132 | |||||||||
4,844,267 | |||||||||||
Professional Services | |||||||||||
665 | Dun & Bradstreet Corp. (The) | 53,326 | |||||||||
1,333 | Equifax, Inc. | 62,438 | |||||||||
541 | IHS, Inc., Class A (a) | 59,656 |
See Notes to Financial Statements
40
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
1,354 | Manpower, Inc. | $ | 48,175 | ||||||||
1,949 | Robert Half International, Inc. | 52,643 | |||||||||
1,789 | Verisk Analytics, Inc., Class A (a) | 89,897 | |||||||||
366,135 | |||||||||||
Real Estate Investment Trusts (REITs) | |||||||||||
3,178 | American Tower Corp. REIT | 229,801 | |||||||||
2,608 | Annaly Capital Management, Inc. REIT | 45,457 | |||||||||
1,203 | AvalonBay Communities, Inc. REIT | 176,949 | |||||||||
1,295 | Boston Properties, Inc. REIT | 143,616 | |||||||||
2,430 | Equity Residential REIT | 153,843 | |||||||||
1,323 | General Growth Properties, Inc. REIT | 23,973 | |||||||||
1,242 | HCP, Inc. REIT | 58,635 | |||||||||
554 | Health Care REIT, Inc. REIT | 34,475 | |||||||||
8,204 | Host Hotels & Resorts, Inc. REIT | 120,435 | |||||||||
1,278 | Kimco Realty Corp. REIT | 24,908 | |||||||||
454 | Liberty Property Trust REIT | 16,476 | |||||||||
462 | Macerich Co. (The) REIT | 26,985 | |||||||||
487 | Plum Creek Timber Co., Inc. REIT | 19,767 | |||||||||
3,791 | ProLogis, Inc. REIT | 122,563 | |||||||||
3,198 | Public Storage REIT | 476,342 | |||||||||
497 | Rayonier, Inc. REIT | 23,702 | |||||||||
303 | Regency Centers Corp. REIT | 14,499 |
NUMBER OF SHARES | VALUE | ||||||||||
49 | Rouse Properties, Inc. REIT | $ | 678 | ||||||||
4,511 | Simon Property Group, Inc. REIT | 723,970 | |||||||||
403 | Ventas, Inc. REIT | 27,102 | |||||||||
407 | Vornado Realty Trust REIT | 33,985 | |||||||||
1,599 | Weyerhaeuser Co. REIT | 37,337 | |||||||||
2,535,498 | |||||||||||
Real Estate Management & Development | |||||||||||
5,179 | CBRE Group, Inc., Class A (a) | 80,689 | |||||||||
9,091 | Lend Lease Group REIT (Stapled Securities) (b)(c) | 77,385 | |||||||||
158,074 | |||||||||||
Road & Rail | |||||||||||
4,977 | CSX Corp. | 114,172 | |||||||||
312 | JB Hunt Transport Services, Inc. | 17,166 | |||||||||
10,388 | Norfolk Southern Corp. | 769,232 | |||||||||
1,978 | Union Pacific Corp. | 242,523 | |||||||||
1,143,093 | |||||||||||
Semiconductors & Semiconductor Equipment | |||||||||||
2,800 | Advanced Micro Devices, Inc. (a) | 11,368 | |||||||||
3,773 | Altera Corp. | 133,753 | |||||||||
3,558 | Analog Devices, Inc. | 139,047 | |||||||||
5,300 | Applied Materials, Inc. | 57,717 | |||||||||
1,100 | Avago Technologies Ltd. | 40,700 | |||||||||
4,541 | Broadcom Corp., Class A (a) | 153,849 | |||||||||
200 | First Solar, Inc. (a) | 3,108 |
See Notes to Financial Statements
41
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
28,622 | Intel Corp. | $ | 735,585 | ||||||||
800 | KLA-Tencor Corp. | 40,728 | |||||||||
700 | Lam Research Corp. (a) | 24,087 | |||||||||
1,300 | Linear Technology Corp. | 41,925 | |||||||||
2,800 | LSI Corp. (a) | 19,320 | |||||||||
2,600 | Marvell Technology Group Ltd. | 29,276 | |||||||||
1,100 | Maxim Integrated Products, Inc. | 29,953 | |||||||||
700 | Microchip Technology, Inc. | 23,366 | |||||||||
4,200 | Micron Technology, Inc. (a) | 26,082 | |||||||||
2,600 | NVIDIA Corp. (a) | 35,204 | |||||||||
9,287 | Texas Instruments, Inc. | 252,978 | |||||||||
1,100 | Xilinx, Inc. | 35,640 | |||||||||
1,833,686 | |||||||||||
Software | |||||||||||
2,714 | Adobe Systems, Inc. (a) | 83,808 | |||||||||
1,084 | BMC Software, Inc. (a) | 42,926 | |||||||||
1,963 | CA, Inc. | 47,249 | |||||||||
1,172 | Citrix Systems, Inc. (a) | 85,181 | |||||||||
2,338 | Intuit, Inc. | 135,651 | |||||||||
48,212 | Microsoft Corp. | 1,420,808 | |||||||||
18,164 | Oracle Corp. | 548,553 | |||||||||
624 | Salesforce.com, Inc. (a) | 77,601 | |||||||||
4,850 | Symantec Corp. (a) | 76,387 | |||||||||
2,518,164 | |||||||||||
Specialty Retail | |||||||||||
232 | Abercrombie & Fitch Co., Class A | 7,842 | |||||||||
232 | Advance Auto Parts, Inc. | 16,275 | |||||||||
106 | AutoZone, Inc. (a) | 39,774 | |||||||||
1,243 | Bed Bath & Beyond, Inc. (a) | 75,761 |
NUMBER OF SHARES | VALUE | ||||||||||
908 | Best Buy Co., Inc. | $ | 16,426 | ||||||||
575 | CarMax, Inc. (a) | 16,002 | |||||||||
507 | GameStop Corp., Class A | 8,122 | |||||||||
781 | Gap, Inc. (The) | 23,032 | |||||||||
14,525 | Home Depot, Inc. | 757,914 | |||||||||
5,705 | Lowe's Cos., Inc. | 144,736 | |||||||||
1,879 | Ltd. Brands, Inc. | 89,346 | |||||||||
942 | O'Reilly Automotive, Inc. (a) | 80,767 | |||||||||
274 | PetSmart, Inc. | 18,114 | |||||||||
1,530 | Ross Stores, Inc. | 101,653 | |||||||||
4,882 | Staples, Inc. | 62,197 | |||||||||
401 | Tiffany & Co. | 22,027 | |||||||||
3,516 | TJX Cos., Inc. | 155,688 | |||||||||
274 | Urban Outfitters, Inc. (a) | 8,371 | |||||||||
1,644,047 | |||||||||||
Textiles, Apparel & Luxury Goods | |||||||||||
1,058 | Coach, Inc. | 52,191 | |||||||||
1,314 | NIKE, Inc., Class B | 122,662 | |||||||||
4,039 | VF Corp. | 603,023 | |||||||||
777,876 | |||||||||||
Thrifts & Mortgage Finance | |||||||||||
4,800 | New York Community Bancorp, Inc. | 62,304 | |||||||||
Tobacco | |||||||||||
8,392 | Altria Group, Inc. | 301,860 | |||||||||
656 | Lorillard, Inc. | 84,388 | |||||||||
14,271 | Philip Morris International, Inc. | 1,304,940 | |||||||||
12,366 | Reynolds American, Inc. | 572,175 | |||||||||
2,263,363 | |||||||||||
Trading Companies & Distributors | |||||||||||
1,866 | Fastenal Co. | 80,462 | |||||||||
2,000 | Watsco, Inc. | 135,880 |
See Notes to Financial Statements
42
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES | VALUE | ||||||||||
556 | WW Grainger, Inc. | $ | 113,885 | ||||||||
330,227 | |||||||||||
Wireless Telecommunication Services | |||||||||||
2,971 | Crown Castle International Corp. (a) | 183,846 | |||||||||
1,500 | NII Holdings, Inc. (a) | 10,125 | |||||||||
20,300 | Sprint Nextel Corp. (a) | 88,508 | |||||||||
282,479 | |||||||||||
Total United States | 88,306,934 | ||||||||||
Total Common Stocks (Cost $197,976,522) | 203,933,025 | ||||||||||
Commodity Linked Securities (2.7%) | |||||||||||
United States | |||||||||||
11,802,000 | Deutsche Bank AG, Series 0003 (Cost $10,839,637) (e)(f) | 12,088,789 | |||||||||
Investment Companies (0.8%) | |||||||||||
8,000 | iShares MSCI Emerging Markets Index Fund | 312,960 | |||||||||
110,800 | Technology Select Sector SPDR Fund | 3,242,008 | |||||||||
Total Investment Companies (Cost $3,252,724) | 3,554,968 | ||||||||||
NUMBER OF RIGHTS | |||||||||||
Rights (0.0%) | |||||||||||
Norway | |||||||||||
4,080 | Renewable Energy (Cost $0) (a) | 406 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Corporate Bonds (9.4%) | |||||||||||
Australia (0.9%) | |||||||||||
Consumer, Cyclical | |||||||||||
$ | 195 | Wesfarmers Ltd. (e) 2.983% 05/18/16 | $ | 201,702 | |||||||
Consumer, Non-Cyclical | |||||||||||
195 | Woolworths Ltd. (e) 4.00% 09/22/20 | 211,368 | |||||||||
Finance | |||||||||||
EUR | 400 | Australia & New Zealand Banking Group Ltd. 5.125% 09/10/19 | 540,753 | ||||||||
$ | 500 | Commonwealth Bank of Australia (e) 2.90% 09/17/14 | 524,091 | ||||||||
355 | Commonwealth Bank of Australia (e) 5.00% 10/15/19 | 401,889 | |||||||||
515 | Macquarie Bank Ltd. (e) 3.30% 07/17/14 | 542,084 | |||||||||
245 | Macquarie Bank Ltd. (e) 6.625% 04/07/21 | 252,957 | |||||||||
235 | Macquarie Group Ltd. (e) 6.00% 01/14/20 | 240,750 | |||||||||
400 | National Australia Bank Ltd. (e) 3.375% 07/08/14 | 421,422 | |||||||||
325 | QBE Capital Funding III Ltd. (e) 7.25% (g) 05/24/41 | 304,763 | |||||||||
90 | Westpac Banking Corp. 3.00% 12/09/15 | 94,368 | |||||||||
3,323,077 | |||||||||||
Information Technology | |||||||||||
245 | Westpac Banking Corp. 4.20% 02/27/15 | 263,102 | |||||||||
Total Australia | 3,999,249 |
See Notes to Financial Statements
43
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Belgium (0.1%) | |||||||||||
Consumer, Non-Cyclical | |||||||||||
$ | 200 | Anheuser-Busch InBev Worldwide, Inc. 4.125% 01/15/15 | $ | 216,534 | |||||||
85 | Anheuser-Busch InBev Worldwide, Inc. 5.00% 04/15/20 | 103,010 | |||||||||
45 | Anheuser-Busch InBev Worldwide, Inc. 5.375% 11/15/14 | 49,872 | |||||||||
Total Belgium | 369,416 | ||||||||||
Brazil (0.2%) | |||||||||||
Basic Materials | |||||||||||
185 | Vale Overseas Ltd. 5.625% 09/15/19 | 209,376 | |||||||||
50 | Vale Overseas Ltd. 6.875% 11/10/39 | 60,954 | |||||||||
270,330 | |||||||||||
Energy | |||||||||||
330 | Petrobras International Finance Co. 5.75% 01/20/20 | 374,496 | |||||||||
Finance | |||||||||||
290 | Banco Votorantim SA (e) 5.25% 02/11/16 | 298,700 | |||||||||
Total Brazil | 943,526 | ||||||||||
Canada (0.2%) | |||||||||||
Finance | |||||||||||
615 | Bank of Montreal (e) 2.85% 06/09/15 | 653,764 | |||||||||
380 | Brookfield Asset Management, Inc. 5.80% 04/25/17 | 418,243 | |||||||||
Total Canada | 1,072,007 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Chile (0.1%) | |||||||||||
Basic Materials | |||||||||||
$ | 381 | Inversiones CMPC SA (e) 4.50% 04/25/22 | $ | 389,192 | |||||||
China (0.1%) | |||||||||||
Energy | |||||||||||
217,000 | Sinopec Group Overseas Development 2012 Ltd. (d)(e) | 224,966 | |||||||||
France (0.6%) | |||||||||||
Communications | |||||||||||
145 | Vivendi SA (e) 6.625% 04/04/18 | 162,108 | |||||||||
Finance | |||||||||||
EUR | 400 | Banque Federative du Credit Mutuel SA 3.00% 10/29/15 | 511,877 | ||||||||
$ | 455 | BNP Paribas SA 5.00% 01/15/21 | 487,849 | ||||||||
EUR | 300 | Credit Agricole SA 3.90% 04/19/21 | 311,352 | ||||||||
350 | Credit Agricole SA 5.875% 06/11/19 | 428,806 | |||||||||
$ | 200 | Societe Generale SA (e) 5.20% 04/15/21 | 205,658 | ||||||||
1,945,542 | |||||||||||
Utilities | |||||||||||
EUR | 400 | Veolia Environnement SA 6.75% 04/24/19 | 619,098 | ||||||||
Total France | 2,726,748 | ||||||||||
Germany (0.2%) | |||||||||||
Communications | |||||||||||
