Morgan
Stanley Institutional Fund, Inc.
Opportunity
Portfolios
Global
Opportunity Portfolio
International
Opportunity Portfolio
Prospectus | April
30, 2024
| |
Global
Opportunity Portfolio Share
Class |
Ticker
Symbol |
Class
IR |
MGORX |
| |
International
Opportunity Portfolio Share
Class |
Ticker
Symbol |
Class
IR |
MRNPX |
The
Securities and Exchange Commission (“SEC”) has not approved or disapproved these
securities or passed upon the adequacy
of this Prospectus. Any representation to the contrary is a criminal
offense.
An
investment in a Fund is not a bank deposit and is not insured by the
Federal Deposit Insurance Corporation or any other government
agency. An investment in a Fund involves investment risks, and you may
lose money in the Fund.
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
Global
Opportunity Portfolio
Investment
Objective
The
Global Opportunity Portfolio (the “Fund”) seeks long-term capital
appreciation.
Fees
and Expenses
The
table below describes the fees and expenses that you may pay if you buy, hold
and sell Class IR shares of the Fund. The Fund does
not charge any sales loads or other fees when you purchase or redeem Class IR
shares. You
may pay fees other than the fees and
expenses of the Fund, such as brokerage commissions and other fees charged by
financial intermediaries, which are not reflected
in the tables and examples below.
Annual
Fund Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment)
|
| |
|
Class
IR |
|
Advisory
Fee1
|
% |
|
Distribution
and/or Shareholder Service (12b-1) Fee |
None |
|
Other
Expenses2
|
% |
|
Total
Annual Fund Operating Expenses |
0.86% |
|
Example
The
example below is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The
example assumes that you invest $10,000 in the Fund, your investment has a 5%
return each year and the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
| |
If
You SOLD Your Shares |
|
|
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Class
IR |
$88 |
$274 |
$477 |
$1,061 |
|
|
|
|
|
| |
If
You HELD Your shares |
|
|
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Class
IR |
$88 |
$274 |
$477 |
$1,061 |
|
1 |
“Advisory
Fee” includes the management fee of a wholly-owned subsidiary of the Fund
organized as a company under the laws of the Cayman Islands (the
“Subsidiary”). The Fund’s “Adviser,” Morgan Stanley Investment Management
Inc., has agreed to waive or credit a portion of the advisory fee in an
amount
equal to the management fee paid to the Adviser by the
Subsidiary. |
2 |
“Other
Expenses” include expenses of the Fund’s and Subsidiary’s most recent
fiscal year. |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account.
These costs, which are not reflected in Total Annual Fund Operating Expenses or
in the example,
affect the Fund’s performance.
During the most recent fiscal year, the Fund’s portfolio turnover rate was
11% of
the average value of its portfolio.
Principal
Investment Strategies
Under
normal market conditions, the Adviser seeks to achieve the Fund’s investment
objective by investing primarily in established and
emerging companies located throughout the world, with capitalizations within the
range of companies included in the MSCI All Country
World Index.
The
Adviser emphasizes a bottom-up stock selection process, seeking attractive
investments on an individual company basis. In selecting
securities for investment, the Adviser seeks high quality established and
emerging companies that the Adviser believes are undervalued
at the time of purchase. Fundamental research drives the investment process. The
Adviser typically favors companies it believes
have sustainable competitive advantages that can be monetized through growth.
The investment process integrates analysis of sustainability
with respect to disruptive change, financial strength, environmental and social
externalities and governance (also referred
to as ESG). The Adviser typically
focuses a significant portion of the Fund’s investments in a limited number of
issuers, which
may be in the same industry, sector or geographic region. The Adviser
generally
considers selling a portfolio holding when it determines
that the holding no longer satisfies its investment
criteria.
The
Adviser views incorporating ESG-related potential risks and opportunities within
the investment process as important to ensure long-term
stewardship of capital. Over extended time horizons, the Adviser believes that
ESG risks are more likely to materialize and externalities
not borne by the company are more likely to be priced into the value of
securities. Since ESG risks could potentially
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
Global
Opportunity Portfolio (Con’t)
impact
the risk and reward profile of investment opportunities, the Adviser typically
engages company management in constructive discussions
on a range of ESG issues the Adviser deems materially
important.
The
Fund may invest in China A-Shares (shares of publicly traded companies based in
mainland China) listed and traded on the Shanghai
Stock Exchange through the Shanghai-Hong Kong Stock Connect program, as well as
China A-Shares listed and traded on the
Shenzhen-Hong Kong Stock Connect program (collectively, “Stock
Connect”).
The
Fund may also invest in American Depositary Receipts (“ADRs”), Global Depositary
Receipts (“GDRs”) and other types of depositary
receipts with respect to issuers located or operating outside of the United
States. The Fund may invest in equity securities. The
Fund may also invest in privately placed and restricted
securities.
Principal
Risks
There
is no assurance that the Fund will achieve its investment objective, and you can
lose money investing in this Fund.
The principal
risks of investing in the Fund include:
• |
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, political conditions and public health conditions. During
periods when equity securities experience heightened volatility, such as
during periods of market, economic or financial
uncertainty or distress, the Fund’s investments in equity securities may
be subject to heightened
risks. |
|
The
value of equity securities and related instruments may decline in response
to adverse changes in the economy or the economic outlook;
deterioration in investor sentiment; interest rate, currency, and
commodity price fluctuations; adverse geopolitical, social or
environmental developments; issuer- and sector-specific considerations;
unexpected trading activity among retail investors; and other
factors. Market conditions may affect certain types of stocks to a greater
extent than other types of stocks. If the stock market
declines, the value of Fund shares will also likely
decline. |
• |
Active
Management Risk.
In pursuing the Fund’s investment objective, the Adviser has considerable
leeway in deciding which investments
to buy, hold or sell on a day-to-day basis, and which trading strategies
to use. For example, the Adviser, in its discretion,
may determine to use some permitted trading strategies while not using
others. The success or failure of such decisions will
affect the Fund’s
performance. |
• |
Focused
Investing.
Although the Fund is a diversified investment company under the Investment
Company Act of 1940 (the “1940
Act”), the Fund typically invests a significant portion of its portfolio
in a limited number of issuers, which may be in the same
industry, sector or geographic region. As a result, the Fund will be more
susceptible to risks associated with, and negative events
affecting those issuers, industries, sectors or geographic regions, and a
decline in the value of a particular instrument may cause
the Fund’s overall value to be more volatile and decline to a greater
degree than if the Fund were invested more
widely. |
• |
Foreign
and Emerging Market Securities.
Investments in foreign markets entail special risks such as currency,
political (including geopolitical),
economic and market risks. There also may be greater market volatility,
less reliable financial information, less stringent
investor protections and disclosure standards, 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
that have historically been considered stable may become more volatile and
subject to increased risk due to 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. Certain foreign markets
may rely heavily on particular industries or foreign capital
and are more vulnerable to diplomatic developments, the imposition of
economic sanctions against a particular country or countries,
organizations, companies, entities and/or individuals, changes in
international trading patterns, trade barriers and other protectionist
or retaliatory measures. Investments in foreign markets may also be
adversely affected by governmental actions such as
the imposition of capital controls, nationalization of companies or
industries, expropriation of assets or the imposition of punitive
taxes. The governments of certain countries may prohibit or impose
substantial restrictions on foreign investing in their capital
markets or in certain sectors or industries. In addition, a foreign
government may limit or cause delay in the convertibility or
repatriation of its currency which would adversely affect the U.S. dollar
value and/or liquidity of investments denominated in that
currency. Certain foreign investments may become less liquid in response
to market developments or adverse investor perceptions,
or become illiquid after purchase by the Fund, particularly during periods
of market turmoil. When the Fund holds illiquid
investments, its portfolio may be harder to value. The risks of investing
in emerging market countries are greater than the risks
associated with investments in foreign developed countries. Certain
emerging market countries may be subject to less stringent
requirements regarding accounting, auditing, financial reporting and
record keeping and therefore, material information related
to an investment may not be available or reliable.
In addition, the Fund is limited in its ability to exercise its legal
rights or enforce
a counterparty’s legal obligations in certain jurisdictions outside of the
United States, in particular, in emerging market countries.
In addition, the Fund’s investments in foreign issuers may be denominated
in foreign currencies and therefore, to the extent
unhedged, the value of those investments will fluctuate with U.S. dollar
exchange rates. To the extent hedged by the use of
|
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
Global
Opportunity Portfolio (Con’t)
|
foreign
currency forward exchange contracts, the precise matching of the foreign
currency forward exchange contract amounts and the
value of the securities involved will not generally be possible because
the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those
securities between the date on which the contract is entered
into and the date it matures. There is additional risk that such
transactions may reduce or preclude the opportunity for gain
if the value of the currency should move in the direction opposite to the
position taken and that foreign currency forward exchange
contracts create exposure to currencies in which the Fund’s securities are
not denominated. The use of foreign currency forward
exchange contracts involves the risk of loss from the insolvency or
bankruptcy of the counterparty to the contract or the failure
of the counterparty to make payments or otherwise comply with the terms of
the contract. Economic sanctions or other similar
measures may be, and have been, imposed against certain countries,
organizations, companies, entities and/or individuals. Economic
sanctions and other similar measures could, among other things,
effectively restrict or eliminate the Fund’s ability to purchase
or sell securities, negatively impact the value or liquidity of the
Fund’s investments, significantly delay or prevent the settlement
of the Fund’s securities transactions, force the Fund to sell or otherwise
dispose of investments at inopportune times or prices,
or impair the Fund’s ability to meet its investment objective or invest in
accordance with its investment
strategies. |
• |
Market
and Geopolitical Risk.
The value of your investment in the Fund is based on the values of the
Fund’s investments, which change
due to economic and other events that affect markets generally, as well as
those that affect particular regions, countries, industries,
companies or governments. These events may be sudden and unexpected, and
could adversely affect the liquidity of the Fund’s
investments, which may in turn impact valuation, the Fund’s ability to
sell securities and/or its ability to meet redemptions.
The risks associated with these developments may be magnified if certain
social, political, economic and other conditions
and events (such as war, natural disasters, epidemics and pandemics,
terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes and supply chain disruptions) adversely interrupt
the global economy and financial markets. It is difficult
to predict when events affecting the U.S. or global financial markets may
occur, the effects that such events may have and the
duration of those effects (which may last for extended periods). These
events may negatively impact broad segments of businesses
and populations and have a significant and rapid negative impact on the
performance of the Fund’s investments, adversely
affect and increase the volatility of the Fund’s share price
and exacerbate pre-existing risks to the
Fund. |
• |
Liquidity.
The Fund may make investments that are illiquid or restricted or that may
become illiquid or less liquid in response to overall
economic conditions or adverse investor perceptions, and which may entail
greater risk than investments in other types of securities.
These investments may be more difficult to value or sell, particularly in
times of market turmoil, and there may be little trading
in the secondary market available for particular securities. If the Fund
is forced to sell an illiquid or restricted security to fund
redemptions or for other cash needs, it may be forced to sell the security
at a loss or for less than its fair value and may be unable
to sell the security at
all. |
• |
Consumer
Discretionary.
To the extent that the Fund invests a substantial portion of its assets in
the consumer discretionary sector, the
Fund will be particularly susceptible to the risks associated with
companies operating in such sector(s). Companies in the consumer
discretionary sector are subject to risks, including fluctuations in the
performance of the overall domestic and international
economy, shipment and supply chain disruptions, interest rate changes,
currency exchange rates, increased competition
and consumer confidence. Performance of such companies may also be
adversely affected by factors such as reduced disposable
household income, reduced consumer spending, and changing demographics and
consumer tastes. |
• |
Information
Technology Sector Risk.
To the extent the Fund invests a substantial portion of its assets in the
information technology sector,
the value of Fund shares may be particularly impacted by events that
adversely affect the information technology sector, such
as rapid changes in technology product cycles, product obsolescence,
government regulation, and competition, and may fluctuate
more than that of a fund that does not invest significantly in companies
in the technology
sector. |
• |
China
Risk.
Investments in securities of Chinese issuers,
including A shares,
involve risks associated with investments in foreign markets
as well as special considerations not typically associated with
investments in the U.S. securities markets. For example, the Chinese
government has historically exercised substantial control over virtually
every sector of the Chinese economy through administrative
regulation and/or state ownership and actions of the Chinese central and
local government authorities continue to have
a substantial effect on economic conditions in China. In addition, the
Chinese government has taken actions that influenced the
prices at which certain goods may be sold, encouraged companies to invest
or concentrate in particular industries, induced mergers
between companies in certain industries and induced private companies to
publicly offer their securities. Investments in China
involve risk of a total loss due to government action or
inaction.
Additionally,
the Chinese economy is export-driven and highly reliant on trade. Adverse
changes to the economic conditions of its primary
trading partners, such as the United States, Japan and South Korea, would
adversely impact the Chinese economy and the
Fund’s investments. Moreover, a slowdown in other significant economies of
the world, such as the United States, the European
Union and certain Asian countries, may adversely affect economic growth in
China. An economic downturn in China would
adversely impact the Fund’s investments. In addition, certain securities
are, or may in the future, become restricted, and/or sanctioned
by the U.S. government or other governments and the Fund may be forced to
sell such restricted securities and incur a loss
as a result. |
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
Global
Opportunity Portfolio (Con’t)
|
These
and other developments, including government actions, may result in
significant illiquidity risk or forced disposition for Chinese
investments. The Chinese securities markets are emerging markets
characterized by a relatively small number of equity issues
and relatively low trading volume, resulting in decreased liquidity,
greater price volatility (caused by, among other things, military,
diplomatic, or trade conflicts), and potentially fewer investment
opportunities for the Fund. Ongoing political tension between
the People’s Republic of China and the Hong Kong Special Administrative
Region may have impacts on the economy of Hong
Kong, and these impacts remain
uncertain. |
|
Risks
of Investing through Stock Connect.
The Fund may invest in A-shares listed and traded through Stock Connect,
or on such other
stock exchanges in China which participate in Stock Connect from time to
time or in the future. Trading through Stock Connect
is subject to a number of restrictions that may affect the Fund’s
investments and returns. Moreover, Stock Connect A-shares
generally may not be sold, purchased or otherwise transferred other than
through Stock Connect in accordance with applicable
rules. The Stock Connect program is a relatively new program and may be
subject to further interpretation and guidance.
There can be no assurance as to the program’s continued existence or
whether future developments regarding the program
may restrict or adversely affect the Fund’s investments or returns.
Because certain transactions through Stock Connect may
not be subject to certain investor protection programs, the Fund may be
exposed to the risks of default of the broker(s) they engage
in their trading in China A
Shares. |
|
Variable
Interest Entities.
Chinese operating companies sometimes rely on variable interest entity
(“VIE”) structures to raise capital from
non-Chinese investors because of Chinese government limitations or
prohibitions on direct foreign ownership in certain industries.
In a VIE structure, a series of contractual arrangements are entered into
between a holding company domiciled outside of
China and a Chinese operating company or companies, which are intended to
mimic direct ownership in the operating company,
but in many cases these arrangements have not been tested in court and it
is not clear that the contracts are enforceable or
that the structures will otherwise work as intended. The offshore holding
company, which is not a Chinese operating company, then
issues exchange-traded shares that are sold to the public, including
non-Chinese investors (such as the Fund). Shares of the offshore
entity purchased by the Fund would not be equity ownership interests in
the Chinese operating company and the Fund’s interest
would be subject to legal, operational and other risks associated with the
company’s use of the VIE structure. For example, at
any time the Chinese government could determine that the contractual
arrangements constituting part of the VIE structure are unenforceable
or do not comply with applicable law or regulations, these laws or
regulations could change or be interpreted differently
in the future, and the Chinese government may with no advance notice
otherwise intervene in or exert influence over VIE
structures or the related Chinese operating companies. If any of these or
similar risks or developments materialize, the Fund’s investment
in the offshore entity may suddenly and significantly decline in value or
become worthless because of, among other things,
difficulty enforcing (or the inability to enforce) the contractual
arrangements or materially adverse effects on the Chinese
operating
company’s performance. In these circumstances, the Fund could experience
significant losses with no recourse available. From
time to time, the Fund’s investments in U.S.-listed shell companies
relying on VIE structures to consolidate China-based operations
could be
significant. |
• |
India
Risk.
