Item 1
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Report to Shareholders
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Trustees
Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid
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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
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Transfer Agent
Boston Financial Data
Services, Inc.
2000 Crown Colony Drive
Quincy,
Massachusetts 02169
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Custodian
State Street Bank and Trust
Company
One Lincoln Street
Boston, Massachusetts
02111
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Independent Registered Public Accounting Firm
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
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Legal Counsel
Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
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Counsel to the Independent Trustees
Kramer
Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
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Adviser
Morgan Stanley Investment
Management Inc.
522 Fifth Avenue
New York, New York
10036
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Sub-Advisers
Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA England
Morgan Stanley Investment Management Company
23 Church Street
16-01
Capital Square 049481 Singapore
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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 Funds Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling
(800) 869-NEWS.
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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.
© 2013 Morgan Stanley
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UTLFSAN
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706282 EXP [08/31/14]
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INVESTMENT MANAGEMENT
Morgan Stanley
Global Infrastructure Fund
Semiannual
Report
June 30, 2013
Morgan Stanley Global Infrastructure Fund
Table of Contents
2
Welcome Shareholder,
We are pleased to provide this semiannual report, in which you will learn how your investment in Morgan Stanley Global Infrastructure Fund performed during the latest
six-month
period. It includes an overview of the market conditions and discusses some of the factors that affected performance during the reporting period. In addition, the report contains financial statements
and a list of portfolio holdings.
Morgan Stanley Investment Management is a client-centric,
investor-led
organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of todays 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 Funds shares may be less than what you paid for them. Accordingly, you can
lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.
3
Fund Report
(unaudited)
For the six months ended June 30, 2013
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Total Return for the 6 Months Ended June 30, 2013
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Class A
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Class B
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Class L
(formerly
Class C)
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Class I
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Class Q
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Dow
Jones
Brookfield
Global
Infrastructure
Index
SM1
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S&P
Global
BMI
Index
2
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5.20
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4.68
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4.88
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5.24
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5.11
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5.12%
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6.73%
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The performance of the Funds five share classes varies because each has different expenses. The Funds 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
Infrastructure
shares advanced 5.12 percent during the first half of 2013, as measured by the Dow Jones Brookfield Global Infrastructure
Index
SM
(the Index), but underperformed global equities. Among the
major infrastructure sectors, gas distribution utilities, gas midstream, and transmission and distribution exhibited relative outperformance, while pipeline companies, communications, toll roads, and European regulated utilities underperformed the
Index.
Infrastructure performance was mixed in the first half of 2013, as strong sector performance through April gave way to a bout of selling toward
the end of the period, brought on predominantly by investor concerns over rising interest rates in particular in the U.S. and the perceived impact on valuation and company cost of capital. Investor rotation out of some of the perceived
more defensive areas of infrastructure into more cyclically leveraged names may also have had some negative impact; however, we would note that flows into the infrastructure asset class overall remain relatively resilient.
Within the individual sectors, we view the relative outperformance of companies in the gas distribution, gas midstream, and transmission and distribution sectors
as a combination of strong cash flow growth brought on by robust capital programs (gas distribution in China, gas midstream in Canada and the U.S., gas distribution in the U.S., in particular for those companies leveraged to liquefied natural gas
export development), favorable rate case developments (select U.S. utility companies), and the resolution of dividend tax policy concerns (for U.S. utilities). We attribute the underperformance of pipeline companies to near-term concerns over
valuation and company-specific events (e.g., delay in Keystone XL pipeline approval for TransCanada), the underperformance of communications to the potential for a slowdown in leasing for wireless towers in the U.S. as well as concerns over the
impact of sequestration on U.S. government contracts for fixed satellite services operators, and the underperformance of European regulated utilities to regulatory interference and the prospects for reduced returns on capital brought on
by ongoing rate cases or rate cases resolved in the quarter. Foreign currency trends had a large negative impact on toll roads during the first half, with sector performance largely in line with the overall infrastructure universe on a local
currency basis.
At a high level, the dominant investor theme for infrastructure in the first half of 2013 was rising interest rates and their potential
to negatively impact valuation. To generally address this, it is important to note that some companies and sectors within infrastructure will be affected more than others. It is
4
also important to consider why rates are rising (i.e., if the economy is truly improving and improved operating fundamentals will offset rising rates). For many companies within the
infrastructure universe, there is a self-correcting mechanism within the regulatory compact that will adjust for higher debt costs and rising interest rates such that the impact on a company is mitigated. Utilities or other regulatory asset based
companies broadly fit within this category, as returns are adjusted through the rate case process. For example, in some U.S. jurisdictions such as California, the ability to pass through higher debt costs is formulaic and automatic if certain
thresholds are met. For other companies that are not allowed higher returns on invested capital concurrent with rising interest rates, value should decline as rates rise, all else being equal.
While we understand that rising rates can have a negative near-term impact on certain companies within our portfolio, we continue to believe these companies
reflect solid long-term investment value. Furthermore, despite the prospect for rising interest rates, we believe infrastructure as an asset class remains broadly appealing to public pension funds and other long-term institutional investors, with
private market value continuing to exceed valuation levels in the public markets.
Performance Analysis
Morgan Stanley Global Infrastructure Fund Class A and Class I shares outperformed and Class B, Class L, and Class Q shares underperformed
the Dow Jones Brookfield Global Infrastructure Index
SM
(the Index)
and all share classes underperformed the S&P Global BMI Index for the six months ended June 30, 2013, assuming no deduction of applicable sales charges.
For the first half of 2013, the Fund realized favorable performance from
bottom-up
stock selection, partially offset by adverse
top-down
allocation. From a
bottom-up
perspective, the Fund benefited from stock selection in the gas distribution utilities, transmission and distribution,
communications, and pipeline companies sectors, partially offset by unfavorable selection in the toll roads, European regulated utilities, and gas midstream sectors. From a
top-down
perspective, the Fund
benefited from an overweight to the gas distribution utilities sector and an underweight to the European regulated utilities sector, but this was more than offset by adverse positioning in other sectors, most notably with the overweight to pipeline
companies and the underweight to gas midstream.
We remain committed to our core investment philosophy as an infrastructure value investor. As
value-oriented,
bottom-up
driven investors, our investment perspective is that over the medium and long-term, the key factor in determining the performance of infrastructure securities will be underlying
infrastructure asset values. Given the large and growing private infrastructure market, we believe that there are limits as to the level of premium or discount at which the public sector should trade relative to its underlying private infrastructure
value. These limits can be viewed as the point at which the arbitrage opportunity between owning infrastructure in the private versus public markets becomes compelling. In aiming to achieve core infrastructure exposure in a cost effective manner, we
invest in equity securities of publicly listed infrastructure companies we believe offer the best value relative to their underlying infrastructure value and Net Asset Value growth prospects.
5
Our research currently leads us to an overweighting in the Fund (amongst the largest sectors) to a group of companies in the pipeline companies, communications, and toll roads sectors, and an underweighting to
companies in the transmission and distribution, gas midstream, gas distribution utilities, and European regulated utilities sectors. When compared to our
year-end
commentary, the primary changes from a sector
perspective (resulting from shifts in company-specific investments) are a
re-introduction
of an overweight in the communications sector as well as a shift in gas distribution utilities from an overweight to an
underweight, brought on primarily by the sale of outperforming Hong Kong-listed Chinese gas distribution utilities.
Looking forward, we continue to see
good opportunities in sectors with secular growth themes, in particular energy infrastructure but also in communications. In addition, we believe we have a number of favorable company-specific positions across sectors with attractive total return
prospects. These investments have been overlooked by the market during the first half of the year in large part, in our opinion, due to the short-term orientation of the market and a lack of near-term catalysts or the delay in catalyst realization.
As long-term investors, we continue to see value in these companies and will wait patiently for these value highlighting opportunities to materialize.
There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future.
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TOP 10 HOLDINGS as of
06/30/13
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TransCanada Corp.
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7.7
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%
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National Grid PLC
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6.2
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American Tower Corp., REIT
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4.9
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SBA Communications Corp., Class A
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4.5
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Enbridge, Inc.
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4.2
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Sempra Energy
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4.2
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Kinder Morgan, Inc.
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4.1
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Williams Cos., Inc. (The)
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3.6
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Beijing Enterprises Holdings Ltd.
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3.5
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ITC Holdings Corp.
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3.5
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TOP FIVE COUNTRIES as of
06/30/13
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United States
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50.1
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%
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Canada
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11.9
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United Kingdom
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8.3
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China
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6.4
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Italy
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6.1
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Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the
securities mentioned above. Top 10 holdings and top five countries are as a percentage of net assets.
Morgan Stanley is a full-service securities
firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services.
6
Investment Strategy
The Fund will normally invest at least 80 percent of its assets in equity securities
issued by companies located throughout the world that are engaged in the infrastructure business. A company will be considered to be in the infrastructure business if it derives at least 50 percent of its revenues or earnings from, or devotes at
least 50 percent of its assets to, infrastructure-related activities. Infrastructure refers to the systems and networks of energy, transportation, communication and other services required for the normal function of society. Companies in the
infrastructure business may be involved in a variety of areas, including, but not limited to, (i) the transmission, distribution, storage or transportation of electricity, oil and gas (and other bulk liquid products), water, and other natural
resources used to produce energy, (ii) the construction and operation of renewable power facilities, (iii) the development, ownership, lease, concession, or management of highways, toll roads, tunnels, bridges, pipelines, airports, marine
ports, refueling and related facilities, (iv) the provision of communications, including the development, lease, concession, or management of telephone, broadcast and mobile towers, fiber optic/copper cable, and satellite networks,
(v) waste-water management and water purification/desalination and (vi) the construction or operation of essential public structures. The Funds equity investments may include convertible securities. The Funds investments may
include securities of small and medium capitalization companies. The Fund may invest up to 100 percent of its net assets in foreign securities, which may include emerging market securities. Under normal market conditions, the Fund invests at least
40% of its assets in the securities of issuers located outside of the United States.
