Principal Risks
There is no assurance that the Portfolio will achieve its investment objective and you can lose money investing in this Portfolio. The principal risks of investing in the Portfolio include:
•
Infrastructure Industry.
By concentrating its investments in the infrastructure industry, the Portfolio has greater exposure to the potential adverse economic, regulatory, political and other changes affecting companies operating within such industry. Companies within the infrastructure industry are subject to a variety of factors that may adversely affect their business or operations, including high interest costs in connection with capital construction and improvement programs, high leverage, costs associated with compliance with and changes in environmental and other regulations, difficulty in raising capital in adequate amounts and on reasonable terms in periods of high inflation and unsettled capital markets or government budgetary constraints that impact publicly funded projects, the effects of economic slowdown or recession and surplus capacity, increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the effects of energy conservation policies and other factors.
Other factors that may affect the operations of companies within the infrastructure industry include innovations in technology that could render the way in which a company delivers a product or service obsolete, significant changes to the number of ultimate end-users of a company's products, inexperience with and potential losses resulting from a developing deregulatory environment, increased susceptibility to terrorist attacks, risks of environmental damage due to a company's operations or an accident, and general changes in market sentiment towards infrastructure and utilities assets. Companies operating in the infrastructure industry face operating risks, including the risk of fire, explosions, leaks, mining and drilling accidents or other catastrophic events. In addition, natural risks, such as earthquakes, floods, lightning, hurricanes, tsunamis and wind, are inherent risks in infrastructure company operations.
•
Equity Securities.
In general, prices of equity securities are more volatile than those of fixed income securities. The prices of equity securities fluctuate, and sometimes widely fluctuate, in response to activities specific to the issuer of the security as well as factors unrelated to the fundamental condition of the issuer, including general market, economic and political conditions. To the extent that the Portfolio invests in convertible securities, and the convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying equity security.
•
Small and Medium Capitalization Companies.
Investments in small and medium capitalization companies may involve greater risks than investments in larger, more established companies. The securities issued by small and medium capitalization companies may be less liquid, and such companies may have more limited markets, financial resources and product lines, and may lack the depth of management of larger companies.
•
Foreign and Emerging Market Securities.
Investments in foreign markets entail special risks such as currency, political,
economic and market risks. There also may be greater market volatility, less reliable financial information, higher transaction and custody costs, decreased market liquidity and less government and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreign markets, which have historically been considered stable, may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. The risks of investing in emerging market countries are greater than risks associated with investments in foreign developed countries. In addition, the Portfolio's investments may be denominated in foreign currencies and therefore, to the extent unhedged, the value of the investment will fluctuate with the U.S. dollar exchange rates.
•
Non-Diversification.
Because the Portfolio is non-diversified, it may be more susceptible to an adverse event affecting a portfolio investment than a diversified portfolio and a decline in the value of that instrument would cause the Portfolio's overall value to decline to a greater degree.
Shares of the Portfolio are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.
Performance Information
The bar chart and table below provide some indication of the risks of investing in the Portfolio by showing changes in the Portfolio's Class I shares' performance from year-to-year and by showing how the Portfolio's average annual returns for the past one year period and since inception compare with those of a broad measure of market performance, as well as a comparative sector index, over time. The performance of the other Classes, which is shown in the table below, will differ because the Classes have different ongoing fees. The Portfolio's returns in the table include the maximum applicable sales charge for Class P and Class H and assume you sold your shares at the end of each period (unless otherwise noted). The Portfolio's past performance, before and after taxes, is not necessarily an indication of how the Portfolio will perform in the future. Updated performance information is available online at
www.morganstanley.com/im
.