To the extent that the Fund invests a substantial portion of its assets in
Indian issuers, the value of the Fund’s assets may
be adversely affected by political, economic, social and religious factors
impacting Indian businesses and the Indian economy, changes
in Indian law or regulations and the status of India’s relations with
other countries. Indian government actions in the future
could have a significant effect on the Indian economy, which could affect
private sector companies and the Fund, market conditions,
and prices and yields of securities in the Fund’s portfolio. To the extent
the Fund invests a significant portion of its assets
in Indian businesses and the Indian economy, factors that have an adverse
impact on Indian businesses and the Indian economy
may have a disproportionate impact on the Fund’s
performance. |
Shares
of the Fund are not bank deposits and are not guaranteed or insured by the
Federal Deposit Insurance Corporation or any other
government agency.
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
Global
Opportunity Portfolio (Con’t)
Performance
Information
The
bar chart and table below provide some indication of the risks of
investing in the Fund by showing changes in the Fund’s Class IR
shares’ performance from year-to-year and by showing
how the Fund’s average annual returns for the past one year period and
since
inception compare with those of an
index intended to measure broad market performance.
The
Fund’s past performance, before
and after taxes, is not necessarily an indication of how the Fund will
perform in the future.
Updated performance information is
available online at www.morganstanley.com/im or
by calling toll-free 1-800-869-6397.
Annual
Total Returns—Calendar Years
|
| |
High
Quarter |
06/30/20
|
31.69% |
Low
Quarter |
06/30/22
|
-27.31% |
Average
Annual Total Returns
(for
the calendar periods ended December
31, 2023)
|
|
| |
|
Past
One Year |
Past
Five Years |
Since
Inception |
Class
IR (commenced
operations on 6/15/2018) |
|
|
Return
Before Taxes |
49.85% |
13.15% |
7.70% |
Return
After Taxes on Distributions1
|
% |
% |
% |
Return
After Taxes on Distributions and Sale of Fund Shares |
30.03% |
10.29% |
5.85% |
MSCI
All Country World Net Index (reflects no deduction for fees, expenses
or
taxes)2
|
% |
|
%3 |
1 |
These
returns do not reflect any tax consequences from a sale of your shares at
the end of each
period. |
2 |
The
MSCI All Country World Net Index is a free float-adjusted market
capitalization weighted index designed to measure the equity market
performance
of developed and emerging markets. The term “free float” represents the
portion of shares outstanding that are deemed to be available for
purchase in the public equity markets by investors. The performance of the
index is listed in U.S. dollars and assumes reinvestment of net dividends.
Net
total return indices reinvest dividends after the deduction of withholding
taxes, using (for international indices) a tax rate applicable to
non-resident institutional
investors who do not benefit from double taxation treaties. It is not
possible to invest directly in an
index. |
3 |
Since
Inception reflects the inception date of Class
IR. |
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 Fund’s other classes will vary from
Class IR 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 Fund 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 Fund shares been sold at the end of the relevant
periods, as applicable.
Fund
Management
Adviser.
Morgan Stanley Investment Management Inc.
Portfolio
Managers. The
Fund is managed by members of the Global Opportunity team. Information about the
member primarily responsible
for the day-to-day management of the Fund is shown below:
|
| |
Name |
Title
with Adviser |
Date
Began Managing
Fund |
Kristian
Heugh |
Managing
Director of the Adviser |
Since
inception |
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
Global
Opportunity Portfolio (Con’t)
Purchase
and Sale of Fund Shares
To
purchase Class IR shares, an investor must meet a minimum initial investment of
$5 million or be a defined contribution, defined benefit
or other employer sponsored employee benefit plan, in each case provided that
the plan trades through an intermediary that combines
its clients’ assets in a single omnibus account, whether or not such plan is
qualified under the Internal Revenue Code of 1986,
as amended (the “Code”), and in each case subject to the discretion of the
Adviser. The minimum initial investment may be waived
for certain investments. For more information, please refer to the section of
the Prospectus entitled “Shareholder Information—Minimum
Investment Amounts.”
Shares
of the Fund 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 SS&C Global Investor and Distribution Solutions, Inc.,
P.O. Box 219804, Kansas City, MO 64121-9804), by
telephone (1-800-869-6397) or by contacting an authorized third-party, such as a
broker-dealer or other financial intermediary that
has entered into a selling agreement with the Fund’s “Distributor,” Morgan
Stanley Distribution, Inc. (each, a “Financial Intermediary”).
For more information, please refer to the sections of the Prospectus entitled
“Shareholder Information—How To Purchase
Fund Shares” and “—How To Redeem Fund Shares.”
Tax
Information
The
Fund 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 Class IR shares of the Fund through a Financial Intermediary
(such as a bank), the Adviser and/or the Distributor may
pay the Financial Intermediary for the sale of Class IR shares and
related services. These payments, which may be significant in amount,
may create a conflict of interest by influencing the Financial
Intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your Financial
Intermediary’s web site for more information. For additional information
about the Fund’s revenue sharing arrangements for Class IR shares, see the
section of the Statement of Additional Information
entitled “Revenue Sharing.”
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
International
Opportunity Portfolio
Investment
Objective
The
International Opportunity Portfolio (the “Fund”) seeks long-term capital
appreciation.
Fees
and Expenses
The
table below describes the fees and expenses that you may pay if you buy, hold
and sell Class IR shares of the Fund. The Fund does
not charge any sales loads or other fees when you purchase Class IR shares.
You
may pay fees other than the fees and expenses of
the Fund, such as brokerage commissions and other fees charged by financial
intermediaries, which are not reflected in the tables
and examples below.
Shareholder
Fees (fees
paid directly from your investment)
|
| |
|
Class
IR |
|
Maximum
sales charge (load) imposed on purchases (as a percentage of offering
price) |
None |
|
Maximum
deferred sales charge (load) (as a percentage based on the lesser of the
offering price or net asset value per share (“NAV”)
at redemption) |
None |
|
Redemption
Fee (as a percentage of the amount redeemed on redemptions made within 30
days of purchase) |
2.00% |
|
Annual
Fund Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment)
|
| |
|
Class
IR |
|
Advisory
Fee1
|
% |
|
Distribution
and/or Shareholder Service (12b-1) Fee |
None |
|
Other
Expenses2
|
% |
|
Total
Annual Fund Operating Expenses |
0.94% |
|
Example
The
example below is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The
example assumes that you invest $10,000 in the Fund, your investment has a 5%
return each year and that the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
| |
If
You SOLD Your Shares |
|
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Class
IR |
$96 |
$300 |
$520 |
$1,155 |
|
|
|
|
|
| |
If
You HELD Your Shares |
|
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Class
IR |
$96 |
$300 |
$520 |
$1,155 |
|
1 |
“Advisory
Fee” includes the management fee of a wholly-owned subsidiary of the Fund
organized as a company under the laws of the Cayman Islands (the
“Subsidiary”). The Fund’s “Adviser,” Morgan Stanley Investment Management
Inc., has agreed to waive or credit a portion of the advisory fee in an
amount
equal to the management fee paid to the Adviser by the
Subsidiary. |
2 |
“Other
Expenses” include expenses of the Fund’s and Subsidiary’s most recent
fiscal year. |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account.
These costs, which are not reflected in Total Annual Fund Operating Expenses or
in the example,
affect the Fund’s performance.
During the most recent fiscal year, the Fund’s portfolio turnover rate was
20% of
the average value of its portfolio.
Principal
Investment Strategies
Under
normal market conditions, the Adviser seeks to achieve the Fund’s investment
objective by investing primarily in established and
emerging companies on an international basis, with capitalizations within the
range of companies included in the MSCI All Country
World ex USA Index.
The
Adviser emphasizes a bottom-up stock selection process, seeking attractive
investments on an individual company basis. In selecting
securities for investment, the Adviser seeks high quality established and
emerging companies that the Adviser believes are undervalued
at the time of purchase. Fundamental research drives the investment process. The
Adviser typically favors companies it believes
have sustainable competitive advantages that can be monetized through growth.
The investment process integrates analysis of
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
International
Opportunity Portfolio (Con’t)
sustainability
with respect to disruptive change, financial strength, environmental and social
externalities and governance (also referred
to as ESG). The Adviser
typically focuses a significant portion of the Fund’s investments in a limited
number of issuers, which
may be in the same industry, sector or geographic region. The
Adviser generally
considers selling a portfolio holding when it determines
that the holding no longer satisfies its investment
criteria.
The
Adviser views incorporating ESG-related potential risks and opportunities within
the investment process as important to ensure long-term
stewardship of capital. Over extended time horizons, the Adviser believes that
ESG risks are more likely to materialize and externalities
not borne by the company are more likely to be priced into the value of
securities. Since ESG risks could potentially impact
the risk and reward profile of investment opportunities, the Adviser typically
engages company management in constructive discussions
on a range of ESG issues the Adviser deems materially
important.
The
Fund may invest in China A-Shares (shares of publicly traded companies based in
mainland China) listed and traded on the Shanghai
Stock Exchange through the Shanghai-Hong Kong Stock Connect program, as well as
China A-Shares listed and traded on the
Shenzhen-Hong Kong Stock Connect program (collectively, “Stock
Connect”).
The
Fund may also invest in American Depositary Receipts (“ADRs”), Global Depositary
Receipts (“GDRs”) and other types of depositary
receipts with respect to issuers located or operating outside of the United
States. The Fund may invest in equity securities. The
Fund may also invest in privately placed and restricted
securities.
The
Fund invests primarily in securities of companies located in Europe, Japan,
Asia, the Pacific Basin, Latin America, the Middle East
and Africa. The Fund may also invest in securities of companies located in the
United States to a limited extent.
Principal
Risks
There
is no assurance that the Fund will achieve its investment objective, and you can
lose money investing in this Fund.
The principal
risks of investing in the Fund include:
• |
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, political conditions and public health conditions. During
periods when equity securities experience heightened volatility, such as
during periods of market, economic or financial
uncertainty or distress, the Fund’s investments in equity securities may
be subject to heightened
risks. |
|
The
value of equity securities and related instruments may decline in response
to adverse changes in the economy or the economic outlook;
deterioration in investor sentiment; interest rate, currency, and
commodity price fluctuations; adverse geopolitical, social or
environmental developments; issuer- and sector-specific considerations;
unexpected trading activity among retail investors; and other
factors. Market conditions may affect certain types of stocks to a greater
extent than other types of stocks. If the stock market
declines, the value of Fund shares will also likely
decline. |
• |
Active
Management Risk.
In pursuing the Fund’s investment objective, the Adviser has considerable
leeway in deciding which investments
to buy, hold or sell on a day-to-day basis, and which trading strategies
to use. For example, the Adviser, in its discretion,
may determine to use some permitted trading strategies while not using
others. The success or failure of such decisions will
affect the Fund’s
performance. |
• |
Focused
Investing.
Although the Fund is a diversified investment company under the Investment
Company Act of 1940 (the “1940
Act”), the Fund typically invests a significant portion of its portfolio
in a limited number of issuers, which may be in the same
industry, sector or geographic region. As a result, the Fund will be more
susceptible to risks associated with, and negative events
affecting those issuers, industries, sectors or geographic regions, and a
decline in the value of a particular instrument may cause
the Fund’s overall value to be more volatile and decline to a greater
degree than if the Fund were invested more
widely. |
• |
Foreign
and Emerging Market Securities.
Investments in foreign markets entail special risks such as currency,
political (including geopolitical),
economic and market risks. There also may be greater market volatility,
less reliable financial information, less stringent
investor protections and disclosure standards, 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
that have historically been considered stable may become more volatile and
subject to increased risk due to 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. Certain foreign markets
may rely heavily on particular industries or foreign capital
and are more vulnerable to diplomatic developments, the imposition of
economic sanctions against a particular country or countries,
organizations, companies, entities and/or individuals, changes in
international trading patterns, trade barriers and other protectionist
or retaliatory measures. Investments in foreign markets may also be
adversely affected by governmental actions such as
the imposition of capital controls, nationalization of companies or
industries, expropriation of assets or the imposition of punitive
taxes. The governments of certain countries may prohibit or impose
substantial restrictions on foreign investing in their
|
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
International
Opportunity Portfolio (Con’t)
|
capital
markets or in certain sectors or industries. In addition, a foreign
government may limit or cause delay in the convertibility or
repatriation of its currency which would adversely affect the U.S. dollar
value and/or liquidity of investments denominated in that
currency. Certain foreign investments may become less liquid in response
to market developments or adverse investor perceptions,
or become illiquid after purchase by the Fund, particularly during periods
of market turmoil. When the Fund holds illiquid
investments, its portfolio may be harder to value. The risks of investing
in emerging market countries are greater than the risks
associated with investments in foreign developed countries. Certain
emerging market countries may be subject to less stringent
requirements regarding accounting, auditing, financial reporting and
record keeping and therefore, material information related
to an investment may not be available or reliable.
In addition, the Fund is limited in its ability to exercise its legal
rights or enforce
a counterparty’s legal obligations in certain jurisdictions outside of the
United States, in particular, in emerging market countries.
In addition, the Fund’s investments in foreign issuers may be denominated
in foreign currencies and therefore, to the extent
unhedged, the value of those investments will fluctuate with U.S. dollar
exchange rates. To the extent hedged by the use of foreign
currency forward exchange contracts, the precise matching of the foreign
currency forward exchange contract amounts and the
value of the securities involved will not generally be possible because
the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those
securities between the date on which the contract is entered
into and the date it matures. There is additional risk that such
transactions may reduce or preclude the opportunity for gain
if the value of the currency should move in the direction opposite to the
position taken and that foreign currency forward exchange
contracts create exposure to currencies in which the Fund’s securities are
not denominated. The use of foreign currency forward
exchange contracts involves the risk of loss from the insolvency or
bankruptcy of the counterparty to the contract or the failure
of the counterparty to make payments or otherwise comply with the terms of
the contract. Economic sanctions or other similar
measures may be, and have been, imposed against certain countries,
organizations, companies, entities and/or individuals. Economic
sanctions and other similar measures could, among other things,
effectively restrict or eliminate the Fund’s ability to purchase
or sell securities, negatively impact the value or liquidity of the
Fund’s investments, significantly delay or prevent the settlement
of the Fund’s securities transactions, force the Fund to sell or otherwise
dispose of investments at inopportune times or prices,
or impair the Fund’s ability to meet its investment objective or invest in
accordance with its investment
strategies. |
• |
Market
and Geopolitical Risk.
The value of your investment in the Fund is based on the values of the
Fund’s investments, which change
due to economic and other events that affect markets generally, as well as
those that affect particular regions, countries, industries,
companies or governments. These events may be sudden and unexpected, and
could adversely affect the liquidity of the Fund’s
investments, which may in turn impact valuation, the Fund’s ability to
sell securities and/or its ability to meet redemptions.
The risks associated with these developments may be magnified if certain
social, political, economic and other conditions
and events (such as war, natural disasters, epidemics and pandemics,
terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes and supply chain disruptions) adversely interrupt
the global economy and financial markets. It is difficult
to predict when events affecting the U.S. or global financial markets may
occur, the effects that such events may have and the
duration of those effects (which may last for extended periods). These
events may negatively impact broad segments of businesses
and populations and have a significant and rapid negative impact on the
performance of the Fund’s investments, adversely
affect and increase the volatility of the Fund’s share price
and exacerbate pre-existing risks to the
Fund. |
• |
Liquidity.
The Fund may make investments that are illiquid or restricted or that may
become illiquid or less liquid in response to overall
economic conditions or adverse investor perceptions, and which may entail
greater risk than investments in other types of securities.
These investments may be more difficult to value or sell, particularly in
times of market turmoil, and there may be little trading
in the secondary market available for particular securities. If the Fund
is forced to sell an illiquid or restricted security to fund
redemptions or for other cash needs, it may be forced to sell the security
at a loss or for less than its fair value and may be unable
to sell the security at
all. |
• |
Consumer
Discretionary.