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
funds 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 funds 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 SECs web site, http://www.sec.gov. You may also review and copy them at the SECs public reference room in Washington, DC. Information on the operation of the SECs
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 SECs
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 Funds 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
SECs web site at http://www.sec.gov.
7
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 SECs 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.
8
Performance
Summary
(unaudited)
Average Annual Total Returns Period Ended June 30, 2013
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Class A
Shares*
(since 07/28/97)
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Class B
Shares**
(since 04/29/88)
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Class L Shares
(since
07/28/97)
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Class I Shares
(since 07/28/97)
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Class Q Shares
(since 04/29/88)
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Symbol
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UTLAX
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UTLBX
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UTLCX
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UTLDX
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UTLQX
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1 Year
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16.46
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%
3
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15.46
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%
3
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15.75
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%
3
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16.71
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%
3
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16.48
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%
3
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10.39
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4
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10.46
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4
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15.75
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4
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11.48
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4
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5 Years
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5.01
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3
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4.20
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3
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4.30
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3
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5.26
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3
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5.00
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3
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3.88
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4
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4.02
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4
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4.30
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4
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4.82
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4
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10 Years
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9.80
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3
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9.44
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3
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9.02
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3
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10.06
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3
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9.82
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3
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9.21
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4
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9.44
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4
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9.02
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4
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9.82
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4
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Since Inception
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7.31
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3
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8.32
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3
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6.53
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3
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7.56
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3
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8.32
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3
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6.94
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4
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8.32
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4
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6.53
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4
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8.32
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4
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Gross Expense Ratio
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1.11
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1.86
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1.61
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0.86
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1.10
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Performance data quoted represents past performance, which is no guarantee of future results and current performance may be lower
or higher than the figures shown. For most recent
month-end
performance figures, please visit www.morganstanley.com/im or speak with your Financial Advisor. Investment returns and principal value will
fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for
Class A, Class B, Class L, Class I, and Class Q shares will vary due to differences in sales charges and expenses. See the Funds current prospectus for complete details on fees and sales charges. Expenses are as of each Funds fiscal
year end as outlined in the Funds current prospectus.
*
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The maximum
front-end
sales charge for Class A is 5.25%.
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**
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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 December 31, 2006. Prior
to December 31, 2006, the conversion feature was suspended because the annual total operating expense ratio of Class B was lower than that of Class A.
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Effective February 25, 2013, Class C shares were renamed Class L shares. Class C shares held for less than one year were subject to a 1.0% CDSC. The CDSC on Class L shares was
eliminated effective February 25, 2013.
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Class I has no sales charge.
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The maximum contingent deferred sales charge (CDSC) for Class Q is 5.0%. The CDSC declines to 0% after six years. For periods greater than eight years, returns do not reflect
conversion to Class A shares eight years after the end of the calendar month in which shares were purchased. The conversion feature is currently suspended because the total annual operating expense ratio of Class Q is currently lower than that
of Class A. See Conversion Feature for Class Q shares in Share Class Arrangements of the Prospectus for more information. Class B commenced operations on April 29, 1988. On December 8, 2006, all then-existing Class
B shares of the Fund (Pre-Conversion Class B) were converted into Class Q shares. Because the
Pre-Conversion
Class B shares were subject to the same level of fees and expenses applied to Class B shares,
historical performance information prior to conversion date has been restated for Class Q shares to reflect this information. Performance information for Class B shares prior to December 8, 2006 reflects the performance of the
Pre-Conversion
Class B shares.
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(1)
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The Dow Jones Brookfield Global Infrastructure Index
SM
is a float-adjusted market
capitalization weighted index that measures the stock performance of companies that exhibit strong infrastructure characteristics. The index intends to measure all sectors of the
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9
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infrastructure market. The Index was first published in July 2008, however, back-tested hypothetical performance information is available for this Index since December 31, 2002. Returns
are calculated using the return data of the S&P Global BMI Index through December 31, 2002 and the return data of the Dow Jones Brookfield Global Infrastructure Index for periods thereafter. 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.
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(2)
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The Standard & Poors Global BMI Index (S&P Global BMI Index) is a broad market index designed to capture exposure to equities in all countries in the world
that meet minimum size and liquidity requirements. As of the date of this Report, there are approximately 11,000 index members representing 26 developed and 20 emerging market countries. 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.
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(3)
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Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges.
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(4)
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Figure shown assumes reinvestment of all distributions and the deduction of the maximum applicable sales charge. See the Funds current prospectus for complete details on
fees and sales charges.
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10
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, administration fees;
distribution and shareholder services (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.
This example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 01/01/13
06/30/13.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the
Funds 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.
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Beginning
Account Value
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Ending
Accounting Value
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Expenses Paid
During Period@
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01/01/13
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06/30/13
|
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|
01/01/13
06/30/13
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Class A
|
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Actual (5.20% return)
|
|
$
|
1,000.00
|
|
|
$
|
1,052.00
|
|
|
$
|
5.60
|
|
Hypothetical (5% annual return before expenses)
|
|
$
|
1,000.00
|
|
|
$
|
1,019.34
|
|
|
$
|
5.51
|
|
Class B
|
|
|
|
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|
|
|
|
|
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|
Actual (4.68% return)
|
|
$
|
1,000.00
|
|
|
$
|
1,046.80
|
|
|
$
|
9.39
|
|
Hypothetical (5% annual return before expenses)
|
|
$
|
1,000.00
|
|
|
$
|
1,015.62
|
|
|
$
|
9.25
|
|
Class L @@
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual (4.88% return)
|
|
$
|
1,000.00
|
|
|
$
|
1,048.80
|
|
|
$
|
8.48
|
|
Hypothetical (5% annual return before expenses)
|
|
$
|
1,000.00
|
|
|
$
|
1,016.51
|
|
|
$
|
8.35
|
|
Class I
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual (5.24% return)
|
|
$
|
1,000.00
|
|
|
$
|
1,052.40
|
|
|
$
|
4.33
|
|
Hypothetical (5% annual return before expenses)
|
|
$
|
1,000.00
|
|
|
$
|
1,020.58
|
|
|
$
|
4.26
|
|
Class Q
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual (5.11% return)
|
|
$
|
1,000.00
|
|
|
$
|
1,051.10
|
|
|
$
|
5.54
|
|
Hypothetical (5% annual return before expenses)
|
|
$
|
1,000.00
|
|
|
$
|
1,019.39
|
|
|
$
|
5.46
|
|
|
@
|
Expenses are equal to the Funds annualized expense ratios of 1.10%, 1.85%, 1.67%, 0.85%, and 1.09% for Class A, Class B, Class L, Class I, and Class Q shares,
respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the
one-half
year period).
|
|
@@
|
Effective February 25, 2013, Class C shares were renamed Class L shares.
|
11
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 reviewed similar
information and factors regarding the Sub-Advisers (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Funds 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 Advisers expense. (The
Investment Adviser, Sub-Advisers and Administrator together are referred to as the Adviser and the advisory, sub-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 administrative and advisory services to the
Fund. The Board determined that the Advisers 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 funds 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, 2012, 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 Funds performance was better than its peer group average for the one-, three- and five-year periods. 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
12
addition to the management fee, the Board also reviewed the Funds total expense ratio. The Board noted that both the Funds management fee and total expense ratio were lower than its
peer group averages. After discussion, the Board concluded that the Funds performance, management fee and total expense ratio were competitive with its peer group averages.
Economies of Scale
The Board considered the size and growth prospects of the Fund and how that relates to the
Funds total expense ratio and particularly the Funds management fee rate, which includes breakpoints. In conjunction with its review of the Advisers 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 supports 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 Advisers 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 Advisers 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
13
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
Funds operations and the Boards 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.
Other Factors and Current Trends
The Board considered the controls and procedures adopted and implemented by the Adviser and monitored by the Funds 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 Funds 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.
14
Morgan Stanley Global Infrastructure Fund
Portfolio of Investments
n
June 30, 2013 (unaudited)
|
|
|
|
|
|
|
|
|
NUMBER OF
SHARES
|
|
|
|
|
VALUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks (98.9%)
|
|
|
|
|
|
|
|
|
Australia (4.0%)
|
|
|
|
|
|
|
|
|
Airports
|
|
|
|
|
|
272,794
|
|
|
Sydney Airport
|
|
$
|
843,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified
|
|
|
|
|
|
1,040,166
|
|
|
DUET Group (a)
|
|
|
1,912,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil & Gas Storage & Transportation
|
|
|
426,738
|
|
|
APA Group
|
|
|
2,337,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Toll Roads
|
|
|
|
|
|
367,731
|
|
|
Macquarie Atlas Roads Group
|
|
|
652,438
|
|
|
1,273,868
|
|
|
Transurban Group (a)
|
|
|
7,875,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,527,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transmission & Distribution
|
|
|
|
|
|
336,048
|
|
|
Spark Infrastructure Group
|
|
|
533,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Australia
|
|
|
14,154,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Austria (0.6%)
|
|
|
|
|
|
|
|
|
Airports
|
|
|
|
|
|
34,207
|
|
|
Flughafen Wien AG
|
|
|
1,955,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazil (1.2%)
|
|
|
|
|
|
|
|
|
Water
|
|
|
|
|
|
395,010
|
|
|
Cia de Saneamento Basico do Estado de Sao Paulo ADR
|
|
|
4,112,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada (11.9%)
|
|
|
|
|
|
|
|
|
Oil & Gas Storage & Transportation
|
|
|
351,828
|
|
|
Enbridge, Inc.