$ | 150 | Deutsche Telekom International Finance BV 8.75% 06/15/30 | 221,818 |
See Notes to Financial Statements
44
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Consumer, Cyclical | |||||||||||
$ | 45 | Daimler Finance North America LLC 8.50% 01/18/31 | $ | 71,613 | |||||||
Finance | |||||||||||
EUR | 400 | Deutsche Bank AG 5.00% 06/24/20 | 515,390 | ||||||||
Total Germany | 808,821 | ||||||||||
Israel (0.1%) | |||||||||||
Consumer, Non-Cyclical | |||||||||||
$ | 360 | Teva Pharmaceutical Finance IV BV 3.65% 11/10/21 | 392,964 | ||||||||
Italy (0.7%) | |||||||||||
Communications | |||||||||||
EUR | 400 | Telecom Italia Finance SA 7.75% 01/24/33 | 497,804 | ||||||||
Finance | |||||||||||
500 | Finmeccanica Finance SA 8.125% 12/03/13 | 654,050 | |||||||||
400 | Intesa Sanpaolo SpA 4.125% 04/14/20 | 432,327 | |||||||||
500 | UniCredit SpA 4.375% 02/10/14 | 614,001 | |||||||||
300 | UniCredit SpA 5.75% 09/26/17 | 348,321 | |||||||||
2,048,699 | |||||||||||
Utilities | |||||||||||
$ | 650 | Enel Finance International N.V. (e) 5.125% 10/07/19 | 640,561 | ||||||||
Total Italy | 3,187,064 | ||||||||||
Luxembourg (0.1%) | |||||||||||
Basic Materials | |||||||||||
390 | ArcelorMittal 9.85% 06/01/19 | 469,290 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Mexico (0.1%) | |||||||||||
Finance | |||||||||||
$ | 625 | BBVA Bancomer SA (e) 4.50% 03/10/16 | $ | 650,000 | |||||||
Netherlands (0.4%) | |||||||||||
Finance | |||||||||||
EUR | 200 | ABN Amro Bank N.V. 3.625% 10/06/17 | 261,887 | ||||||||
$ | 335 | Aegon N.V. 4.625% 12/01/15 | 360,642 | ||||||||
EUR | 300 | Cooperatieve Centrale Raiffeisen- Boerenleenbank BA, Series G 3.75% 11/09/20 | 367,209 | ||||||||
$ | 600 | ING Bank N.V. (e) 3.90% 03/19/14 | 630,987 | ||||||||
Total Netherlands | 1,620,725 | ||||||||||
Spain (0.2%) | |||||||||||
Finance | |||||||||||
EUR | 350 | Gas Natural Capital Markets SA 4.125% 01/26/18 | 386,768 | ||||||||
$ | 125 | Santander Holdings USA, Inc. 4.625% 04/19/16 | 124,080 | ||||||||
510,848 | |||||||||||
Utilities | |||||||||||
200 | Iberdrola Finance Ireland Ltd. (e) 5.00% 09/11/19 | 189,496 | |||||||||
Total Spain | 700,344 | ||||||||||
Sweden (0.1%) | |||||||||||
Finance | |||||||||||
EUR | 480 | Nordea Bank AB 4.00% 03/29/21 | 569,972 |
See Notes to Financial Statements
45
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Switzerland (0.1%) | |||||||||||
Finance | |||||||||||
$ | 175 | ABB Treasury Center USA, Inc. (e) 2.50% 06/15/16 | $ | 182,811 | |||||||
110 | Credit Suisse 5.40% 01/14/20 | 119,058 | |||||||||
90 | Credit Suisse 6.00% 02/15/18 | 99,739 | |||||||||
Total Switzerland | 401,608 | ||||||||||
United Kingdom (1.5%) | |||||||||||
Communications | |||||||||||
100 | WPP Finance UK 8.00% 09/15/14 | 113,166 | |||||||||
Consumer, Non-Cyclical | |||||||||||
375 | BAT International Finance PLC (e) 2.125% 06/07/17 | 381,850 | |||||||||
155 | BAT International Finance PLC (e) 9.50% 11/15/18 | 213,055 | |||||||||
200 | Diageo Capital PLC 1.50% 05/11/17 | 204,065 | |||||||||
200 | Diageo Investment Corp. 2.875% 05/11/22 | 210,458 | |||||||||
EUR | 350 | Imperial Tobacco Finance PLC 8.375% 02/17/16 | 530,773 | ||||||||
1,540,201 | |||||||||||
Finance | |||||||||||
650 | Abbey National Treasury Services PLC 3.625% 10/14/16 | 863,922 | |||||||||
$ | 265 | Abbey National Treasury Services PLC (e) 3.875% 11/10/14 | 265,196 | ||||||||
EUR | 200 | Barclays Bank PLC 6.00% 01/23/18 | 246,147 | ||||||||
250 | Barclays Bank PLC 6.00% 01/14/21 | 295,395 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
EUR | 300 | FCE Bank PLC 4.75% 01/19/15 | $ | 392,194 | |||||||
400 | HSBC Holdings PLC 6.00% 06/10/19 | 551,240 | |||||||||
300 | Lloyds TSB Bank PLC 6.375% 06/17/16 | 420,896 | |||||||||
250 | Lloyds TSB Bank PLC 6.50% 03/24/20 | 291,248 | |||||||||
$ | 150 | Lloyds TSB Bank PLC, MTN (e) 5.80% 01/13/20 | 165,657 | ||||||||
525 | Nationwide Building Society (e) 6.25% 02/25/20 | 580,019 | |||||||||
EUR | 350 | Royal Bank of Scotland PLC (The) 5.50% 03/23/20 | 473,322 | ||||||||
$ | 160 | Standard Chartered PLC (e) 3.85% 04/27/15 | 168,903 | ||||||||
4,714,139 | |||||||||||
Industrials | |||||||||||
EUR | 300 | BAA Funding Ltd. 4.60% 02/15/18 | 411,222 | ||||||||
Total United Kingdom | 6,778,728 | ||||||||||
United States (3.7%) | |||||||||||
Basic Materials | |||||||||||
$ | 275 | Georgia-Pacific LLC 8.875% 05/15/31 | 404,028 | ||||||||
Communications | |||||||||||
300 | AT&T, Inc. 6.30% 01/15/38 | 399,911 | |||||||||
40 | CenturyLink, Inc. 6.45% 06/15/21 | 44,216 | |||||||||
65 | CenturyLink, Inc., Series Q 6.15% 09/15/19 | 70,376 | |||||||||
105 | Comcast Corp. 5.70% 05/15/18 | 126,420 |
See Notes to Financial Statements
46
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
$ | 50 | Comcast Corp. 6.40% 05/15/38 | $ | 65,370 | |||||||
100 | DirecTV Holdings LLC/ DirecTV Financing Co., Inc. 3.80% 03/15/22 | 105,908 | |||||||||
175 | NBC Universal Media LLC 4.375% 04/01/21 | 198,148 | |||||||||
285 | Omnicom Group, Inc. 3.625% 05/01/22 | 303,792 | |||||||||
125 | Qwest Corp. 6.875% 09/15/33 | 126,562 | |||||||||
105 | Time Warner Cable, Inc. 6.75% 06/15/39 | 137,741 | |||||||||
60 | Verizon Communications, Inc. 5.85% 09/15/35 | 77,984 | |||||||||
150 | Verizon Communications, Inc. 6.35% 04/01/19 | 191,412 | |||||||||
125 | Verizon Communications, Inc. 8.95% 03/01/39 | 216,681 | |||||||||
2,064,521 | |||||||||||
Consumer, Cyclical | |||||||||||
175 | Home Depot, Inc. 5.40% 09/15/40 | 227,997 | |||||||||
400 | Home Depot, Inc. 5.875% 12/16/36 | 541,639 | |||||||||
769,636 | |||||||||||
Consumer, Non-Cyclical | |||||||||||
85 | Altria Group, Inc. 4.125% 09/11/15 | 93,061 | |||||||||
185 | Altria Group, Inc. 9.25% 08/06/19 | 261,394 | |||||||||
300 | Boston Scientific Corp. 6.00% 01/15/20 | 362,239 | |||||||||
25 | Gilead Sciences, Inc. 5.65% 12/01/41 | 31,641 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
$ | 265 | SABMiller Holdings, Inc. (e) 3.75% 01/15/22 | $ | 291,202 | |||||||
185 | UnitedHealth Group, Inc. 3.375% 11/15/21 | 198,248 | |||||||||
210 | UnitedHealth Group, Inc. 4.625% 11/15/41 | 237,562 | |||||||||
1,475,347 | |||||||||||
Energy | |||||||||||
125 | Kinder Morgan Energy Partners LP 5.95% 02/15/18 | 148,063 | |||||||||
275 | Marathon Petroleum Corp. 5.125% 03/01/21 | 317,440 | |||||||||
190 | Plains All American Pipeline LP/PAA Finance Corp. 6.70% 05/15/36 | 239,743 | |||||||||
190 | Plains All American Pipeline LP/PAA Finance Corp. 8.75% 05/01/19 | 253,430 | |||||||||
958,676 | |||||||||||
Finance | |||||||||||
350 | Bank of America Corp., Series L 5.65% 05/01/18 | 386,875 | |||||||||
180 | BNP Paribas/BNP Paribas US Medium-Term Note Program LLC (e) 5.125% 01/15/15 | 181,850 | |||||||||
75 | Boston Properties LP 5.875% 10/15/19 | 88,520 | |||||||||
455 | Capital One Bank, USA NA 8.80% 07/15/19 | 586,842 |
See Notes to Financial Statements
47
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
$ | 245 | Citigroup, Inc. (See Note 6) 6.125% 05/15/18 | $ | 280,157 | |||||||
720 | Citigroup, Inc. (See Note 6) 8.50% 05/22/19 | 915,420 | |||||||||
235 | Farmers Exchange Capital (e) 7.05% 07/15/28 | 281,867 | |||||||||
430 | Ford Motor Credit Co., LLC (e) 4.207% 04/15/16 | 445,557 | |||||||||
275 | General Electric Capital Corp. 5.30% 02/11/21 | 315,676 | |||||||||
635 | General Electric Capital Corp., Series G 6.00% 08/07/19 | 766,456 | |||||||||
275 | Genworth Financial, Inc. 7.20% 02/15/21 | 269,872 | |||||||||
775 | Goldman Sachs Group, Inc. (The) 6.15% 04/01/18 | 870,630 | |||||||||
255 | Goldman Sachs Group, Inc. (The) 6.75% 10/01/37 | 262,977 | |||||||||
135 | Harley-Davidson Funding Corp. (e) 6.80% 06/15/18 | 163,680 | |||||||||
365 | JPMorgan Chase & Co. 4.625% 05/10/21 | 406,994 | |||||||||
75 | JPMorgan Chase & Co. 6.00% 01/15/18 | 88,875 | |||||||||
1,280 | Merrill Lynch & Co., Inc., MTN 6.875% 04/25/18 | 1,479,224 | |||||||||
265 | Prudential Financial, Inc., MTN 4.75% 09/17/15 | 289,768 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
$ | 150 | Prudential Financial, Inc., MTN 6.625% 12/01/37 | $ | 180,011 | |||||||
435 | SLM Corp., MTN 6.25% 01/25/16 | 463,275 | |||||||||
8,724,526 | |||||||||||
Industrials | |||||||||||
155 | Agilent Technologies, Inc. 5.50% 09/14/15 | 174,270 | |||||||||
375 | CRH America, Inc. 6.00% 09/30/16 | 415,992 | |||||||||
255 | L-3 Communications Corp. 4.75% 07/15/20 | 277,596 | |||||||||
250 | United Technologies Corp. 4.50% 06/01/42 | 291,180 | |||||||||
1,159,038 | |||||||||||
Technology | |||||||||||
410 | Hewlett-Packard Co. 4.65% 12/09/21 | 431,744 | |||||||||
Utilities | |||||||||||
375 | PPL WEM Holdings PLC (e) 3.90% 05/01/16 | 391,293 | |||||||||
Total United States | 16,378,809 | ||||||||||
Total Corporate Bonds (Cost $40,010,253) | 41,683,429 | ||||||||||
Sovereign (20.5%) | |||||||||||
Australia (0.9%) | |||||||||||
AUD | 1,950 | Australia Government Bond 5.25% 03/15/19 | 2,356,197 | ||||||||
1,600 | Treasury Corp. of Victoria 5.75% 11/15/16 | 1,836,466 | |||||||||
Total Australia | 4,192,663 |
See Notes to Financial Statements
48
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Brazil (0.3%) | |||||||||||
$ | 1000 | Banco Nacional de Desenvolvimento, Economico e Social 5.50% 07/12/20 | $ | 1,155,000 | |||||||
Canada (1.6%) | |||||||||||
EUR | 300 | Canada Government International Bond 3.50% 01/13/20 | 436,740 | ||||||||
CAD | 300 | Canadian Government Bond 3.75% 06/01/19 | 343,535 | ||||||||
4,750 | Canadian Government Bond 4.25% 06/01/18 | 5,490,315 | |||||||||
EUR | 600 | Province of Ontario Canada 4.00% 12/03/19 | 861,075 | ||||||||
Total Canada | 7,131,665 | ||||||||||
Chile (0.4%) | |||||||||||
CLP | 859,000 | Chile Government International Bond 5.50% 08/05/20 | 1,958,217 | ||||||||
Denmark (0.2%) | |||||||||||
DKK | 3,300 | Denmark Government Bond 4.00% 11/15/19 | 675,730 | ||||||||
France (1.7%) | |||||||||||
EUR | 100 | France Government Bond OAT 3.25% 10/25/21 | 135,982 | ||||||||