To the extent that the Fund invests a substantial portion of its assets in
the consumer discretionary sector, the
Fund will be particularly susceptible to the risks associated with
companies operating in such sector(s). Companies in the consumer
discretionary sector are subject to risks, including fluctuations in the
performance of the overall domestic and international
economy, shipment and supply chain disruptions, interest rate changes,
currency exchange rates, increased competition
and consumer confidence. Performance of such companies may also be
adversely affected by factors such as reduced disposable
household income, reduced consumer spending, and changing demographics and
consumer tastes. |
• |
Financials
Sector.
To the extent the Fund invests a substantial portion of its assets in the
financials sector, factors that have an adverse
impact on this sector may have a disproportionate impact on the Fund’s
performance. The financials sector can be affected by
global and local economic conditions, such as the levels and liquidity of
the global and local financial and asset markets, the absolute
and relative level and volatility of interest rates and equity prices,
investor sentiment, inflation, and the availability and cost
of credit. Adverse developments in these conditions can have a greater
adverse effect on the financials sector of an emerging market
economy than on other industries of its economy. The enactment of new
legislation or regulations, as well as changes in interpretation
and enforcement of current laws, may affect the manner of operations and
profitability of the financials
sector. |
• |
China
Risk.
Investments in securities of Chinese issuers,
including A shares,
involve risks associated with investments in foreign markets
as well as special considerations not typically associated with
investments in the U.S. securities markets. For example, the Chinese
government has historically exercised substantial control over virtually
every sector of the Chinese economy through
|
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
International
Opportunity Portfolio (Con’t)
|
administrative
regulation and/or state ownership and actions of the Chinese central and
local government authorities continue to have
a substantial effect on economic conditions in China. In addition, the
Chinese government has taken actions that influenced the
prices at which certain goods may be sold, encouraged companies to invest
or concentrate in particular industries, induced mergers
between companies in certain industries and induced private companies to
publicly offer their securities. Investments in China
involve risk of a total loss due to government action or
inaction.
Additionally,
the Chinese economy is export-driven and highly reliant on trade. Adverse
changes to the economic conditions of its primary
trading partners, such as the United States, Japan and South Korea, would
adversely impact the Chinese economy and the
Fund’s investments. Moreover, a slowdown in other significant economies of
the world, such as the United States, the European
Union and certain Asian countries, may adversely affect economic growth in
China. An economic downturn in China would
adversely impact the Fund’s investments. In addition, certain securities
are, or may in the future, become restricted, and/or sanctioned
by the U.S. government or other governments and the Fund may be forced to
sell such restricted securities and incur a loss
as a
result. |
|
These
and other developments, including government actions, may result in
significant illiquidity risk or forced disposition for Chinese
investments. The Chinese securities markets are emerging markets
characterized by a relatively small number of equity issues
and relatively low trading volume, resulting in decreased liquidity,
greater price volatility (caused by, among other things, military,
diplomatic, or trade conflicts), and potentially fewer investment
opportunities for the Fund. Ongoing political tension between
the People’s Republic of China and the Hong Kong Special Administrative
Region may have impacts on the economy of Hong
Kong, and these impacts remain
uncertain. |
|
Risks
of Investing through Stock Connect.
The Fund may invest in A-shares listed and traded through Stock Connect,
or on such other
stock exchanges in China which participate in Stock Connect from time to
time or in the future. Trading through Stock Connect
is subject to a number of restrictions that may affect the Fund’s
investments and returns. Moreover, Stock Connect A-shares
generally may not be sold, purchased or otherwise transferred other than
through Stock Connect in accordance with applicable
rules. The Stock Connect program is a relatively new program and may be
subject to further interpretation and guidance.
There can be no assurance as to the program’s continued existence or
whether future developments regarding the program
may restrict or adversely affect the Fund’s investments or returns.
Because certain transactions through Stock Connect may
not be subject to certain investor protection programs, the Fund may be
exposed to the risks of default of the broker(s) they engage
in their trading in China A
Shares. |
|
Variable
Interest Entities.
Chinese operating companies sometimes rely on variable interest entity
(“VIE”) structures to raise capital from
non-Chinese investors because of Chinese government limitations or
prohibitions on direct foreign ownership in certain industries.
In a VIE structure, a series of contractual arrangements are entered into
between a holding company domiciled outside of
China and a Chinese operating company or companies, which are intended to
mimic direct ownership in the operating company,
but in many cases these arrangements have not been tested in court and it
is not clear that the contracts are enforceable or
that the structures will otherwise work as intended. The offshore holding
company, which is not a Chinese operating company, then
issues exchange-traded shares that are sold to the public, including
non-Chinese investors (such as the Fund). Shares of the offshore
entity purchased by the Fund would not be equity ownership interests in
the Chinese operating company and the Fund’s interest
would be subject to legal, operational and other risks associated with the
company’s use of the VIE structure. For example, at
any time the Chinese government could determine that the contractual
arrangements constituting part of the VIE structure are unenforceable
or do not comply with applicable law or regulations, these laws or
regulations could change or be interpreted differently
in the future, and the Chinese government may with no advance notice
otherwise intervene in or exert influence over VIE
structures or the related Chinese operating companies. If any of these or
similar risks or developments materialize, the Fund’s investment
in the offshore entity may suddenly and significantly decline in value or
become worthless because of, among other things,
difficulty enforcing (or the inability to enforce) the contractual
arrangements or materially adverse effects on the Chinese
operating
company’s performance. In these circumstances, the Fund could experience
significant losses with no recourse available. From
time to time, the Fund’s investments in U.S.-listed shell companies
relying on VIE structures to consolidate China-based operations
could be
significant. |
• |
India
Risk.
To the extent that the Fund invests a substantial portion of its assets in
Indian issuers, the value of the Fund’s assets may
be adversely affected by political, economic, social and religious factors
impacting Indian businesses and the Indian economy, changes
in Indian law or regulations and the status of India’s relations with
other countries. Indian government actions in the future
could have a significant effect on the Indian economy, which could affect
private sector companies and the Fund, market conditions,
and prices and yields of securities in the Fund’s portfolio. To the extent
the Fund invests a significant portion of its assets
in Indian businesses and the Indian economy, factors that have an adverse
impact on Indian businesses and the Indian economy
may have a disproportionate impact on the Fund’s
performance. |
Shares
of the Fund are not bank deposits and are not guaranteed or insured by the
Federal Deposit Insurance Corporation or any other
government agency.
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
International
Opportunity Portfolio (Con’t)
Performance
Information
The
bar chart and table below provide some indication of the risks of
investing in the Fund by showing changes in the Fund’s Class IR
shares’ performance from year-to-year and by showing
how the Fund’s average annual returns for the past one year period and
since
inception compare with those of an
index intended to measure broad market performance.
The
Fund’s past performance, before
and after taxes, is not necessarily an indication of how the Fund will
perform in the future.
Updated performance information is
available online at www.morganstanley.com/im or
by calling toll-free 1-800-869-6397.
Annual
Total Returns—Calendar Years
|
| |
High
Quarter |
06/30/20
|
34.04% |
Low
Quarter |
03/31/22
|
-26.32% |
Average
Annual Total Returns
(for
the calendar periods ended December
31, 2023)
|
|
| |
|
Past
One Year |
Past
Five Years |
Since
Inception |
Class
IR (commenced
operations on 6/15/2018) |
|
|
Return
Before Taxes |
21.09% |
6.38% |
1.14% |
Return
After Taxes on Distributions1
|
% |
% |
% |
Return
After Taxes on Distributions and Sale of Fund Shares |
12.69% |
5.02% |
0.89% |
MSCI
All Country World ex USA Net Index (reflects no deduction for fees,
expenses
or taxes)2
|
% |
% |
%3 |
1 |
These
returns do not reflect any tax consequences from a sale of your shares at
the end of each
period. |
2 |
The
MSCI All Country World ex USA Net Index is a free float-adjusted market
capitalization weighted index designed to measure the equity market
performance
of developed and emerging markets, excluding the United States. The term
“free float” represents the portion of shares outstanding that
are
deemed to be available for purchase in the public equity markets by
investors. The performance of the index is listed in U.S. dollars and
assumes reinvestment
of net dividends. Net total return indices reinvest dividends after the
deduction of withholding taxes, using (for international indices) a tax
rate
applicable to non-resident institutional investors who do not benefit from
double taxation treaties. It is not possible to invest directly in an
index. |
3 |
Since
Inception reflects the inception date of Class
IR. |
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 Fund’s other classes will vary from
Class IR 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 Fund 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 Fund shares been sold at the end of the relevant
periods, as applicable.
Fund
Management
Adviser.
Morgan Stanley Investment Management Inc.
Portfolio
Managers. The
Fund is managed by members of the Global Opportunity team. Information about the
member primarily responsible
for the day-to-day management of the Fund is shown below:
|
| |
Name |
Title
with Adviser |
Date
Began Managing
Fund |
Kristian
Heugh |
Managing
Director of the Adviser |
Since
inception |
Morgan
Stanley Institutional Fund, Inc. Prospectus | Fund
Summary
International
Opportunity Portfolio (Con’t)
Purchase
and Sale of Fund Shares
To
purchase Class IR shares, an investor must meet a minimum initial investment of
$5 million or be a defined contribution, defined benefit
or other employer sponsored employee benefit plan, in each case provided that
the plan trades through an intermediary that combines
its clients’ assets in a single omnibus account, whether or not such plan is
qualified under the Internal Revenue Code of 1986,
as amended (the “Code”), and in each case subject to the discretion of the
Adviser. The minimum initial investment may be waived
for certain investments. For more information, please refer to the section of
the Prospectus entitled “Shareholder Information—Minimum
Investment Amounts.”
Shares
of the Fund 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 SS&C Global Investor and Distribution Solutions, Inc.,
P.O. Box 219804, Kansas City, MO 64121-9804), by
telephone (1-800-869-6397) or by contacting an authorized third-party, such as a
broker-dealer or other financial intermediary that
has entered into a selling agreement with the Fund’s “Distributor,” Morgan
Stanley Distribution, Inc. (each, a “Financial Intermediary”).
For more information, please refer to the sections of the Prospectus entitled
“Shareholder Information—How To Purchase
Fund Shares” and “—How To Redeem Fund Shares.”
Tax
Information
The
Fund 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 Class IR shares of the Fund through a Financial Intermediary
(such as a bank), the Adviser and/or the Distributor may
pay the Financial Intermediary for the sale of Class IR shares and
related services. These payments, which may be significant in amount,
may create a conflict of interest by influencing the Financial
Intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your Financial
Intermediary’s web site for more information. For additional information
about the Fund’s revenue sharing arrangements for Class IR shares, see the
section of the Statement of Additional Information
entitled “Revenue Sharing.”
Morgan
Stanley Institutional Fund, Inc. Prospectus | Details
of the Funds
Global
Opportunity Portfolio
Investment
Objective
The
Global Opportunity Portfolio seeks long-term capital appreciation.
The
Fund’s investment objective may be changed by the Company’s Board of Directors
without shareholder approval, but no change is
anticipated. If the Fund’s investment objective changes, the Fund will notify
shareholders and shareholders should consider whether
the Fund remains an appropriate investment in light of the change.
Approach
Under
normal market conditions, the Adviser seeks to achieve the Fund’s investment
objective by investing primarily in established and
emerging companies located throughout the world, with capitalizations within the
range of companies included in the MSCI All Country
World Index.
Process
The
Adviser emphasizes a bottom-up stock selection process, seeking attractive
investments on an individual company basis. In selecting
securities for investment, the Adviser seeks high quality established and
emerging companies that the Adviser believes are undervalued
at the time of purchase. The Adviser typically favors companies it believes have
sustainable competitive advantages that can
be monetized through growth. The investment process integrates analysis of
sustainability with respect to disruptive change, financial
strength, environmental and social externalities and governance (also referred
to as ESG). The Adviser typically
focuses a significant
portion of the Fund’s investments in a limited number of issuers, which may be
in the same industry, sector or geographic region.
The Adviser generally
considers selling a portfolio holding when it determines that the holding no
longer satisfies its investment
criteria.
The
Adviser views incorporating ESG-related potential risks and opportunities within
the investment process as important to ensure long-term
stewardship of capital. Over extended time horizons, the Adviser believes that
ESG risks are more likely to materialize and externalities
not borne by the company are more likely to be priced into the value of
securities. Since ESG risks could potentially impact
the risk and reward profile of investment opportunities, the Adviser typically
engages company management in constructive discussions
on a range of ESG issues the Adviser deems materially important.
Fundamental
research drives the investment process. The Adviser studies on an ongoing basis
company developments, including business
strategy and financial results.
The
Fund may also invest in ADRs, GDRs and other types of depositary receipts with
respect to issuers located or operating outside of
the United States.
The
Fund may invest in equity securities. The Fund may also invest in privately
placed and restricted securities.
The
Fund may invest in China A-Shares (shares of publicly traded companies based in
mainland China) listed and traded on the Shanghai
Stock Exchange through the Shanghai Hong Kong Stock Connect program, as well as
China A Shares listed and traded on the
Stock Connect.
Derivative
instruments used by the Fund will be counted toward the Fund’s exposure in the
types of securities listed above to the extent
they have economic characteristics similar to such
securities.
Morgan
Stanley Institutional Fund, Inc. Prospectus | Details
of the Funds
International
Opportunity Portfolio
Investment
Objective
The
International Opportunity Portfolio seeks long-term capital
appreciation.
The
Fund’s investment objective may be changed by the Company’s Board of Directors
without shareholder approval, but no change is
anticipated. If the Fund’s investment objective changes, the Fund will notify
shareholders and shareholders should consider whether
the Fund remains an appropriate investment in light of the change.
Approach
Under
normal market conditions, the Adviser seeks to achieve the Fund’s investment
objective by investing primarily in established and
emerging companies on an international basis, with capitalizations within the
range of companies included in the MSCI All Country
World ex USA Index.
Process
The
Adviser emphasizes a bottom-up stock selection process, seeking attractive
investments on an individual company basis. In selecting
securities for investment, the Adviser seeks high quality established and
emerging companies that the Adviser believes are undervalued
at the time of purchase. The Adviser typically favors companies it believes have
sustainable competitive advantages that can
be monetized through growth. The investment process integrates analysis of
sustainability with respect to disruptive change, financial
strength, environmental and social externalities and governance (also referred
to as ESG). The Adviser typically
focuses a significant
portion of the Fund’s investments in a limited number of issuers, which may be
in the same industry, sector or geographic region.
The Adviser generally
considers selling a portfolio holding when it determines that the holding no
longer satisfies its investment
criteria.
The
Adviser views incorporating ESG-related potential risks and opportunities within
the investment process as important to ensure long-term
stewardship of capital. Over extended time horizons, the Adviser believes that
ESG risks are more likely to materialize and externalities
not borne by the company are more likely to be priced into the value of
securities. Since ESG risks could potentially impact
the risk and reward profile of investment opportunities, the Adviser typically
engages company management in constructive discussions
on a range of ESG issues the Adviser deems materially important.
Fundamental
research drives the investment process. The Adviser studies on an ongoing basis
company developments, including business
strategy and financial results.
The
Fund may also invest in ADRs, GDRs and other types of depositary receipts with
respect to issuers located or operating outside of
the United States.
The
Fund may invest in equity securities. The Fund may also invest in privately
placed and restricted securities.
The
Fund may invest in China A-Shares (shares of publicly traded companies based in
mainland China) listed and traded on the Shanghai
Stock Exchange through the Shanghai Hong Kong Stock Connect program, as well as
China A Shares listed and traded on the
Stock Connect.
The
Fund invests primarily in securities of companies located in Europe, Japan,
Asia, the Pacific Basin, Latin America, the Middle East
and Africa. The Fund may also invest in securities of companies located in the
United
States
to a limited extent.
Derivative
instruments used by the Fund will be counted toward the Fund’s exposure in the
types of securities listed above to the extent
they have economic characteristics similar to such
securities.
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Stanley Institutional Fund, Inc. Prospectus | Additional
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Additional
Information About Fund Investment Strategies and Related Risks
|
| |
This
section discusses additional information relating to Fund investment
strategies, other types of investments that the Funds
may make and related risk factors. “Fund” as used herein and under
“Additional Information About Fund Investment Strategies
and Related Risks” refers to each Fund listed on the cover page of this
Prospectus (unless otherwise noted). Fund investment
practices and limitations are described in more detail in the Statement of
Additional Information (“SAI”), which is incorporated
by reference and legally is a part of this Prospectus. For details on how
to obtain a copy of the SAI and other reports
and information, see the back cover of this
Prospectus. |
There
is no assurance that the Fund will achieve its investment objective. The Fund’s
share price and yield will fluctuate with changes in
the market value and/or yield of the Fund’s portfolio securities. When you sell
Fund shares, they may be worth less than what you paid
for them and, accordingly, you can lose money investing in this
Fund.