|
|
|
14,789,689
|
|
|
621,553
|
|
|
TransCanada Corp. (a)
|
|
|
26,760,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Canada
|
|
|
41,550,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China (6.4%)
|
|
|
|
|
|
|
|
|
Oil & Gas Storage & Transportation
|
|
|
1,721,000
|
|
|
Beijing Enterprises Holdings Ltd. (b)
|
|
|
12,392,629
|
|
|
1,922,000
|
|
|
China Gas Holdings Ltd. (b)
|
|
|
1,965,106
|
|
|
280,000
|
|
|
ENN Energy Holdings Ltd. (b)
|
|
|
1,492,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,850,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ports
|
|
|
|
|
|
853,912
|
|
|
China Merchants Holdings International Co., Ltd. (b)
|
|
|
2,658,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Toll Roads
|
|
|
|
|
|
1,896,322
|
|
|
Jiangsu Expressway Co., Ltd., H Shares (b)
|
|
$
|
1,955,967
|
|
|
7,022,400
|
|
|
Sichuan Expressway Co., Ltd., H Shares (b)
|
|
|
1,883,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,839,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total China
|
|
|
22,348,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
France (2.8%)
|
|
|
|
|
|
|
|
|
Communications
|
|
|
|
|
|
106,107
|
|
|
Eutelsat Communications SA
|
|
|
3,012,269
|
|
|
236,494
|
|
|
SES SA
|
|
|
6,772,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total France
|
|
|
9,784,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany (1.7%)
|
|
|
|
|
|
|
|
|
Airports
|
|
|
|
|
|
98,570
|
|
|
Fraport AG Frankfurt Airport Services Worldwide
|
|
|
5,963,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Italy (6.1%)
|
|
|
|
|
|
|
|
|
Oil & Gas Storage & Transportation
|
|
|
2,196,423
|
|
|
Snam SpA
|
|
|
10,006,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Toll Roads
|
|
|
|
|
|
257,978
|
|
|
Atlantia SpA (a)
|
|
|
4,207,535
|
|
|
233,324
|
|
|
Societa Iniziative Autostradali e Servizi SpA
|
|
|
1,908,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,116,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transmission & Distribution
|
|
|
|
|
|
1,273,498
|
|
|
Terna Rete Elettrica Nazionale SpA (a)
|
|
|
5,291,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Italy
|
|
|
21,413,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Japan (1.3%)
|
|
|
|
|
|
|
|
|
Oil & Gas Storage & Transportation
|
|
|
814,000
|
|
|
Tokyo Gas Co., Ltd.
|
|
|
4,497,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Luxembourg (0.6%)
|
|
|
|
|
|
|
|
|
Communications
|
|
|
|
|
|
103,300
|
|
|
Intelsat SA (c)
|
|
|
2,066,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Netherlands (1.4%)
|
|
|
|
|
|
|
|
|
Oil & Gas Storage & Transportation
|
|
|
81,336
|
|
|
Koninklijke Vopak N.V.
|
|
|
4,798,601
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements
15
Morgan Stanley Global Infrastructure Fund
Portfolio of Investments
n
June 30, 2013 (unaudited)
continued
|
|
|
|
|
|
|
|
|
NUMBER OF
SHARES
|
|
|
|
|
VALUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spain (1.2%)
|
|
|
|
|
|
|
|
|
Diversified
|
|
|
|
|
|
119,193
|
|
|
Ferrovial SA
|
|
$
|
1,905,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Toll Roads
|
|
|
|
|
|
135,447
|
|
|
Abertis Infraestructuras SA
|
|
|
2,362,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Spain
|
|
|
4,267,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Switzerland (1.3%)
|
|
|
|
|
|
|
|
|
Airports
|
|
|
|
|
|
9,188
|
|
|
Flughafen Zuerich AG (Registered)
|
|
|
4,615,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom (8.3%)
|
|
|
|
|
|
|
|
|
Transmission & Distribution
|
|
|
|
|
|
1,906,425
|
|
|
National Grid PLC
|
|
|
21,630,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
|
|
|
|
|
|
54,040
|
|
|
Pennon Group PLC
|
|
|
529,728
|
|
|
207,840
|
|
|
Severn Trent PLC
|
|
|
5,260,140
|
|
|
165,210
|
|
|
United Utilities Group PLC
|
|
|
1,718,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,508,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total United Kingdom
|
|
|
29,139,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States (50.1%)
|
|
|
|
|
|
|
|
|
Communications
|
|
|
|
|
|
231,990
|
|
|
American Tower Corp. REIT
|
|
|
16,974,708
|
|
|
142,380
|
|
|
Crown Castle International Corp. (c)
|
|
|
10,306,888
|
|
|
212,000
|
|
|
SBA Communications Corp., Class A (c)
|
|
|
15,713,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,995,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified
|
|
|
|
|
|
487,520
|
|
|
CenterPoint Energy, Inc.
|
|
|
11,451,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil & Gas Storage & Transportation
|
|
|
28,490
|
|
|
Atmos Energy Corp.
|
|
|
1,169,799
|
|
|
176,250
|
|
|
Cheniere Energy, Inc. (c)
|
|
|
4,892,700
|
|
|
264,708
|
|
|
Enbridge Energy Management LLC (a)(c)
|
|
|
8,015,358
|
|
|
375,480
|
|
|
Kinder Morgan, Inc.
|
|
|
14,324,562
|
|
|
204,124
|
|
|
NiSource, Inc.
|
|
|
5,846,111
|
|
|
225,550
|
|
|
ONEOK, Inc.
|
|
|
9,317,471
|
|
|
239,050
|
|
|
PG&E Corp.
|
|
|
10,931,757
|
|
|
180,440
|
|
|
Sempra Energy
|
|
|
14,752,774
|
|
|
336,623
|
|
|
Spectra Energy Corp.
|
|
|
11,600,029
|
|
|
|
|
|
|
|
|
|
|
|
385,500
|
|
|
Williams Cos., Inc. (The)
|
|
$
|
12,517,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,367,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transmission & Distribution
|
|
|
|
|
|
132,020
|
|
|
ITC Holdings Corp.
|
|
|
12,053,426
|
|
|
212,675
|
|
|
Northeast Utilities
|
|
|
8,936,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,990,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
|
|
|
|
|
|
127,570
|
|
|
American Water Works Co., Inc.
|
|
|
5,259,711
|
|
|
42,230
|
|
|
California Water Service Group
|
|
|
823,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,083,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total United States
|
|
|
174,888,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stocks
(Cost $268,227,262)
|
|
|
345,555,820
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF
SHARES (000)
|
|
|
|
|
|
|
|
|
|
|
Short-Term Investments (8.7%)
|
|
|
|
|
|
Securities held as Collateral on Loaned Securities (8.0%)
|
|
|
|
|
|
Investment Company (7.1%)
|
|
|
|
|
|
24,953
|
|
|
Morgan Stanley Institutional Liquidity Funds Money Market Portfolio
Institutional Class
(See Note 5)
(Cost $24,952,657)
|
|
|
24,952,657
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL
AMOUNT (000)
|
|
|
|
|
|
|
|
|
|
|
Repurchase Agreements (0.9%)
|
|
$
|
1,985
|
|
|
HSBC Securities USA, Inc. (0.15%, dated 06/28/13, due 07/01/13; proceeds $1,984,621; fully collateralized by U.S. Government
Agencies; Federal National Mortgage Association 3.50% 5.00% due 12/01/26 5/1/38; valued at $2,024,319)
|
|
|
1,984,596
|
|
See Notes to Financial Statements
16
Morgan Stanley Global Infrastructure Fund
Portfolio of Investments
n
June 30, 2013 (unaudited)
continued
|
|
|
|
|
|
|
|
|
PRINCIPAL
AMOUNT (000)
|
|
|
|
|
VALUE
|
|
|
|
|
|
|
|
|
|
|
$
|
1,103
|
|
|
Merrill Lynch & Co., Inc. (0.18%, dated 06/28/13, due 07/01/13; proceeds $1,102,570; fully collateralized by Common Stocks; a
Convertible Preferred Stock; and Exchange Traded Funds; valued at $1,207,935)
|
|
$
|
1,102,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Repurchase Agreements
(Cost $3,087,150)
|
|
|
3,087,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Securities held as Collateral on Loaned Securities
(Cost $28,039,807)
|
|
|
28,039,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF
SHARES (000)
|
|
|
|
|
|
|
|
|
|
|
|
Investment Company (0.7%)
|
|
|
2,378
|
|
|
Morgan Stanley Institutional Liquidity Funds Treasury Portfolio Institutional Class (See Note 5)
(Cost
$2,377,867)
|
|
|
|
2,377,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Short-Term Investments
(Cost $30,417,674
)
|
|
|
|
30,417,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments
(Cost $298,644,936)
|
|
|
107.6%
|
|
|
|
375,973,494
|
|
|
Liabilities in Excess of
Other Assets
|
|
|
(7.6)
|
|
|
|
(26,692,693
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets
|
|
|
100.0%
|
|
|
$
|
349,280,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADR
|
American Depositary Receipt.
|
REIT
|
Real Estate Investment Trust.
|
(a)
|
All or a portion of this security was on loan at June 30, 2013.
|
(b)
|
Security trades on the Hong Kong exchange.
|
(c)
|
Non-income
producing security.
