<Page>
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: 811-08283
Morgan Stanley Fund of Funds - Domestic Portfolio
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
(Address of principal executive offices) (Zip code)
Ronald E. Robison
1221 Avenue of the Americas, New York, New York 10020
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: September 30, 2005
Date of reporting period: March 31, 2005
Item 1 - Report to Shareholders
<Page>
WELCOME, SHAREHOLDER:
IN THIS REPORT, YOU'LL LEARN ABOUT HOW YOUR INVESTMENT IN MORGAN STANLEY FUND OF
FUNDS -- DOMESTIC PORTFOLIO PERFORMED DURING THE SEMIANNUAL PERIOD. WE WILL
PROVIDE AN OVERVIEW OF THE MARKET CONDITIONS, AND DISCUSS SOME OF THE FACTORS
THAT AFFECTED PERFORMANCE DURING THE REPORTING PERIOD. IN ADDITION, THIS REPORT
INCLUDES THE FUND'S FINANCIAL STATEMENTS AND A LIST OF FUND INVESTMENTS.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE FUND BEING
OFFERED.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE
IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. THE FUND IS
SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY THAT MARKET VALUES OF
SECURITIES OWNED BY THE FUND WILL DECLINE AND, THEREFORE, THE VALUE OF THE
FUND'S SHARES MAY BE LESS THAN WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE
MONEY INVESTING IN THIS FUND. PLEASE SEE THE PROSPECTUS FOR MORE COMPLETE
INFORMATION ON INVESTMENT RISKS.
<Page>
FUND REPORT
FOR THE SIX MONTHS ENDED MARCH 31, 2005
TOTAL RETURN FOR THE 6 MONTHS ENDED MARCH 31, 2005
<Table>
<Caption>
LIPPER FLEXIBLE
S&P 500 PORTFOLIO
CLASS A CLASS B CLASS C CLASS D INDEX(1) FUNDS INDEX(2)
- ------- ------- ------- ------- -------- ---------------
6.24% 5.82% 5.98% 6.45% 6.88% 6.12%
</Table>
THE PERFORMANCE OF THE FUND'S FOUR SHARE CLASSES VARIES BECAUSE EACH HAS
DIFFERENT EXPENSES. THE FUND'S TOTAL RETURNS ASSUME THE REINVESTMENT OF ALL
DISTRIBUTIONS BUT DO NOT REFLECT THE DEDUCTION OF ANY APPLICABLE SALES CHARGES.
SUCH COSTS WOULD LOWER PERFORMANCE. SEE PERFORMANCE SUMMARY FOR STANDARDIZED
PERFORMANCE AND BENCHMARK INFORMATION.
MARKET CONDITIONS
For the six-month period ending March 31, 2005, U.S. equity markets posted
broadly positive returns. Strong gross domestic product growth and generally
positive economic data over the full six months confirmed a sustained economic
expansion. The Federal Open Market Committee (the "Fed") continued to raise
rates at a "measured pace," elevating nominal real rates into positive territory
for the first time since 2002. By the end of the period, the federal funds rate
stood at 2.75 percent.
Contributions to full-period positive returns were largely due to a powerful
market rally during the first half of the period, the fourth quarter 2004.
During this period, investors' spirits were buoyed by a decline in oil prices,
and by the swift and decisive outcome of the U.S. presidential election.
Markets faltered in the first quarter of 2005, however, amid concerns of
decelerating earnings growth and accelerating inflation. For the first three
months of 2005, the S&P 500 Index lost 2.1 percent. Inflationary pressures, as
measured by both consumer prices and producer prices, steadily advanced over the
period, and began to weigh on investor sentiment. This anxiety was exacerbated
as oil prices began ramping upward again.
Among sectors, energy produced the strongest returns over the period, advancing
over 22 percent. Although energy stocks faltered in the last months of 2004 as
oil prices cooled, concerns about production capacity and speculation
contributed to renewed strength in global oil prices during the first three
months of 2005. As the Fed continued to raise rates, investors favored stable
sectors that produce high yields. As such, in addition to energy, utilities
outperformed over the period. Meanwhile, in part due to their interest-rate
sensitivity, financials weakened.
PERFORMANCE ANALYSIS
The Morgan Stanley Fund of Funds -- Domestic Portfolio underperformed its
benchmark index, the S&P 500 Index, for the six months ending March 31, 2005,
assuming no deduction of applicable sales charges. Against its Lipper peers, the
Fund had mixed results over the six month period. Class A Shares and Class D
Shares outperformed the Lipper Flexible Portfolio Funds Index, however, Class B
Shares and Class C Shares underperformed the Lipper Index.
The Fund invests in a broad selection of Morgan Stanley mutual funds. The
portfolio manager can increase or decrease exposure to each of these funds and
investment styles as the market environment warrants.
2
<Page>
Throughout the period, the Fund maintained a strong underweight position in
fixed income securities relative to its peer group. The Fund held less than 20
percent of the average fixed income allocation for Lipper Flexible Portfolio
funds. In the fourth quarter of 2004, this fixed income underweight contributed
to the Fund's relative outperformance by Class A and Class D as equities
rallied. However, in the first quarter of 2005, as equities faltered and bonds
posted a contra-trend rally, the Fund's performance suffered relative to its
peer group.
As the Fed continued to raise rates through the period, the Fund decreased its
exposure to interest rate sensitive stocks. In particular, the Fund reduced its
allocation to both financial services and real estate. The financials sector was
one of the weakest sectors during the period, and the decision to decrease
exposure to interest rate sensitive stocks positively contributed to
performance. Considerable allocations to health care and biotech, however,
hindered Fund performance over the period. Negative news, competitive pricing,
and failed drug approvals hampered the performance of both groups.