Economies
and financial markets worldwide have recently experienced periods of increased
volatility, uncertainty, distress, government
spending, inflation and disruption to consumer demand, economic output and
supply chains. To the extent these conditions
continue, the risks associated with an investment in the Fund, including those
described below, could be heightened and the
Fund’s investments (and thus a shareholder’s investment in the Fund) may be
particularly susceptible to sudden and substantial losses,
reduced yield or income or other adverse developments. The occurrence, duration
and extent of these or other types of adverse economic
and market conditions and uncertainty over the long term cannot be reasonably
projected or estimated at this time.
The
percentage limitations relating to the composition of the Fund’s portfolio apply
at the time the Fund acquires an investment. Subsequent
percentage changes that result from market fluctuations generally will not
require the Fund to sell any portfolio security. However,
the Fund may be required to reduce its borrowings, if any, in response to
fluctuations in the value of such holdings. The Fund
may change its principal investment strategies without shareholder approval;
however, you would be notified of any changes.
Asia
Market
Many
of the currencies in Asia have recently experienced extreme volatility relative
to the U.S. dollar. For example, Thailand, Indonesia,
the Philippines and South Korea have had currency crises and have sought help
from the International Monetary Fund. Holding
securities in currencies that are devalued (or in companies whose revenues are
substantially in currencies that are devalued) will
likely decrease the value of a Fund.
The
trading volume on some Asian stock exchanges is much lower than in the United
States, and Asian securities of some companies are
less liquid and more volatile than similar U.S. securities. In addition,
brokerage commissions on regional stock exchanges are fixed and
are generally higher than the negotiated commissions in the United States.
Because certain Funds concentrate in a single region of
the world, the Fund’s performance may be more volatile than that of a fund that
invests globally. If Asian securities fall out of favor,
it may cause a Fund to underperform funds that do not concentrate in a single
region of the world.
Investing
in certain Funds may be appropriate for you if you are willing to accept the
risks and uncertainties of investing in a portfolio
of equity securities of issuers located in Asia (excluding Japan). In general,
prices of equity securities are more volatile than those
of fixed-income securities. The prices of equity securities will rise and fall
in response to a number of different factors. In particular,
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.
The
small size of securities markets and the low trading volume in many countries in
Asia, among other factors, may lead to a lack of liquidity.
The share prices of companies in the region tend to be volatile and there is a
significant possibility of loss, including as a result
of diplomatic, trade or military conflicts. Many of the countries in the region
are developing, both politically and economically, and
as a result companies in the region may be subject to risks like nationalization
or other forms of government interference, and/or may
be heavily reliant on only a few industries or commodities. Investments in the
region may also be subject to currency risks, such as
restrictions on the flow of money in and out of the country, extreme volatility
relative to the U.S. dollar and devaluation, all of which
could decrease the value of a Fund. Some countries in the region have previously
experienced currency devaluations that resulted
in higher interest rates, reductions in economic activity and drops in
securities prices.
China
Risk
Investments
in securities of Chinese issuers, including A-shares, involve risks associated
with investments in foreign markets as well as special
considerations not typically associated with investments in the U.S. securities
markets. For example, the Chinese government has
historically exercised substantial control over virtually every sector of the
Chinese economy through administrative regulation and/or
state ownership and actions of the Chinese central and local government
authorities continue to have a substantial effect on economic
conditions in China. In addition, the Chinese government has taken actions that
influenced the prices at which certain goods
may be sold, encouraged companies to invest or concentrate in particular
industries, induced mergers between companies in certain
industries and induced private companies to publicly offer their securities.
Investments in China involve risk of a total loss
Morgan
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due
to government action or inaction. Additionally, the Chinese economy is
export-driven and highly reliant on trade. Adverse changes
to the economic conditions of its primary trading partners, such as the United
States, Japan and South Korea, would adversely
impact the Chinese economy and a Fund’s investments. Moreover, a slowdown in
other significant economies of the world, such
as the United States, the European Union and certain Asian countries, may
adversely affect economic growth in China. An economic
downturn in China would adversely impact a Fund’s investments. In addition,
certain securities are, or may in the future become
restricted and/or sanctioned by the U.S. government or other governments and a
Fund may be forced to sell such restricted securities
and incur a loss as a result.
These
and other developments, including government actions, may result in significant
illiquidity risk or forced disposition for Chinese
investments. The Chinese securities markets are emerging markets characterized
by a relatively small number of equity issues and
relatively low trading volume, resulting in decreased liquidity, greater price
volatility (caused by, among other things, military, diplomatic,
or trade conflicts), and potentially fewer investment opportunities for the
Fund. Ongoing political tension between the People’s
Republic of China and the Hong Kong Special Administrative Region may have
impacts on the economy of Hong Kong, and
these impacts remain uncertain.
Risks
of Investing through Stock Connect. A
Fund may invest in A-shares listed and traded through Stock Connect, or on such
other stock
exchanges in China which participate in Stock Connect from time to time or in
the future. Trading through Stock Connect is subject
to a number of restrictions that may affect a Fund’s investments and returns.
For example, trading through Stock Connect is subject
to daily quotas that limit the maximum daily net purchases on any particular
day, which may restrict or preclude a Fund’s ability
to invest in Stock Connect A-shares. In addition, investments made through Stock
Connect are subject to trading, clearance and
settlement procedures that are relatively untested in China, which could pose
risks to a Fund. Furthermore, securities purchased via
Stock Connect will be held via a book entry omnibus account in the name of Hong
Kong Securities Clearing Company Limited (“HKSCC”),
Hong Kong’s clearing entity, at the China Securities Depository and Clearing
Corporation Limited (“CSDCC”). A Fund’s
ownership interest in Stock Connect securities will not be reflected directly in
book entry with CSDCC and will instead only
be reflected on the books of its Hong Kong sub-custodian. A Fund may
therefore depend on HKSCC’s ability or willingness as record-holder
of Stock Connect securities to enforce a Fund’s shareholder rights. Chinese law
did not historically recognize the concept
of beneficial ownership; while Chinese regulations and the Hong Kong Stock
Exchange have issued clarifications and guidance
supporting the concept of beneficial ownership via Stock Connect, the
interpretation of beneficial ownership in China by regulators
and courts may continue to evolve. Moreover, Stock Connect A-shares generally
may not be sold, purchased or otherwise transferred
other than through Stock Connect in accordance with applicable rules. The Stock
Connect program is a relatively new program
and may be subject to further interpretation and guidance. There can be no
assurance as to the program’s continued existence
or whether future developments regarding the program may restrict or adversely
affect a Fund’s investments or returns. In addition,
the application and interpretation of the laws and regulations of China and Hong
Kong, and the rules, policies or guidelines
published or applied by relevant regulators and exchanges in respect of the
Stock Connect program, are uncertain, and they
may have a detrimental effect on a Fund’s investments and returns. Because
certain transactions through Stock Connect may not
be subject to certain investor protection programs, the Fund may be exposed to
the risks of default of the broker(s) it engages in its
trading in China A Shares.
Variable
Interest Entities. A
Fund could seek to gain economic exposure to certain operating companies in
China through legal structures
known as variable interest entities (“VIEs”). In a VIE structure, a series of
contractual arrangements are entered into between
a holding company domiciled outside of China and a Chinese operating company or
companies. More specifically, in a VIE structure,
a China-based operating company (“Operating Company”) typically establishes an
offshore shell company (“Shell Company”)
in another jurisdiction, such as the Cayman Islands, which generally does not
conduct operations but enters into service and
other contracts with the Operating Company and issues shares on a foreign
exchange, like the New York Stock Exchange or Hong
Kong Exchange. U.S. investors, such as a Fund, would hold stock in the Shell
Company with contractual arrangements with a VIE
based in China rather than hold stock in the Operating Company and the Shell
Company does not typically own stock or other equity
in the Operating Company. Thus, VIE structures and these contractual
arrangements are not equivalent to equity ownership in
the Operating Company, which presents additional risks. Certain Chinese
companies have used VIEs to facilitate foreign investment
because of Chinese governmental prohibitions or restrictions on non-Chinese
ownership (e.g., by U.S. persons and entities)
of companies in certain industries in China. Through a VIE arrangement, the
Operating Companies indirectly raise capital from
U.S. investors (such as a Fund) without distributing ownership of the Operating
Companies to such U.S. investors.
Investments
in VIEs are subject to unique risks in addition to those generally associated
with investments in China. For example, breaches
of the contractual arrangements, changes in Chinese law or regulation with
respect to enforceability or permissibility of these
arrangements or failure of these contracts to function as intended would likely
adversely materially affect the Operating Company’s
performance and an investment in the Shell Company. In addition, VIE structures
are also subject to the risk of inconsistent
and unpredictable application of Chinese law and regulations, that the Shell
Company could be limited in its ability to control,
or may lose control over, the Operating Company, and that the equity owners of
the Operating Company might have interests
conflicting with those of the Shell Company’s investors. There is also
uncertainty related to the Chinese taxation of VIEs and
the Chinese tax authorities could take positions that result in increased tax
liabilities. Thus, investors, such as the Funds, face
Morgan
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Additional
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(Con’t)
risks
and uncertainty about future actions or intervention by the government of China
or other similar developments (such as changes
in regulations, laws and judicial decisions or interpretations), which could
occur at any time and without advance notice and which
could suddenly and significantly affect VIE structures, the Operating Companies
and the Shell Companies (such as impacting or
limiting the enforceability of the Shell Company’s contractual arrangements with
the Operating Company or restricting the listing of
the shares of the offshore entity). If any of these or similar risks
materialize, the value and liquidity of a Fund’s investments in the Shell
Company would likely be significantly adversely affected, causing a Fund to
incur significant losses with no recourse available.
Although
the China Securities Regulatory Commission published its position that it does
not object to the use of VIE structures for Operating
Companies to raise capital from non-Chinese investors, there is no guarantee
that the Chinese government or Chinese regulator
or court will not determine that these arrangements are inconsistent with
Chinese laws or regulations or otherwise interfere with
the operation of or disallow VIE structures or that this published position will
remain unchanged. Intervention by the Chinese government
with respect to VIE structures could materially adversely affect the Operating
Company’s performance, the enforceability
of the Shell Company’s contractual arrangements with the Operating Company and
the value of the Shell Company’s shares.
Further, if the Chinese government or other regulatory or judicial authority
determines that the agreements establishing the VIE
structure do not comply with Chinese law and regulations, including those
related to prohibitions on foreign ownership, the Operating
Company could be subject to penalties, revocation of business and operating
licenses or forfeiture of ownership interests. Much
of the value of an investment in the Shell Company depends on the enforceability
of the contractual arrangements entered into as
part of the VIE structure, which are generally less effective than direct
ownership, and a Shell Company’s ability to exert any control
over the Operating Company could be jeopardized if certain legal formalities are
not observed in connection with the agreements,
if the agreements are breached, or if the agreements are otherwise determined
not to be enforceable. In addition, the Offshore
Company could incur significant costs to seek to enforce the terms of these
arrangements because of, among other things, legal
uncertainties and jurisdictional limits. If any of the foregoing or similar
developments were to occur, the market value and liquidity
of the associated investments would fall, causing substantial investment losses
for investors with no recourse available.
India
Risk
Investments
in securities of Indian issuers may be adversely affected by political,
economic, social and religious factors impacting Indian
businesses and the Indian economy, changes in Indian law or regulations and the
status of India’s relations with other countries.
In addition, the economy of India may differ favorably or unfavorably from the
U.S. economy in such respects as the rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position.
The Indian government has exercised and continues to exercise significant
influence over many aspects of the economy, and the
number of public sector enterprises in India is substantial. Accordingly, Indian
government actions in the future could have a significant
effect on the Indian economy, which could affect private sector companies and
the Fund, market conditions, and prices and
yields of securities in the Fund’s portfolio. To the extent the Fund invests a
substantial portion of its assets in Indian businesses and
the Indian economy, factors that have an adverse impact on Indian businesses and
the Indian economy may have a disproportionate
impact on the Fund’s performance.
Equity
Securities
Equity
securities may include common and preferred stocks, convertible securities and
equity-linked securities, rights and warrants to purchase
common stocks, depositary receipts, shares of investment companies
(including those which may be managed by the Adviser
or its affiliates),
limited partnership interests and other specialty securities having equity
features. Many factors affect the value
of equity securities, including earnings, earnings forecasts, corporate events
and factors impacting the issuer’s industry and the market
generally. The
Funds may invest in equity securities that are publicly traded on
securities exchanges or over-the-counter (“OTC”)
or in equity securities that are not publicly traded. Securities that are not
publicly traded may be more difficult to value or sell
and their value may fluctuate more dramatically than other securities. The
prices of convertible securities are affected by changes similar
to those of equity and fixed-income securities.
During
periods when equity securities experience heightened volatility, such as during
periods of market, economic or financial uncertainty
or distress, the Fund’s investments in equity securities may be subject to
heightened risks.
Depositary
Receipts
A
depositary receipt is generally issued by a bank or financial institution and
represents the common stock or other equity securities of
a foreign company. Depositary receipts involve many of the same risks as those
associated with direct investment in foreign securities.
In addition, the underlying issuers of certain depositary receipts, particularly
unsponsored or unregistered depositary receipts,
are under no obligation to distribute shareholder communications to the holders
of such receipts, or to pass through to them any
voting rights with respect to the deposited securities.
Convertible
Securities
A
convertible security is a bond, debenture, note, preferred stock, right, warrant
or other security that may be converted into or exchanged
for a prescribed amount of common stock or other security of the same or a
different issuer or into cash within a particular period
of time at a specified price or formula. A convertible security generally
entitles the holder to receive interest paid or accrued on debt
securities or the dividend paid on preferred stock until the convertible
security matures or is redeemed, converted or exchanged.
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Before
conversion, convertible securities generally have characteristics similar to
both debt and equity securities. The prices of convertible
securities are affected by changes similar to those of equity and fixed-income
securities. The value of convertible securities tends
to decline as interest rates rise and, because of the conversion feature, tends
to vary with fluctuations in the market value of the underlying
securities. Convertible securities ordinarily provide a stream of income with
generally higher yields than those of common stock
of the same or similar issuers. Convertible securities generally rank senior to
common stock in a corporation’s capital structure but
are usually subordinated to other comparable nonconvertible fixed-income
securities in such capital structure. Convertible securities
generally do not participate directly in any dividend increases or decreases of
the underlying securities although the market prices
of convertible securities may be affected by any dividend changes or other
changes in the underlying securities.
Market
and Geopolitical Risk
The
value of your investment in the Fund is based on the values of the Fund’s
investments, which change due to economic and other events
that affect markets generally, as well as those that affect particular regions,
countries, industries, companies or governments. Price
movements, sometimes called volatility, may be greater or less depending on the
types of securities the Fund owns and the markets
in which the securities trade. Volatility and disruption in financial markets
and economies may be sudden and unexpected, expose
the Fund to greater risk, including risks associated with reduced market
liquidity and fair valuation, and adversely affect the Fund’s
operations. For example, the Adviser potentially will be prevented from
executing investment decisions at an advantageous time
or price as a result of any domestic or global market disruptions, and reduced
market liquidity may impact the Fund’s ability to sell
securities to meet redemptions.
The
increasing interconnectivity between global economies and markets increases the
likelihood that events or conditions in one region
or market may adversely impact other companies and issuers in a different
country, region, sector, industry, market or with respect
to one company may adversely impact other companies and issuers in a different
country, region, sector, industry, or market. For
example, adverse developments in the banking or financial services sector could
impact companies operating in various sectors or industries
and adversely impact the Fund’s investments. Securities in the Fund’s portfolio
may underperform due to inflation (or expectations
for inflation), interest rates, global demand for particular products or
resources, natural disasters and extreme weather events,
health emergencies (such as epidemics and pandemics), terrorism, regulatory
events and governmental or quasi-governmental actions.