Annual Total ReturnsCalendar Years
High Quarter
|
|
12/31/11
|
|
|
11.15
|
%
|
|
Low Quarter
|
|
9/30/11
|
|
|
6.54
|
%
|
|
Average Annual Total Returns
(for the calendar periods ended December 31, 2012)
|
|
Past
One Year
|
|
Since
Inception
|
|
Class I
(commenced operations on 9/20/10)
|
|
Return before Taxes
|
|
|
18.21
|
%
|
|
|
17.29
|
%
|
|
Return after Taxes on Distributions
|
|
|
17.59
|
%
|
|
|
16.51
|
%
|
|
Return after Taxes on Distributions and Sale of
Portfolio Shares
|
|
|
13.29
|
%
|
|
|
14.86
|
%
|
|
Class P
†
(commenced operations on 9/20/10)
|
|
Return before Taxes
|
|
|
11.64
|
%
|
|
|
14.26
|
%
|
|
Class H
(commenced operations on 9/20/10)
|
|
Return before Taxes
|
|
|
12.26
|
%
|
|
|
14.48
|
%
|
|
Class L
(commenced operations on 9/20/10)
|
|
Return before Taxes
|
|
|
17.31
|
%
|
|
|
16.42
|
%
|
|
Dow Jones Brookfield Global Infrastructure
Index
SM
(reflects no deduction for fees,
expenses or taxes)
1
|
|
|
16.01
|
%
|
|
|
15.90
|
%
|
|
S&P Global BMI Index (reflects no
deduction for fees, expenses or taxes)
2
|
|
|
17.15
|
%
|
|
|
8.25
|
%
|
|
† The historical performance of Class P shares has been restated to reflect the current maximum initial sales charge of 5.25%.
1
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 infrastructure market. It is not possible to invest directly in an index.
2
The Standard & Poor's 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 the Prospectus, there are approximately 11,000 index members representing 26 developed and 20 emerging market countries. It is not possible to invest directly in an index.
The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Portfolio's other Classes will vary from Class I shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Portfolio shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to an assumed benefit from capital losses that would have been realized had Portfolio shares been sold at the end of the relevant periods, as applicable.
Fund Management
Adviser.
Morgan Stanley Investment Management Inc.
Sub-Advisers.
Morgan Stanley Investment Management Limited and Morgan Stanley Investment Management Company.
3
Portfolio Managers.
The Portfolio is managed by members of the Global Infrastructure Securities team. Information about the members jointly and primarily responsible for the day-to-day management of the Portfolio is shown below:
Name
|
|
Title with
Adviser
|
|
Date Began
Managing Portfolio
|
|
Theodore R. Bigman
|
|
Managing Director
|
|
September 2010
|
|
Matthew King
|
|
Executive Director
|
|
September 2010
|
|
Purchase and Sale of Portfolio Shares
The minimum initial investment generally is $5,000,000 for Class I shares, $25,000 for Class H shares and $1,000 for each of Class P and Class L shares of the Portfolio. The minimum initial investment may be waived for certain investments. For more information, please refer to the "Shareholder InformationMinimum Investment Amounts" section beginning on page 61 of the Prospectus.
Class I and Class L shares of the Portfolio may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business directly from the Fund by mail (c/o Morgan Stanley Services Company Inc., P.O. Box 219804, Kansas City, MO 64121-9804) or by telephone (1-800-548-7786) or by contacting your authorized financial intermediary. For more information, please refer to the "Shareholder InformationHow To Purchase Class I and Class L Shares" and "How To Redeem SharesClass I and Class L Shares" sections beginning on pages 62 and 65, respectively, of the Prospectus.
Class P and Class H shares of the Portfolio may be purchased or redeemed by contacting your authorized financial intermediary. For more information, please refer to the "Shareholder InformationHow To Purchase Class P and Class H Shares" and "How To Redeem SharesClass P and Class H Shares" sections beginning on pages 62 and 65, respectively, of the Prospectus.
Tax Information
The Portfolio intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Portfolio through a broker-dealer or other financial intermediary (such as a bank), the Adviser and/or the Portfolio's "Distributor," Morgan Stanley Distribution, Inc., may pay the financial intermediary for the sale of Portfolio shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the Portfolio over another investment. Ask your salesperson or visit your broker-dealer's or other financial intermediary's web site for more information.