THERE IS NO GUARANTEE THAT ANY SECTORS MENTIONED WILL CONTINUE TO PERFORM WELL
OR THAT SECURITIES IN THESE SECTORS WILL BE HELD BY THE FUND IN THE FUTURE.
TOP FIVE FUNDS
<Table>
Morgan Stanley S&P 500 Index Fund 14.7%
Morgan Stanley Equally-Weighted S&P 500 Fund 11.0
Morgan Stanley Value Fund 10.4
Morgan Stanley Information Fund 8.9
Morgan Stanley Dividend Growth Securities Inc. 8.8
</Table>
DATA AS OF MARCH 31, 2005. SUBJECT TO CHANGE DAILY. ALL PERCENTAGES FOR TOP FIVE
FUNDS ARE AS A PERCENTAGE OF NET ASSETS. THESE DATA ARE PROVIDED FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE DEEMED A RECOMMENDATION TO BUY OR
SELL THE SECURITIES MENTIONED. MORGAN STANLEY IS A FULL-SERVICE SECURITIES FIRM
ENGAGED IN SECURITIES TRADING AND BROKERAGE ACTIVITIES, INVESTMENT BANKING,
RESEARCH AND ANALYSIS, FINANCING AND FINANCIAL ADVISORY SERVICES.
3
<Page>
INVESTMENT STRATEGY
THE FUND OF FUNDS DOMESTIC PORTFOLIO NORMALLY INVESTS AT LEAST 80 PERCENT OF ITS
ASSETS IN SHARES OF UNDERLYING MORGAN STANLEY FUNDS INTENDED TO GIVE THE
PORTFOLIO BROAD EXPOSURE TO THE U.S. EQUITY AND FIXED-INCOME MARKETS. AT ANY
TIME, THE PORTFOLIO'S INVESTMENT ADVISER, MORGAN STANLEY INVESTMENT ADVISORS
INC., MAY ADD OR SUBSTITUTE UNDERLYING FUNDS IN WHICH THE PORTFOLIO MAY INVEST.
IN DECIDING HOW TO ALLOCATE THE PORTFOLIO'S ASSETS AMONG THE SELECTED UNDERLYING
FUNDS, THE INVESTMENT ADVISER CONSIDERS ITS OUTLOOK FOR THE U.S. ECONOMY AND
FINANCIAL MARKETS AS WELL AS THE RELATIVE MARKET VALUATIONS OF THE TYPES OF
SECURITIES HELD IN THE UNDERLYING FUNDS. THE PORTFOLIO NORMALLY EXPECTS TO
INVEST BETWEEN 50 AND 100 PERCENT OF ITS NET ASSETS IN UNDERLYING FUNDS THAT
INVEST PRIMARILY IN EQUITY SECURITIES AND BETWEEN 0 AND 50 PERCENT OF ITS NET
ASSETS IN UNDERLYING FUNDS THAT INVEST PRIMARILY IN FIXED-INCOME SECURITIES.
THERE ARE NO MINIMUM OR MAXIMUM PERCENTAGES IN WHICH THE PORTFOLIO MUST INVEST
IN ANY UNDERLYING FUND.
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 BY FILING THE SCHEDULE ELECTRONICALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEMIANNUAL REPORTS ARE FILED ON
FORM N-CSRS AND THE ANNUAL REPORTS ARE FILED ON FORM N-CSR. MORGAN STANLEY ALSO
DELIVERS THE SEMIANNUAL AND ANNUAL REPORTS TO FUND SHAREHOLDERS AND MAKES THESE
REPORTS AVAILABLE ON ITS PUBLIC WEB SITE, www.morganstanley.com. EACH MORGAN
STANLEY FUND ALSO FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC
FOR THE FUND'S FIRST AND THIRD FISCAL QUARTERS ON FORM N-Q. MORGAN STANLEY DOES
NOT DELIVER THE REPORTS FOR THE FIRST AND THIRD FISCAL QUARTERS TO SHAREHOLDERS,
NOR ARE THE REPORTS POSTED TO THE MORGAN STANLEY PUBLIC WEB SITE. YOU MAY,
HOWEVER, OBTAIN THE FORM N-Q FILINGS (AS WELL AS THE FORM N-CSR AND N-CSRS
FILINGS) BY ACCESSING THE SEC'S WEB SITE, http://www.sec.gov. YOU MAY ALSO
REVIEW AND COPY THEM AT THE SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC.
INFORMATION ON THE OPERATION OF THE SEC'S PUBLIC REFERENCE ROOM MAY BE OBTAINED
BY CALLING THE SEC AT (800) SEC-0330. YOU CAN ALSO REQUEST COPIES OF THESE
MATERIALS, UPON PAYMENT OF A DUPLICATING FEE, BY ELECTRONIC REQUEST AT THE SEC'S
E-MAIL ADDRESS (publicinfo@sec.gov) OR BY WRITING THE PUBLIC REFERENCE SECTION
OF THE SEC, WASHINGTON, DC 20549-0102.
PROXY VOTING POLICIES AND PROCEDURES
A DESCRIPTION OF (1) THE FUND'S POLICIES AND PROCEDURES WITH RESPECT TO THE
VOTING OF PROXIES RELATING TO THE FUND'S PORTFOLIO SECURITIES AND (2) HOW THE
FUND VOTED PROXIES RELATING TO PORTFOLIO SECURITIES DURING THE MOST RECENT
12-MONTH PERIOD ENDED JUNE 30, 2004, IS AVAILABLE WITHOUT CHARGE BY VISITING THE
MUTUAL FUND CENTER ON OUR WEB SITE AT www.morganstanley.com. THIS INFORMATION IS
ALSO AVAILABLE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT
http://www.sec.gov.