1,000 | France Government Bond OAT 4.00% 04/25/18 | 1,427,509 | |||||||||
4,500 | French Treasury Note BTAN 3.00% 07/12/14 | 5,848,083 | |||||||||
Total France | 7,411,574 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Germany (2.6%) | |||||||||||
EUR | 3,800 | Bundesobligation 2.75% 04/08/16 | $ | 5,130,424 | |||||||
535 | Bundesrepublik Deutschland 1.75% 07/04/22 | 686,274 | |||||||||
100 | Bundesrepublik Deutschland 2.25% 09/04/21 | 134,809 | |||||||||
1,050 | Bundesrepublik Deutschland 4.25% 07/04/39 | 1,872,508 | |||||||||
2,050 | Bundesrepublik Deutschland 4.75% 07/04/34 | 3,748,954 | |||||||||
Total Germany | 11,572,969 | ||||||||||
Italy (0.8%) | |||||||||||
1,000 | Italy Buoni Poliennali Del Tesoro 3.00% 06/15/15 | 1,177,592 | |||||||||
1,500 | Italy Buoni Poliennali Del Tesoro 4.50% 02/01/18 | 1,768,343 | |||||||||
600 | Italy Buoni Poliennali Del Tesoro 5.00% 03/01/22 | 692,484 | |||||||||
Total Italy | 3,638,419 | ||||||||||
Japan (4.3%) | |||||||||||
JPY | 110,000 | Japan Finance Organization for Municipalities 1.90% 06/22/18 | 1,543,040 | ||||||||
140,000 | Japan Government Ten Year Bond 1.30% 12/20/13 | 1,821,631 | |||||||||
380,000 | Japan Government Ten Year Bond 1.40% 09/20/15 | 5,060,442 |
See Notes to Financial Statements
49
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
JPY | 190,000 | Japan Government Ten Year Bond 1.70% 06/20/18 | $ | 2,631,560 | |||||||
120,000 | Japan Government Ten Year Bond 1.90% 06/20/16 | 1,641,333 | |||||||||
505,000 | Japan Government Thirty Year Bond 1.70% 06/20/33 | 6,533,236 | |||||||||
Total Japan | 19,231,242 | ||||||||||
Kazakhstan (0.3%) | |||||||||||
$ | 1,000 | KazMunayGas National Co. 6.375% 04/09/21 | 1,164,540 | ||||||||
Korea, Republic of (0.3%) | |||||||||||
200 | Korea Development Bank (The) 3.875% 05/04/17 | 213,605 | |||||||||
200 | Korea Development Bank (The) 4.375% 08/10/15 | 215,147 | |||||||||
630 | Korea Finance Corp. 4.625% 11/16/21 | 697,300 | |||||||||
150 | Republic of Korea 7.125% 04/16/19 | 193,954 | |||||||||
Total Korea, Republic of | 1,320,006 | ||||||||||
Mexico (1.1%) | |||||||||||
MXN | 4,100 | Mexican Bonos 7.50% 06/03/27 | 362,918 | ||||||||
30,900 | Mexican Bonos 10.00% 12/05/24 | 3,300,922 | |||||||||
$ | 1,000 | Petroleos Mexicanos 4.875% 01/24/22 | 1,130,000 | ||||||||
Total Mexico | 4,793,840 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Netherlands (0.6%) | |||||||||||
EUR | 1,900 | Netherlands Government Bond (e) 4.00% 07/15/19 | $ | 2,783,507 | |||||||
Norway (0.1%) | |||||||||||
NOK | 3,500 | Norway Government Bond 6.50% 05/15/13 | 604,087 | ||||||||
Poland (0.6%) | |||||||||||
PLN | 6,000 | Poland Government Bond 5.25% 10/25/17 | 1,864,563 | ||||||||
$ | 500 | Poland Government International Bond 5.00% 03/23/22 | 575,000 | ||||||||
Total Poland | 2,439,563 | ||||||||||
Qatar (0.2%) | |||||||||||
900 | Qatar Government International Bond (e) 4.00% 01/20/15 | 953,100 | |||||||||
Russia (0.2%) | |||||||||||
800 | Russian Foreign Bond - Eurobond (e) 3.25% 04/04/17 | 830,320 | |||||||||
South Africa (0.4%) | |||||||||||
900 | Eskom Holdings SOC Ltd. 5.75% 01/26/21 | 1,002,375 | |||||||||
ZAR | 6,000 | South Africa Government Bond 7.25% 01/15/20 | 756,272 | ||||||||
Total South Africa | 1,758,647 | ||||||||||
Supernational (0.9%) | |||||||||||
JPY | 145,000 | European Investment Bank 2.15% 01/18/27 | 2,005,593 |
See Notes to Financial Statements
50
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
EUR | 300 | European Union 2.75% 04/04/22 | $ | 393,450 | |||||||
1,000 | European Union 3.25% 04/04/18 | 1,374,903 | |||||||||
Total Supernational | 3,773,946 | ||||||||||
Sweden (0.3%) | |||||||||||
SEK | 7,800 | Sweden Government Bond 4.25% 03/12/19 | 1,371,311 | ||||||||
United Kingdom (2.7%) | |||||||||||
GBP | 1,000 | United Kingdom Gilt 3.75% 09/07/21 | 1,884,357 | ||||||||
475 | United Kingdom Gilt 4.00% 03/07/22 | 913,987 | |||||||||
2,450 | United Kingdom Gilt 4.25% 06/07/32 | 4,889,399 | |||||||||
570 | United Kingdom Gilt 4.25% 09/07/39 | 1,132,241 | |||||||||
1,600 | United Kingdom Gilt 5.00% 03/07/18 | 3,107,582 | |||||||||
Total United Kingdom | 11,927,566 | ||||||||||
Total Sovereign (Cost $86,044,659) | 90,687,912 | ||||||||||
Municipal Bonds (0.2%) | |||||||||||
$ | 145 | Illinois State Toll Highway Authority, Highway Revenue, Build America Bonds 6.184% 01/01/34 | 182,745 | ||||||||
Municipal Electric Authority of Georgia | |||||||||||
160 | 6.637% 04/01/57 | 194,418 | |||||||||
295 | 6.655% 04/01/57 | 354,000 | |||||||||
Total Municipal Bonds (Cost $603,725) | 731,163 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Agency Fixed Rate Mortgages (5.0%) | |||||||||||
Federal Home Loan Mortgage Corporation, Gold Pools: | |||||||||||
$ | 822 | 4.00% 12/01/41 | $ | 880,767 | |||||||
417 | 6.00% 11/01/37 | 459,019 | |||||||||
288 | 6.50% 05/01/32 - 09/01/32 | 329,610 | |||||||||
September TBA: | |||||||||||
3,580 | 3.50% 09/25/42 (h) | 3,781,934 | |||||||||
Federal National Mortgage Association, | |||||||||||
Conventional Pools: | |||||||||||
2,899 | 4.00% 11/01/41 - 01/01/42 | 3,112,971 | |||||||||
2,470 | 5.00% 01/01/41 - 03/01/41 | 2,736,339 | |||||||||
1,060 | 5.50% 02/01/38 | 1,171,772 | |||||||||
65 | 6.50% 12/01/29 | 77,038 | |||||||||
665 | 7.00% 12/01/17 - 02/01/31 | 787,244 | |||||||||
Government National Mortgage Association, | |||||||||||
August TBA: | |||||||||||
5,865 | 4.00% 08/25/42 (h) | 6,448,815 | |||||||||
Various Pools: | |||||||||||
1,607 | 4.50% 04/15/39 - 08/15/39 | 1,771,055 | |||||||||
284 | 5.50% 08/15/39 | 318,953 | |||||||||
Total Agency Fixed Rate Mortgages (Cost $21,518,946) | 21,875,517 | ||||||||||
Asset-Backed Securities (0.6%) | |||||||||||
30 | ARI Fleet Lease Trust (e) 1.699% (g) 08/15/18 | 30,179 |
See Notes to Financial Statements
51
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
$ | 27 | Chesapeake Funding LLC (e) 2.249% (g) 12/15/20 | $ | 27,298 | |||||||
821 | CNH Equipment Trust 1.20% 05/16/16 | 826,488 | |||||||||
401 | CVS Pass-Through Trust 6.036% 12/10/28 | 461,466 | |||||||||
525 | Ford Credit Floorplan Master Owner Trust (e) 1.949% (g) 02/15/17 | 541,748 | |||||||||
325 | GE Dealer Floorplan Master Note Trust (e) 1.799% (g) 10/20/14 | 326,091 | |||||||||
425 | SLM Student Loan Trust (e) 4.37% 04/17/28 | 451,907 | |||||||||
Total Asset-Backed Securities (Cost $2,556,394) | 2,665,177 | ||||||||||
U.S. Treasury Securities (5.5%) | |||||||||||
5,200 | U.S. Treasury Bond 3.50% 02/15/39 | 6,227,000 | |||||||||
U.S. Treasury Notes | |||||||||||
1,300 | 1.50% 06/30/16 | 1,353,931 | |||||||||
5,800 | 2.375% 10/31/14 | 6,078,220 | |||||||||
1,000 | 2.75% 02/28/18 | 1,111,406 | |||||||||
4,700 | 3.125% 05/15/19 | 5,383,704 | |||||||||
3,540 | 3.625% 02/15/21 | 4,225,599 | |||||||||
Total U.S. Treasury Securities (Cost $22,527,560) | 24,379,860 | ||||||||||
Mortgage - Other (0.2%) | |||||||||||
United Kingdom | |||||||||||
GBP | 616 | Holmes Master Issuer PLC 2.378% (g) 10/15/54 (Cost $953,445) | 975,937 |
PRINCIPAL AMOUNT (000) | VALUE | ||||||||||
Commercial Mortgage Backed Securities (0.3%) | |||||||||||
United States | |||||||||||
$ | 700 | JP Morgan Chase Commercial Mortgage Securities Corp. 4.171% 08/15/46 | $ | 791,093 | |||||||
255 | UBS-Barclays Commercial Mortgage Trust 3.525% 05/10/63 | 271,655 | |||||||||
Total Commercial Mortgage Backed Securities (Cost $967,082) | 1,062,748 | ||||||||||
Short-Term Investments (9.4%) | |||||||||||
U.S. Treasury Securities (2.3%) | |||||||||||
U.S. Treasury Bills | |||||||||||
330 | 0.074% 08/30/12 (i)(j) | 329,981 | |||||||||
630 | 0.077% 08/30/12 (i)(j) | 629,962 | |||||||||
1,570 | 0.087% 08/30/12 (i) | 1,569,891 | |||||||||
185 | 0.088% 08/30/12 (i) | 184,987 | |||||||||
235 | 0.098% 08/30/12 (i) | 234,982 | |||||||||
510 | 0.101% 08/30/12 (i) | 509,959 | |||||||||
350 | 0.114% 08/30/12 (i) | 349,968 | |||||||||
210 | 0.114% 08/30/12 (i) | 209,981 | |||||||||
290 | 0.118% 08/30/12 (i) | 289,973 | |||||||||
3,880 | 0.127% 12/13/12 (i) | 3,878,269 | |||||||||
820 | 0.129% 08/30/12 (i) | 819,916 | |||||||||
931 | 0.136% 08/30/12 (i) | 930,899 | |||||||||
Total U.S. Treasury Securities (Cost $9,938,686) | 9,938,768 |
See Notes to Financial Statements
52
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF SHARES (000) | VALUE | ||||||||||
Investment Company (7.1%) | |||||||||||
31,601 | Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $31,600,798) | $ | 31,600,798 | ||||||||
Total Short-Term Investments (Cost $41,539,484) | 41,539,566 | ||||||||||
Total Investments (Cost $428,790,431) (k) | 100.7 | % | 445,178,497 | ||||||||
Liabilities in Excess of Other Assets | (0.7 | ) | (3,042,142 | ) | |||||||
Net Assets | 100.0 | % | $ | 442,136,355 |
ADR American Depositary Receipt.
BTAN Bons du Trésor à Intérets Annuels (Treasury Bill Annual Interest).
CVA Certificaten Van Aandelen.
MTN Medium Term Note.
OAT Obligations Assimilables du Trésor (French Treasury Obligation).
PPS Price Protected Shares.
SDR Swedish Depositary Receipt.
SPDR Standard & Poor's Depository Receipt.
TBA To Be Announced.
(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 classes of securities traded together as a unit; stocks with attached warrants.
(d) Security trades on the Hong Kong exchange.
(e) 144A security - Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.
(f) 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.
(g) Variable/Floating Rate Security - Interest rate changes on these instruments are based on changes in a designated base rate. The rates shown are those in effect on July 31, 2012.
(h) Security is subject to delayed delivery.
(i) Rate shown is the yield to maturity at July 31, 2012.
(j) A portion of this security has been physically segregated in connection with open swap agreements.
(k) Securities are available for collateral in connection with securities purchased on a forward commitment basis, open foreign currency exchange contracts, futures contracts and swap agreements.