|
Summary of Investments
|
|
|
|
|
|
|
|
|
INDUSTRY
|
|
VALUE
|
|
|
PERCENT OF
TOTAL
INVESTMENTS
|
|
Oil & Gas Storage & Transportation
|
|
$
|
172,408,690
|
|
|
|
49.5
|
%
|
Communications
|
|
|
54,845,615
|
|
|
|
15.8
|
|
Transmission & Distribution
|
|
|
48,445,303
|
|
|
|
13.9
|
|
Toll Roads
|
|
|
20,845,973
|
|
|
|
6.0
|
|
Water
|
|
|
17,704,268
|
|
|
|
5.1
|
|
Diversified
|
|
|
15,269,136
|
|
|
|
4.4
|
|
Airports
|
|
|
13,378,010
|
|
|
|
3.8
|
|
Ports
|
|
|
2,658,825
|
|
|
|
0.8
|
|
Investment Company
|
|
|
2,377,867
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
347,933,687
|
+
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
+
|
Does not reflect the value of securities held as collateral on loaned securities.
|
See Notes to Financial Statements
17
Morgan Stanley Global Infrastructure Fund
Financial Statements
Statement of Assets and Liabilities
June 30, 2013 (unaudited)
|
|
|
|
|
Assets:
|
|
|
|
|
Investments in securities, at value (cost $271,314,412) (including $38,230,615 for securities loaned)
|
|
$
|
348,642,970
|
|
Investment in affiliate, at value (cost $27,330,524)
|
|
|
27,330,524
|
|
|
|
|
|
|
Total investments in securities, at value (cost $298,644,936)
|
|
|
375,973,494
|
|
Cash (including foreign currency valued at $332,394 with a cost of $334,079)
|
|
|
3,891,598
|
|
Receivable for:
|
|
|
|
|
Dividends
|
|
|
2,072,256
|
|
Foreign withholding taxes reclaimed
|
|
|
170,284
|
|
Dividends from affiliate
|
|
|
36
|
|
Prepaid expenses and other assets
|
|
|
29,952
|
|
|
|
|
|
|
Total Assets
|
|
|
382,137,620
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Collateral on securities loaned, at value
|
|
|
31,599,011
|
|
Payable for:
|
|
|
|
|
Shares of beneficial interest redeemed
|
|
|
700,109
|
|
Advisory fee
|
|
|
166,543
|
|
Transfer agent fee
|
|
|
162,593
|
|
Distribution fee
|
|
|
74,457
|
|
Administration fee
|
|
|
23,402
|
|
Accrued expenses and other payables
|
|
|
130,704
|
|
|
|
|
|
|
Total Liabilities
|
|
|
32,856,819
|
|
|
|
|
|
|
Net Assets
|
|
$
|
349,280,801
|
|
|
|
|
|
|
Composition of Net Assets:
|
|
|
|
|
Paid-in-capital
|
|
$
|
251,713,647
|
|
Net unrealized appreciation
|
|
|
77,309,464
|
|
Accumulated undistributed net investment income
|
|
|
4,030,032
|
|
Accumulated undistributed net realized gain
|
|
|
16,227,658
|
|
|
|
|
|
|
Net Assets
|
|
$
|
349,280,801
|
|
|
|
|
|
|
Class A Shares:
|
|
|
|
|
Net Assets
|
|
|
$86,929,273
|
|
Shares Outstanding
(unlimited shares authorized, $0.01 par value)
|
|
|
11,094,898
|
|
Net Asset Value Per Share
|
|
|
$7.84
|
|
|
|
|
|
|
Maximum Offering Price Per Share,
|
|
|
|
|
(net asset value plus 5.54% of net asset value)
|
|
|
$8.27
|
|
|
|
|
|
|
Class B Shares:
|
|
|
|
|
Net Assets
|
|
|
$1,540,885
|
|
Shares Outstanding
(unlimited shares authorized, $0.01 par value)
|
|
|
192,067
|
|
Net Asset Value Per Share
|
|
|
$8.02
|
|
|
|
|
|
|
Class L Shares: @@
|
|
|
|
|
Net Assets
|
|
|
$6,959,862
|
|
Shares Outstanding
(unlimited shares authorized, $0.01 par value)
|
|
|
880,471
|
|
Net Asset Value Per Share
|
|
|
$7.90
|
|
|
|
|
|
|
Class I Shares:
|
|
|
|
|
Net Assets
|
|
|
$2,305,021
|
|
Shares Outstanding
(unlimited shares authorized, $0.01 par value)
|
|
|
295,914
|
|
Net Asset Value Per Share
|
|
|
$7.79
|
|
|
|
|
|
|
Class Q Shares:
|
|
|
|
|
Net Assets
|
|
|
$251,545,760
|
|
Shares Outstanding
(unlimited shares authorized, $0.01 par value)
|
|
|
31,550,494
|
|
Net Asset Value Per Share
|
|
|
$7.97
|
|
|
|
|
|
|
|
@@
|
Effective February 25, 2013, Class C shares were renamed Class L shares.
|
See Notes to Financial Statements
18
Morgan Stanley Global Infrastructure Fund
Financial Statements
continued
Statement of Operations
For the six months ended June 30, 2013 (unaudited)
|
|
|
|
|
Net Investment Income:
|
|
|
|
|
|
|
Income
|
|
|
|
|
Dividends (net of $352,959 foreign withholding tax)
|
|
$
|
6,386,462
|
|
Income from securities loaned net
|
|
|
33,743
|
|
Dividends from affiliate (Note 5)
|
|
|
535
|
|
Interest
|
|
|
236
|
|
|
|
|
|
|
Total Income
|
|
|
6,420,976
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
Advisory fee (Note 3)
|
|
|
1,037,503
|
|
Distribution fee (Class A shares) (Note 4)
|
|
|
113,136
|
|
Distribution fee (Class B shares) (Note 4)
|
|
|
9,314
|
|
Distribution fee (Class L shares) (Note 4) @@
|
|
|
29,608
|
|
Distribution fee (Class Q shares) (Note 4)
|
|
|
314,406
|
|
Transfer agent fees and expenses
|
|
|
180,206
|
|
Administration fee (Note 3)
|
|
|
145,614
|
|
Professional fees
|
|
|
49,773
|
|
Shareholder reports and notices
|
|
|
44,042
|
|
Custodian fees
|
|
|
37,376
|
|
Trustees fees and expenses
|
|
|
9,052
|
|
Other
|
|
|
48,548
|
|
|
|
|
|
|
Total Expenses
|
|
|
2,018,578
|
|
Less: rebate from Morgan Stanley affiliated cash sweep (Note 5)
|
|
|
(2,562
|
)
|
|
|
|
|
|
Net Expenses
|
|
|
2,016,016
|
|
|
|
|
|
|
Net Investment Income
|
|
|
4,404,960
|
|
|
|
|
|
|
Realized and Unrealized Gain (Loss):
|
|
|
|
|
Realized Gain (Loss) on:
|
|
|
|
|
Investments
|
|
|
19,162,168
|
|
Foreign currency translation
|
|
|
(19,096
|
)
|
|
|
|
|
|
Net Realized Gain
|
|
|
19,143,072
|
|
|
|
|
|
|
Change in Unrealized Appreciation (Depreciation) on:
|
|
|
|
|
Investments
|
|
|
(4,816,308
|
)
|
Foreign currency translation
|
|
|
(29,835
|
)
|
|
|
|
|
|
Net Change in Unrealized Appreciation (Depreciation)
|
|
|
(4,846,143
|
)
|
|
|
|
|
|
Net Gain
|
|
|
14,296,929
|
|
|
|
|
|
|
Net Increase
|
|
$
|
18,701,889
|
|
|
|
|
|
|
|
@@
|
Effective February 25, 2013, Class C shares were renamed Class L shares.
|
See Notes to Financial Statements
19
Morgan Stanley Global Infrastructure Fund
Financial Statements
continued
Statements of Changes in Net Assets
|
|
|
|
|
|
|
|
|
|
|
FOR THE SIX
MONTHS ENDED
JUNE 30, 2013
|
|
|
FOR THE YEAR
ENDED
DECEMBER 31, 2012
|
|
|
|
(unaudited)
|
|
|
|
|
Increase (Decrease) in Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
4,404,960
|
|
|
$
|
8,034,936
|
|
Net realized gain
|
|
|
19,143,072
|
|
|
|
27,703,298
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
(4,846,143
|
)
|
|
|
24,230,030
|
|
|
|
|
|
|
|
|
|
|
Net Increase
|
|
|
18,701,889
|
|
|
|
59,968,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and Distributions to Shareholders from:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
|
|
Class A shares
|
|
|
(168,557
|
)
|
|
|
(1,887,753
|
)
|
Class B shares
|
|
|
(3,360
|
)
|
|
|
(25,630
|
)
|
Class L shares @@
|
|
|
(13,329
|
)
|
|
|
(100,765
|
)
|
Class I shares
|
|
|
(4,461
|
)
|
|
|
(53,856
|
)
|
Class Q shares
|
|
|
(478,175
|
)
|
|
|
(5,432,004
|
)
|
Net realized gain
|
|
|
|
|
|
|
|
|
Class A shares
|
|
|
(1,949,257
|
)
|
|
|
(5,966,803
|
)
|
Class B shares
|
|
|
(35,006
|
)
|
|
|
(146,089
|
)
|
Class L shares @@
|
|
|
(153,839
|
)
|
|
|
(485,107
|
)
|
Class I shares
|
|
|
(51,489
|
)
|
|
|
(163,891
|
)
|
Class Q shares
|
|
|
(5,517,440
|
)
|
|
|
(17,156,211
|
)
|
|
|
|
|
|
|
|
|
|
Total Dividends and Distributions
|
|
|
(8,374,913
|
)
|
|
|
(31,418,109
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease from transactions in shares of beneficial interest
|
|
|
(18,316,921
|
)
|
|
|
(23,029,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease)
|
|
|
(7,989,945
|
)
|
|
|
5,521,003
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
357,270,746
|
|
|
|
351,749,743
|
|
|
|
|
|
|
|
|
|
|
End of Period
|
|
|
|
|
|
|
|
|
(Including accumulated undistributed net investment income of $4,030,032 and $292,954, respectively)
|
|
$
|
349,280,801
|
|
|
$
|
357,270,746
|
|
|
|
|
|
|
|
|
|
|
|
@@
|
Effective February 25, 2013, Class C shares were renamed Class L shares.
|
See Notes to Financial Statements
20
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
1. Organization and Accounting Policies
Morgan Stanley Global Infrastructure 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 Funds investment objective is to seek to provide both capital appreciation and current income. The Fund was organized as a Massachusetts business
trust on December 8, 1987 and commenced operations on April 29, 1988. On July 28, 1997, the Fund converted to a multiple class share structure.