HOUSEHOLDING NOTICE
TO REDUCE PRINTING AND MAILING COSTS, THE FUND ATTEMPTS TO ELIMINATE DUPLICATE
MAILINGS TO THE SAME ADDRESS. THE FUND DELIVERS A SINGLE COPY OF CERTAIN
SHAREHOLDER DOCUMENTS, INCLUDING SHAREHOLDER REPORTS, PROSPECTUSES AND PROXY
MATERIALS, TO INVESTORS WITH THE SAME LAST NAME WHO RESIDE AT THE SAME ADDRESS.
YOUR PARTICIPATION IN THIS PROGRAM WILL CONTINUE FOR AN UNLIMITED PERIOD OF TIME
UNLESS YOU INSTRUCT US OTHERWISE. YOU CAN REQUEST MULTIPLE COPIES OF THESE
DOCUMENTS BY CALLING (800) 350-6414, 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.
4
<Page>
PERFORMANCE SUMMARY
AVERAGE ANNUAL TOTAL RETURNS--PERIOD ENDED MARCH 31, 2005
<Table>
<Caption>
CLASS A SHARES* CLASS B SHARES** CLASS C SHARES+ CLASS D SHARES++
(SINCE 11/25/97) (SINCE 11/25/97) (SINCE 11/25/97) (SINCE 11/25/97)
SYMBOL DOFAX DOFBX DOFCX DOFDX
- --------------- ---------------- ---------------- ---------------- ----------------
1 YEAR 6.78(3) 5.93(3) 5.98(3) 7.10(3)
1.18(4) 0.93(4) 4.98(4) --
5 YEARS (0.30)(3) (1.06)(3) (1.05)(3) (0.06)(3)
(1.37)(4) (1.42)(4) (1.05)(4) --
SINCE INCEPTION 4.39(3) 3.61(3) 3.68(3) 4.65(3)
3.63(4) 3.61(4) 3.68(4) --
</Table>
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 THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
morganstanley.com OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. THE TABLE DOES NOT REFLECT THE DEDUCTION OF
TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF
FUND SHARES. PERFORMANCE FOR CLASS A, CLASS B, CLASS C, AND CLASS D SHARES WILL
VARY DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.
* THE MAXIMUM FRONT-END SALES CHARGE FOR CLASS A IS 5.25%.
** THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR CLASS B IS 5.0%.
THE CDSC DECLINES TO 0% AFTER SIX YEARS.
+ THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C IS 1% FOR SHARES
REDEEMED WITHIN ONE YEAR OF PURCHASE.
++ CLASS D HAS NO SALES CHARGE.
(1) THE STANDARD AND POOR'S 500 INDEX (S&P 500(R)) IS A BROAD-BASED INDEX,
THE PERFORMANCE OF WHICH IS BASED ON THE PERFORMANCE OF 500 WIDELY-HELD
COMMON STOCKS CHOSEN FOR MARKET SIZE, LIQUIDITY AND INDUSTRY GROUP
REPRESENTATION. INDEXES ARE UNMANAGED AND THEIR RETURNS DO NOT INCLUDE ANY
SALES CHARGES OR FEES. SUCH COSTS WOULD LOWER PERFORMANCE. IT IS NOT
POSSIBLE TO INVEST DIRECTLY IN AN INDEX.
(2) THE LIPPER FLEXIBLE PORTFOLIO FUNDS INDEX IS AN EQUALLY WEIGHTED
PERFORMANCE INDEX OF THE LARGEST QUALIFYING FUNDS (BASED ON NET ASSETS) IN
THE LIPPER FLEXIBLE PORTFOLIO FUNDS CLASSIFICATION. THE INDEX, WHICH IS
ADJUSTED FOR CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS, IS UNMANAGED
AND SHOULD NOT BE CONSIDERED AN INVESTMENT. THERE ARE CURRENTLY 30 FUNDS
REPRESENTED IN THIS INDEX.
(3) FIGURE SHOWN ASSUMES REINVESTMENT OF ALL DISTRIBUTIONS AND DOES NOT REFLECT
THE DEDUCTION OF ANY SALES CHARGES.
(4) FIGURE SHOWN ASSUMES REINVESTMENT OF ALL DISTRIBUTIONS AND THE DEDUCTION OF
THE MAXIMUM APPLICABLE SALES CHARGE. SEE THE FUND'S CURRENT PROSPECTUS FOR
COMPLETE DETAILS ON FEES AND SALES CHARGES.
5
<Page>
EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments and
redemption fees; and (2) ongoing costs, including 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 10/01/04 - 03/31/05.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
expenses based on the Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing cost of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and redemption fees. Therefore, the second line of the table is
useful in comparing ongoing costs, and will not help you determine the relative
total cost of owning different funds. In addition, if these transactional costs
were included, your costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD *
------------- ------------- ---------------
10/01/04 -
10/01/04 03/31/05 03/31/05
------------- ------------- ---------------
CLASS A
Actual (6.24% return) $ 1,000.00 $ 1,062.40 $ 1.13
Hypothetical (5% annual return before expenses) $ 1,000.00 $ 1,023.83 $ 1.11
CLASS B
Actual (5.82% return) $ 1,000.00 $ 1,058.20 $ 5.13
Hypothetical (5% annual return before expenses) $ 1,000.00 $ 1,019.95 $ 5.04
CLASS C
Actual (5.98% return) $ 1,000.00 $ 1,059.80 $ 4.62
Hypothetical (5% annual return before expenses) $ 1,000.00 $ 1,020.44 $ 4.53
CLASS D
Actual (6.45% return) $ 1,000.00 $ 1,064.50 $ 0.00
Hypothetical (5% annual return before expenses) $ 1,000.00 $ 1,024.93 $ 0.00
</Table>
- ----------
* EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO OF 0.22%, 1.00%,
0.90% AND 0.00%, RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER
THE PERIOD, MULTIPLIED BY 182/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). IF
THE FUND HAD BORNE ALL OF ITS EXPENSES, THE EXPENSE RATIOS WOULD HAVE BEEN
0.94%, 1.72%, 1.62% AND 0.72%, RESPECTIVELY.