See Notes to Financial Statements
53
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
Foreign Currency Exchange Contracts Open at July 31, 2012:
COUNTERPARTY | CONTRACTS TO DELIVER | IN EXCHANGE FOR | DELIVERY DATE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
Bank of America NA | CAD | 3,849,714 | $ | 3,784,325 | 08/16/12 | $ | (53,267 | ) | |||||||||||
Deutsche Bank AG London | AUD | 1,204,733 | $ | 1,231,297 | 08/16/12 | (33,129 | ) | ||||||||||||
Deutsche Bank AG London | JPY | 979,413,643 | $ | 12,402,037 | 08/16/12 | (136,204 | ) | ||||||||||||
Deutsche Bank AG London | JPY | 113,005,588 | $ | 1,447,285 | 08/16/12 | 612 | |||||||||||||
Deutsche Bank AG London | $ | 411,898 | INR | 22,765,606 | 08/16/12 | (3,707 | ) | ||||||||||||
Goldman Sachs International | CAD | 1,475,104 | $ | 1,450,061 | 08/16/12 | (20,398 | ) | ||||||||||||
Goldman Sachs International | EUR | 4,901,451 | $ | 5,988,005 | 08/16/12 | (43,675 | ) | ||||||||||||
JPMorgan Chase Bank | NOK | 3,557,217 | $ | 581,269 | 08/16/12 | (8,588 | ) | ||||||||||||
JPMorgan Chase Bank | $ | 200,633 | SGD | 253,744 | 08/16/12 | 3,275 | |||||||||||||
Mellon Bank | AUD | 10,145,907 | $ | 10,579,137 | 08/16/12 | (69,488 | ) | ||||||||||||
Mellon Bank | MXN | 19,823,777 | $ | 1,491,721 | 08/16/12 | 2,990 | |||||||||||||
Royal Bank of Scotland | $ | 1,087,928 | ILS | 4,349,046 | 08/16/12 | 3,043 | |||||||||||||
Royal Bank of Scotland | $ | 624,097 | THB | 19,765,167 | 08/16/12 | 3,355 | |||||||||||||
State Street Bank and Trust Co. | CLP | 403,846,447 | $ | 821,243 | 08/16/12 | (13,550 | ) | ||||||||||||
State Street Bank and Trust Co. | $ | 1,074,681 | CHF | 1,048,244 | 08/16/12 | (669 | ) | ||||||||||||
State Street Bank and Trust Co. | $ | 3,612,280 | EUR | 2,933,879 | 08/16/12 | (1,876 | ) | ||||||||||||
State Street Bank and Trust Co. | $ | 174,521 | GBP | 111,289 | 08/16/12 | (38 | ) | ||||||||||||
State Street Bank and Trust Co. | $ | 335,379 | JPY | 26,206,297 | 08/16/12 | 108 | |||||||||||||
State Street Bank and Trust Co. | $ | 1,336,526 | SEK | 9,376,143 | 08/16/12 | 41,409 | |||||||||||||
State Street Bank and Trust Co. | $ | 725,520 | SEK | 4,932,955 | 08/16/12 | (564 | ) | ||||||||||||
State Street Bank and Trust Co. | $ | 1,171,789 | TWD | 35,142,070 | 08/16/12 | (19 | ) | ||||||||||||
UBS AG | GBP | 1,416,251 | $ | 2,204,947 | 08/16/12 | (15,505 | ) | ||||||||||||
UBS AG | GBP | 965,229 | $ | 1,513,839 | 08/16/12 | 518 | |||||||||||||
UBS AG | KRW | 1,997,064,073 | $ | 1,771,625 | 08/16/12 | 7,010 | |||||||||||||
UBS AG | $ | 3,558,597 | CHF | 3,497,460 | 08/16/12 | 24,839 | |||||||||||||
UBS AG | $ | 2,513,140 | HKD | 19,491,260 | 08/16/12 | 447 | |||||||||||||
UBS AG | $ | 240,173 | INR | 13,262,112 | 08/16/12 | (2,381 | ) | ||||||||||||
UBS AG | $ | 1,386,860 | KRW | 1,594,802,242 | 08/16/12 | 22,315 | |||||||||||||
UBS AG | $ | 504,725 | RUB | 16,548,378 | 08/16/12 | 7,590 | |||||||||||||
UBS AG | $ | 1,410,742 | SGD | 1,784,181 | 08/16/12 | 23,021 | |||||||||||||
UBS AG | $ | 625,434 | TRY | 1,139,592 | 08/16/12 | 7,968 | |||||||||||||
UBS AG | $ | 3,132,403 | ZAR | 25,895,301 | 08/16/12 | (9,314 | ) | ||||||||||||
Goldman Sachs International | ZAR | 3,040,233 | $ | 365,327 | 08/24/12 | (935 | ) | ||||||||||||
JPMorgan Chase Bank | AUD | 1,512,764 | $ | 1,533,552 | 08/24/12 | (53,002 | ) | ||||||||||||
JPMorgan Chase Bank | MXN | 10,177,733 | $ | 752,904 | 08/24/12 | (10,855 | ) | ||||||||||||
JPMorgan Chase Bank | $ | 1,883,245 | SGD | 2,394,150 | 08/24/12 | 40,684 | |||||||||||||
UBS AG | CAD | 247,557 | $ | 243,077 | 08/24/12 | (3,660 | ) | ||||||||||||
UBS AG | CAD | 591,176 | $ | 587,376 | 08/24/12 | (1,842 | ) | ||||||||||||
UBS AG | CLP | 462,000,000 | $ | 921,420 | 08/24/12 | (32,436 | ) | ||||||||||||
UBS AG | GBP | 1,032,756 | $ | 1,602,011 | 08/24/12 | (17,175 | ) | ||||||||||||
UBS AG | NOK | 2,428,000 | $ | 397,213 | 08/24/12 | (5,280 | ) | ||||||||||||
UBS AG | PLN | 4,361,087 | $ | 1,259,552 | 08/24/12 | (42,388 | ) | ||||||||||||
UBS AG | SEK | 1,455,000 | $ | 207,281 | 08/24/12 | (6,479 | ) | ||||||||||||
UBS AG | SGD | 2,394,150 | $ | 1,916,501 | 08/24/12 | (7,428 | ) |
See Notes to Financial Statements
54
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
COUNTERPARTY | CONTRACTS TO DELIVER | IN EXCHANGE FOR | DELIVERY DATE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
UBS AG | $ | 2,239,688 | CAD | 2,290,081 | 08/24/12 | $ | 42,807 | ||||||||||||
UBS AG | $ | 1,556,909 | EUR | 1,264,582 | 08/24/12 | (588 | ) | ||||||||||||
UBS AG | $ | 17,780,108 | JPY | 1,415,278,820 | 08/24/12 | 339,427 | |||||||||||||
UBS AG | $ | 1,764,430 | KRW | 2,008,274,129 | 08/24/12 | 9,102 | |||||||||||||
UBS AG | $ | 424,528 | THB | 13,500,000 | 08/24/12 | 3,777 | |||||||||||||
Wells Fargo Bank | AUD | 932,052 | $ | 954,271 | 08/24/12 | (23,245 | ) | ||||||||||||
Wells Fargo Bank | MXN | 13,166,448 | $ | 971,643 | 08/24/12 | (16,396 | ) | ||||||||||||
Net Unrealized Depreciation | $ | (49,784 | ) |
Futures Contracts Open at July 31, 2012:
NUMBER OF CONTRACTS | LONG/SHORT | DESCRIPTION, DELIVERY MONTH AND YEAR | UNDERLYING FACE AMOUNT AT VALUE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
403 | Long | S&P 500 E Mini Index, September 2012 | $ | 27,698,190 | $ | 849,849 | |||||||||||||
609 | Long | CAC 40 Index, August 2012 | 24,667,398 | 631,969 | |||||||||||||||
107 | Long | U.S. Treasury 5 yr. Note, September 2012 | 13,351,594 | 953 | |||||||||||||||
4 | Long | 10 yr. Japan Government Bond, September 2012 | 7,373,312 | 29,696 | |||||||||||||||
48 | Long | U.S. Treasury 30 yr. Bond, September 2012 | 7,249,500 | 198,000 | |||||||||||||||
75 | Long | U.S. Dollar Index, September 2012 | 6,203,250 | (13,815 | ) | ||||||||||||||
182 | Long | Euro Stoxx 50 Index, September 2012 | 5,213,155 | 100,059 | |||||||||||||||
18 | Long | DAX Index, September 2012 | 3,756,164 | 160,536 | |||||||||||||||
40 | Long | FTSE 100 Index, September 2012 | 3,515,748 | 109,059 | |||||||||||||||
63 | Long | NIKKEI 225 Index, September 2012 | 3,463,488 | 32,827 | |||||||||||||||
41 | Long | SGX MSCI Singapore Index, August 2012 | 2,287,882 | 23,063 | |||||||||||||||
47 | Long | MSCI Emerging Market E-Mini, September 2012 | 2,221,925 | (14,671 | ) | ||||||||||||||
8 | Long | Hang Seng China ENT Index, August 2012 | 1,016,880 | 47,352 | |||||||||||||||
7 | Long | TOPIX Index, September 2012 | 657,664 | 15,590 |
See Notes to Financial Statements
55
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
NUMBER OF CONTRACTS | LONG/SHORT | DESCRIPTION, DELIVERY MONTH AND YEAR | UNDERLYING FACE AMOUNT AT VALUE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
7 | Long | IBEX 35 Index, August 2012 | $ | 577,531 | $ | 13,350 | |||||||||||||
1 | Long | U.S. Treasury Ultra Long Bond, September 2012 | 172,500 | 8,172 | |||||||||||||||
12 | Short | S&P TSE 60 Index, September 2012 | (1,589,311 | ) | (12,594 | ) | |||||||||||||
17 | Short | ASX SPI 200 Index, September 2012 | (1,887,916 | ) | (30,975 | ) | |||||||||||||
21 | Short | U.S. Treasury 30 yr. Bond, September 2012 | (3,171,656 | ) | (81,703 | ) | |||||||||||||
22 | Short | U.S. Treasury 2 yr. Note, September 2012 | (4,853,406 | ) | (359 | ) | |||||||||||||
150 | Short | U.S. Treasury 5 yr. Note, September 2012 | (18,717,188 | ) | (160,547 | ) | |||||||||||||
198 | Short | German Euro Bund, September 2012 | (35,220,020 | ) | (209,388 | ) | |||||||||||||
380 | Short | U.S. Treasury 10 yr. Note, September 2012 | (51,169,375 | ) | (360,163 | ) | |||||||||||||
Net Unrealized Appreciation | $ | 1,336,260 |
Interest Rate Swap Agreements Open at July 31, 2012:
SWAP COUNTERPARTY | NOTIONAL AMOUNT (000) | FLOATING RATE INDEX | PAY/RECEIVE FLOATING RATE | FIXED RATE | TERMINATION DATE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||||||||
Bank of America NA | EUR | 9,270 | 6 Month EURIBOR | Pay | 4.26 | % | 08/18/26 | $ | 614,524 | ||||||||||||||||||
Bank of America NA | 10,355 | 6 Month EURIBOR | Receive | 3.61 | 08/18/31 | (522,134 | ) | ||||||||||||||||||||
Goldman Sachs & Co. | $ | 9,936 | 3 Month LIBOR | Receive | 0.82 | 07/24/17 | (12,995 | ) | |||||||||||||||||||
Net Unrealized Appreciation | $ | 79,395 |
See Notes to Financial Statements
56
Morgan Stanley Global Strategist Fund
Portfolio of Investments n July 31, 2012 continued
Total Return Swap Agreements Open at July 31, 2012:
SWAP COUNTERPARTY | INDEX | NOTIONAL AMOUNT (000) | FLOATING RATE | PAY/RECEIVE TOTAL RETURN ON REFERENCED INDEX | MATURITY DATE | UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||||||||
Bank of America NA | 3-Month USD-LIBOR minus 0.15% | $ | 4,502 | Merrill Lynch Custom Luxury Basket Index | Pay | 05/29/13 | $ | 13,470 | |||||||||||||||||||
Bank of America NA | 3-Month USD-LIBOR minus 0.15% | 4,506 | Merrill Lynch Custom Luxury Basket Index | Pay | 05/29/13 | (66,663 | ) | ||||||||||||||||||||
Barclays Bank | 3-Month USD-LIBOR plus 0.43% | 31,035 | MSCI Emerging Market Index | Receive | 03/05/13 | 1,782,862 | |||||||||||||||||||||
Goldman Sachs International | 1-Month USD-LIBOR minus 0.47% | 800 | Goldman Sachs Custom Machinery Index | Pay | 05/13/13 | (28,894 | ) | ||||||||||||||||||||
Goldman Sachs International | 1-Month USD-LIBOR minus 0.47% | 822 | Goldman Sachs Custom Machinery Index | Pay | 05/13/13 | (29,683 | ) | ||||||||||||||||||||
Goldman Sachs International | 1-Month USD-LIBOR minus 0.47% | 2,754 | Goldman Sachs Custom Machinery Index | Pay | 05/13/13 | (100,220 | ) | ||||||||||||||||||||
Goldman Sachs International | 1-Month USD-LIBOR minus 0.47% | 2,283 | Goldman Sachs Custom Machinery Index | Pay | 05/13/13 | — | |||||||||||||||||||||
Goldman Sachs International | 3-Month USD-LIBOR minus 0.55% | 4,589 | Goldman Sachs Luxury Custom Basket Index | Pay | 05/29/13 | — | |||||||||||||||||||||
Goldman Sachs International | 3-Month HKD-HIBOR minus 1.24% | 48,626 | Goldman Sachs China Retail Custom Basket Index | Pay | 06/25/13 | (241,488 | ) | ||||||||||||||||||||
Goldman Sachs International | 3-Month USD-LIBOR minus 0.55% | 6,631 | Goldman Sachs South Africa Consumer Discretionary | Pay | 06/21/13 | (274,427 | ) | ||||||||||||||||||||
Custom Basket Index | |||||||||||||||||||||||||||
Net Unrealized Appreciation | $ | 1,054,957 |
EURIBOR Euro Interbank Offered Rate.
HIBOR Hong Kong Interbank Offered Rate.
LIBOR London Interbank Offered Rate.
Currency Abbreviations:
AUD Australian Dollar.
CAD Canadian Dollar.
CHF Swiss Franc.
CLP Chilean Peso.
DKK Danish Krone.
EUR Euro.
GBP British Pound.
HKD Hong Kong Dollar.
ILS Israeli Shekel.
INR Indian Rupee.
JPY Japanese Yen.
KRW South Korean Won.
MXN Mexican New Peso.
NOK Norwegian Krone.
PLN Polish Zloty.
RUB Russian Ruble.
SEK Swedish Krona.
SGD Singapore Dollar.