The occurrence of global events, such as terrorist attacks around the world,
natural disasters, health emergencies, social and political
(including geopolitical) discord and tensions or debt crises and downgrades,
among others, may result in market volatility and
may have long term effects on both the U.S. and global financial markets.
Inflation rates may change frequently and significantly because
of various factors, including unexpected shifts in the domestic or global
economy and changes in monetary or economic policies
(or expectations that these policies may change). Changes in expected inflation
rates may adversely affect market and economic
conditions, the Fund’s investments and an investment in the Fund. Other
financial, economic and other global market and social
developments or disruptions may result in similar adverse circumstances, and it
is difficult to predict when similar events affecting
the U.S. or global financial markets may occur, the effects that such events may
have and the duration of those effects (which
may last for extended periods). In general, the securities or other instruments
that the Adviser believes represent an attractive investment
opportunity or in which the Fund seeks to invest may be unavailable entirely or
in the specific quantities sought by the Fund.
As a result, the Fund may need to obtain the desired exposure through a less
advantageous investment, forgo the investment at the
time or seek to replicate the desired exposure through a derivative transaction
or investment in another investment vehicle. Any such
event(s) could have a significant adverse impact on the value and risk profile
of the Fund’s portfolio. There is a risk that you may
lose money by investing in the Fund.
Social,
political, economic and other conditions and events, such as war, natural
disasters, health emergencies (e.g., epidemics and pandemics),
terrorism, conflicts, social unrest, recessions, inflation, interest rate
changes and supply chain disruptions could reduce consumer
demand or economic output, result in market closures, travel restrictions or
quarantines, and generally have a significant impact
on the economies and financial markets and the Adviser’s investment advisory
activities and services of other service providers, which
in turn could adversely affect the Fund’s investments and other
operations.
Governmental
and quasi-governmental responses to certain economic or other conditions may
lead to increasing government and other
public debt, which heighten these risks. Unsustainable debt levels can lead to
declines in the value of currency, and can prevent a
government from implementing effective counter-cyclical fiscal policy during
economic downturns, can generate or contribute to an
economic downturn or cause other adverse economic or market developments, such
as increases in inflation or volatility. Increasing
government and other public debt may adversely affect issuers, obligors,
guarantors or instruments across a variety of asset classes.
Global
events may negatively impact broad segments of businesses and populations, cause
a significant negative impact on the performance
of the Fund’s investments, adversely affect and increase the volatility of the
Fund’s share price, exacerbate pre-existing political,
social and economic risks to the Fund. The Fund’s operations may be interrupted
as a result, which may contribute to the negative
impact on investment performance. In addition, governments, their regulatory
agencies, or self-regulatory organizations may take
actions that affect the instruments in which the Fund invests, or the issuers of
such instruments, in ways that could have a significant
negative impact on the Fund’s investment performance. In addition, government
actions (such as changes to interest rates) could
have unintended economic and market consequences that adversely affect the
Fund’s investments.
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ESG
Investment Risk
To
the extent that the Adviser considers ESG issues as a component in its
investment decision-making process, the Fund’s performance
may be impacted. Additionally, the Adviser’s consideration of ESG issues in its
investment decision-making process may require
subjective analysis and the ability of the Adviser to consider ESG issues may be
difficult if data about a particular issuer (or obligor)
is limited. The Adviser’s consideration of ESG issues may contribute to the
Adviser’s decision to forgo opportunities to buy certain
securities. ESG issues with respect to an issuer (or obligor) or the Adviser’s
assessment of such may change over time.
Foreign
Investing
To
the extent that a Fund invests in foreign issuers, there is the risk that news
and events unique to a country or region will affect those
markets and their issuers. These same events will not necessarily have an effect
on the U.S. economy or similar issuers located in the
United States. In addition, some of the Funds’ securities, including
underlying securities represented by depositary receipts, may be
denominated in foreign currencies. As a result, changes in the value of a
country’s currency compared to the U.S. dollar may affect the
value of a Fund’s investments. These changes may happen separately from,
and in response to, events that do not otherwise affect the
value of the security in the issuer’s home country. These risks may be
intensified for a Fund’s investments in securities of issuers located
in emerging market or developing countries.
Foreign
Securities
Foreign
issuers generally are subject to different accounting, auditing and financial
reporting standards than U.S. issuers. There may be
less information available to the public about foreign issuers. Securities of
foreign issuers can be less liquid and experience greater price
movements. In addition, the prices of such securities may be susceptible to
influence by large traders, due to the limited size of many
foreign securities markets. Moreover, investments in certain foreign markets
that have historically been considered stable may become
more volatile and subject to increased risk due to developments and changing
conditions in such markets. Also, 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. In some foreign
countries, there is also the risk of government expropriation, excessive
taxation, political or social instability, the imposition of currency
controls or diplomatic developments that could affect a Fund’s investment.
There also can be difficulty obtaining and enforcing
judgments against issuers in foreign countries. Foreign stock exchanges,
broker-dealers and listed issuers may be subject to less
government regulation and oversight. The cost of investing in foreign
securities, including brokerage commissions and custodial expenses,
can be higher than the cost of investing in domestic securities.
Certain
foreign markets may rely heavily on particular industries or foreign capital and
are more vulnerable to diplomatic developments,
the imposition of economic sanctions against a particular country or countries,
organizations, companies, entities and/or
individuals, changes in international trading patterns, tariffs, trade barriers
and other protectionist or retaliatory measures. International
trade barriers or economic sanctions against foreign countries, organizations,
companies, entities and/or individuals may
adversely affect a Fund’s foreign holdings or exposures. Investments in foreign
markets may also be adversely affected by less stringent
investor protections and disclosure standards, and governmental actions such as
the imposition of capital controls, nationalization
of companies or industries, expropriation of assets or the imposition of
punitive taxes. Governmental actions can have a
significant effect on the economic conditions in foreign countries, which also
may adversely affect the value and liquidity of a Fund’s
investments. Foreign investment in the securities markets of certain foreign
countries is restricted or controlled to varying degrees.
For example, the governments of certain countries may prohibit or impose
substantial restrictions on foreign investing in their
capital markets or in certain sectors or industries. In addition, a foreign
government may limit or cause delay in the convertibility
or repatriation of its currency which would adversely affect the U.S. dollar
value and/or liquidity of investments denominated
in that currency. Moreover, if a deterioration occurs in a country’s balance of
payments, the country could impose temporary
restrictions on foreign capital remittances. A Fund could also be adversely
affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investment. Any of these actions
could severely affect security prices, which could result in losses to a Fund
and increased transaction costs, impair a Fund’s ability
to purchase or sell foreign securities or transfer a Fund’s assets back into the
United States, or otherwise adversely affect a Fund’s
operations. Certain foreign investments may become less liquid in response to
market developments or adverse investor perceptions,
or become illiquid after purchase by a Fund, particularly during periods of
market turmoil. Certain foreign investments may
become illiquid when, for instance, there are few, if any, interested buyers and
sellers or when dealers are unwilling to make a market
for certain securities. When a Fund holds illiquid investments, its
portfolio may be harder to value.
Economic
sanctions or other similar measures may be, and have been, imposed against
certain countries, organizations, companies, entities
and/or individuals. A Fund’s investments in foreign securities are subject to
trade laws and potential economic sanctions in the
United States and other jurisdictions. These laws and related governmental
actions, including counter-sanctions and other retaliatory
measures, can, from time to time, prevent or prohibit a Fund from
investing in certain foreign securities. In addition, economic
sanctions could prohibit a Fund from transacting with particular
countries, organizations, companies, entities and/or individuals
by banning them from global payment systems that facilitate cross-border
payments, restricting their ability to settle securities
transactions, and freezing their assets. The imposition of sanctions and other
similar measures could, among other things, cause
a decline in the value of securities issued by the sanctioned country or
companies located in, or economically linked to, the
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sanctioned
country, downgrades in the credit ratings of the sanctioned country or companies
located in, or economically linked to, the
sanctioned country, devaluation of the sanctioned country’s currency, and
increased market volatility and disruption in the sanctioned
country and throughout the world. Economic sanctions or other similar measures
could, among other things, effectively restrict
or eliminate a Fund’s ability to purchase or sell securities, negatively
impact the value or liquidity of a Fund’s investments, significantly
delay or prevent the settlement of a Fund’s securities transactions, force
a Fund to sell or otherwise dispose of investments
at inopportune times or prices, increase a Fund’s transaction costs, make a
Fund’s investments more difficult to value or impair
a Fund’s ability to meet its investment objective or invest in accordance
with its investment strategies. These conditions may be
in place for a substantial period of time and enacted with limited advance
notice to a Fund. Even if the Fund does not have significant
investments in securities affected by sanctions, sanctions or the threat of
sanctions may cause volatility in regional and global
markets and may negatively impact the performance of various sectors and
industries, as well as companies in other countries, including
through global supply chain disruptions, increased inflationary pressures, and
reduced economic activity, which could have a
negative effect on the Fund’s performance. In addition, trade disputes may
affect investor and consumer confidence and adversely affect
financial markets and the broader economy, perhaps suddenly and to a significant
degree. Events such as these and their impact on
the Fund are difficult to predict.
In
addition, the Holding Foreign Companies Accountable Act (the “HFCAA”) could
cause securities of a foreign (non-U.S.) company,
including American Depositary Receipts, to be delisted from U.S. stock exchanges
if the company does not allow the U.S. government
to oversee the auditing of its financial information. Although the requirements
of the HFCAA apply to securities of all foreign
(non-U.S.) issuers, the SEC has thus far limited its enforcement efforts to
securities of Chinese companies. If securities are delisted,
the Fund’s ability to transact in such securities will be impaired, and the
liquidity and market price of the securities may decline.
The Fund may also need to seek other markets in which to transact in such
securities, which could increase the Fund’s costs.
A
depositary receipt is generally issued by a bank or financial institution and
represents the common stock or other equity securities of
a foreign company. Depositary receipts involve many of the same risks as those
associated with direct investment in foreign securities.
In addition, the underlying issuers of certain depositary receipts, particularly
unsponsored or unregistered depositary receipts,
are under no obligation to distribute shareholder communications to the holders
of such receipts, or to pass through to them any
voting rights with respect to the deposited securities.
Emerging
Market Securities
Certain Funds may
invest in emerging market or developing countries, which are countries that
major international financial institutions
generally consider to be less economically mature than developed nations (such
as the United States or most nations in Western
Europe). Emerging market or developing countries may be more likely to
experience political turmoil or rapid changes in economic
conditions than more developed countries, and the financial condition of issuers
in emerging market or developing countries
may be more precarious than in other countries. Certain emerging market
countries may be subject to less stringent requirements
regarding accounting, auditing, financial reporting and record keeping and
therefore, material information related to an investment
may not be available or reliable. In addition, a Fund is limited in its ability
to exercise its legal rights or enforce a counterparty’s
legal obligations in certain jurisdictions outside of the United States, in
particular, in emerging markets countries. In addition,
due to jurisdictional limitations, U.S. authorities (e.g., SEC and the U.S.
Department of Justice) may be limited in their ability
to enforce regulatory or legal obligations in emerging market countries. In
addition, emerging market securities generally are less
liquid and subject to wider price and currency fluctuations than securities
issued in more developed countries. These characteristics
result in greater risk of price volatility in emerging market or developing
countries, which may be heightened by currency
fluctuations relative to the U.S. dollar.
Foreign
Currency
Investments
in foreign securities may be denominated in foreign currencies. The value of
foreign currencies may fluctuate relative to the
value of the U.S. dollar or other applicable foreign currency. Since the Funds
may invest in non-U.S.
dollar-denominated securities,
and therefore may convert the value of such securities into U.S. dollars,
changes in currency exchange rates can increase or decrease
the U.S. dollar value of the Funds’
assets. Currency exchange rates may fluctuate significantly over short periods
of time for a number
of reasons, including changes in interest rates and the overall economic health
of the issuer. Devaluation of a currency by a country’s
government or banking authority also will have a significant impact on the value
of any investments denominated in that currency.
The Adviser may use derivatives to seek
to reduce
this risk. The Adviser may in its discretion choose not to hedge against
currency
risk. In addition, certain market conditions may make it impossible or
uneconomical to hedge against currency risk.
Foreign
Currency Forward Exchange Contracts
In
connection with their investments in foreign securities, the Funds
also may enter into contracts with banks, brokers or dealers to purchase
or sell securities or foreign currencies at a future date. A foreign currency
forward exchange contract is a negotiated agreement
between the contracting parties to exchange a specified amount of currency at a
specified future time at a specified rate. The
rate can be higher or lower than the spot rate between the currencies that are
the subject of the contract. Foreign currency forward
exchange contracts may be used to seek
to protect
against uncertainty in the level of future foreign currency exchange rates or
to
gain or modify exposure to a particular currency. In addition,
the
Fund may use cross currency hedging or proxy hedging with respect
to currencies in which the
Fund has or expects to have portfolio or currency exposure. Cross currency and
proxy hedges
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involve
the sale of one currency against the positive exposure to a different currency
and may be used for hedging purposes or to establish
an active exposure to the exchange rate between any two currencies.
Investments
in foreign currency forward exchange contracts may substantially change
the Funds’ exposure to currency exchange rates and
could result in losses to the Funds if currencies do not perform as the
Adviser expects. The Adviser’s success in these transactions will
depend principally on its ability to predict accurately the future exchange
rates between foreign currencies and the U.S. dollar. Foreign
currency forward exchange contracts may be used for non-hedging purposes in
seeking to meet the Funds’ investment objectives,
such as when the Adviser anticipates that particular non-U.S. currencies will
appreciate or depreciate in value, even though securities
denominated in those currencies are not then held in the Funds’ investment
portfolios. Investing in foreign currency forward
exchange contracts for purposes of gaining from projected changes in exchange
rates, as opposed to hedging currency risks applicable
to the Funds’ holdings, further increases the Funds’ exposure to
foreign securities losses. There is no assurance that the Adviser’s
use of currency derivatives will benefit the Funds or that they will be,
or can be, used at appropriate times.
REITs
and Foreign Real Estate Companies
Investing
in real estate investment trusts (“REITs”) and foreign real estate
companies exposes investors to the risks of owning real estate
directly and investing in companies in the real estate industry, including
the risks associated with residential and commercial real
estate, as
well as to risks that relate specifically to the way in which REITs and foreign
real estate companies are organized and operated.
REITs and foreign real estate companies generally invest directly in real
estate, in mortgages or in some combination of the two.
Real estate income and values may also be greatly affected by demographic
trends, such as population shifts or changing tastes, preferences
(such as remote work arrangements) and values.
Operating
REITs and foreign real estate companies requires specialized management skills
and a Fund indirectly bears management expenses
along with the direct expenses of a Fund. The value of REIT and foreign
real estate company securities will also rise and fall in
response to the management skill and creditworthiness of the issuer. In
particular, the value of these securities may decline when interest
rates rise and will also be affected by the real estate market and by the
management or development of the underlying properties,
which may be
subject to mortgage loans and the underlying mortgage loans may be subject to
the risks of default.
REITs
may be more volatile and/or more illiquid than other types of securities, and
publicly traded REIT and real estate company shares
are also subject to risks associated with equity securities. In addition,
individual REITs and foreign real estate companies may own
a limited number of properties and may concentrate in a particular region or
property type. REITs may also be subject to heavy cash
flow dependency, default by borrowers and self-liquidation.
REITs
also must satisfy specific requirements of the Internal Revenue Code of 1986, as
amended (“the Code”) in order to qualify for tax-free
pass-through income. The failure of a company to qualify as a REIT could have
adverse consequences for a Fund, including significantly
reducing the return to a Fund on its investment in such company. Foreign
real estate companies may be subject to laws, rules
and regulations governing those entities and their failure to comply with those
laws, rules and regulations could negatively impact
the performance of those entities. In addition, REITs and foreign real estate
companies, like mutual funds, have expenses, including
management and administration fees, that are paid by their shareholders. As a
result, shareholders will directly bear the expenses
of their investment in the Fund and indirectly bear the expenses of the Fund’s
investments when a Fund invests in REITs and
foreign real estate companies.