6
<Page>
MORGAN STANLEY FUND OF FUNDS -- DOMESTIC PORTFOLIO
PORTFOLIO OF INVESTMENTS - MARCH 31, 2005 (UNAUDITED)
<Table>
<Caption>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------------------------------
Common Stocks (99.5%)
70,187 Morgan Stanley Aggressive Equity Fund* $ 658,357
120,595 Morgan Stanley Biotechnology Fund 1,671,443
76,521 Morgan Stanley Capital Opportunities Trust* 1,132,507
24,914 Morgan Stanley Convertible Securities Trust 396,377
101,835 Morgan Stanley Developing Growth Securities Trust* 2,281,109
95,998 Morgan Stanley Dividend Growth Securities Inc. 3,510,636
118,991 Morgan Stanley Equally-Weighted S&P 500 Fund 4,377,679
177,958 Morgan Stanley Financial Services Trust 2,482,507
47,151 Morgan Stanley Global Advantage Fund* 399,840
143,422 Morgan Stanley Growth Fund* 1,764,094
37,665 Morgan Stanley Health Sciences Trust 636,534
108,540 Morgan Stanley Income Builder Fund 1,215,647
367,472 Morgan Stanley Information Fund* 3,546,101
103,110 Morgan Stanley Nasdaq-100 Index Fund* 878,498
41,870 Morgan Stanley Natural Resource Development Securities Inc.* 878,861
69,819 Morgan Stanley Real Estate Fund 1,131,770
456,752 Morgan Stanley S&P 500 Index Fund 5,882,966
92,204 Morgan Stanley Special Growth Fund* 1,607,110
85,658 Morgan Stanley U. S. Government Securities Trust 776,916
27,820 Morgan Stanley Utilities Fund 379,461
313,923 Morgan Stanley Value Fund 4,153,199
-------------
TOTAL COMMON STOCKS
(COST $35,226,880) 39,761,612
-------------
<Caption>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ----------
SHORT-TERM INVESTMENT (0.7%)
REPURCHASE AGREEMENT
$ 267 Joint repurchase agreement account 2.845% due 04/01/05
(dated 03/31/05; proceeds $267,021) (a)
(COST $267,000) 267,000
-------------
TOTAL INVESTMENTS
(COST $35,493,880) (b) 100.2% 40,028,612
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2) (87,562)
----- -------------
NET ASSETS 100.0% $ 39,941,050
===== =============
</Table>
- ----------
* NON-INCOME PRODUCING SECURITY.
(a) COLLATERALIZED BY FEDERAL AGENCY AND U.S. TREASURY OBLIGATIONS.
(b) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES APPROXIMATES THE
AGGREGATE COST FOR BOOK PURPOSES. THE AGGREGATE GROSS UNREALIZED
APPRECIATION IS $5,047,785 AND THE AGGREGATE GROSS UNREALIZED
DEPRECIATION IS $513,053, RESULTING IN NET UNREALIZED APPRECIATION OF
$4,534,732.
SEE NOTES TO FINANCIAL STATEMENTS
7
<Page>
MORGAN STANLEY FUND OF FUNDS -- DOMESTIC PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2005 (UNAUDITED)
<Table>
ASSETS:
Investments in securities, at value (cost $35,493,880) $ 40,028,612
Cash 35,571
Receivable for shares of beneficial interest sold 14,051
Receivable from affiliate 4,584
Prepaid expenses and other assets 13,015
--------------
TOTAL ASSETS 40,095,833
--------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed 104,627
Distribution fee 32,778
Accrued expenses and other payables 17,378
--------------
TOTAL LIABILITIES 154,783
--------------
NET ASSETS $ 39,941,050
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 41,876,065
Net unrealized appreciation 4,534,732
Accumulated undistributed net investment income 184,108
Accumulated net realized loss (6,653,855)
--------------
NET ASSETS $ 39,941,050
==============
CLASS A SHARES:
Net Assets $ 2,146,762
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 208,438
NET ASSET VALUE PER SHARE $ 10.30
==============
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE) $ 10.87
==============
CLASS B SHARES:
Net Assets $ 32,784,309
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 3,251,759
NET ASSET VALUE PER SHARE $ 10.08
==============
CLASS C SHARES:
Net Assets $ 4,296,337
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 425,027
NET ASSET VALUE PER SHARE $ 10.11
==============
CLASS D SHARES:
Net Assets $ 713,642
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 68,838
NET ASSET VALUE PER SHARE $ 10.37
==============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
8
<Page>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2005 (UNAUDITED)
<Table>
NET INVESTMENT INCOME:
INCOME
Dividends $ 488,205
Interest 4,365
--------------
TOTAL INCOME 492,570
--------------
EXPENSES
Distribution fee (Class A shares) 2,250
Distribution fee (Class B shares) 167,815
Distribution fee (Class C shares) 19,466
Shareholder reports and notices 58,873
Transfer agent fees and expenses 32,065
Registration fees 24,960
Professional fees 22,296
Custodian fees 1,673
Other 4,782
--------------
TOTAL EXPENSES 334,180
Less: amounts waived/reimbursed (144,649)
--------------
NET EXPENSES 189,531
--------------
NET INVESTMENT INCOME 303,039
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain 77,172
Capital gain distributions received 623,497
--------------
NET REALIZED GAIN 700,669
Net change in unrealized appreciation 1,272,978
--------------
NET GAIN 1,973,647
--------------
NET INCREASE $ 2,276,686
==============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
9
<Page>
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 2005 SEPTEMBER 30, 2004
-------------- ------------------
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 303,039 $ 822
Net realized gain 700,669 1,902,121
Net change in unrealized appreciation 1,272,978 1,748,826
------------ -------------
NET INCREASE 2,276,686 3,651,769
------------ -------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A shares (22,825) --
Class B shares (87,702) --
Class C shares (4,678) --
Class D shares (4,548) --
------------ -------------
TOTAL DIVIDENDS (119,753) --
------------ -------------
Net increase (decrease) from transactions in shares of beneficial interest (1,078,546) 9,823,966
------------ -------------
NET INCREASE 1,078,387 13,475,735
NET ASSETS:
Beginning of period 38,862,663 25,386,928
------------ -------------
END OF PERIOD
(INCLUDING ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME OF
$184,108 AND $822, RESPECTIVELY) $ 39,941,050 $ 38,862,663