THB Thai Baht.
TRY Turkish Lira.
TWD Taiwan Dollar.
USD United States Dollar.
ZAR South African Rand.
See Notes to Financial Statements
57
Morgan Stanley Global Strategist Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2012
Assets: | |||||||
Investments in securities, at value (cost $395,881,550) | $ | 412,059,926 | |||||
Investment in affiliate, at value (cost $32,908,881) | 33,118,571 | ||||||
Total investments in securities, at value (cost $428,790,431) | 445,178,497 | ||||||
Unrealized appreciation on open swap agreements | 2,410,856 | ||||||
Unrealized appreciation on open foreign currency exchange contracts | 584,297 | ||||||
Foreign currency (cost of $1,563,960) | 1,567,789 | ||||||
Receivable for: | |||||||
Variation margin | 5,347,824 | ||||||
Investments sold | 5,079,723 | ||||||
Interest | 1,619,933 | ||||||
Dividends | 261,204 | ||||||
Foreign withholding taxes reclaimed | 136,122 | ||||||
Shares of beneficial interest sold | 65,262 | ||||||
Interest and dividends from affiliates | 22,021 | ||||||
Prepaid expenses and other assets | 11,991 | ||||||
Total Assets | 462,285,519 | ||||||
Liabilities: | |||||||
Unrealized depreciation on open swap agreements | 1,276,504 | ||||||
Unrealized depreciation on open foreign currency exchange contracts | 634,081 | ||||||
Due to broker | 1,570,000 | ||||||
Payable for: | |||||||
Investments purchased | 13,986,914 | ||||||
Shares of beneficial interest redeemed | 1,806,691 | ||||||
Transfer agent fee | 222,612 | ||||||
Advisory fee | 158,079 | ||||||
Distribution fee | 126,389 | ||||||
Administration fee | 31,058 | ||||||
Accrued expenses and other payables | 336,836 | ||||||
Total Liabilities | 20,149,164 | ||||||
Net Assets | $ | 442,136,355 | |||||
Composition of Net Assets: | |||||||
Paid-in-capital | $ | 416,214,534 | |||||
Net unrealized appreciation | 18,790,516 | ||||||
Accumulated undistributed net investment income | 6,166,864 | ||||||
Accumulated undistributed net realized gain | 964,441 | ||||||
Net Assets | $ | 442,136,355 | |||||
Class A Shares: | |||||||
Net Assets | $ | 367,160,019 | |||||
Shares Outstanding (unlimited shares authorized, $0.01 par value) | 24,009,855 | ||||||
Net Asset Value Per Share | $ | 15.29 | |||||
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value) | $ | 16.14 | |||||
Class B Shares: | |||||||
Net Assets | $ | 15,879,344 | |||||
Shares Outstanding (unlimited shares authorized, $0.01 par value) | 1,033,824 | ||||||
Net Asset Value Per Share | $ | 15.36 | |||||
Class C Shares: | |||||||
Net Assets | $ | 35,441,651 | |||||
Shares Outstanding (unlimited shares authorized, $0.01 par value) | 2,345,375 | ||||||
Net Asset Value Per Share | $ | 15.11 | |||||
Class I Shares: | |||||||
Net Assets | $ | 23,655,341 | |||||
Shares Outstanding (unlimited shares authorized, $0.01 par value) | 1,540,946 | ||||||
Net Asset Value Per Share | $ | 15.35 |
See Notes to Financial Statements
58
Morgan Stanley Global Strategist Fund
Financial Statements continued
Statement of Operations
For the year ended July 31, 2012
Net Investment Income: Income | |||||||
Dividends (net of $357,643 foreign withholding tax) | $ | 6,984,105 | |||||
Interest (net of $1,450 foreign withholding tax) | 5,814,716 | ||||||
Interest and dividends from affiliates (Note 6) | 161,798 | ||||||
Total Income | 12,960,619 | ||||||
Expenses | |||||||
Advisory fee (Note 4) | 2,021,734 | ||||||
Distribution fee (Class A shares) (Note 5) | 989,043 | ||||||
Distribution fee (Class B shares) (Note 5) | 236,961 | ||||||
Distribution fee (Class C shares) (Note 5) | 370,762 | ||||||
Transfer agent fees and expenses | 582,260 | ||||||
Administration fee (Note 4) | 385,092 | ||||||
Custodian fees | 227,654 | ||||||
Shareholder reports and notices | 177,370 | ||||||
Professional fees | 108,529 | ||||||
Registration fees | 59,279 | ||||||
Merger expense | 58,368 | ||||||
Trustees' fees and expenses | 21,651 | ||||||
Other | 153,545 | ||||||
Total Expenses | 5,392,248 | ||||||
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6) | (54,925 | ) | |||||
Net Expenses | 5,337,323 | ||||||
Net Investment Income | 7,623,296 | ||||||
Realized and Unrealized Gain (Loss): Realized Gain (Loss) on: | |||||||
Investments | 14,631,982 | ||||||
Investments in affiliates (Note 6) | 179,579 | ||||||
Futures contracts | (1,550,493 | ) | |||||
Swap agreements | (7,743,728 | ) | |||||
Foreign currency exchange contracts | 1,104,200 | ||||||
Foreign currency translation | (266,621 | ) | |||||
Net Realized Gain | 6,354,919 | ||||||
Change in Unrealized Appreciation (Depreciation) on: | |||||||
Investments | (26,952,599 | ) | |||||
Investments in affiliates (Note 6) | 51,973 | ||||||
Futures contracts | 2,452,903 | ||||||
Swap agreements | 1,847,215 | ||||||
Foreign currency exchange contracts | (803,192 | ) | |||||
Foreign currency translation | (177,817 | ) | |||||
Net Change in Unrealized Appreciation (Depreciation) | (23,581,517 | ) | |||||
Net Loss | (17,226,598 | ) | |||||
Net Decrease | $ | (9,603,302 | ) |
See Notes to Financial Statements
59
Morgan Stanley Global Strategist Fund
Financial Statements continued
Statements of Changes in Net Assets
FOR THE YEAR ENDED JULY 31, 2012 | FOR THE YEAR ENDED JULY 31, 2011 | ||||||||||
Increase (Decrease) in Net Assets: Operations: | |||||||||||
Net investment income | $ | 7,623,296 | $ | 8,102,501 | |||||||
Net realized gain | 6,354,919 | 40,231,561 | |||||||||
Net change in unrealized appreciation (depreciation) | (23,581,517 | ) | 24,941,498 | ||||||||
Net Increase (Decrease) | (9,603,302 | ) | 73,275,560 | ||||||||
Dividends and Distributions to Shareholders from: | |||||||||||
Net investment income | |||||||||||
Class A shares | (10,073,583 | ) | (3,087,669 | ) | |||||||
Class B shares | (442,186 | ) | (116,860 | ) | |||||||
Class C shares | (787,188 | ) | (127,307 | ) | |||||||
Class I shares | (606,586 | ) | (268,166 | ) | |||||||
Net realized gain | |||||||||||
Class A shares | (19,684,755 | ) | (67,021,038 | ) | |||||||
Class B shares | (1,265,971 | ) | (7,180,925 | ) | |||||||
Class C shares | (1,912,103 | ) | (6,220,483 | ) | |||||||
Class I shares | (1,109,905 | ) | (4,887,059 | ) | |||||||
Total Dividends and Distributions | (35,882,277 | ) | (88,909,507 | ) | |||||||
Net decrease from transactions in shares of beneficial interest | (74,612,133 | ) | (7,101,105 | ) | |||||||
Net Decrease | (120,097,712 | ) | (22,735,052 | ) | |||||||
Net Assets: | |||||||||||
Beginning of period | 562,234,067 | 584,969,119 | |||||||||
End of Period (Including accumulated undistributed net investment income of $6,166,864 and $10,979,960, respectively) | $ | 442,136,355 | $ | 562,234,067 |
See Notes to Financial Statements
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1. Organization and Accounting Policies
Morgan Stanley Global Strategist Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The Fund's investment objective is to maximize the total return on 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 domestic exchange is valued at its latest sales price (or at the exchange official closing price if such exchange reports an official closing price) prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (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 asked price; (3) all other domestic securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and asked prices. In cases where a security is traded on more than one domestic exchange, the security is valued on the exchange designated as the primary market; (4) for equity securities traded on foreign exchanges, the latest reported sales price (or the exchange official closing price if such exchange reports an official closing price) or the mean between the last reported bid and asked prices may be used if there were no sales on a particular day or the latest bid price may be used if only bid prices are available; (5) futures are valued at the latest price published by the commodities exchange on which they trade; (6) commodity-linked notes are marked-to-market daily based upon quotations from market makers; (7) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly owned subsidiary of Morgan Stanley, determines that the latest sale price, the bid price or the mean between the last reported bid and ask price do not reflect a security's fair value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Board of Trustees (the "Trustees"). Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the
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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 Trustees or by the Adviser using a pricing service and/or procedures approved by the Trustees; (8) certain portfolio securities may be valued by an outside pricing service approved by the Trustees. The prices provided by a pricing service take into account broker-dealer market price quotations for trading in similar groups of securities, security quality, maturity, coupon and other security characteristics as well as any developments related to the specific securities; (9) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (10) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost, which approximates fair value.
Under procedures approved by the Trustees, the Fund's Adviser has formed a Valuation Committee. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Trustees. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and adhoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
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
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date. Discounts are accreted and premiums are amortized over the life of the respective securities and are included in interest income. Interest income is accrued daily as earned.
C. Multiple Class Allocations — Investment income, expenses (other than distribution fees), and realized and unrealized gains and losses are allocated to each class of shares based upon the relative net asset value on the date such items are recognized. Distribution fees are charged directly to the respective class.
D. Foreign Currency Translation — The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and foreign currency exchange contracts are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded as realized and unrealized gains/losses on foreign currency exchange contracts and foreign currency translations. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gains/losses are included in or are a reduction of ordinary income for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities held.
E. Dividends and Distributions to Shareholders — Dividends and distributions to shareholders are recorded on the ex-dividend date.
F. When-Issued/Delayed Delivery Securities — The Fund may purchase or sell when-issued and delayed delivery securities. Securities purchased on a when-issued or delayed delivery basis are purchased for delivery beyond the normal settlement date at a stated price and yield, and no income accrues to the Fund on such securities prior to delivery date. Payment and delivery for when-issued and delayed delivery securities can take place up to 120 days after the date of the transaction. When the Fund enters into a purchase transaction on a when-issued or delayed delivery basis, securities are available for collateral in an amount at least equal in value to the Fund's commitments to purchase such securities. Purchasing securities on a when-issued or delayed delivery basis may involve a risk that the market price at the time of delivery may be lower than the agreed upon purchase price, in which case there could be an unrealized loss at the time of delivery. Purchasing investments on a when-issued or delayed delivery basis may be considered a form of leverage which may increase the impact that gains (losses) may have on the Fund.
G. Structured Investments — The Fund may invest a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes, warrants and options to purchase securities. The Fund will typically use
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structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint.
H. 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.
I. Indemnifications — The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
2. Fair Valuation Measurements
Financial Accounting Standards Board ("FASB") Accounting Standards Codification(TM) ("ASC") 820, Fair Value Measurements and Disclosures ("ASC 820"), defines fair value as the value that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below.
• Level 1 — unadjusted quoted prices in active markets for identical investments
• Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 — significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances
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The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.
The following is a summary of the inputs used to value the Fund's investments as of July 31, 2012.