The Fund offers Class A shares, Class B shares, Class L shares and Class I shares. The Funds Class Q shares are closed to new investments (except dividend reinvestments). The five classes are
substantially the
same except, 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 Q shares are subject to a contingent deferred sales charge imposed on shares redeemed within eighteen months, six years and six years, respectively. Class L shares and Class I shares are not subject to a sales charge.
Additionally, Class A shares, Class B shares, Class L shares and Class Q shares incur distribution expenses.
On February 25, 2013, Class C
shares were renamed Class L shares.
The following is a summary of significant accounting policies:
A. Valuation of Investments
(1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at
the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio
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 exchange, the security is valued on the exchange designated as the primary market; (3) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency
are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the New York Stock Exchange (NYSE); (4) when market quotations are not readily available, including circumstances under which Morgan
Stanley Investment Management Inc. (the Adviser) or Morgan Stanley Investment Management Limited or Morgan Stanley Investment Management Company (each, a Sub-Adviser), each a wholly owned subsidiary of Morgan Stanley,
determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a securitys 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 Funds 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 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
21
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
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; (5) certain portfolio securities may be valued by an outside pricing service approved by the Trustees; (6) 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 (7) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the
securities market value, in which case these securities will be valued at their fair market value determined by the Adviser.
Under procedures
approved by the Trustees, the Funds Adviser has formed a Valuation Committee. The Valuation Committee provides administration and oversight of the Funds valuation policies and procedures, which are reviewed at least annually by the
Trustees. 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 ad hoc 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
date except for certain dividends on
foreign securities which are recorded as soon as the Fund is informed after the
ex-dividend
date. Discounts are accreted and premiums are amortized over the life of the respective securities and are included
in interest income. Interest income is accrued daily as earned.
22
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
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. Securities Lending
The Fund may lend securities to qualified financial institutions,
such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the
Fund. The Fund receives cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is
marked-to-market
daily, by State Street Bank and Trust Company (State Street), the securities lending agent, to ensure that a minimum of 100% collateral
coverage is maintained.
Based on
pre-established
guidelines, the securities lending agent invests any cash
collateral that is received in high-quality short-term investments. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent.
The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2013.
|
|
|
|
|
|
|
GROSS AMOUNTS NOT OFFSET IN THE STATEMENT OF ASSETS
AND LIABILITIES
|
GROSS ASSET AMOUNT
PRESENTED
IN STATEMENT OF
ASSETS AND LIABILITIES
|
|
FINANCIAL
INSTRUMENT
|
|
COLLATERAL
RECEIVED
|
|
NET AMOUNT
(NOT LESS THAN 0)
|
$38,230,615
(1)
|
|
|
|
$(38,230,615)
(2)(3)
|
|
$0
|
|
|
|
|
|
|
|
(1)
|
Represents market value of loaned securities at period end.
|
(2)
|
The Fund received cash collateral of $31,599,011, of which $28,039,807 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as
reported in the Portfolio of Investments. As of June 30, 2013, there was uninvested cash collateral of $3,559,204, which is not reflected in the Portfolio of Investments. In addition, the Fund received non-cash collateral of $8,664,071 in the form
of U.S. Government Obligations, which the Fund cannot sell or re-pledge and accordingly are not reflected in the Portfolio of Investments.
|
(3)
|
The actual collateral received is greater than the amount shown here due to overcollateralization.
|
E. Foreign Currency Translation and Foreign Investments
The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the mean of
the bid and asked prices of such currencies against U.S. dollars last quoted by a major bank as follows:
investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;
investment
transactions and investment income at the prevailing rates of exchange on the dates of such transactions.
23
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
Although the net assets of the Fund are presented at the
foreign exchange rates and market values at the close of the period, 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 fluctuations arising from changes in the
market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly,
realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax
regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal
income tax purposes.
Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency
forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding
taxes recorded on the Funds books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are
reflected as a component of unrealized appreciation (depreciation) on the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of
Operations.
Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar
denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility
of political or economic instability.
F. Dividends and Distributions to Shareholders
Dividends and distributions to shareholders are
recorded on the
ex-dividend
date.
G. Use of Estimates
The preparation of financial statements
in accordance with generally accepted accounting principles in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those
estimates.
H. Indemnifications
The Fund enters into contracts that contain a variety of indemnifications. The Funds 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.
24
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
2. Fair Valuation Measurements
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820,
Fair Value Measurements and Disclosures
(ASC 820), defines fair value as the value that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal
market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs 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 entitys 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 Funds 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 Funds 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 issuers financial
statements or other available documents and, if necessary, available information concerning other securities in similar circumstances
|
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the
determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.
25
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
The following is a summary of the inputs used to value
the Funds investments as of June 30, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT TYPE
|
|
LEVEL 1
UNADJUSTED
QUOTED
PRICES
|
|
|
LEVEL 2
OTHER
SIGNIFICANT
OBSERVABLE
INPUTS
|
|
|
LEVEL 3
SIGNIFICANT
UNOBSERVABLE
INPUTS
|
|
|
TOTAL
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Airports
|
|
$
|
13,378,010
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
13,378,010
|
|
Communications
|
|
|
54,845,615
|
|
|
|
|
|
|
|
|
|
|
|
54,845,615
|
|
Diversified
|
|
|
15,269,136
|
|
|
|
|
|
|
|
|
|
|
|
15,269,136
|
|
Oil & Gas Storage & Transportation
|
|
|
172,408,690
|
|
|
|
|
|
|
|
|
|
|
|
172,408,690
|
|
Ports
|
|
|
2,658,825
|
|
|
|
|
|
|
|
|
|
|
|
2,658,825
|
|
Toll Roads
|
|
|
20,845,973
|
|
|
|
|
|
|
|
|
|
|
|
20,845,973
|
|
Transmission & Distribution
|
|
|
48,445,303
|
|
|
|
|
|
|
|
|
|
|
|
48,445,303
|
|
Water
|
|
|
17,704,268
|
|
|
|
|
|
|
|
|
|
|
|
17,704,268
|
|
Total Common Stocks
|
|
|
345,555,820
|
|
|
|
|
|
|
|
|
|
|
|
345,555,820
|
|
Short-Term Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Company
|
|
|
27,330,524
|
|
|
|
|
|
|
|
|
|
|
|
27,330,524
|
|
Repurchase Agreements
|
|
|
|
|
|
|
3,087,150
|
|
|
|
|
|
|
|
3,087,150
|
|
Total Short-Term Investments
|
|
|
27,330,524
|
|
|
|
3,087,150
|
|
|
|
|
|
|
|
30,417,674
|
|
Total Assets
|
|
$
|
372,886,344
|
|
|
$
|
3,087,150
|
|
|
$
|
|
|
|
$
|
375,973,494
|
|
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investments
valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2013, securities with a total value of $119,920,884 transferred from Level 2 to Level 1. At December 31, 2012, the fair market
value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.
3. Advisory/Administration and
Sub-Advisory
Agreements
Pursuant to an Investment Advisory Agreement, the Fund pays the Adviser an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined at the
close of each business day: 0.57% to the portion of the daily net assets not exceeding $500 million; 0.47% to the portion of the daily net assets exceeding $500 million but not exceeding $1 billion; 0.445% to the portion of the daily net assets
exceeding $1 billion but not exceeding $1.5 billion; 0.42% to the portion of the daily net assets exceeding $1.5 billion but not exceeding $2.5 billion; 0.395% to the portion of the daily net assets exceeding $2.5 billion but not exceeding $3.5
billion; 0.37% to the portion of the daily net assets exceeding $3.5 billion but not exceeding $5 billion; and 0.345% to the portion of the daily net assets exceeding $5 billion. For the six months ended June 30, 2013, the advisory fee rate
(net of rebate) was equivalent to an annual effective rate of 0.57% of the Funds daily net assets.
26
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
Under the
Sub-Advisory
Agreement between the Adviser and the
Sub-Advisers,
the
Sub-Advisers
provide the Fund with advisory services,
subject to the overall supervision of the Adviser and the Funds Officers and Trustees. The Adviser pays the
Sub-Advisers
on a monthly basis a portion of the net advisory fees the Adviser receives from
the Fund.
Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the Administrator), an affiliate of the Adviser
and
Sub-Advisers,
the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.08% to the Funds daily net assets.
Under a
Sub-Administration
Agreement between the Administrator and 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.
4. Plan of Distribution
Shares of the Fund are distributed by Morgan Stanley Distribution, Inc. (the
Distributor), an affiliate of the Adviser, Administrator and
Sub-Advisers.
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; (iii) Class L up to 0.75% of the average daily net assets of Class L shares; and (iv) Class
Q up to 0.26% of the average daily net assets of Class Q shares.