============ =============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
10
<Page>
MORGAN STANLEY FUND OF FUNDS -- DOMESTIC PORTFOLIO
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2005 (UNAUDITED)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Fund of Funds -- Domestic Portfolio (the "Fund") is registered
under the Investment Company Act of 1940, as amended (the "Act"), as a
non-diversified, open-end management investment company. The Fund will invest in
Class D shares of other open-end management investment companies that are either
members of the Morgan Stanley Family of Funds or managed by an investment
advisor that is an affiliate of Morgan Stanley Investment Advisors, Inc. (the
"Investment Adviser") (individually, an "Underlying Fund" and collectively, the
"Underlying Funds"). The Fund investment objective is to maximize total
investment return. The Fund was organized as a Massachusetts business trust on
July 3, 1997 and commenced operations on November 25, 1997.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) Investments are valued at the net asset value
per share of each Underlying Fund determined as of the close of the New York
Stock Exchange on valuation date; and (2) 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.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted and premiums are amortized over the life of the
respective securities. Interest income is accrued daily.
C. REPURCHASE AGREEMENTS -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated
entities managed by the Investment Adviser, may transfer uninvested cash
balances into one or more joint repurchase agreement accounts. These balances
are invested in one or more repurchase agreements and are collateralized by
cash, U.S. Treasury or federal agency obligations. The Fund may also invest
directly with institutions in repurchase agreements. The Fund's custodian
receives the collateral, which is marked-to-market daily to determine that the
value of the collateral does not decrease below the repurchase price plus
accrued interest.
11
<Page>
D. 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.
E. FEDERAL INCOME TAX POLICY -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to
shareholders are recorded on the ex-dividend date.
G. USE OF ESTIMATES -- The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates.
2. INVESTMENT ADVISORY/ADMINISTRATION AGREEMENTS
Pursuant to an Investment Advisory Agreement, the Fund pays no advisory fee.
However, the Fund, through its investments in the Underlying Funds, will pay its
pro rata share of the advisory or sub-advisory fees to the Investment Adviser
and/or Sub-Advisors or Advisor of the Underlying Funds.
Effective November 1, 2004, pursuant to an Administration Agreement with Morgan
Stanley Services Company Inc. (the "Administrator"), an affiliate of the
Investment Adviser, the Fund pays no administration fee. However, the Fund
through its investments in the Underlying Funds, will pay its pro rata share of
the administration fee to the Administrator.
The Investment Adviser agreed to assume all operating expenses (except for
distribution fees) until April 30, 2006. At March 31, 2005, included in the
Statements of Assets and Liabilities are receivables from an affiliate which
represent expense reimbursements due to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the
"Distributor"), an affiliate of the Investment Adviser and Administrator. The
Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1
under the Act. The Plan provides that the Fund will pay the Distributor a fee
which is accrued daily and paid monthly at the following annual rates: (i) Class
A -- up to 0.25% of the average daily net assets of Class A; (ii) Class B -- up
to 1.0% of the average daily net assets of Class B; and (iii) Class C -- up to
1.0% of the average daily net assets of Class C.
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
12
<Page>
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 $3,813,054
at March 31, 2005.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Financial Advisors or other selected
broker-dealer representatives may be reimbursed in the subsequent calendar year.
For the six months ended March 31, 2005, the distribution fee was accrued for
Class A shares and Class C shares at the annual rate of 0.22% and 0.90%,
respectively.
The Distributor has informed the Fund that for the six months ended March 31,
2005, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $27,109 and $869, respectively
and received $14,392 in front-end sales charges from sales of the Fund's Class A
shares. The respective shareholders pay such charges which are not an expense of
the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended March 31, 2005 aggregated
$1,767,798 and $2,048,184, respectively.
Morgan Stanley Trust, an affiliate of the Investment Adviser, Administrator and
Distributor, is the Fund's transfer agent. At March 31, 2005, the Fund had
transfer agent fees and expenses payable of approximately $1,300.
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 receives for serving on the Board of Trustees. Each eligible Trustee
generally may elect to have the deferred amounts credited with a return equal to
the total return on one or more of the Morgan Stanley funds that are offered as
investment options under the Compensation Plan. Appreciation/depreciation and
distributions received from these investments are recorded with an offsetting
increase/decrease in the deferred compensation obligation and do not affect the
net asset value of the Fund.
5. FEDERAL INCOME TAX STATUS
The amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations which may differ from generally
13
<Page>
accepted accounting principles. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their federal tax-basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment income
and net realized capital gains for tax purposes are reported as distributions of
paid-in-capital.