Derivatives
The
Fund may,
but is
not
required to, use derivatives and other similar instruments for a variety of
purposes, including hedging, risk management,
portfolio management or to seek
to earn
income. Derivative instruments used by the
Fund will be counted towards the Fund’s
exposure in the types of securities listed herein to the extent they have
economic characteristics similar to such securities. A derivative
is a financial instrument whose value is based, in part, on the value of an
underlying asset, interest rate, index or financial instrument.
Prevailing interest rates and volatility levels, among other things, also affect
the value of derivative instruments. Derivatives
and other similar instruments that
create synthetic exposure often are subject to
risks similar to those of the underlying asset
or instrument and may be
subject to
additional risks, including imperfect correlation between the value of the
derivative and the underlying
asset, risks of default by the counterparty
to certain transactions, magnification of losses incurred due to changes in the
market
value of the securities, instruments, indices or interest rates to which the
derivative instrument relates, risks that the transactions
may not be liquid, risks arising from margin and payment requirements, risks
arising from mispricing or valuation complexity
and operational and legal risks. The use of derivatives involves risks that are
different from, and possibly greater than, the risks
associated with other portfolio investments. Derivatives may involve the use of
highly specialized instruments that require investment
techniques and risk analyses different from those associated with other
portfolio investments.
Certain
derivatives
transactions may give rise to a form of leverage. Leverage magnifies the
potential for gain and the risk of loss. Leverage
associated with derivative transactions may cause
the
Fund to liquidate portfolio positions when it may not be advantageous
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to
do so, or may cause the
Fund to be more volatile than if the Fund had not been leveraged. Although the
Adviser seeks to use derivatives
to further the
Fund’s investment objective, there is no assurance that the use of derivatives
will achieve this result.
The
derivative instruments and techniques that the
Fund
may use include:
Futures.
A futures contract is a standardized, exchange-traded agreement to buy or sell a
specific quantity of an underlying asset, reference
rate or index at a specific price at a specific future time. While the value of
a futures contract tends to increase or decrease in tandem
with the value of the underlying instrument, differences between the futures
market and the market for the underlying asset may
result in an imperfect correlation. Depending on the terms of the particular
contract, futures contracts are settled through either physical
delivery of the underlying instrument on the settlement date or by payment of a
cash settlement amount on the settlement date.
A decision as to whether, when and how to use futures contracts involves the
exercise of skill and judgment and even a well-conceived
futures transaction may be unsuccessful because of market behavior or unexpected
events. In addition to the derivatives risks
discussed above, the prices of futures contracts can be highly volatile, using
futures contracts can lower total return, and the potential
loss from futures contracts can exceed the Fund’s initial investment in such
contracts. No assurance can be given that a liquid
market will exist for any particular futures contract at any particular time.
There is also the risk of loss by the Fund of margin deposits
in the event of bankruptcy of a broker with which the Fund has open positions in
the futures contract.
Options.
If the Fund buys an option, it buys a legal contract giving it the right to buy
or sell a specific amount of the underlying instrument,
foreign currency or contract, such as a swap agreement or futures contract, on
the underlying instrument or foreign currency
at an agreed-upon price typically in exchange for a premium paid by the Fund. If
the Fund sells an option, it sells to another person
the right to buy from or sell to the Fund a specific amount of the underlying
instrument, swap, foreign currency, or futures contract
on the underlying instrument or foreign currency at an agreed-upon price during
a period of time or on a specified date typically
in exchange for a premium received by the Fund. When options are purchased OTC,
the Fund bears the risk that the counterparty
that wrote the option will be unable or unwilling to perform its obligations
under the option contract. Options may also
be illiquid and the Fund may have difficulty closing out its position. A
decision as to whether, when and how to use options involves
the exercise of skill and judgment and even a well-conceived option transaction
may be unsuccessful because of market behavior
or unexpected events. The prices of options can be highly volatile and the use
of options can lower total returns.
Investments
in foreign currency options may substantially change the Fund’s exposure to
currency exchange rates and could result in losses
to the Fund if currencies do not perform as the Adviser expects. There is a risk
that such transactions may reduce or preclude the
opportunity for gain if the value of the currency should move in the direction
opposite to the position taken. The value of a foreign
currency option is dependent upon the value of the underlying foreign currency
relative to the U.S. dollar or other applicable foreign
currency. The price of the option may vary with changes in the value of either
or both currencies and has no relationship to the
investment merits of a foreign security. Options on foreign currencies are
affected by all of those factors that influence foreign exchange
rates and foreign investment generally. Unanticipated changes in currency prices
may result in losses to the Fund and poorer
overall performance for the Fund than if it had not entered into such contracts.
Options on foreign currencies are traded primarily
in the OTC market, but may also be traded on U.S. and foreign
exchanges.
Foreign
currency options contracts may be used for hedging purposes or non-hedging
purposes in pursuing the Fund’s investment objective,
such as when the Adviser anticipates that particular non-U.S. currencies will
appreciate or depreciate in value, even though securities
denominated in those currencies are not then held in the Fund’s investment
portfolio. Investing in foreign currencies for purposes
of gaining from projected changes in exchange rates, as opposed to only hedging
currency risks applicable to the Fund’s holdings,
further increases the Fund’s exposure to foreign securities losses. There is no
assurance that the Adviser’s use of currency derivatives
will benefit the Fund or that they will be, or can be, used at appropriate
times.
Swaps.
The Fund may enter into OTC swap contracts or cleared swap transactions. An OTC
swap contract is an agreement between two
parties pursuant to which the parties exchange payments at specified dates on
the basis of a specified notional amount, with the payments
calculated by reference to specified securities, indices, reference rates,
currencies or other instruments. Typically swap agreements
provide that when the period payment dates for both parties are the same, the
payments are made on a net basis (i.e., the two
payment streams are netted out, with only the net amount paid by one party to
the other). The Fund’s obligations or rights under
a swap contract entered into on a net basis will generally be equal only to the
net amount to be paid or received under the agreement,
based on the relative values of the positions held by each party. Cleared swap
transactions may help reduce counterparty credit
risk. In a cleared swap, the Fund’s ultimate counterparty is a clearinghouse
rather than a swap dealer, bank or other financial institution.
OTC swap agreements are not entered into or traded on exchanges and often there
is no central clearing or guaranty function
for swaps. These OTC swaps are often subject to credit risk or the risk of
default or non-performance by the counterparty. Certain
swaps have begun trading on exchanges called swap execution facilities. Exchange
trading is expected to increase liquidity of swaps
trading. Both OTC and cleared swaps could result in losses if interest rates,
foreign currency exchange rates or other factors are not
correctly anticipated by the Fund or if the reference index, security or
investments do not perform as expected. The Dodd-Frank Wall
Street Reform and Consumer Protection Act and related regulatory developments
require the clearing and exchange trading of certain
standardized swap transactions. Mandatory exchange-trading and clearing is
occurring on a phased-in basis. The Fund may pay
fees or incur costs each time it enters into, amends or terminates a swap
agreement.
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The
Fund’s use of swaps may include those based on the credit of an underlying
security, commonly referred to as “credit default swaps.”
Where the Fund is the buyer of a credit default swap contract, it would
typically be entitled to receive the par (or other agreed-upon)
value of a referenced debt obligation from the counterparty to the contract only
in the event of a default or similar event
by a third-party on the debt obligation. If no default occurs, the Fund would
have paid to the counterparty a periodic stream of payments
over the term of the contract and received no benefit from the contract. When
the Fund is the seller of a credit default swap
contract, it typically receives the stream of payments but is obligated to pay
an amount equal to the par (or other agreed-upon) value
of a referenced debt obligation upon the default or similar event of the issuer
of the referenced debt obligation.
Structured
Investments.
Certain Funds also may invest a portion of their assets in structured
investments. A structured investment is a derivative
security designed to offer a return linked to a particular underlying security,
currency, commodity or market. Structured investments
may come in various forms including notes (such as exchange-traded notes),
warrants and options to purchase securities. The
Funds will typically use structured investments to gain exposure to a permitted
underlying security, currency, commodity or market
when direct access to a market is limited or inefficient from a tax or cost
standpoint. There can be no assurance that structured
investments will trade at the same price or have the same value as the
underlying security, currency, commodity or market. Investments
in structured investments involve risks including issuer risk, counterparty risk
and market risk. Holders of structured investments
bear risks of the underlying investment and are subject to issuer or
counterparty risk because a Fund is relying on the creditworthiness
of such issuer or counterparty and has no rights with respect to the underlying
investment. Certain structured investments
may be thinly traded or have a limited trading market and may have the effect of
increasing a Fund’s illiquidity to the extent
that a Fund, at a particular point in time, may be unable to find qualified
buyers for these securities.
CFDs.
A contract for difference (“CFD”) is a privately-negotiated contract between two
parties, buyer and seller, stipulating that the seller
will pay to or receive from the buyer the difference between the nominal value
of the underlying instrument at the opening of the
contract and that instrument’s value at the end of the contract. The underlying
instrument may be a single security, stock basket or
index. A CFD can be set up to take either a short or long position on the
underlying instrument. The buyer and seller are typically both
required to post margin, which is adjusted daily. The buyer will also pay to the
seller a financing rate on the notional amount of the
capital employed by the seller less the margin deposit. In addition to the
general risks of derivatives, CFDs may be subject to liquidity
risk and counterparty risk.
Exchange-Traded
Funds
Each Fund
may invest in exchange-traded funds (“ETFs”)
(including those which may be managed by the Adviser or its
affiliates).
ETFs
seek to track the performance of various portions or segments of the equity and
fixed-income markets. Shares of ETFs have many
of the same risks as direct investments in common stocks or bonds. In addition,
the market value of ETF
shares may differ from
their NAV because the supply and demand in the market for ETF shares at any
point in time is not always identical to the supply
and demand in the market for the underlying securities. Also, ETFs that track
particular indices typically will be unable to match
the performance of the index exactly due to, among other things, the ETF’s
operating expenses and transaction costs. ETFs typically
incur fees that are separate from those fees incurred directly by the Fund.
Therefore, as a shareholder in an ETF, a Fund would
bear its ratable share of that entity’s expenses. At the same time, the Fund
would continue to pay its own investment management
fees and other expenses. As a result, shareholders will directly bear the
expenses of their investment in a Fund and indirectly
bear the expenses of a Fund’s investments in ETFs with respect to investments in
ETFs.
Focused
Investing
Although
the Fund is a diversified investment company under the Investment Company Act of
1940 (the “1940 Act”), the Fund typically
invests a significant portion of its portfolio in a limited number of issuers,
which may be in the same industry, sector or geographic
region. As a result, the Fund will be more susceptible to risks associated with,
and negative events, conditions or developments
affecting or economic results of, those issuers, industries, sectors or
geographic regions, and a decline in the value of a particular
instrument may cause the Fund’s overall value to be more volatile and decline to
a greater degree than if the Fund were invested
more widely. Such volatility and decline may be sudden and significant. In
addition, if such issuers are within the same market
segment or of a similar type (e.g., growth stocks), the Fund will be more
sensitive to adverse developments or conditions and risks
affecting such market segment or type of issuer, including that the market
segment or type of issuer may fall out of favor, than if the
Fund were invested more widely.
The
Fund does not lose its status as a diversified investment company because of any
subsequent discrepancy between the value of its various
investments and the diversification requirements of the 1940 Act, so long as any
such discrepancy existing immediately after the
Fund’s acquisition of any security or other property is neither wholly nor
partly the result of such acquisition.
Large
Shareholder Transactions Risk
A Fund
may experience adverse effects when certain shareholders, or shareholders
collectively, purchase or redeem large amounts of shares
of a Fund. Such larger than normal redemptions may cause a Fund to sell
portfolio securities at times when it would not otherwise
do so, which may negatively impact a Fund’s NAV and liquidity. Similarly, large
Fund share purchases may adversely affect a Fund’s
performance to the extent that a Fund is delayed in investing new cash and is
required to maintain a larger cash position than
it ordinarily would. These transactions may also accelerate the realization of
taxable income to shareholders if such sales of
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investments
resulted in gains, and may also increase transaction costs. In addition, a large
redemption could result in a Fund’s current expenses
being allocated over a smaller asset base, leading to an increase in a Fund’s
expense ratio. Although large shareholder transactions
may be more frequent under certain circumstances, a Fund is generally
subject to the risk that shareholders can purchase or
redeem a significant percentage of Fund shares at any time.
Liquidity
The
Fund may make investments that are illiquid or restricted or that may become
illiquid or less liquid in response to overall economic
conditions or adverse investor perceptions, and which may entail greater risk
than investments in other types of securities. Illiquidity
can be caused by, among other things, a drop in overall market trading volume,
an inability to find a willing buyer, or legal restrictions
on the securities’ resale. These investments may be more difficult to value or
sell, particularly in times of market turmoil, and
there may be little trading in the secondary market available for particular
securities. If the Fund is forced to sell an illiquid or restricted
security to fund redemptions or for other cash needs, it may be forced to sell
the security at a loss or for less than its fair value
and may be unable to sell the security at all.
Special
Purpose Acquisition Companies
A
special purpose acquisition company (“SPAC”) is a publicly traded company that
raises investment capital for the purpose of acquiring
or merging with an existing company. Typically, the acquisition target is an
existing privately held company that wants to trade
publicly, which it accomplishes through a combination with a SPAC rather than by
conducting a traditional initial public offering
(“IPO”). SPACs and similar entities are blank check companies and do not have
any operating history or ongoing business other
than seeking acquisitions. The long term value of a SPAC’s securities is
particularly dependent on the ability of the SPAC’s management
to identify a merger target and complete an acquisition.
An
investment in a SPAC is subject to the risks that any proposed acquisition or
merger may not obtain the requisite approval of SPAC
shareholders, may require governmental or other approvals that it fails to
obtain or that an acquisition or merger, once effected,
may prove unsuccessful and lose value. In addition, among other conflicts of
interest, the economic interests of the management,
directors, officers and related parties of a SPAC can differ from the economic
interests of public shareholders, which may
lead to conflicts as they evaluate, negotiate and recommend business combination
transactions to shareholders. This risk may become
more acute as the deadline for the completion of a business combination nears or
in the event that attractive acquisition or merger
targets become scarce.
An
investment in a SPAC is also subject to the risk that a significant portion of
the funds raised by the SPAC may be expended during
the search for a target acquisition or merger. The value of investments in SPACs
may be highly volatile and may depreciate over
time. In addition, investments in SPACs may be subject to the same risks as
investing in any initial public offering, including the
risks associated with companies that have little operating history as public
companies, including unseasoned trading, small number
of shares available for trading and limited information about the issuer. In
addition, the market for IPO issuers may be volatile,
and share prices of newly-public companies have fluctuated significantly over
short periods of time. Although some IPOs may
produce high returns, such returns are not typical and may not be sustainable.
Certain investments in SPACs are privately placed securities
and are also subject to the risks of such securities.
Active
Management Risk
In
pursuing the Fund’s investment objective, the Adviser has considerable leeway in
deciding which investments it buys, holds or sells on
a day-to-day basis, and which trading strategies it uses. For example, the
Adviser, in its discretion, may determine to use some permitted
trading strategies while not using others. The success or failure of such
decisions will affect the Fund’s performance.
The
success or failure of such decisions will affect the Fund’s performance. In
addition, it is expected that confidential or material non-public
information regarding an investment or potential investment opportunity may
become available to the Adviser. If such information
becomes available, the Adviser may be precluded (including by applicable law or
internal policies or procedures) from pursuing
an investment or disposition opportunity with respect to such investment or
investment opportunity and the Adviser may be
restricted in its ability to cause the Fund to buy or sell securities of an
issuer for substantial periods of time when the Fund otherwise
could realize profit or avoid loss. This may adversely affect the Fund’s
flexibility with respect to buying or selling securities and
may impair the Fund’s liquidity.
Temporary
Defensive Investments
Under
adverse or unstable market conditions or abnormal circumstances or
when
the Adviser believes that changes in market, economic,
political or other conditions warrant,
the Fund may, in the discretion of the Adviser, take temporary positions that
are inconsistent
with the Fund’s principal investment strategy in attempting to respond to such
conditions or circumstances. For example,
the Fund may
invest without limit in cash, cash equivalents or other fixed-income securities
for temporary defensive purposes.