The Distributor has agreed to permanently cap the
12b-1
fee for the Class Q shares at 0.24% of the average daily net assets of Class Q. For the six months ended June 30, 2013, the distribution fee was accrued for Class Q shares at the annual rate of 0.24%.
In the case of Class B shares and Class Q 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 and Class Q 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 $5,185,072 and $2,539, for Class B shares and Class Q shares respectively, at
June 30, 2013.
For the six months ended June 30, 2013, the distribution fee was accrued for Class B at an annual rate of 1.00%.
On February 25, 2013, Class C shares were renamed Class L shares. In addition, the Trustees approved an amendment to the Plan of Distribution reducing the
distribution and shareholder services
(12b-1)
fee for the
27
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
Funds Class L shares from 1.00% to 0.75% of the average daily net assets of such Class, effective February 25, 2013.
In the case of Class A shares and Class L shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 0.75% of the average daily net assets of Class A shares or Class L
shares, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Financial Advisors and other authorized financial representatives at the time
of sale may be reimbursed in the subsequent calendar year. For the six months ended June 30, 2013, the distribution fee was accrued for Class A shares and Class L shares at the annual rate of 0.25% and 0.82%, respectively.
The Distributor has informed the Fund that for the six months ended June 30, 2013, it received contingent deferred sales charges from certain redemptions of
the Funds Class B shares and Class Q shares of $268 and $30,391, respectively, and received $2,387 in
front-end
sales charges from sales of the Funds Class A shares. The respective
shareholders pay such charges which are not an expense of the Fund.
5. Security Transactions and Transactions with Affiliates
The cost of purchases and proceeds from sales of investment securities, excluding short-term investments, for the six months ended June 30, 2013, aggregated
$54,872,536 and $77,628,521, respectively.
The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds
Treasury 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 six months ended June 30, 2013, advisory fees paid were reduced by $2,562 relating
to the Funds investment in the Liquidity Funds.
A summary of the Funds transactions in shares of the Liquidity Funds during the six months
ended June 30, 2013 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VALUE
DECEMBER 31, 2012
|
|
PURCHASES
AT COST
|
|
|
SALES
|
|
|
DIVIDEND
INCOME
|
|
|
VALUE
JUNE 30, 2013
|
|
$3,179,165
|
|
$
|
64,389,006
|
|
|
$
|
40,237,647
|
|
|
$
|
535
|
|
|
$
|
27,330,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2013, the Fund incurred brokerage commissions of $663 with Citigroup, Inc., and its
affiliated broker-dealers, which may be deemed affiliates of the Adviser,
Sub-Advisers,
Administrator and Distributor under Section 17 of the Act, for portfolio transactions executed on behalf of the
Fund.
Morgan Stanley Services Company Inc., an affiliate of the Adviser,
Sub-Advisers
and Distributor, was the
Funds transfer agent. Effective July 1, 2013, the Trustees approved changing the transfer agent to Boston Financial Data Services, Inc.
28
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
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 six months ended June 30, 2013, included
in Trustees fees and expenses in the Statement of Operations amounted to $4,670. At June 30, 2013, the Fund had an accrued pension liability of $66,429, 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 they receive 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.
6. Federal Income Tax Status
It is the Funds 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 semiannually. Net realized capital gains, if any, are distributed at least annually.
The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net
realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.
FASB ASC
740-10,
Income Taxes Overall,
sets forth a minimum threshold for financial statement recognition
of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes
interest accrued related to unrecognized tax benefits in Interest Expense and penalties in Other Expenses in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various
states. Each of the tax years in the four-year period ended December 31, 2012, remains subject to examination by taxing authorities.
29
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
The tax character of distributions paid may differ from
the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 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
|
$7,500,008
|
|
$23,918,101
|
|
$7,750,008
|
|
$7,948,422
|
|
|
|
|
|
|
|
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 differing treatments of gains (losses) related to foreign currency transactions and on certain equity securities designated as issued by passive foreign investment companies,
resulted in the following reclassifications among the Funds components of net assets at December 31, 2012:
|
|
|
|
|
ACCUMULATED
UNDISTRIBUTED
NET INVESTMENT
INCOME
|
|
ACCUMULATED
UNDISTRIBUTED
NET REALIZED
GAIN
|
|
PAID-IN-CAPITAL
|
$364,089
|
|
$(364,089)
|
|
|
|
|
|
|
|
At December 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
|
$667,685
|
|
$7,706,314
|
|
|
|
At June 30, 2013, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The
aggregate gross unrealized appreciation is $79,702,456 and the aggregate gross unrealized depreciation is $2,373,898 resulting in net unrealized appreciation of $77,328,558.
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.
30
Morgan Stanley Global Infrastructure Fund
Notes to Financial Statements
n
June 30, 2013 (unaudited)
continued
7. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE SIX
MONTHS ENDED
JUNE 30, 2013
|
|
|
FOR THE YEAR
ENDED
DECEMBER 31, 2012
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
SHARES
|
|
|
AMOUNT
|
|
|
SHARES
|
|
|
AMOUNT
|
|
CLASS A SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
76,516
|
|
|
$
|
616,707
|
|
|
|
138,464
|
|
|
$
|
1,039,131
|
|
Conversion from Class B
|
|
|
49,310
|
|
|
|
397,878
|
|
|
|
114,371
|
|
|
|
862,045
|
|
Reinvestment of dividends and distributions
|
|
|
264,910
|
|
|
|
2,037,151
|
|
|
|
1,000,412
|
|
|
|
7,579,556
|
|
Redeemed
|
|
|
(858,840
|
)
|
|
|
(6,950,613
|
)
|
|
|
(1,891,092
|
)
|
|
|
(14,256,866
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease Class A
|
|
|
(468,104
|
)
|
|
|
(3,898,877
|
)
|
|
|
(637,845
|
)
|
|
|
(4,776,134
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLASS B SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
131
|
|
|
|
1,051
|
|
|
|
25,738
|
|
|
|
204,873
|
|
Conversion to Class A
|
|
|
(48,092
|
)
|
|
|
(397,878
|
)
|
|
|
(112,017
|
)
|
|
|
(862,045
|
)
|
Reinvestment of dividends and distributions
|
|
|
4,579
|
|
|
|
36,054
|
|
|
|
20,633
|
|
|
|
160,080
|
|
Redeemed
|
|
|
(26,259
|
)
|
|
|
(217,644
|
)
|
|
|
(90,281
|
)
|
|
|
(689,023
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease Class B
|
|
|
(69,641
|
)
|
|
|
(578,417
|
)
|
|
|
(155,927
|
)
|
|
|
(1,186,115
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLASS L SHARES @@
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
5,042
|
|
|
|
42,701
|
|
|
|
12,817
|
|
|
|
97,268
|
|
Reinvestment of dividends and distributions
|
|
|
21,176
|
|
|
|
164,326
|
|
|
|
74,978
|
|
|
|
573,852
|
|
Redeemed
|
|
|
(84,607
|
)
|
|
|
(692,539
|
)
|
|
|
(167,288
|
)
|
|
|
(1,265,158
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease Class L
|
|
|
(58,389
|
)
|
|
|
(485,512
|
)
|
|
|
(79,493
|
)
|
|
|
(594,038
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLASS I SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
19,156
|
|
|
|
153,573
|
|
|
|
164,602
|
|
|
|
1,197,770
|
|
Reinvestment of dividends and distributions
|
|
|
7,305
|
|
|
|
55,815
|
|
|
|
28,953
|
|
|
|
217,303
|
|
Redeemed
|
|
|
(26,477
|
)
|
|
|
(214,236
|
)
|
|
|
(197,769
|
)
|
|
|
(1,543,889
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease Class I
|
|
|
(16
|
)
|
|
|
(4,848
|
)
|
|
|
(4,214
|
)
|
|
|
(128,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLASS Q SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinvestment of distributions
|
|
|
742,380
|
|
|
|
5,805,405
|
|
|
|
2,828,468
|
|
|
|
21,792,285
|
|
Redeemed
|
|
|
(2,318,606
|
)
|
|
|
(19,154,672
|
)
|
|
|
(4,956,800
|
)
|
|
|
(38,136,334
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease Class Q
|
|
|
(1,576,226
|
)
|
|
|
(13,349,267
|
)
|
|
|
(2,128,332
|
)
|
|
|
(16,344,049
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in Fund
|
|
|
(2,172,376
|
)
|
|
$
|
(18,316,921
|
)
|
|
|
(3,005,811
|
)
|
|
$
|
(23,029,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
@@
|
Effective February 25, 2013, Class C shares were renamed Class L shares.
|
Effective February 25, 2013, the Trustees approved the suspension of the continuous offering of Class B shares to new and existing shareholders.