As of September 30, 2004, the Fund had a net capital loss carryforward of
$7,215,832 of which $114,408 will expire on September 30, 2009, $672,400 will
expire on September 30, 2010 and $6,429,024 will expire on September 30, 2011 to
offset future capital gains to the extent provided by regulations.
As of September 30, 2004, the Fund had temporary book/tax differences
attributable to capital loss deferrals on wash sales.
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 2005 SEPTEMBER 30, 2004
------------------------------------------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------
CLASS A SHARES
Sold 34,062 $ 357,218 169,650 $ 1,603,045
Reinvestment of dividends 2,046 21,874 -- --
Redeemed (21,196) (216,857) (79,710) (761,520)
------------ ------------ ------------ ------------
Net increase -- Class A 14,912 162,235 89,940 841,525
------------ ------------ ------------ ------------
CLASS B SHARES
Sold 336,929 3,404,143 1,660,602 15,444,499
Reinvestment of dividends 7,564 79,269 -- --
Redeemed (476,432) (4,806,986) (859,474) (7,998,992)
------------ ------------ ------------ ------------
Net increase (decrease) -- Class B (131,939) (1,323,574) 801,128 7,445,507
------------ ------------ ------------ ------------
CLASS C SHARES
Sold 51,638 523,716 279,197 2,567,087
Reinvestment of dividends 395 4,148 -- --
Redeemed (78,542) (796,012) (138,060) (1,293,226)
------------ ------------ ------------ ------------
Net increase (decrease) -- Class C (26,509) (268,148) 141,137 1,273,861
------------ ------------ ------------ ------------
CLASS D SHARES
Sold 38,178 393,356 49,710 482,507
Reinvestment of dividends 399 4,293 -- --
Redeemed (4,542) (46,708) (23,014) (219,434)
------------ ------------ ------------ ------------
Net increase -- Class D 34,035 350,941 26,696 263,073
------------ ------------ ------------ ------------
Net increase (decrease) in Fund (109,501) $ (1,078,546) 1,058,901 $ 9,823,966
============ ============ ============ ============
</Table>
14
<Page>
7. LEGAL MATTERS
The Investment Adviser, certain affiliates of the Investment Adviser, certain
officers of such affiliates and certain investment companies advised by the
Investment Adviser or its affiliates, including the Fund, are named as
defendants in a consolidated class action. This consolidated action also names
as defendants certain individual Trustees and Directors of the Morgan Stanley
funds. The consolidated amended complaint generally alleges that defendants,
including the Fund, violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Investment Adviser
and certain affiliates of the Investment Adviser allegedly offered economic
incentives to brokers and others to recommend the funds advised by the
Investment Adviser or its affiliates to investors rather than funds managed by
other companies, and (ii) that the funds advised by the Investment Adviser or
its affiliates, including the Fund, allegedly paid excessive commissions to
brokers in return for their efforts to recommend these funds to investors. The
complaint seeks, among other things, unspecified compensatory damages,
rescissionary damages, fees and costs. The defendants have moved to dismiss the
action and intend to otherwise vigorously defend it. On March 10, 2005,
Plaintiffs sought leave to supplement their complaint to assert claims on behalf
of other investors. While the Fund and Adviser believe that each has meritorious
defenses, the ultimate outcome of this matter is not presently determinable at
this early stage of the litigation, and no provision has been made in the Fund's
financial statements for the effect, if any, of this matter.
15
<Page>
MORGAN STANLEY FUND OF FUNDS -- DOMESTIC PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED SEPTEMBER 30,
MONTHS ENDED ----------------------------------------------------------------
MARCH 31, 2005 2004 2003 2002 2001 2000
-------------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
CLASS A SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period $ 9.80 $ 8.60 $ 6.69 $ 8.17 $ 12.37 $ 11.54
-------------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income++ 0.12 0.06 0.01 0.05 0.11 0.38
Net realized and unrealized gain (loss) 0.50 1.14 1.90 (1.45) (3.21) 1.83
-------------- ---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations 0.62 1.20 1.91 (1.40) (3.10) 2.21
-------------- ---------- ---------- ---------- ---------- ----------
Less dividends and distributions from:
Net investment income (0.12) - - (0.08) (0.31) (0.29)
Net realized gain - - - - (0.79) (1.09)
-------------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions (0.12) - - (0.08) (1.10) (1.38)
-------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.30 $ 9.80 $ 8.60 $ 6.69 $ 8.17 $ 12.37
============== ========== ========== ========== ========== ==========
TOTAL RETURN+ 6.24%(3) 13.95% 28.55% (17.44)% (27.24)% 20.16%
RATIOS TO AVERAGE NET ASSETS(1)(2)(5):
Expenses 0.22%(4) 0.24% 0.23% 0.24% 0.23% 0.24%
Net investment income 2.23%(4) 0.72% 0.16% 0.50% 0.91% 3.35%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $ 2,147 $ 1,896 $ 890 $ 846 $ 976 $ 1,493
Portfolio turnover rate 4%(3) 46% 87% 163% 177% 434%
</Table>
- ----------
++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD.
+ DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE NET
ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD.
(1) DOES NOT INCLUDE ANY EXPENSES INCURRED AS A RESULT OF INVESTMENT IN THE
UNDERLYING FUNDS.
(2) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS SPECIFIC
EXPENSES.
(3) NOT ANNUALIZED.
(4) ANNUALIZED.