INVESTMENT TYPE | LEVEL 1 UNADJUSTED QUOTED PRICES | LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS | LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS | TOTAL | |||||||||||||||
Assets: | |||||||||||||||||||
Common Stocks | |||||||||||||||||||
Aerospace & Defense | $ | 2,395,146 | $ | — | $ | — | $ | 2,395,146 | |||||||||||
Air Freight & Logistics | 774,906 | — | — | 774,906 | |||||||||||||||
Airlines | 87,469 | — | — | 87,469 | |||||||||||||||
Auto Components | 1,478,093 | — | — | 1,478,093 | |||||||||||||||
Automobiles | 3,854,968 | — | — | 3,854,968 | |||||||||||||||
Beverages | 3,819,587 | — | — | 3,819,587 | |||||||||||||||
Biotechnology | 1,495,463 | — | — | 1,495,463 | |||||||||||||||
Building Products | 1,131,246 | — | — | 1,131,246 | |||||||||||||||
Capital Markets | 2,397,820 | — | — | 2,397,820 | |||||||||||||||
Chemicals | 6,008,332 | — | — | 6,008,332 | |||||||||||||||
Commercial Banks | 18,630,556 | — | — | 18,630,556 | |||||||||||||||
Commercial Services & Supplies | 1,204,395 | — | — | 1,204,395 | |||||||||||||||
Communications Equipment | 1,661,010 | — | — | 1,661,010 | |||||||||||||||
Computers & Peripherals | 4,772,844 | — | — | 4,772,844 | |||||||||||||||
Construction & Engineering | 733,348 | — | — | 733,348 | |||||||||||||||
Construction Materials | 314,997 | — | — | 314,997 | |||||||||||||||
Consumer Finance | 531,829 | — | — | 531,829 | |||||||||||||||
Containers & Packaging | 172,972 | — | — | 172,972 | |||||||||||||||
Distributors | 79,023 | — | — | 79,023 | |||||||||||||||
Diversified Consumer Services | 66,225 | — | — | 66,225 | |||||||||||||||
Diversified Financial Services | 2,227,016 | — | — | 2,227,016 | |||||||||||||||
Diversified Telecommunication Services | 5,981,843 | — | — | 5,981,843 | |||||||||||||||
Electric Utilities | 3,876,041 | — | — | 3,876,041 | |||||||||||||||
Electrical Equipment | 1,783,457 | — | — | 1,783,457 | |||||||||||||||
Electronic Equipment, Instruments & Components | 1,341,732 | — | — | 1,341,732 | |||||||||||||||
Energy Equipment & Services | 2,345,733 | — | — | 2,345,733 | |||||||||||||||
Food & Staples Retailing | 5,736,669 | — | — | 5,736,669 | |||||||||||||||
Food Products | 5,269,095 | — | — | 5,269,095 | |||||||||||||||
Gas Utilities | 741,185 | — | — | 741,185 |
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INVESTMENT TYPE | LEVEL 1 UNADJUSTED QUOTED PRICES | LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS | LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS | TOTAL | |||||||||||||||
Health Care Equipment & Supplies | $ | 2,070,385 | $ | — | $ | — | $ | 2,070,385 | |||||||||||
Health Care Providers & Services | 1,824,870 | — | — | 1,824,870 | |||||||||||||||
Health Care Technology | 62,536 | — | — | 62,536 | |||||||||||||||
Hotels, Restaurants & Leisure | 3,274,948 | — | — | 3,274,948 | |||||||||||||||
Household Durables | 7,008,700 | — | — | 7,008,700 | |||||||||||||||
Household Products | 2,760,195 | — | — | 2,760,195 | |||||||||||||||
Independent Power Producers & Energy Traders | 116,822 | — | — | 116,822 | |||||||||||||||
Industrial Conglomerates | 3,496,330 | — | — | 3,496,330 | |||||||||||||||
Information Technology Services | 2,988,738 | — | — | 2,988,738 | |||||||||||||||
Insurance | 6,142,235 | — | — | 6,142,235 | |||||||||||||||
Internet & Catalog Retail | 653,596 | — | — | 653,596 | |||||||||||||||
Internet Software & Services | 1,265,287 | — | — | 1,265,287 | |||||||||||||||
Leisure Equipment & Products | 163,764 | — | — | 163,764 | |||||||||||||||
Life Sciences Tools & Services | 374,080 | — | — | 374,080 | |||||||||||||||
Machinery | 4,281,214 | — | — | 4,281,214 | |||||||||||||||
Marine | 310,278 | — | — | 310,278 | |||||||||||||||
Media | 5,004,963 | — | — | 5,004,963 | |||||||||||||||
Metals & Mining | 6,743,701 | — | — | 6,743,701 | |||||||||||||||
Multi-Utilities | 3,055,078 | — | — | 3,055,078 | |||||||||||||||
Multiline Retail | 719,682 | — | — | 719,682 | |||||||||||||||
Office Electronics | 607,701 | — | — | 607,701 | |||||||||||||||
Oil, Gas & Consumable Fuels | 18,204,306 | — | — | 18,204,306 | |||||||||||||||
Paper & Forest Products | 831,603 | — | — | 831,603 | |||||||||||||||
Personal Products | 892,311 | — | — | 892,311 | |||||||||||||||
Pharmaceuticals | 12,892,198 | — | — | 12,892,198 | |||||||||||||||
Professional Services | 923,064 | — | — | 923,064 | |||||||||||||||
Real Estate Investment Trusts (REITs) | 4,130,190 | — | — | 4,130,190 | |||||||||||||||
Real Estate Management & Development | 8,358,709 | — | — | 8,358,709 | |||||||||||||||
Road & Rail | 3,489,001 | — | — | 3,489,001 | |||||||||||||||
Semiconductors & Semiconductor Equipment | 2,420,778 | — | — | 2,420,778 | |||||||||||||||
Software | 3,472,186 | — | — | 3,472,186 | |||||||||||||||
Specialty Retail | 2,499,016 | — | — | 2,499,016 | |||||||||||||||
Textiles, Apparel & Luxury Goods | 1,929,976 | — | — | 1,929,976 | |||||||||||||||
Thrifts & Mortgage Finance | 62,304 | — | — | 62,304 | |||||||||||||||
Tobacco | 4,371,725 | — | — | 4,371,725 | |||||||||||||||
Trading Companies & Distributors | 1,821,054 | — | — | 1,821,054 | |||||||||||||||
Transportation Infrastructure | 385,145 | — | — | 385,145 |
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INVESTMENT TYPE | LEVEL 1 UNADJUSTED QUOTED PRICES | LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS | LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS | TOTAL | |||||||||||||||
Wireless Telecommunication Services | $ | 3,411,356 | $ | — | $ | — | $ | 3,411,356 | |||||||||||
Total Common Stocks | 203,933,025 | — | — | 203,933,025 | |||||||||||||||
Commodity Linked Securities | — | 12,088,789 | — | 12,088,789 | |||||||||||||||
Investment Companies | 3,554,968 | — | — | 3,554,968 | |||||||||||||||
Rights | — | 406 | — | 406 | |||||||||||||||
Fixed Income Securities | |||||||||||||||||||
Corporate Bonds | — | 41,683,429 | — | 41,683,429 | |||||||||||||||
Sovereign | — | 90,687,912 | — | 90,687,912 | |||||||||||||||
Municipal Bonds | — | 731,163 | — | 731,163 | |||||||||||||||
Agency Fixed Rate Mortgages | — | 21,875,517 | — | 21,875,517 | |||||||||||||||
Asset-Backed Securities | — | 2,665,177 | — | 2,665,177 | |||||||||||||||
U.S. Treasury Securities | — | 24,379,860 | — | 24,379,860 | |||||||||||||||
Mortgage — Other | — | 975,937 | — | 975,937 | |||||||||||||||
Commercial Mortgage Backed Securities | — | 1,062,748 | — | 1,062,748 | |||||||||||||||
Total Fixed Income Securities | $ | — | $ | 184,061,743 | $ | — | $ | 184,061,743 | |||||||||||
Short-Term Investments | |||||||||||||||||||
U.S. Treasury Securities | — | 9,938,768 | — | 9,938,768 | |||||||||||||||
Investment Company | 31,600,798 | — | — | 31,600,798 | |||||||||||||||
Total Short-Term Investments | 31,600,798 | 9,938,768 | — | 41,539,566 | |||||||||||||||
Foreign Currency Exchange Contracts | — | 584,297 | — | 584,297 | |||||||||||||||
Futures Contracts | 2,220,475 | — | — | 2,220,475 | |||||||||||||||
Interest Rate Swap Agreements | — | 614,524 | — | 614,524 | |||||||||||||||
Total Return Swap Agreements | — | 1,796,332 | — | 1,796,332 | |||||||||||||||
Total Assets | 241,309,266 | 209,084,859 | — | 450,394,125 | |||||||||||||||
Liabilities: | |||||||||||||||||||
Foreign Currency Exchange Contracts | — | (634,081 | ) | — | (634,081 | ) | |||||||||||||
Futures Contracts | (884,215 | ) | — | — | (884,215 | ) | |||||||||||||
Interest Rate Swap Agreements | — | (535,129 | ) | — | (535,129 | ) | |||||||||||||
Total Return Swap Agreements | — | (741,375 | ) | — | (741,375 | ) | |||||||||||||
Total Liabilities | (884,215 | ) | (1,910,585 | ) | — | (2,794,800 | ) | ||||||||||||
Total | $ | 240,425,051 | $ | 207,174,274 | $ | — | $ | 447,599,325 |
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of July 31, 2012, securities with a total value of $95,033,999 transferred from Level 2 to Level 1. At July 31, 2011, the fair market values of certain securities were adjusted due to
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developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.
3. Derivatives
The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based on the value of an underlying asset, interest rate, index or financial instrument. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which they relate, and risks that the transactions may not be liquid. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Fund's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.
Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.
Following is a description of the derivative instruments and techniques that the Fund used during the period and their associated risks:
Foreign Currency Exchange Contracts In connection with its investments in foreign securities, the Fund entered into contracts with banks, brokers or dealers to purchase or sell foreign currencies at a future date. A foreign currency exchange contract ("currency contract") is a negotiated agreement between two parties to exchange specified amounts of two or more currencies at a specified future time at a specified rate. The rate specified by the currency contract can be higher or lower than the spot rate between the currencies that are the subject of the currency contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. Hedging the Fund's currency risks involves the risk of
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mismatching the Fund's objectives under a currency contract with the value of securities denominated in a particular currency. Furthermore, such transactions reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is an additional risk to the effect that currency contracts create exposure to currencies in which the Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund than if it had not entered into such currency contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the term of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Fund as unrealized gain or (loss). The Fund records realized gains (losses) when the currency contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.
Futures A futures contract is a standardized agreement between two parties to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Fund's initial investment in such contracts.
Swaps An over-the-counter ("OTC") swap agreement is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. A small percentage of swap agreements are cleared through a central clearing house. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Fund's obligations or rights under a swap agreement entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. Most swap agreements are not entered into or traded on exchanges and there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty. Swaps could result in losses if interest rate or foreign currency
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exchange rates or credit quality changes are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected.
When the Fund has an unrealized loss on a swap agreement, 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. If applicable, cash collateral is included with "Due from (to) broker" in the Statement of Assets and Liabilities.
FASB ASC 815, Derivatives and Hedging: Overall ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.
The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of July 31, 2012.
PRIMARY RISK EXPOSURE | ASSET DERIVATIVES STATEMENT OF ASSETS AND LIABILITIES LOCATION | FAIR VALUE | LIABILITY DERIVATIVES STATEMENT OF ASSETS AND LIABILITIES LOCATION | FAIR VALUE | |||||||||||||||
Interest Rate Risk | Variation margin | $ | 236,821 | † | Variation margin | $ | (812,160 | ) | |||||||||||
Unrealized appreciation on open swap agreements | 614,524 | Unrealized depreciation on open swap agreements | (535,129 | ) | |||||||||||||||
Foreign Currency Risk | Unrealized appreciation on open foreign currency exchange contracts | 584,297 | Unrealized depreciation on open foreign currency exchange contracts | (634,081 | ) | ||||||||||||||
Equity Risk | Variation margin Unrealized appreciation on open swap agreements | 1,983,654 1,796,332 | † | Variation margin Unrealized depreciation on open swap agreements | (72,055 (741,375) | ) | |||||||||||||
$ | 5,215,628 | $ | (2,794,800 | ) |
† Includes cumulative appreciation (depreciation) of futures contracts as reported in the Portfolio of Investments. Only current day's net variation margin is reported within the Statement of Assets and Liabilities.
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Notes to Financial Statements n July 31, 2012 continued
The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended July 31, 2012 in accordance with ASC 815.
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVE CONTRACTS
PRIMARY RISK EXPOSURE | FUTURES | FOREIGN CURRENCY EXCHANGE | SWAPS | ||||||||||||
Interest Rate Risk | $ | (5,015,704 | ) | — | $ | (2,551,618 | ) | ||||||||
Foreign Currency Risk | — | $ | 1,104,200 | — | |||||||||||
Equity Risk | 3,465,211 | — | (5,192,110 | ) | |||||||||||
Total | $ | (1,550,493 | ) | $ | 1,104,200 | $ | (7,743,728 | ) |
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVE CONTRACTS
PRIMARY RISK EXPOSURE | FUTURES | FOREIGN CURRENCY EXCHANGE | SWAPS | ||||||||||||
Interest Rate Risk | $ | 301,057 | — | $ | 792,258 | ||||||||||
Foreign Currency Risk | — | $ | (803,192 | ) | — | ||||||||||
Equity Risk | 2,151,846 | — | 1,054,957 | ||||||||||||
Total | $ | 2,452,903 | $ | (803,192 | ) | $ | 1,847,215 |
For the year ended July 31, 2012, the average monthly original value of futures contracts was $172,165,309, the average monthly notional value of swap agreements was $150,841,643 and the average monthly principal amount of foreign currency exchange contracts was $161,056,086.
4. Advisory/Administration Agreements
Pursuant to an Investment Advisory Agreement with the 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 Adviser, the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.08% to the Fund's daily net assets.
Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.
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Notes to Financial Statements n July 31, 2012 continued
5. Plan of Distribution
Shares of the Fund are distributed by Morgan Stanley Distribution, Inc. (the "Distributor"), an affiliate of the Adviser and Administrator. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A — up to 0.25% of the average daily net assets of Class A shares; (ii) Class B — up to 1.00% of the average daily net assets of Class B shares; and (iii) Class C — up to 1.00% of the average daily net assets of Class C shares.
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 $11,837,000 at July 31, 2012.
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 1.00% of the average daily net assets of Class A shares or Class C shares, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Smith Barney Financial Advisors and other authorized financial representatives at the time of sale may be reimbursed in the subsequent calendar year. For the year ended July 31, 2012, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 0.97%, respectively.
The Distributor has informed the Fund that for the year ended July 31, 2012, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $9,281, $15,569 and $3,004, respectively, and received $50,178 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges, which are not an expense of the Fund.
6. Security Transactions and Transactions with Affiliates
The cost of purchases and proceeds from sales of investment securities, excluding short-term investments, for the year ended July 31, 2012, aggregated $362,966,789 and $476,712,957, respectively. Included in the aforementioned are purchases and sales of U.S. Government securities of $170,782,163 and $170,236,043, respectively.
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Morgan Stanley Global Strategist Fund
Notes to Financial Statements n July 31, 2012 continued
The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the year ended July 31, 2012, advisory fees paid were reduced by $54,925 relating to the Fund's investment in the Liquidity Funds.