If the Adviser incorrectly predicts the effects of these changes, or
during periods of temporary defensive or other temporary positions,
such
defensive investments may adversely affect
a Fund’s performance and the Fund may not achieve its investment objective.
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Consumer
Discretionary
To
the extent that the Fund invests a substantial portion of its assets in the
consumer sector, the Fund will be particularly susceptible to
the risks associated with companies operating in such sector(s). Companies in
the consumer discretionary sector are subject to risks,
including fluctuations in domestic and international economic conditions and
forecasts, inflation, shipment and supply chain disruptions
and interest rate changes, currency exchange rates, increased competition and
consumer confidence as well as increases in production-related
costs. Performance of such companies also may be adversely affected by factors
such as reduced disposable household
income, reduced consumer spending, and changing demographics and consumer
tastes. Companies in this sector are subject
to competitive forces (including competition brought by foreign brands), which
may also have an adverse impact on their profitability
and the value of their securities. This sector may be strongly affected by fads,
marketing campaigns, changes in demographics
and consumer preferences, and other economic or social factors affecting
consumer demand. Governmental regulation, including
price controls and regulations on packaging, labeling, competition, and
certification, may affect the profitability of companies
in such sector(s). Companies operating in this sector may also be adversely
affected by government and private litigation.
Information
Technology Sector Risk
To
the extent a Fund invests a substantial portion of its assets in the information
technology sector, the value of Fund shares may be particularly
impacted by events that adversely affect the information technology sector, such
as rapid changes in technology product cycles,
competition for the services of qualified personnel and government regulation.
The products of information technology companies
may face product obsolescence due to rapid technological developments and
frequent new product introduction and unpredictable
changes in growth rates. Companies in the information technology sector also can
be heavily dependent on patent protection
and the expiration of patents may adversely affect the profitability of these
companies. As a result, the value of shares may fluctuate
more than that of a fund that does not invest significantly in companies in the
technology sector.
Regulatory
and Legal Risk
U.S.
and non-U.S. governmental agencies and other regulators regularly implement
additional regulations and legislators pass new laws
that affect the investments held by the Fund, the strategies used by the Fund or
the level of regulation or taxation applying to the
Fund (such as regulations related to investments in derivatives and other
transactions). These regulations and laws impact the investment
strategies, performance, costs and operations of the Fund or taxation of
shareholders.
The
SEC has recently proposed amendments to Rule 22e-4 of the 1940 Act that, if
adopted, would result in changes to the Fund’s liquidity
classification framework and could potentially increase the percentage of the
Fund’s investments classified as illiquid. In addition,
the Fund’s operations and investment strategies may be adversely impacted if the
proposed amendments are adopted.
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Management
Adviser
Morgan
Stanley Investment Management Inc., with principal offices at 1585
Broadway,
New York, NY 10036, conducts a worldwide
portfolio management business and provides a broad range of portfolio management
services to customers in the United States
and abroad. Morgan Stanley (NYSE: “MS”) is the parent of the Adviser, which is
the parent of the Distributor. Morgan Stanley
is a preeminent global financial services firm engaged in securities trading and
brokerage activities, as well as providing investment
banking, research and analysis, financing and financial advisory services. As of
March 31, 2024,
the Adviser, together with its
affiliated asset management companies, had approximately $1.5
trillion in assets under management or supervision.
A
discussion regarding the Board of Directors’ approval of the Investment Advisory
Agreement is available in each Fund’s Semi-Annual
Report to Shareholders for the period ended June 30, 2023.
Advisory
Fees
For
the fiscal year ended December 31, 2023,
the Adviser received from each Fund the advisory fee (net of fee waivers, if
applicable) set
forth in the table below.
| |
Fund
(as a percentage of average daily net assets) |
Global
Opportunity |
0.74% |
International
Opportunity |
0.79% |
The
Adviser has agreed to reduce its advisory fee and/or reimburse the Funds, if
necessary, if such fees would cause the total annual operating
expenses of Class IR of each Fund to exceed the percentage of average daily net
assets set forth in the table below. In determining
the actual amount of fee waiver and/or expense reimbursement for a Fund, if any,
the Adviser excludes from total annual operating
expenses, acquired fund fees and expenses (as applicable), certain investment
related expenses, taxes, interest and other extraordinary
expenses (including litigation). The fee waivers and/or expense reimbursements
for a Fund will continue for at least one year
from the date of this Prospectus or until such time as the Company’s Board of
Directors acts to discontinue all or a portion of such
waivers and/or reimbursements when it deems such action is
appropriate. The Adviser may make additional voluntary fee waivers
and/or expense reimbursements. The Adviser may discontinue these voluntary fee
waivers and/or expense reimbursements at any
time in the future.
A
Fund’s annual operating expenses may vary throughout the period and from year to
year. A Fund’s actual expenses may be different
than the expenses listed in the Fund’s fee and expense table based upon the
extent and amount of a fee waiver and/or expense
reimbursement.
|
| |
Fund |
Expense
Cap Class
IR |
|
Global
Opportunity |
0.95% |
|
International
Opportunity |
0.94% |
|
Morgan
Stanley Institutional Fund, Inc. Prospectus | Portfolio
Management
Each
Fund is managed by members of the Global Opportunity team. The team consists of
portfolio managers and analysts. Kristian Heugh
is the lead portfolio manager and is primarily responsible for the day-to-day
management of the Funds. Mr. Heugh has been associated
with the Adviser in an investment management capacity since 2001.
The
Funds’ SAI provides additional information about the portfolio manager’s
compensation structure, other accounts managed by the
portfolio manager and the portfolio manager’s ownership of securities in the
Funds.
The
composition of each team may change from time to time.
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Share
Class Arrangements
This
Prospectus offers Class IR shares of each Fund. The Company also offers
investors Class I, Class A, Class L, Class C and Class R6
shares of each Fund through a separate prospectus. The Class L shares of
the Funds are currently closed to all investors except in the
limited circumstances set forth in such prospectus. Class IR shares are not
subject to a sales charge and are not subject to a distribution
and/or shareholder service (12b-1) fee. In addition, no sub-accounting or other
similar fees, or any finder’s fee payments are
charged or paid on Class IR shares.
Minimum
Investment Amounts
Class
IR shares are offered only to eligible investors meeting certain minimum
investment requirements. To purchase Class IR shares, an
investor must meet a minimum initial investment of $5 million or be a defined
contribution, defined benefit or other employer sponsored
employee benefit plan, in each case provided that the plan trades through an
intermediary that combines its clients’ assets in
a single omnibus account, whether or not such plan is qualified under the Code
and in each case subject to the discretion of the Adviser.
Initial omnibus trades of $5 million or more shall be accepted from certain
platforms, including (i) banks and trust companies;
(ii) insurance companies; and (iii) registered investment advisory firms. The $5
million minimum initial investment amount
may be waived for Fund shares purchased by or through: (1) certain registered
open-end investment companies whose shares are
distributed by the Distributor; or (2) investments made in connection with
certain mergers and/or reorganizations as approved by the
Adviser.
If
the value of your account falls below the applicable minimum initial investment
amount for a class of shares of a Fund as a result of share
redemptions or you no longer meet one of the waiver criteria set forth above,
your account may be subject to involuntary conversion
or involuntary redemption, as applicable. You will be notified prior to any such
conversions or redemptions.
The
Adviser, in its sole discretion, may waive a minimum initial investment amount
in certain cases.
Distribution
of Fund Shares
Morgan
Stanley Distribution, Inc. is the exclusive distributor of the shares of each
Fund. The Distributor receives no compensation from
the Funds for distributing Class IR shares of the Funds.
The
Adviser and/or Distributor may pay compensation to Financial Intermediaries in
connection with the sale, distribution, marketing
and retention of a Fund’s Class IR shares and/or Class IR shareholder servicing.
Such compensation may be significant in amount
and the prospect of receiving any such additional compensation may provide
affiliated or unaffiliated Financial Intermediaries
with an incentive to favor sales of shares of the Funds over other investment
options. Any such payments will not change
the NAV
or the
price
of a Fund. For more information, please see the Funds’ SAI.
About
Net Asset Value
The
NAV of a class of shares of a Fund is determined by dividing the total of the
value of the Fund’s investments and other assets attributable
to the class, less any liabilities attributable to the class, by the total
number of outstanding shares of that class of the Fund.
In making this calculation, each Fund generally values its portfolio securities
and other assets at market price. When no market quotations
are readily available for a security or other asset, including circumstances
under which the Adviser determines that a market
quotation is not accurate, fair value for the security or other asset will be
determined in good faith using methods approved by the
Company’s Board of Directors.
In
addition, with respect to securities that primarily are listed on foreign
exchanges, when an event occurs after the close of such exchanges
that is likely to have changed the value of the securities (e.g., a percentage
change in value of one or more U.S. securities indices
in excess of specified thresholds), such securities will be valued at their fair
value, as determined in
good faith using methods
approved
by the Company’s
Board of Directors. Securities also may be fair valued in the event of a
significant development affecting a
country or region or an issuer-specific development that is likely to have
changed the value of the security. In these cases, a Fund’s NAV
will reflect certain portfolio securities’ fair value rather than their market
price. To the extent a Fund invests in open-end management
companies (other than ETFs) that are registered under the Investment Company Act
of 1940, as amended (the “1940 Act”),
the Fund’s NAV is calculated based in relevant part upon the NAV of such funds.
The prospectuses for such funds explain the circumstances
under which they will use fair value pricing and its effects.
Fair
value pricing involves subjective judgments and it is possible that the fair
value determined for a security or other asset is materially
different than the value that could be realized upon the sale of that security
or other asset. With respect to securities that are
primarily listed on foreign exchanges, the values of a Fund’s portfolio
securities may change on days when you will not be able to purchase
or sell your shares. The NAV of a Fund (excluding any applicable sales charges)
is based on the value of the Fund’s portfolio securities
or other assets. Although the assets of each class are invested in the same
portfolio of securities or other assets, the NAV of each
class will differ because the classes have different class specific
expenses.
The
Funds rely on various sources to calculate their NAVs. The ability of a Fund’s
provider of administrative services to calculate the NAV
per share of the Fund is subject to operational risks associated with processing
or human errors, systems or technology failures,
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Shareholder
Information (Con’t)
cyber
attacks and errors caused by third party service providers, data sources, or
trading counterparties. Such failures may result in delays
in the calculation of the Fund’s NAV and/or the inability to calculate NAV over
extended time periods. A Fund may be unable
to recover any losses associated with such failures. In addition, if the third
party service providers and/or data sources upon which
a Fund directly or indirectly relies to calculate its NAV or price individual
securities are unavailable or otherwise unable to calculate
the NAV correctly, it may be necessary for alternative procedures to be utilized
to price the securities at the time of determining
the Fund’s NAV.
A
Fund’s NAV per share is subject to various investment and other risks. Please
refer to the “Additional Information About Fund Investment
Strategies and Related Risks” and “Fund Investments and Strategies” sections of
the Prospectus and SAI, respectively, for more
information regarding risks associated with an investment in a
Fund.
Pricing
of Fund Shares
You
may buy or sell (redeem) shares of the Funds at the NAV next determined for the
class after receipt of your order in good order, plus
any applicable sales charge. The Company determines the NAV for the Funds as of
the close of the NYSE (normally 4:00 p.m. Eastern
time) on each day that the NYSE is open for business (the “Pricing Time”).
Shares generally will not be priced on days that the
NYSE is closed. If the NYSE is closed due to inclement weather, technology
problems or any other reason on a day it would normally
be open for business, or the NYSE has an unscheduled early closing on a day it
has opened for business, a Fund reserves the right
to treat such day as a business day and accept purchase and redemption orders
until, and calculate its NAV as of, the normally scheduled
close of regular trading on the NYSE for that day, so long as the Adviser
believes there generally remains an adequate market
to obtain reliable and accurate market quotations. A Fund may elect to remain
open and price its shares on days when the NYSE
is closed but the primary securities markets on which the Fund’s securities
trade remain open. Trading of securities,
which are traded
on exchanges other than the NYSE,
may take place on days
when a Fund does not price its shares. Therefore, to the extent, if any,
that a Fund invests in securities traded
on other
exchanges, the value of the Fund’s portfolio securities may change on days when
you
will not be able to purchase or sell your shares.
Portfolio
Holdings
A
description of the Company’s policies and procedures with respect to the
disclosure of each Fund’s portfolio securities is available in
the Company’s SAI.
How
To Purchase Fund Shares
You
may purchase shares of a Fund on each day that the Fund is open for business by
contacting your Financial Intermediary or directly
from the Fund.
Purchasing
Shares Through a Financial Intermediary
You
may open a new account and purchase shares of a Fund through a Financial
Intermediary. The Financial Intermediary will assist you
with the procedures to invest in shares of a Fund. Investors purchasing or
selling shares of a Fund through a Financial Intermediary,
including Morgan Stanley Wealth Management, may be charged transaction-based or
other fees by the Financial Intermediary
for its services. If you are purchasing shares of a Fund through a Financial
Intermediary, please consult your Financial Intermediary
for more information regarding any such fees and for purchase
instructions.
With
respect to sales through Financial Intermediaries, no offers or sales of Fund
shares may be made in any foreign jurisdiction, except
with the consent of the Distributor.
Purchasing
Shares Directly From a Fund
Initial Purchase
You
may open a new account, subject to acceptance by a Fund, and purchase shares of
the Fund by completing and signing a New Account
Application provided by SS&C Global Investor and Distribution Solutions,
Inc. (“SS&C GIDS”), the Company’s transfer agent
or Eaton Vance Management, the Company’s co-transfer agent, which you can obtain
by calling Morgan Stanley Shareholder Services
and Eaton Vance Management at
1-800-869-6397 (our automated telephone system (which is generally accessible 24
hours a
day, seven days a week)) and mailing it to Morgan Stanley Institutional Fund,
Inc., c/o
SS&C Global Investor and Distribution Solutions,
Inc., P.O. Box 219804, Kansas City, MO 64121-9804.
After
submitting a completed New Account Application to SS&C GIDS, you may wire
Federal Funds (monies credited by a Federal Reserve
Bank) to State Street Bank and Trust Company (the “Custodian”). You should
instruct your bank to send a Federal Funds wire
in a specified amount to the Custodian using the following wire
instructions:
State
Street Bank and Trust Company
One
Congress
Street
Boston,
MA 02114
ABA
#011000028
DDA
#00575373
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Shareholder
Information (Con’t)
Attn:
Morgan Stanley Institutional Fund, Inc.
Subscription
Account
Ref:
(Fund Name, Account Number, Account Name)
Additional Investments
You
may purchase additional shares of a Fund for your account at any time by
contacting your Financial Intermediary or by contacting
the Fund directly. For additional purchases directly from a Fund, you should
write a “letter of instruction” that includes your
account name, account number, the Fund name and the class selected, signed by
the account owner(s), to assure proper crediting
to your account. After mailing a “letter of instruction,” you may wire Federal
Funds by following the instructions under “Initial
Purchase.”
Conversion
Feature
The
Adviser may in its sole discretion permit a conversion of one share class to
another share class of the same Fund in certain circumstances,
provided that the Fund’s eligibility requirements are met, and subject to the
shareholder’s consent. Such conversions will
be on the basis of the relative NAVs and without the imposition of any
redemption fee or other charge.
A
conversion of shares of one class directly for shares of another class of the
same Fund normally should not be taxable for federal income
tax purposes.
Please
ask your financial advisor if you are eligible for converting a class of shares
pursuant to this conversion feature. You should talk to
your tax advisor before making a conversion.
General
Shares
of a Fund may, in the Fund’s discretion, be purchased with investment securities
(in lieu of or, in conjunction with, cash) acceptable
to the Fund. The securities would be accepted by the Fund at their market value
in return for Fund shares of equal value, taking
into account any applicable sales charge.
To
help the U.S. Government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions
to obtain, verify and record information that identifies each person who opens
an account. What this means to you: when
you open an account, we will ask your name, address, date of birth and other
information that will allow us to identify you. If we
are unable to verify your identity, we reserve the right to restrict additional
transactions and/or liquidate your account at the next calculated
NAV after your account is closed (less any applicable sales/account charges
and/or tax penalties) or take any other action required
by law. In accordance with federal law requirements, the Company
has
implemented an anti-money laundering compliance program,
which includes the designation of an anti-money laundering compliance
officer.