(5) IF THE FUND HAD BORNE ALL OF ITS EXPENSES THAT WERE REIMBURSED OR WAIVED BY
THE INVESTMENT ADVISER, THE ANNUALIZED EXPENSE AND NET INVESTMENT INCOME
(LOSS) RATIOS WOULD HAVE BEEN AS FOLLOWS:
<Table>
<Caption>
EXPENSE NET INVESTMENT
PERIOD ENDED: RATIO INCOME (LOSS) RATIO
------------------ ----------- --------------------
MARCH 31, 2005 0.94% 1.51%
SEPTEMBER 30, 2004 0.64% 0.32%
SEPTEMBER 30, 2003 0.67% (0.28)%
SEPTEMBER 30, 2002 0.63% 0.11%
SEPTEMBER 30, 2001 0.57% 0.57%
SEPTEMBER 30, 2000 0.67% 2.92%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
16
<Page>
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED SEPTEMBER 30,
MONTHS ENDED --------------------------------------------------------------
MARCH 31, 2005 2004 2003 2002 2001 2000
-------------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period $ 9.55 $ 8.44 $ 6.62 $ 8.09 $ 12.28 $ 11.46
-------------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss)++ 0.07 0.00 (0.05) (0.02) 0.01 0.30
Net realized and unrealized gain (loss) 0.49 1.11 1.87 (1.44) (3.16) 1.81
-------------- ---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations 0.56 1.11 1.82 (1.46) (3.15) 2.11
-------------- ---------- ---------- ---------- ---------- ----------
Less dividends and distributions from:
Net investment income (0.03) - - (0.01) (0.25) (0.20)
Net realized gain - - - - (0.79) (1.09)
-------------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions (0.03) - - (0.01) (1.04) (1.29)
-------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.08 $ 9.55 $ 8.44 $ 6.62 $ 8.09 $ 12.28
============== ========== ========== ========== ========== ==========
TOTAL RETURN+ 5.82%(3) 13.15% 27.49% (18.05)% (27.79)% 19.29%
RATIOS TO AVERAGE NET ASSETS(1)(2)(5):
Expenses 1.00%(4) 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income (loss) 1.45%(4) (0.04)% (0.61)% (0.26)% 0.14% 2.59%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $ 32,784 $ 32,309 $ 21,804 $ 18,474 $ 26,364 $ 28,974
Portfolio turnover rate 4%(3) 46% 87% 163% 177% 434%
</Table>
- ----------
++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD.
+ DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE NET
ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD.
(1) DOES NOT INCLUDE ANY EXPENSES INCURRED AS A RESULT OF INVESTMENT IN THE
UNDERLYING FUNDS.
(2) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS SPECIFIC
EXPENSES.
(3) NOT ANNUALIZED.
(4) ANNUALIZED.
(5) IF THE FUND HAD BORNE ALL OF ITS EXPENSES THAT WERE REIMBURSED OR WAIVED BY
THE INVESTMENT ADVISER, THE ANNUALIZED EXPENSE AND NET INVESTMENT INCOME
(LOSS) RATIOS WOULD HAVE BEEN AS FOLLOWS:
<Table>
<Caption>
EXPENSE NET INVESTMENT
PERIOD ENDED: RATIO INCOME (LOSS) RATIO
------------------ ----------- --------------------
MARCH 31, 2005 1.72% 0.73%
SEPTEMBER 30, 2004 1.40% (0.44)%
SEPTEMBER 30, 2003 1.44% (1.05)%
SEPTEMBER 30, 2002 1.39% (0.65)%
SEPTEMBER 30, 2001 1.34% (0.20)%
SEPTEMBER 30, 2000 1.43% 2.16%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
17
<Page>
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED SEPTEMBER 30,
MONTHS ENDED --------------------------------------------------------------
MARCH 31, 2005 2004 2003 2002 2001 2000
-------------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
CLASS C SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period $ 9.55 $ 8.45 $ 6.63 $ 8.08 $ 12.29 $ 11.52
-------------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss)++ 0.08 0.00 (0.05) (0.02) 0.01 0.31
Net realized and unrealized gain (loss) 0.49 1.10 1.87 (1.42) (3.17) 1.80
-------------- ---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations 0.57 1.10 1.82 (1.44) (3.16) 2.11
-------------- ---------- ---------- ---------- ---------- ----------
Less dividends and distributions from:
Net investment income (0.01) - - (0.01) (0.26) (0.25)
Net realized gain - - - - (0.79) (1.09)
-------------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions (0.01) - - (0.01) (1.05) (1.34)
-------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.11 $ 9.55 $ 8.45 $ 6.63 $ 8.08 $ 12.29
============== ========== ========== ========== ========== ==========
TOTAL RETURN+ 5.98%(3) 13.02% 27.45% (18.00)% (27.79)% 19.23%
RATIOS TO AVERAGE NET ASSETS(1)(2)(5):
Expenses 0.90%(4) 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income (loss) 1.55%(4) (0.04)% (0.61)% (0.26)% 0.14% 2.59%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $ 4,296 $ 4,314 $ 2,623 $ 2,218 $ 2,643 $ 1,954
Portfolio turnover rate 4%(3) 46% 87% 163% 177% 434%
</Table>
- ----------
++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD.
+ DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE NET
ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD.
(1) DOES NOT INCLUDE ANY EXPENSES INCURRED AS A RESULT OF INVESTMENT IN THE
UNDERLYING FUNDS.
(2) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS SPECIFIC
EXPENSES.
(3) NOT ANNUALIZED.
(4) ANNUALIZED.