A summary of the Fund's transactions in shares of the Liquidity Funds during the year ended July 31, 2012 is as follows:
VALUE JULY 31, 2011 | PURCHASES AT COST | SALES | DIVIDEND INCOME | VALUE JULY 31, 2012 | |||||||||||||||
$ | 40,758,101 | $ | 211,427,001 | $ | 220,584,304 | $ | 53,772 | $ | 31,600,798 |
The Fund had the following transactions with Citigroup, Inc., and its affiliated broker-dealers, which may be deemed to be affiliates of the Adviser, Administrator and Distributor for the year ended July 31, 2012:
VALUE JULY 31, 2011 | PURCHASES AT COST | SALES | REALIZED GAIN | DIVIDEND/ INTEREST INCOME | VALUE JULY 31, 2012 | ||||||||||||||||||
$ | 2,451,201 | $ | 1,796,809 | $ | 2,962,800 | $ | 179,579 | $ | 108,026 | $ | 1,517,773 |
Morgan Stanley Services Company Inc., an affiliate of the 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, 2012, included in "Trustees' fees and expenses" in the Statement of Operations amounted to $4,238. At July 31, 2012, the Fund had an accrued pension liability of $65,028, 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
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Morgan Stanley Global Strategist Fund
Notes to Financial Statements n July 31, 2012 continued
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
The Fund may invest in mortgage securities, including securities issued by Federal National Mortgage Association ("FNMA") and Federal Home Loan Mortgage Corporation ("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 sub-prime mortgages. Sub-prime 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.
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 U.S. Department of 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.
The Fund may invest in structured investments, which involve risks including counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to counterparty risk because the Fund is relying on the creditworthiness of such counterparty and has no rights with respect to the issuer of the underlying investment. 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.
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Morgan Stanley Global Strategist Fund
Notes to Financial Statements n July 31, 2012 continued
8. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:
FOR THE YEAR ENDED JULY 31, 2012 | FOR THE YEAR ENDED JULY 31, 2011 | ||||||||||||||||||
SHARES | AMOUNT | SHARES | AMOUNT | ||||||||||||||||
CLASS A SHARES | |||||||||||||||||||
Sold | 453,243 | $ | 6,976,703 | 1,186,337 | $ | 20,370,023 | |||||||||||||
Conversion from Class B | 777,639 | 11,829,573 | 1,064,787 | 17,997,024 | |||||||||||||||
Reinvestment of dividends and distributions | 2,062,323 | 28,934,386 | 4,315,526 | 68,314,776 | |||||||||||||||
Redeemed | (6,657,785 | ) | (100,879,371 | ) | (5,728,042 | ) | (97,173,000 | ) | |||||||||||
Net increase (decrease) — Class A | (3,364,580 | ) | (53,138,709 | ) | 838,608 | 9,508,823 | |||||||||||||
CLASS B SHARES | |||||||||||||||||||
Sold | 59,519 | 912,345 | 170,638 | 2,924,036 | |||||||||||||||
Conversion to Class A | (773,814 | ) | (11,829,573 | ) | (1,059,825 | ) | (17,997,024 | ) | |||||||||||
Reinvestment of dividends and distributions | 115,006 | 1,628,491 | 439,740 | 7,013,859 | |||||||||||||||
Redeemed | (418,408 | ) | (6,415,888 | ) | (804,055 | ) | (13,970,971 | ) | |||||||||||
Net decrease — Class B | (1,017,697 | ) | (15,704,625 | ) | (1,253,502 | ) | (22,030,100 | ) | |||||||||||
CLASS C SHARES | |||||||||||||||||||
Sold | 113,788 | 1,722,194 | 272,489 | 4,663,812 | |||||||||||||||
Reinvestment of dividends and distributions | 190,666 | 2,655,977 | 395,595 | 6,234,588 | |||||||||||||||
Redeemed | (581,767 | ) | (8,741,065 | ) | (448,643 | ) | (7,564,471 | ) | |||||||||||
Net increase (decrease) — Class C | (277,313 | ) | (4,362,894 | ) | 219,441 | 3,333,929 | |||||||||||||
CLASS I SHARES | |||||||||||||||||||
Sold | 163,895 | 2,461,252 | 508,455 | 8,796,516 | |||||||||||||||
Reinvestment of dividends and distributions | 120,611 | 1,695,796 | 273,430 | 4,336,592 | |||||||||||||||
Redeemed | (361,831 | ) | (5,562,953 | ) | (675,080 | ) | (11,046,865 | ) | |||||||||||
Net increase (decrease) — Class I | (77,325 | ) | (1,405,905 | ) | 106,805 | 2,086,243 | |||||||||||||
Net decrease in Fund | (4,736,915 | ) | $ | (74,612,133 | ) | (88,648 | ) | $ | (7,101,105 | ) |
Effective the close of business on May 16, 2012, Class B shares were closed for purchases by new investors.
9. Federal Income Tax Status
It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.
Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recognized on an accrual basis. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.
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Notes to Financial Statements n July 31, 2012 continued
The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.
FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "interest expense" and penalties in ''other expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended July 31, 2012, remains subject to examination by taxing authorities.
The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal 2012 and 2011 was as follows:
2012 DISTRIBUTIONS PAID FROM: | 2011 DISTRIBUTIONS PAID FROM: | ||||||||||||||
ORDINARY INCOME | LONG-TERM CAPITAL GAIN | ORDINARY INCOME | LONG-TERM CAPITAL GAIN | ||||||||||||
$ | 26,381,322 | $ | 9,500,955 | $ | 9,018,539 | $ | 79,890,968 |
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.
Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.
Permanent differences, primarily due to non-deductible merger expenses, foreign currency gains, losses on paydowns and swaps and tax adjustments on passive foreign investment companies, real estate investment trusts and debt securities sold by the Fund, resulted in the following reclassifications among the Fund's components of net assets at July 31, 2012:
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME | ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN | PAID-IN-CAPITAL | |||||||||
$ | (526,849 | ) | $ | 585,217 | $ | (58,368 | ) |
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Notes to Financial Statements n July 31, 2012 continued
At July 31, 2012, the components of distributable earnings for the Fund on a tax basis were as follows:
UNDISTRIBUTED ORDINARY INCOME | UNDISTRIBUTED LONG-TERM CAPITAL GAIN | ||||||
$ | 10,437,089 | $ | 9,700,758 |
At July 31, 2012, the aggregate cost for federal income tax purposes is $441,213,089. The aggregate gross unrealized appreciation is $29,481,836 and the aggregate gross unrealized depreciation is $25,516,428 resulting in net unrealized appreciation of $3,965,408.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the "Modernization Act") was signed into law. The Modernization Act modernizes several tax provisions related to Regulated Investment Companies ("RICs") and their shareholders. One key change made by the Modernization Act is that capital losses will generally retain their character as short-term or long-term and may be carried forward indefinitely to offset future gains. These losses are utilized before other capital loss carryforwards that expire. Generally, the Modernization Act is effective for taxable years beginning after December 22, 2010.
10. Expense Offset
The Fund has entered into an arrangement with State Street (the "Custodian"), whereby credits realized on uninvested cash balances were used to offset a portion of the Fund's expenses. If applicable, these custodian credits are shown as "expense offset" in the Statement of Operations.
11. Accounting Pronouncement
In December 2011, FASB issued Accounting Standards Update ("ASU") 2011-11, Balance Sheet: Disclosures about Offsetting Assets and Liabilities. The pronouncement improves disclosures for recognized financial and derivative instruments that are either offset on the balance sheet in accordance with the offsetting guidance in ASC 210-20-45 or ASC 815-10-45 or are subject to an enforceable master netting agreements or similar. The Fund will be required to disclose information about rights to offset and related arrangements (such as collateral agreements) in order to enable financial statement users to understand the effect of those rights and arrangements on its financial position as well as disclose the following (1) gross amounts; (2) amounts offset in the statement of financial position; (3) any other amounts that can be offset in the event of bankruptcy, insolvency or default of any of the parties (including cash and noncash financial collateral); and (4) the Fund's net exposure. The requirements are effective for annual reporting periods beginning on or after January 1, 2013, and must be applied retrospectively. At this time, the Fund's management is evaluating the implications of ASU 2011-11 and its impact, if any, on the financial statements.
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Notes to Financial Statements n July 31, 2012 continued
12. Subsequent Event
The Board of Trustees of the Fund approved an Agreement and Plan of Reorganization by and between the Fund and Morgan Stanley Institutional Fund Trust, on behalf of its series Global Strategist Portfolio, formerly Balanced Portfolio ("Global Strategist"), pursuant to which substantially all of the assets of the Fund would be combined with those of Global Strategist and shareholders of the Fund would become shareholders of Global Strategist, receiving shares of Global Strategist equal to the value of their holdings in the Fund (the "Reorganization"). Each shareholder of the Fund would receive the Class of shares of Global Strategist that corresponds to the Class of shares of the Fund currently held by that shareholder. The Reorganization is subject to the approval of shareholders of the Fund at a special meeting of shareholders scheduled to be held during the third quarter of 2012.
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Morgan Stanley Global Strategist Fund
Financial Highlights
Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE YEAR ENDED JULY 31, | |||||||||||||||||||||||
2012 | 2011 | 2010^ | 2009^ | 2008^ | |||||||||||||||||||
Class A Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.71 | $ | 17.33 | $ | 16.23 | $ | 18.07 | $ | 20.57 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income(1) | 0.25 | 0.25 | 0.21 | 0.25 | 0.45 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.50 | ) | 1.87 | 1.17 | (1.74 | ) | (1.23 | ) | |||||||||||||||
Total income (loss) from investment operations | (0.25 | ) | 2.12 | 1.38 | (1.49 | ) | (0.78 | ) | |||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||
Net investment income | (0.40 | ) | (0.12 | ) | (0.28 | ) | (0.30 | ) | (0.49 | ) | |||||||||||||
Net realized gain | (0.77 | ) | (2.62 | ) | — | (0.05 | ) | (1.23 | ) | ||||||||||||||
Total dividends and distributions | (1.17 | ) | (2.74 | ) | (0.28 | ) | (0.35 | ) | (1.72 | ) | |||||||||||||
Net asset value, end of period | $ | 15.29 | $ | 16.71 | $ | 17.33 | $ | 16.23 | $ | 18.07 | |||||||||||||
Total Return(2) | (0.88 | )% | 13.13 | % | 8.52 | % | (8.06 | )% | (4.27 | )% | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Net expenses | 1.03 | %(4) | 0.96 | %(4) | 0.91 | %(4) | 0.95 | %(4) | 0.90 | %(4) | |||||||||||||
Net investment income | 1.66 | %(4) | 1.47 | %(4) | 1.24 | %(4) | 1.64 | %(4) | 2.30 | %(4) | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.01 | % | 0.02 | % | 0.03 | % | 0.02 | % | 0.02 | % | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 367,160 | $ | 457,333 | $ | 459,742 | $ | 457,914 | $ | 504,350 | |||||||||||||
Portfolio turnover rate | 81 | % | 123 | % | 173 | % | 83 | % | 42 | % |
^ Beginning with the year ended July 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(3) Reflects overall Fund ratios for investment income and non-class specific expenses.
(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate."
See Notes to Financial Statements
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Financial Highlights continued
FOR THE YEAR ENDED JULY 31, | |||||||||||||||||||||||
2012 | 2011 | 2010^ | 2009^ | 2008^ | |||||||||||||||||||
Class B Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.76 | $ | 17.42 | $ | 16.30 | $ | 18.14 | $ | 20.63 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income(1) | 0.14 | 0.12 | 0.08 | 0.14 | 0.30 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.50 | ) | 1.88 | 1.18 | (1.75 | ) | (1.23 | ) | |||||||||||||||
Total income (loss) from investment operations | (0.36 | ) | 2.00 | 1.26 | (1.61 | ) | (0.93 | ) | |||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||
Net investment income | (0.27 | ) | (0.04 | ) | (0.14 | ) | (0.18 | ) | (0.33 | ) | |||||||||||||
Net realized gain | (0.77 | ) | (2.62 | ) | — | (0.05 | ) | (1.23 | ) | ||||||||||||||
Total dividends and distributions | (1.04 | ) | (2.66 | ) | (0.14 | ) | (0.23 | ) | (1.56 | ) | |||||||||||||
Net asset value, end of period | $ | 15.36 | $ | 16.76 | $ | 17.42 | $ | 16.30 | $ | 18.14 | |||||||||||||
Total Return(2) | (1.61 | )% | 12.28 | % | 7.74 | % | (8.77 | )% | (5.02 | )% | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Net expenses | 1.78 | %(4) | 1.71 | %(4) | 1.66 | %(4) | 1.70 | %(4) | 1.66 | %(4) | |||||||||||||
Net investment income | 0.91 | %(4) | 0.72 | %(4) | 0.49 | %(4) | 0.89 | %(4) | 1.54 | %(4) | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.01 | % | 0.02 | % | 0.03 | % | 0.02 | % | 0.02 | % | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 15,879 | $ | 34,374 | $ | 57,559 | $ | 90,105 | $ | 175,410 | |||||||||||||
Portfolio turnover rate | 81 | % | 123 | % | 173 | % | 83 | % | 42 | % |
^ Beginning with the year ended July 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(3) Reflects overall Fund ratios for investment income and non-class specific expenses.
(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate."