31
Morgan Stanley Global Infrastructure Fund
Financial Highlights
Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE SIX
MONTHS
ENDED
JUNE 30, 2013
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010^
|
|
|
2009^
|
|
|
2008^
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
|
$7.64
|
|
|
|
$7.07
|
|
|
|
$6.37
|
|
|
|
$6.16
|
|
|
|
$5.46
|
|
|
|
$15.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
(1)
|
|
|
0.10
|
|
|
|
0.17
|
|
|
|
0.15
|
|
|
|
0.15
|
|
|
|
0.17
|
|
|
|
0.28
|
|
Net realized and unrealized gain (loss)
|
|
|
0.30
|
|
|
|
1.12
|
|
|
|
0.88
|
|
|
|
0.27
|
|
|
|
0.74
|
|
|
|
(5.68
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income (loss) from investment operations
|
|
|
0.40
|
|
|
|
1.29
|
|
|
|
1.03
|
|
|
|
0.42
|
|
|
|
0.91
|
|
|
|
(5.40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less dividends and distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment Income
|
|
|
(0.02
|
)
|
|
|
(0.17
|
)
|
|
|
(0.16
|
)
|
|
|
(0.21
|
)
|
|
|
(0.21
|
)
|
|
|
(0.36
|
)
|
Net realized gain
|
|
|
(0.18
|
)
|
|
|
(0.55
|
)
|
|
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
(4.57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.20
|
)
|
|
|
(0.72
|
)
|
|
|
(0.33
|
)
|
|
|
(0.21
|
)
|
|
|
(0.21
|
)
|
|
|
(4.93
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
|
$7.84
|
|
|
|
$7.64
|
|
|
|
$7.07
|
|
|
|
$6.37
|
|
|
|
$6.16
|
|
|
|
$5.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return
(2)
|
|
|
5.20
|
%
(6)
|
|
|
18.45
|
%
|
|
|
16.27
|
%
|
|
|
6.84
|
%
|
|
|
16.97
|
%
|
|
|
(32.71
|
) %
|
|
|
|
|
|
|
|
Ratios to Average Net Assets
(3)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net expenses
|
|
|
1.10
|
%
(4)(7)
|
|
|
1.11
|
%
(4)
|
|
|
1.14
|
%
(4)
|
|
|
1.18
|
%
(4)
|
|
|
1.22
|
%
(4)
|
|
|
1.03
|
%
(4)
|
Net investment income
|
|
|
2.43
|
%
(4)(7)
|
|
|
2.28
|
%
(4)
|
|
|
2.24
|
%
(4)
|
|
|
2.44
|
%
(4)
|
|
|
3.08
|
%
(4)
|
|
|
2.07
|
%
(4)
|
Rebate from Morgan Stanley affiliate
|
|
|
0.00
|
%
(5)(7)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
|
|
|
|
|
Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period, in thousands
|
|
|
$86,929
|
|
|
|
$88,330
|
|
|
|
$86,249
|
|
|
|
$89,082
|
|
|
|
$102,344
|
|
|
|
$98,711
|
|
Portfolio turnover rate
|
|
|
15
|
%
(6)
|
|
|
28
|
%
|
|
|
36
|
%
|
|
|
149
|
%
|
|
|
382
|
%
|
|
|
124
|
%
|
^
|
Beginning with the year ended December 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)
|
Amount is less than 0.005%.
|
See Notes to Financial Statements
32
Morgan Stanley Global Infrastructure Fund
Financial Highlights
continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE SIX
MONTHS ENDED
JUNE
30, 2013
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010^
|
|
|
2009^
|
|
|
2008^
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
|
$7.85
|
|
|
|
$7.24
|
|
|
|
$6.50
|
|
|
|
$6.26
|
|
|
|
$5.54
|
|
|
|
$15.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
(1)
|
|
|
0.07
|
|
|
|
0.12
|
|
|
|
0.10
|
|
|
|
0.10
|
|
|
|
0.13
|
|
|
|
0.17
|
|
Net realized and unrealized gain (loss)
|
|
|
0.30
|
|
|
|
1.14
|
|
|
|
0.90
|
|
|
|
0.28
|
|
|
|
0.75
|
|
|
|
(5.71
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income (loss) from investment operations
|
|
|
0.37
|
|
|
|
1.26
|
|
|
|
1.00
|
|
|
|
0.38
|
|
|
|
0.88
|
|
|
|
(5.54
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less dividends and distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.02
|
)
|
|
|
(0.10
|
)
|
|
|
(0.09
|
)
|
|
|
(0.14
|
)
|
|
|
(0.16
|
)
|
|
|
(0.25
|
)
|
Net realized gain
|
|
|
(0.18
|
)
|
|
|
(0.55
|
)
|
|
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
(4.57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.20
|
)
|
|
|
(0.65
|
)
|
|
|
(0.26
|
)
|
|
|
(0.14
|
)
|
|
|
(0.16
|
)
|
|
|
(4.82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
|
$8.02
|
|
|
|
$7.85
|
|
|
|
$7.24
|
|
|
|
$6.50
|
|
|
|
$6.26
|
|
|
|
$5.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return
(2)
|
|
|
4.68
|
%
(6)
|
|
|
17.53
|
%
|
|
|
15.35
|
%
|
|
|
6.21
|
%
|
|
|
16.04
|
%
|
|
|
(33.28
|
) %
|
|
|
|
|
|
|
|
Ratios to Average Net Assets
(3)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net expenses
|
|
|
1.85
|
%
(4)(7)
|
|
|
1.86
|
%
(4)
|
|
|
1.89
|
%
(4)
|
|
|
1.93
|
%
(4)
|
|
|
1.97
|
%
(4)
|
|
|
1.79
|
%
(4)
|
Net investment income
|
|
|
1.68
|
%
(4)(7)
|
|
|
1.53
|
%
(4)
|
|
|
1.49
|
%
(4)
|
|
|
1.69
|
%
(4)
|
|
|
2.33
|
%
(4)
|
|
|
1.31
|
%
(4)
|
Rebate from Morgan Stanley affiliate
|
|
|
0.00
|
%
(5)(7)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
|
|
|
|
|
Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period, in thousands
|
|
|
$1,541
|
|
|
|
$2,054
|
|
|
|
$3,022
|
|
|
|
$5,618
|
|
|
|
$9,174
|
|
|
|
$14,745
|
|
Portfolio turnover rate
|
|
|
15
|
%
(6)
|
|
|
28
|
%
|
|
|
36
|
%
|
|
|
149
|
%
|
|
|
382
|
%
|
|
|
124
|
%
|
^
|
Beginning with the year ended December 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)
|
Amount is less than 0.005%.
|
See Notes to Financial Statements
33
Morgan Stanley Global Infrastructure Fund
Financial Highlights
continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE SIX
MONTHS
ENDED
JUNE 30, 2013
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010^
|
|
|
2009^
|
|
|
2008^
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class L Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
|
$7.73
|
|
|
|
$7.14
|
|
|
|
$6.44
|
|
|
|
$6.21
|
|
|
|
$5.51
|
|
|
|
$15.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
(1)
|
|
|
0.08
|
|
|
|
0.12
|
|
|
|
0.12
|
|
|
|
0.10
|
|
|
|
0.13
|
|
|
|
0.18
|
|
Net realized and unrealized gain (loss)
|
|
|
0.29
|
|
|
|
1.13
|
|
|
|
0.87
|
|
|
|
0.28
|
|
|
|
0.75
|
|
|
|
(5.71
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income (loss) from investment operations
|
|
|
0.37
|
|
|
|
1.25
|
|
|
|
0.99
|
|
|
|
0.38
|
|
|
|
0.88
|
|
|
|
(5.53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less dividends and distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.02
|
)
|
|
|
(0.11
|
)
|
|
|
(0.12
|
)
|
|
|
(0.15
|
)
|
|
|
(0.18
|
)
|
|
|
(0.26
|
)
|
Net realized gain
|
|
|
(0.18
|
)
|
|
|
(0.55
|
)
|
|
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
(4.57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.20
|
)
|
|
|
(0.66
|
)
|
|
|
(0.29
|
)
|
|
|
(0.15
|
)
|
|
|
(0.18
|
)
|
|
|
(4.83
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
|
$7.90
|
|
|
|
$7.73
|
|
|
|
$7.14
|
|
|
|
$6.44
|
|
|
|
$6.21
|
|
|
|
$5.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return
(2)
|
|
|
4.88
|
%
(6)
|
|
|
17.70
|
%
|
|
|
15.42
|
%
|
|
|
6.17
|
%
|
|
|
16.18
|
%
|
|
|
(33.26
|
) %
|
|
|
|
|
|
|
|
Ratios to Average Net Assets
(3)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net expenses
|
|
|
1.67
|
%
(4)(7)
|
|
|
1.85
|
%
(4)
|
|
|
1.68
|
%
(4)
|
|
|
1.93
|
%
(4)
|
|
|
1.97
|
%
(4)
|
|
|
1.73
|
%
(4)
|
Net investment income
|
|
|
1.86
|
%
(4)(7)
|
|
|
1.54
|
%
(4)
|
|
|
1.70
|
%
(4)
|
|
|
1.69
|
%
(4)
|
|
|
2.33
|
%
(4)
|
|
|
1.37
|
%
(4)
|
Rebate from Morgan Stanley affiliate
|
|
|
0.00
|
%
(5)(7)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
|
|
|
|
|
Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period, in thousands
|
|
|
$6,960
|
|
|
|
$7,254
|
|
|
|
$7,275
|
|
|
|
$7,642
|
|
|
|
$10,517
|
|
|
|
$6,002
|
|
Portfolio turnover rate
|
|
|
15
|
%
(6)
|
|
|
28
|
%
|
|
|
36
|
%
|
|
|
149
|
%
|
|
|
382
|
%
|
|
|
124
|
%
|
^
|
Beginning with the year ended December 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. Effective February 25, 2013, Class C
shares were renamed Class L shares. Class C shares held for less than one year were subject to a 1.0% contingent deferred sales charge. The contingent deferred sales charge on Class L shares was eliminated effective February 25, 2013.
|
(3)
|
Reflects overall Fund ratios for investment income and
non-class
specific expenses.
|
(4)
|
The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios
is disclosed in the above table as Rebate from Morgan Stanley affiliate.
|
(5)
|
Amount is less than 0.005%.