(5) IF THE FUND HAD BORNE ALL OF ITS EXPENSES THAT WERE REIMBURSED OR WAIVED BY
THE INVESTMENT ADVISER, THE ANNUALIZED EXPENSE AND NET INVESTMENT INCOME
(LOSS) RATIOS WOULD HAVE BEEN AS FOLLOWS:
<Table>
<Caption>
EXPENSE NET INVESTMENT
PERIOD ENDED: RATIO INCOME (LOSS) RATIO
------------------ ----------- --------------------
MARCH 31, 2005 1.62% 0.83%
SEPTEMBER 30, 2004 1.40% (0.44)%
SEPTEMBER 30, 2003 1.44% (1.05)%
SEPTEMBER 30, 2002 1.39% (0.65)%
SEPTEMBER 30, 2001 1.34% (0.20)%
SEPTEMBER 30, 2000 1.43% 2.16%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
18
<Page>
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED SEPTEMBER 30,
MONTHS ENDED ------------------------------------------------------------
MARCH 31, 2005 2004 2003 2002 2001 2000
-------------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
CLASS D SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period $ 9.87 $ 8.64 $ 6.71 $ 8.19 $ 12.39 $ 11.56
-------------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income++ 0.12 0.09 0.03 0.07 0.13 0.48
Net realized and unrealized gain (loss) 0.52 1.14 1.90 (1.45) (3.21) 1.75
-------------- ---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations 0.64 1.23 1.93 (1.38) (3.08) 2.23
-------------- ---------- ---------- ---------- ---------- ----------
Less dividends and distributions from:
Net investment income (0.14) - - (0.10) (0.33) (0.31)
Net realized gain - - - - (0.79) (1.09)
-------------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions (0.14) - - (0.10) (1.12) (1.40)
-------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.37 $ 9.87 $ 8.64 $ 6.71 $ 8.19 $ 12.39
============== ========== ========== ========== ========== ==========
TOTAL RETURN+ 6.45%(3) 14.24% 28.76% (17.18)% (27.07)% 20.39%
RATIOS TO AVERAGE NET ASSETS(1)(2)(5):
Expenses -%(4) -% -% -% -% -%
Net investment income 2.45%(4) 0.96% 0.39% 0.74% 1.14% 3.59%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $ 714 $ 344 $ 70 $ 100 $ 93 $ 37
Portfolio turnover rate 4%(3) 46% 87% 163% 177% 434%
</Table>
- ----------
++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD.
+ CALCULATED BASED ON THE NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE
PERIOD.
(1) DOES NOT INCLUDE ANY EXPENSES INCURRED AS A RESULT OF INVESTMENT IN THE
UNDERLYING FUNDS.
(2) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS SPECIFIC
EXPENSES.
(3) NOT ANNUALIZED.
(4) ANNUALIZED.
(5) IF THE FUND HAD BORNE ALL OF ITS EXPENSES THAT WERE REIMBURSED OR WAIVED BY
THE INVESTMENT ADVISER, THE ANNUALIZED EXPENSE AND NET INVESTMENT INCOME
(LOSS) RATIOS WOULD HAVE BEEN AS FOLLOWS:
<Table>
<Caption>
EXPENSE NET INVESTMENT
PERIOD ENDED: RATIO INCOME (LOSS) RATIO
------------------ ----------- --------------------
MARCH 31, 2005 0.72% 1.73%
SEPTEMBER 30, 2004 0.40% 0.56%
SEPTEMBER 30, 2003 0.44% (0.05)%
SEPTEMBER 30, 2002 0.39% 0.35%
SEPTEMBER 30, 2001 0.34% 0.80%
SEPTEMBER 30, 2000 0.43% 3.16%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
19
<Page>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael E. Nugent
Fergus Reid
OFFICERS
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
Mitchell M. Merin
PRESIDENT
Ronald E. Robison
EXECUTIVE VICE PRESIDENT and PRINCIPAL EXECUTIVE OFFICER
Joseph J. McAlinden
VICE PRESIDENT
Barry Fink
VICE PRESIDENT
Amy R. Doberman
VICE PRESIDENT
Carsten Otto
CHIEF COMPLIANCE OFFICER
Stefanie V. Chang
VICE PRESIDENT
Francis J. Smith
TREASURER and CHIEF FINANCIAL OFFICER
Thomas F. Caloia
VICE PRESIDENT
Mary E. Mullin
SECRETARY
TRANSFER AGENT
Morgan Stanley Trust
Harborside Financial Center, Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
INVESTMENT ADVISER
Morgan Stanley Investment Advisors Inc.
1221 Avenue of the Americas
New York, New York 10020
The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors and accordingly they do not
express an opinion thereon.
This report is submitted for the general information of the shareholders of the
Fund. For more detailed information about the Fund, its fees and expenses and
other pertinent information, please read its Prospectus. The Fund's Statement of
Additional Information contains additional information about the Fund, including
its trustees. It is available, without charge, by calling (800) 869-NEWS.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective Prospectus. Read the
Prospectus carefully before investing.
Investments and services offered through Morgan Stanley DW Inc., member SIPC.
Morgan Stanley Distributors Inc., member NASD.
(C)2005 Morgan Stanley
[MORGAN STANLEY LOGO]
36016RPT-RA05-00397P-Y03/05
[GRAPHIC]
MORGAN STANLEY FUNDS
MORGAN STANLEY
FUND OF FUNDS --
DOMESTIC PORTFOLIO
SEMIANNUAL REPORT
MARCH 31, 2005
[MORGAN STANLEY LOGO]
<Page>
Item 2. Code of Ethics.
Not applicable for semiannual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semiannual reports.
Item 4. Principal Accountant Fees and Services
Not applicable for semiannual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semiannual reports.
Item 6.
Refer to Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable for semiannual reports.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Applicable only to reports filed by closed-end funds.
Item 9. Closed-End Fund Repurchases
Applicable to reports filed by closed-end funds.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
<Page>
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 registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits
(a) Code of Ethics - Not applicable for semiannual reports.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant are attached hereto as part of EX-99.CERT.
<Page>
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 Fund of Funds - Domestic Portfolio
/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
May 19, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
May 19, 2005
/s/ Francis Smith
Francis Smith
Principal Financial Officer
May 19, 2005