See Notes to Financial Statements
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Financial Highlights continued
FOR THE YEAR ENDED JULY 31, | |||||||||||||||||||||||
2012 | 2011 | 2010^ | 2009^ | 2008^ | |||||||||||||||||||
Class C Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.55 | $ | 17.24 | $ | 16.15 | $ | 17.99 | $ | 20.48 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income(1) | 0.14 | 0.12 | 0.08 | 0.14 | 0.30 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.49 | ) | 1.86 | 1.16 | (1.74 | ) | (1.22 | ) | |||||||||||||||
Total income (loss) from investment operations | (0.35 | ) | 1.98 | 1.24 | (1.60 | ) | (0.92 | ) | |||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||
Net investment income | (0.32 | ) | (0.05 | ) | (0.15 | ) | (0.19 | ) | (0.34 | ) | |||||||||||||
Net realized gain | (0.77 | ) | (2.62 | ) | — | (0.05 | ) | (1.23 | ) | ||||||||||||||
Total dividends and distributions | (1.09 | ) | (2.67 | ) | (0.15 | ) | (0.24 | ) | (1.57 | ) | |||||||||||||
Net asset value, end of period | $ | 15.11 | $ | 16.55 | $ | 17.24 | $ | 16.15 | $ | 17.99 | |||||||||||||
Total Return(2) | (1.55 | )% | 12.23 | % | 7.76 | % | (8.78 | )% | (4.94 | )% | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Net expenses | 1.75 | %(4) | 1.71 | %(4) | 1.66 | %(4) | 1.70 | %(4) | 1.64 | %(4)(5) | |||||||||||||
Net investment income | 0.94 | %(4) | 0.72 | %(4) | 0.49 | %(4) | 0.89 | %(4) | 1.56 | %(4)(5) | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.01 | % | 0.02 | % | 0.03 | % | 0.02 | % | 0.02 | % | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 35,442 | $ | 43,411 | $ | 41,439 | $ | 40,203 | $ | 44,664 | |||||||||||||
Portfolio turnover rate | 81 | % | 123 | % | 173 | % | 83 | % | 42 | % |
^ Beginning with the year ended July 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(3) Reflects overall Fund ratios for investment income and non-class specific expenses.
(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate."
(5) If the Fund had borne all of its expenses that were waived by the Adviser and Administrator, the annualized expense and net investment income ratios, would have been 1.65 % and 1.55 % respectively.
See Notes to Financial Statements
81
Morgan Stanley Global Strategist Fund
Financial Highlights continued
FOR THE YEAR ENDED JULY 31, | |||||||||||||||||||||||
2012 | 2011 | 2010^ | 2009^ | 2008^ | |||||||||||||||||||
Class I Shares | |||||||||||||||||||||||
Selected Per Share Data: | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.76 | $ | 17.35 | $ | 16.25 | $ | 18.10 | $ | 20.59 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income(1) | 0.29 | 0.30 | 0.25 | 0.29 | 0.51 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.51 | ) | 1.87 | 1.17 | (1.75 | ) | (1.23 | ) | |||||||||||||||
Total income (loss) from investment operations | (0.22 | ) | 2.17 | 1.42 | (1.46 | ) | (0.72 | ) | |||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||
Net investment income | (0.42 | ) | (0.14 | ) | (0.32 | ) | (0.34 | ) | (0.54 | ) | |||||||||||||
Net realized gain | (0.77 | ) | (2.62 | ) | — | (0.05 | ) | (1.23 | ) | ||||||||||||||
Total dividends and distributions | (1.19 | ) | (2.76 | ) | (0.32 | ) | (0.39 | ) | (1.77 | ) | |||||||||||||
Net asset value, end of period | $ | 15.35 | $ | 16.76 | $ | 17.35 | $ | 16.25 | $ | 18.10 | |||||||||||||
Total Return(2) | (0.63 | )% | 13.38 | % | 8.84 | % | (7.86 | )% | (4.02 | )% | |||||||||||||
Ratios to Average Net Assets(3): | |||||||||||||||||||||||
Net expenses | 0.78 | %(4) | 0.71 | %(4) | 0.66 | %(4) | 0.70 | %(4) | 0.66 | %(4) | |||||||||||||
Net investment income | 1.91 | %(4) | 1.72 | %(4) | 1.49 | %(4) | 1.89 | %(4) | 2.54 | %(4) | |||||||||||||
Rebate from Morgan Stanley affiliate | 0.01 | % | 0.02 | % | 0.03 | % | 0.02 | % | 0.02 | % | |||||||||||||
Supplemental Data: | |||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 23,655 | $ | 27,116 | $ | 26,228 | $ | 26,901 | $ | 27,823 | |||||||||||||
Portfolio turnover rate | 81 | % | 123 | % | 173 | % | 83 | % | 42 | % |
^ Beginning with the year ended July 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(1) The per share amounts were computed using an average number of shares outstanding during the period.
(2) Calculated based on the net asset value as of the last business day of the period.
(3) Reflects overall Fund ratios for investment income and non-class specific expenses.
(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate."
See Notes to Financial Statements
82
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 (the "Fund"), including the portfolio of investments, as of July 31, 2012, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two 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. The financial highlights for the three years ended July 31, 2010 were audited by another independent registered public accounting firm whose report, dated September 29, 2010, expressed an unqualified opinion on those financial highlights.
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 was 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, 2012, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. 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, 2012, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
September 21, 2012
83
Morgan Stanley Global Strategist Fund
An Important Notice Concerning Our U.S. Privacy Policy (unaudited)
This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").
We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.
This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.
We Respect Your Privacy
We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.
This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.
Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.
84
Morgan Stanley Global Strategist Fund
An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
1. What Personal Information Do We Collect From You?
We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:
• We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.
• We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.
• We may obtain information about your creditworthiness and credit history from consumer reporting agencies.
• We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.
2. When Do We Disclose Personal Information We Collect About You?
We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.
a. Information We Disclose to Affiliated Companies. We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.
b. Information We Disclose to Third Parties. We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.
85
Morgan Stanley Global Strategist Fund
An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.
3. How Do We Protect The Security and Confidentiality Of Personal Information We Collect About You?
We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.
4. How Can You Limit Our Sharing Certain Personal Information About You With Our Affiliated Companies For Eligibility Determination?
By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.
5. How Can You Limit the Use of Certain Personal Information About You by Our Affiliated Companies for Marketing?
By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.
86
Morgan Stanley Global Strategist Fund
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 eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:
• Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 5p.m. (EST)
• Writing to us at the following address:
Morgan Stanley Services Company Inc.
c/o Privacy Coordinator
201 Plaza Two, 3rd Floor
Jersey City, New Jersey 07311
If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.
Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.
If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.
7. What if an affiliated company becomes a nonaffiliated third party?
If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies,
87
Morgan Stanley Global Strategist Fund
An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued
your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.
Special Notice to Residents of Vermont
The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.
The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.
Special Notice to Residents of California
The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.
In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.
88
Morgan Stanley Global Strategist Fund
Trustee and Officer Information (unaudited)
Independent Trustees:
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | 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 (67) 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, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley 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) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996); and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); 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; elected to the National Academy of Engineering (2009). | 102 | Director of BP p.l.c.; Director of Naval and Nuclear Technologies LLP; Director of the Armed Services YMCA of the USA and the Naval Submarine League; Director of the American Shipbuilding Suppliers Association; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a member of the CNA Military Advisory Board; Member of the American Lung Association's President's Council. | ||||||||||||||||||
Michael Bozic (71) 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 various Morgan Stanley Funds (since April 1994); 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. | 104 | Director of various business organizations. | ||||||||||||||||||
89
Morgan Stanley Global Strategist Fund
Trustee and Officer Information (unaudited) continued
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | 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 (59) 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 Morgan Stanley Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006). | 102 | Director of various non-profit organizations. | ||||||||||||||||||
Dr. Manuel H. Johnson (63) 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 various Morgan Stanley Funds (since July 1991); 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. | 104 | Director of NVR, Inc. (home construction). | ||||||||||||||||||
Joseph J. Kearns (70) c/o Kearns & Associates LLC PMB754 22631 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 various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of various Morgan Stanley Funds (since August 1994); CFO of the J. Paul Getty Trust. | 105 | Director of Electro Rent Corporation (equipment leasing) and The Ford Family Foundation. | ||||||||||||||||||
90
Morgan Stanley Global Strategist Fund
Trustee and Officer Information (unaudited) continued
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | 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 (53) 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 Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management, President, various Morgan Stanley Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999). | 102 | 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 (76) 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 various Morgan Stanley Funds (since July 2006); Chairperson of the Closed-End Fund Committee (since June 2012) and Director or Trustee of various Morgan Stanley Funds (since July 1991); formerly, Chairperson of the Insurance Committee (until July 2006). | 104 | None. | ||||||||||||||||||
91
Morgan Stanley Global Strategist Fund
Trustee and Officer Information (unaudited) continued
Name, Age and Address of Independent Trustee | Position(s) Held with Registrant | 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 (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 | Chairperson of the Equity Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Morgan Stanley 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). | 102 | Director of Temple-Inland Industries (packaging and forest products); Director of Legg Mason, Inc. and Director of the Auburn University Foundation. | ||||||||||||||||||
Fergus Reid (80) 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 various Morgan Stanley Funds (since June 1992). | 105 | 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 | 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 (64) c/o Morgan Stanley Services Company Inc. Harborside Financial Center 201 Plaza Two Jersey City, NJ 07311 | Trustee | Since June 2000 | Director or Trustee of various Morgan Stanley Funds (since June 2000); Senior Advisor of Morgan Stanley (since August 2000). | 103 | Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services). | ||||||||||||||||||
* Each Trustee serves an indefinite term, until his or her successor is elected.
** The Fund Complex includes (as of December 31, 2011) all open-end and closed-end funds (including all of their portfolios) advised by Morgan Stanley Investment Management Inc. (the "Adviser") and any funds that have an adviser that is an affiliated person of the Adviser (including, but not limited to, Morgan Stanley AIP GP LP).
*** This includes any directorships at public companies and registered investment companies held by the Trustee at any time during the past five years.
92
Morgan Stanley Global Strategist Fund
Trustee and Officer Information (unaudited) continued
Executive Officers:
Name, Age and Address of Executive Officer | Position(s) Held with Registrant | Length of Time Served* | Principal Occupation(s) During Past 5 Years | ||||||||||||
Arthur Lev (51) 522 Fifth Avenue New York, NY 10036 | President and Principal Executive Officer – Equity and Fixed Income Funds | Since June 2011 | President and Principal Executive Officer (since June 2011) of the Equity and Fixed Income Funds in the Fund Complex; Head of the Long Only Business of Morgan Stanley Investment Management (since February 2011); Managing Director of the Adviser and various entities affiliated with the Adviser (since December 2006). Formerly, Chief Strategy Officer of Morgan Stanley Investment Management Traditional Asset Management business (November 2010-February 2011); General Counsel of Morgan Stanley Investment Management (December 2006-October 2010); Partner and General Counsel of FrontPoint Partners LLC (July 2002-December 2006); Managing Director and General Counsel of Morgan Stanley Investment Management (May 2000-June 2002). | ||||||||||||
Mary Ann Picciotto (39) c/o Morgan Stanley Services Company Inc. Harborside Financial Center 201 Plaza Two Jersey City, NJ 07311 | Chief Compliance Officer | Since May 2010 | Managing Director of the Adviser and various entities affiliated with the Adviser; Chief Compliance Officer of various Morgan Stanley Funds (since May 2010); Chief Compliance Officer of the Adviser (since April 2007). | ||||||||||||
Stefanie V. Chang Yu (45) 522 Fifth Avenue New York, NY 10036 | Vice President | Since December 1997 | Managing Director of the Adviser and various entities affiliated with the Adviser; Vice President of various Morgan Stanley Funds (since December 1997). | ||||||||||||
Francis J. Smith (47) c/o Morgan Stanley Services Company Inc. Harborside Financial Center 201 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 Adviser and various entities affiliated with the Adviser; Treasurer and Principal Financial Officer of various Morgan Stanley Funds (since July 2003). | ||||||||||||
Mary E. Mullin (45) 522 Fifth Avenue New York, NY 10036 | Secretary | Since June 1999 | Executive Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999). | ||||||||||||
* Each officer serves an indefinite term, until his or her successor is elected.
93
Morgan Stanley Global Strategist Fund
2012 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, 2012. For corporate shareholders, 8.40% of the dividends qualified for the dividend received deduction. The Fund designated and paid $9,500,955 as a long-term capital gain distribution.
For Federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended July 31, 2012. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of $6,812,176 as taxable at this lower rate.
During the taxable year ended July 31, 2012, the Fund intends to pass through foreign tax credits of $349,085, and has derived income of $4,609,252 from sources within foreign countries.
In January, the Fund provides tax information to shareholders for the preceding calendar year.
94
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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:
2012
|
| Registrant |
| Covered Entities(1) |
| ||
Audit Fees |
| $ | 42,075 |
| N/A |
| |
|
|
|
|
|
| ||
Non-Audit Fees |
|
|
|
|
| ||
Audit-Related Fees |
| $ | — | (2) | $ |
| (2) |
Tax Fees |
| $ | 5,254 | (3) | $ | 197,626 | (4) |
All Other Fees |
| $ |
|
| $ | 1,148,453 |
|
Total Non-Audit Fees |
| $ | 5,254 |
| $ | 1,346,079 |
|
|
|
|
|
|
| ||
Total |
| $ | 47,329 |
| $ | 1,346,079 |
|
2011
|
| Registrant |
| Covered Entities(1) |
| ||
Audit Fees |
| $ | 42,075 |
| N/A |
| |
|
|
|
|
|
| ||
Non-Audit Fees |
|
|
|
|
| ||
Audit-Related Fees |
| $ | — | (2) | $ | 6,501,000 | (2) |
Tax Fees |
| $ | 5,254 | (3) | $ | 1,350,000 | (4) |
All Other Fees |
| $ |
|
| $ |
| (5) |
Total Non-Audit Fees |
| $ | 5,254 |
| $ | 7,851,000 |
|
|
|
|
|
|
| ||
Total |
| $ | 47,329 |
| $ | 7,851,000 |
|
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/ Arthur Lev |
|
Arthur Lev |
|
Principal Executive Officer |
|
September 19, 2012 |
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Arthur Lev |
|
Arthur Lev |
|
Principal Executive Officer |
|
September 19, 2012 |
|
|
|
/s/ Francis Smith |
|
Francis Smith |
|
Principal Financial Officer |
|
September 19, 2012 |
|