|
See Notes to Financial Statements
34
Morgan Stanley Global Infrastructure Fund
Financial Highlights
continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE SIX
MONTHS
ENDED
JUNE 30, 2013
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010^
|
|
|
2009^
|
|
|
2008^
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class I Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
|
$7.59
|
|
|
|
$7.02
|
|
|
|
$6.34
|
|
|
|
$6.12
|
|
|
|
$5.43
|
|
|
|
$15.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
(1)
|
|
|
0.11
|
|
|
|
0.19
|
|
|
|
0.17
|
|
|
|
0.17
|
|
|
|
0.18
|
|
|
|
0.31
|
|
Net realized and unrealized gain (loss)
|
|
|
0.29
|
|
|
|
1.12
|
|
|
|
0.86
|
|
|
|
0.27
|
|
|
|
0.74
|
|
|
|
(5.68
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income (loss) from investment operations
|
|
|
0.40
|
|
|
|
1.31
|
|
|
|
1.03
|
|
|
|
0.44
|
|
|
|
0.92
|
|
|
|
(5.37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less dividends and distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.02
|
)
|
|
|
(0.19
|
)
|
|
|
(0.18
|
)
|
|
|
(0.22
|
)
|
|
|
(0.23
|
)
|
|
|
(0.39
|
)
|
Net realized gain
|
|
|
(0.18
|
)
|
|
|
(0.55
|
)
|
|
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
(4.57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.20
|
)
|
|
|
(0.74
|
)
|
|
|
(0.35
|
)
|
|
|
(0.22
|
)
|
|
|
(0.23
|
)
|
|
|
(4.96
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
|
$7.79
|
|
|
|
$7.59
|
|
|
|
$7.02
|
|
|
|
$6.34
|
|
|
|
$6.12
|
|
|
|
$5.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return
(2)
|
|
|
5.24
|
%
(6)
|
|
|
18.88
|
%
|
|
|
16.33
|
%
|
|
|
7.33
|
%
|
|
|
17.14
|
%
|
|
|
(32.54
|
) %
|
|
|
|
|
|
|
|
Ratios to Average Net Assets
(3)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net expenses
|
|
|
0.85
|
%
(4)(7)
|
|
|
0.86
|
%
(4)
|
|
|
0.89
|
%
(4)
|
|
|
0.93
|
%
(4)
|
|
|
0.97
|
%
(4)
|
|
|
0.79
|
%
(4)
|
Net investment income
|
|
|
2.68
|
%
(4)(7)
|
|
|
2.53
|
%
(4)
|
|
|
2.49
|
%
(4)
|
|
|
2.69
|
%
(4)
|
|
|
3.33
|
%
(4)
|
|
|
2.31
|
%
(4)
|
Rebate from Morgan Stanley affiliate
|
|
|
0.00
|
%
(5)(7)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
|
|
|
|
|
Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period, in thousands
|
|
|
$2,305
|
|
|
|
$2,245
|
|
|
|
$2,108
|
|
|
|
$3,963
|
|
|
|
$2,950
|
|
|
|
$2,076
|
|
Portfolio turnover rate
|
|
|
15
|
%
(6)
|
|
|
28
|
%
|
|
|
36
|
%
|
|
|
149
|
%
|
|
|
382
|
%
|
|
|
124
|
%
|
^
|
Beginning with the year ended December 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered
public accounting firm.
|
(1)
|
The per share amounts were computed using an average number of shares outstanding during the period.
|
(2)
|
Calculated based on the net asset value as of the last business day of the period.
|
(3)
|
Reflects overall Fund ratios for investment income and
non-class
specific expenses.
|
(4)
|
The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios
is disclosed in the above table as Rebate from Morgan Stanley affiliate.
|
(5)
|
Amount is less than 0.005%.
|
See Notes to Financial Statements
35
Morgan Stanley Global Infrastructure Fund
Financial Highlights
continued
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FOR THE SIX
MONTHS ENDED
JUNE
30, 2013
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FOR THE YEAR ENDED DECEMBER 31,
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2012
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2011
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2010^
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2009^
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2008^
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(unaudited)
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Class Q Shares
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Selected Per Share Data:
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Net asset value, beginning of period
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$7.77
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$7.18
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$6.47
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$6.25
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$5.53
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$15.90
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Income (loss) from investment operations:
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Net investment income
(1)
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0.10
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|
|
|
0.18
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|
|
|
0.16
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0.15
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|
|
|
0.17
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|
|
|
0.28
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|
Net realized and unrealized gain (loss)
|
|
|
0.30
|
|
|
|
1.13
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|
|
|
0.88
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|
0.28
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|
|
|
0.76
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|
|
(5.72
|
)
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Total income (loss) from investment operations
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|
0.40
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|
|
|
1.31
|
|
|
|
1.04
|
|
|
|
0.43
|
|
|
|
0.93
|
|
|
|
(5.44
|
)
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|
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Less dividends and distributions from:
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|
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|
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|
|
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|
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Net investment income
|
|
|
(0.02
|
)
|
|
|
(0.17
|
)
|
|
|
(0.16
|
)
|
|
|
(0.21
|
)
|
|
|
(0.21
|
)
|
|
|
(0.36
|
)
|
Net realized gain
|
|
|
(0.18
|
)
|
|
|
(0.55
|
)
|
|
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
(4.57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.20
|
)
|
|
|
(0.72
|
)
|
|
|
(0.33
|
)
|
|
|
(0.21
|
)
|
|
|
(0.21
|
)
|
|
|
(4.93
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
|
$7.97
|
|
|
|
$7.77
|
|
|
|
$7.18
|
|
|
|
$6.47
|
|
|
|
$6.25
|
|
|
|
$5.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return
(2)
|
|
|
5.11
|
%
(6)
|
|
|
18.45
|
%
|
|
|
16.18
|
%
|
|
|
6.91
|
%
|
|
|
17.12
|
%
|
|
|
(32.76
|
) %
|
|
|
|
|
|
|
|
Ratios to Average Net Assets
(3)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net expenses
|
|
|
1.09
|
%
(4)(7)
|
|
|
1.10
|
%
(4)
|
|
|
1.13
|
%
(4)
|
|
|
1.17
|
%
(4)
|
|
|
1.21
|
%
(4)
|
|
|
1.02
|
%
(4)
|
Net investment income
|
|
|
2.44
|
%
(4)(7)
|
|
|
2.29
|
%
(4)
|
|
|
2.25
|
%
(4)
|
|
|
2.45
|
%
(4)
|
|
|
3.09
|
%
(4)
|
|
|
2.08
|
%
(4)
|
Rebate from Morgan Stanley affiliate
|
|
|
0.00
|
%
(5)(7)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
0.00
|
%
(5)
|
|
|
|
|
|
|
|
Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period, in thousands
|
|
|
$251,546
|
|
|
|
$257,387
|
|
|
|
$253,096
|
|
|
|
$260,051
|
|
|
|
$299,176
|
|
|
|
$322,754
|
|
Portfolio turnover rate
|
|
|
15
|
%
(6)
|
|
|
28
|
%
|
|
|
36
|
%
|
|
|
149
|
%
|
|
|
382
|
%
|
|
|
124
|
%
|
^
|
Beginning with the year ended December 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)
|
Amount is less than 0.005%.
|
See Notes to Financial Statements
36
Morgan Stanley Global Infrastructure Fund
Results of Special Shareholder Meeting (unaudited)
On May 31, 2013 then subsequently adjourned to June 7, 2013, a Special Meeting of Shareholders of the Fund was held in order to vote to change the Funds
fundamental investment restriction regarding industry concentration. The voting results were as follows:
|
|
|
|
|
Number of Shares
|
For
|
|
Against
|
|
Abstain
|
19,458,225
|
|
1,108,981
|
|
2,238,580
|
37
Morgan Stanley Global Infrastructure Fund
U.S. Privacy Policy (unaudited)
An Important Notice Concerning Our U.S. Privacy Policy
This privacy notice describes the U.S. privacy
policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds (us, our, we).
We are
required by federal law to provide you with notice of our U.S. privacy policy (Policy). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or
receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other
non-individual
clients or account holders, nor is this Policy
applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a
custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.
This
notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will
inform you of any changes to our Policy as required by law.
We Respect Your Privacy
We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the
confidentiality and security of client information is an important part of how we conduct our business.
This notice describes what personal information
we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not
limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates use of shared information for marketing purposes.
Throughout this Policy, we refer to the nonpublic information that personally identifies you as personal information. We also use the term
affiliated company in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks,
investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by
our affiliates, this notice applies to the use of personal information by our affiliated companies.
38
Morgan Stanley Global Infrastructure Fund
U.S. Privacy Policy (unaudited)
continued
1. What Personal Information Do We Collect From You?
We may collect the following types of
information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your
transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:
|
|
We collect information such as your name, address,
e-mail
address, telephone/fax numbers, assets, income and investment
objectives through applications and other forms you submit to us.
|
|
|
We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your
dealings and transactions with us and other sources.
|
|
|
We may obtain information about your creditworthiness and credit history from consumer reporting agencies.
|
|
|
We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory
requirements.
|
2. When Do We Disclose Personal Information We Collect About You?
We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.
a. Information We Disclose to Affiliated Companies.
We may disclose personal information that we collect about you to our affiliated
companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law.
Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.
b.
Information We Disclose to Third Parties.
We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with
whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders
and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.
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.
39
Morgan Stanley Global Infrastructure Fund
U.S. Privacy Policy (unaudited)
continued
3. How Do We Protect The Security and Confidentiality Of Personal Information We Collect About You?
We maintain physical, electronic and procedural security measures 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.
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)
40
Morgan Stanley Global Infrastructure Fund
U.S. Privacy Policy (unaudited)
continued
|
|
Writing to us at the following address:
|
Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121
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, 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.
41
Morgan Stanley Global Infrastructure Fund
U.S. Privacy Policy (unaudited)
continued
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.
42