When
you buy Fund shares, the shares will be purchased at the next share price
calculated after we receive your purchase order in good
order. Purchase orders not received in good order prior to Pricing Time will be
executed at the NAV next determined after the purchase
order is received in good order. Certain institutional investors and financial
institutions have entered into arrangements with
the Funds, the Adviser and/or the Distributor pursuant to which they may place
orders prior to the Pricing Time, but make payment
in Federal Funds for those shares up to three days after the purchase order is
placed, depending on the arrangement. We reserve
the right to reject any order for the purchase of Fund shares for any
reason.
The
Company may suspend the offering of shares, or any class of shares, of the Funds
or reject any purchase orders when we think it is
in the best interest of the Funds.
Certain
patterns of past exchanges and/or purchase or sale transactions involving a Fund
may result in the Fund rejecting, limiting or prohibiting,
at its sole discretion, and without prior notice, additional purchases and/or
exchanges and may result in a shareholder’s account
being closed. Determinations in this regard may be made based on the frequency
or dollar amount of previous exchanges or purchase
or sale transactions. See “Frequent Purchases and Redemptions of
Shares.”
How
To Redeem Fund Shares
You
may process a redemption request by contacting your Financial Intermediary.
Otherwise, you may redeem shares of a Fund by mail
or, if authorized, by telephone, at no charge other than as described below. The
value of shares redeemed may be more or less than
the purchase price, depending on the NAV at the time of redemption. Shares of a
Fund will be redeemed at the NAV next determined
after we receive your redemption request in good order and will be reduced by
the amount of any applicable CDSC.
Redemptions by Letter
Requests
should be addressed to Morgan Stanley Institutional Fund, Inc., c/o SS&C
Global Investor and Distribution Solutions, Inc. P.O.
Box 219804, Kansas City, MO 64121-9804.
To
be in good order, redemption requests must include the following
documentation:
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Shareholder
Information (Con’t)
(a)
A letter of instruction, if required, or a stock assignment specifying the
account name, the account number, the name of the Fund and
the number of shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which the
shares are registered, and whether you wish to receive the redemption proceeds
by check or by wire to the bank account we have on
file for you;
(b)
Any required signature guarantees if you are requesting payment to anyone other
than the registered owner(s) or that payment be sent
to any address other than the address of the registered owner(s) or
pre-designated bank account; and
(c)
Other supporting legal documents, if required, in the case of estates, trusts,
guardianships, custodianship, corporations, pension and
profit sharing plans and other organizations.
Redemptions by
Telephone
You
automatically have telephone redemption and exchange privileges unless you
indicate otherwise by checking the applicable box on
the New Account Application or calling Morgan Stanley Shareholder
Services to opt out of such privileges. You may request a redemption
of shares of a Fund by calling Morgan Stanley Shareholder Services at
1-800-869-6397 and requesting that the redemption
proceeds be mailed or wired to you. You cannot redeem shares of a Fund by
telephone if you hold share certificates for those
shares. For your protection when calling the Fund, we will employ reasonable
procedures to confirm that instructions communicated
over the telephone are genuine. These procedures may include requiring various
forms of personal identification (such as
name, mailing address, social security number or other tax identification
number), tape-recording telephone communications and providing
written confirmation of instructions communicated by telephone. If reasonable
procedures are employed, neither Morgan Stanley
(or its affiliates) nor the Fund will be liable for following telephone
instructions which it reasonably believes to be genuine. Telephone
redemptions and exchanges may not be available if you cannot reach Morgan
Stanley Shareholder Services by telephone, whether
because all telephone lines are busy or for any other reason; in such case, a
shareholder would have to use the Fund’s other redemption
and exchange procedures described in this section. Telephone instructions will
be accepted if received by Morgan Stanley Shareholder
Services between 9:00 a.m. and 4:00 p.m. Eastern time on any day the NYSE
is open for business. During periods of drastic
economic or market changes, it is possible that the telephone privileges may be
difficult to implement, although this has not been
the case with the Fund in the past. To opt out of telephone privileges, please
contact Morgan Stanley Shareholder Services at 1-800-869-6397.
Redemption
Proceeds
Each
Fund typically expects to pay redemption proceeds to you within two business
days following receipt of your redemption request
for those payments made to your brokerage account held with a Financial
Intermediary. For redemption proceeds that are paid
directly to you by a Fund, the Fund typically expects to pay redemption proceeds
by check or by wire to you within one business
day, following receipt of your redemption request; however, in all cases, it may
take up to seven calendar days to pay redemption
proceeds.
Each
Fund typically expects to meet redemption requests by using a combination of
sales of securities held by the Fund and/or holdings
of cash and cash equivalents. On a less regular basis, each Fund also reserves
the right to use borrowings to meet redemption requests,
and the Fund may use these methods during both normal and stressed market
conditions.
If
we determine that it is in the best interest of the Company or a Fund not to pay
redemption proceeds in cash, we may distribute to you
securities held by the Fund. If requested, we will pay a portion of your
redemption(s) in cash (during any 90 day period) up to the
lesser of $250,000 or 1% of the net assets of the Fund at the beginning of such
period. If a Fund redeems your shares in-kind, you
will bear any market risks associated with the securities paid as redemption
proceeds. Such in-kind securities may be illiquid and difficult
or impossible for a shareholder to sell at a time and at a price that a
shareholder would like. Redemptions paid in such securities
generally will give rise to income, gain or loss for income tax purposes in the
same manner as redemptions paid in cash. In addition,
you may incur brokerage costs and a further gain or loss for income tax purposes
when you ultimately sell the securities.
Redemption
Fees
Shares
of the International Opportunity Portfolio redeemed within 30 days of purchase
may be subject to a 2% redemption fee, payable
to the Fund. The redemption fee is designed to protect the Fund and its
remaining shareholders from the effects of short-term
trading. The redemption fee is not imposed on redemptions made: (i) through
systematic withdrawal/exchange plans, (ii) through
asset allocation programs, such as model programs, including redemptions or
exchanges that are part of a periodic rebalancing,
(iii) of shares received by reinvesting income dividends or capital gain
distributions, (iv) through certain collective trust funds
or other pooled vehicles, including funds of funds, (v) on behalf of advisory
accounts where client allocations are solely at the discretion
of the Morgan Stanley Investment Management investment team and (vi) in
qualified retirement plans maintained pursuant
to Sections 401 (tax-qualified pension, profit sharing, 401(k), money purchase
and stock bonus plans), 403 (qualified annuity
plans and tax-sheltered annuities) and 457 (deferred compensation plans for
employees of tax-exempt entities or governments)
of the Code, or certain transactions in other types of retirement accounts,
including but not limited to required minimum
distributions and redemptions relating to forfeitures, death, disability or
qualified domestic relations order. The redemption
fee is based on, and deducted from, the redemption proceeds. Each time you
redeem or exchange shares of the Fund, the
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Shareholder
Information (Con’t)
shares
held the longest will be redeemed or exchanged first.
The
redemption fee may not be imposed on transactions that occur through certain
omnibus accounts at Financial Intermediaries. Certain
Financial Intermediaries may not have the ability to assess a redemption fee.
Certain Financial Intermediaries may apply different
methodologies than those described above in assessing redemption fees, may
impose their own redemption fee that may differ
from the International Opportunity Portfolio’s redemption fee or may impose
certain trading restrictions to deter market-timing
and frequent trading. If you invest in a Fund through a Financial Intermediary,
please read that Financial Intermediary’s materials
carefully to learn about any other restrictions or fees that may
apply.
Exchange
Privilege
You
may exchange shares of any class of a Fund for the same class of shares of any
mutual fund (excluding money market funds) sponsored
and advised by the Adviser (each, a “Morgan Stanley Multi-Class Fund”), if
available, without the imposition of an exchange
fee. In addition, you may exchange shares of any class of a Fund for shares of
Morgan Stanley U.S.
Government Money Market
Trust (a
“Morgan Stanley Money Market Fund” and, together with the Morgan Stanley
Multi-Class Funds, the “Morgan Stanley
Funds”), if available, without the imposition of an exchange fee. Exchanges are
effected based on the respective NAVs
of the applicable
Morgan Stanley Fund (subject to any applicable redemption fee) and in accordance
with the eligibility requirements of such
Fund. To obtain a prospectus for another Morgan Stanley Fund, contact your
Financial Intermediary or call Morgan Stanley Shareholder
Services at 1-800-869-6397. Prospectuses are also available on our Internet site
at www.morganstanley.com/im. If you purchased
Fund shares through a Financial Intermediary, certain Morgan Stanley Funds may
be unavailable for exchange. Contact your
Financial Intermediary to determine which Morgan Stanley Funds are available for
exchange.
The
current prospectus for each Morgan Stanley Fund describes its investment
objective(s), policies
and
investment minimums, and should
be read before investing. Since exchanges are available only into continuously
offered Morgan Stanley Funds, exchanges are generally
not available into Morgan Stanley Funds or classes of Morgan Stanley Funds that
are not currently being offered for purchase.
You
can process your exchange by contacting your Financial Intermediary. You may
also send exchange requests to the Company’s transfer
agent, SS&C GIDS, or Eaton Vance Management, the Fund’s co-transfer agent,
by mail to Morgan Stanley Institutional Fund,
Inc., c/o SS&C Global Investor and Distribution Solutions, Inc., P.O. Box
219804, Kansas City, MO 64121-9804 or by calling
1-800-869-6397.
You
will be subject to the same minimum initial investment and account size as an
initial purchase. Your exchange price will be the price
calculated at the next Pricing Time after the Morgan Stanley Fund receives your
exchange order. The Morgan Stanley Fund, in its
sole discretion, may waive the minimum initial investment amount in certain
cases. For direct accounts, the check writing privilege
is not available for Morgan Stanley Money Market Fund shares you acquire in an
exchange from a non-money market fund. If
you are investing through a financial advisor, check with your advisor regarding
the availability of check writing privileges. An exchange
of shares of the International Opportunity Portfolio held for less than 30 days
from the date of purchase will be subject to the
2% redemption fee described above. The Fund may terminate or revise the exchange
privilege upon required notice or in certain cases
without notice. The Fund reserves the right to reject an exchange order for any
reason.
If
you exchange shares of a Fund for shares of another Morgan Stanley Fund, there
are important tax considerations. For tax purposes,
the exchange out of a Fund is considered a sale of Fund shares and the exchange
into the other fund is considered a purchase.
As a result, you may realize a capital gain or loss. You should review the
“Taxes” section and consult your own tax professional
about the tax consequences of an exchange.
Frequent
Purchases and Redemptions of Shares
Frequent
purchases and redemptions of shares by Fund shareholders are referred to as
“market-timing” or “short-term trading” and may
present risks for other shareholders of a Fund, which may include, among other
things, diluting the value of a Fund’s shares held by
long-term shareholders, interfering with the efficient management of the Fund,
increasing brokerage and administrative costs, incurring
unwanted taxable gains and forcing the Fund to hold excess levels of
cash.
In
addition, a Fund is subject to the risk that market-timers and/or short-term
traders may take advantage of time zone differences between
the foreign markets on which a Fund’s securities trade and the time the Fund’s
NAV is calculated (“time-zone arbitrage”). For
example, a market-timer may purchase shares of a Fund based on events occurring
after foreign market closing prices are established,
but before the Fund’s NAV calculation, that are likely to result in higher
prices in foreign markets the following day. The market-timer
would redeem the Fund’s shares the next day, when the Fund’s share price would
reflect the increased prices in foreign markets
for a quick profit at the expense of long-term Fund shareholders.
Investments
in other types of securities also may be susceptible to short-term trading
strategies. These investments include securities that
are, among other things, thinly traded, traded infrequently or relatively
illiquid, which have the risk that the current market price for
the securities may not accurately reflect current market values. A shareholder
may seek to engage in short-term trading to take
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Shareholder
Information (Con’t)
advantage
of these pricing differences (referred to as “price arbitrage”). Investments in
certain fixed-income securities may be adversely
affected by price arbitrage trading strategies.
The
Company discourages and does not accommodate frequent purchases and redemptions
of Fund shares by Fund shareholders and the
Company’s Board of Directors has adopted policies and procedures with respect to
such frequent purchases and redemptions.
The
Company’s policies with respect to purchases, redemptions and exchanges of Fund
shares are described in the “Shareholder Information—How
To Purchase Fund Shares,” “Shareholder Information—General,” “Shareholder
Information—How To Redeem Fund
Shares” and “Shareholder Information—Exchange Privilege” sections of this
Prospectus. Except as described in each of these sections,
and with respect to trades that occur through omnibus accounts at Financial
Intermediaries, as described below, the Company’s
policies regarding frequent trading of Fund shares are applied uniformly to all
shareholders. With respect to trades that occur
through omnibus accounts at Financial Intermediaries, such as investment
advisers, broker-dealers, transfer agents and third-party
administrators, the Company
(i) has requested assurance that such Financial Intermediaries currently selling
Fund shares have in
place internal policies and procedures reasonably designed to address
market-timing concerns and has instructed such Financial Intermediaries
to notify the Fund immediately if they are unable to comply with such policies
and procedures and (ii) requires all prospective
Financial Intermediaries to agree to cooperate in enforcing the Company’s
policies (or, upon prior written approval only, a
Financial Intermediary’s own policies) with respect to frequent purchases,
redemptions and exchanges of Fund shares.
With
respect to trades that occur through omnibus accounts at Financial
Intermediaries, to some extent, the Company relies on the Financial
Intermediary to monitor frequent short-term trading within a Fund by the
Financial Intermediary’s customers and to collect
the Fund’s redemption fee, as applicable, from its customers. However,
each
Fund has
entered into agreements with Financial Intermediaries
whereby Financial Intermediaries are required to provide certain customer
identification and transaction information upon
the Fund’s request. A
Fund
may use this information to help identify and prevent market-timing activity in
the Fund. There can
be no assurance that a
Fund
will be able to identify or prevent all market-timing activities.
Dividends
and Distributions
Each
Fund’s policy is to distribute to shareholders substantially all of its net
investment income, if any, in the form of an annual dividend
and to distribute net realized capital gains, if any, at least
annually.
The
Funds automatically reinvest all dividends and distributions in additional
shares. However, you may elect to receive distributions in
cash by giving written notice to a Fund or your Financial Intermediary or by
checking the appropriate box in the Distribution Option
section on the New Account Application.
If
any distribution check remains uncashed for six months, Morgan Stanley reserves
the right to invest the amount represented by the check
in Fund shares at the then-current net asset value of the Fund and all future
distributions will be reinvested.
For accounts held directly
with a Fund’s transfer agent for which the shareholder has elected to receive
distributions via check, any distribution (dividend
or capital gain) under $10.00 is automatically reinvested in additional shares
regardless of your elected distribution option.
Inactive
Accounts and Risk of Escheatment
In
accordance with state “unclaimed property” laws, your Fund shares may legally be
considered abandoned and required to be transferred
to the relevant state (also known as “escheatment”) under various circumstances.
These circumstances, which vary by state,
can include inactivity (e.g., no owner-initiated contact for a certain period),
returned mail (e.g., when mail sent to a shareholder is
returned by the post office as undeliverable), uncashed checks or a combination
of these. An incorrect address may cause a shareholder’s
account statements and other mailings to be returned to the Fund or your
Financial Intermediary. Since states’ statutory
requirements regarding inactivity differ, it is important to regularly contact
your Financial Intermediary or the Fund’s transfer
agent. The process described above, and the application of state escheatment
laws, may vary by state and/or depending on how
shareholders hold their shares in the Fund.
It
is your responsibility to ensure that you maintain a valid mailing address for
your account, keep your account active by contacting your
Financial Intermediary or the Fund’s transfer agent (e.g., by mail or
telephone), and promptly cash all checks for dividends, capital
gains and redemptions. Neither the Fund nor the Adviser will be liable to
shareholders or their representatives for good faith compliance
with escheatment laws.
For
more information, please contact us at 1-888-378-1630.
Taxes
The
dividends and distributions you receive from a Fund may be subject to federal,
state and local taxation, depending on your tax situation.
The tax treatment of dividends and distributions is the same whether or not you
reinvest them. Dividends paid by a Fund that
are attributable to “qualified dividends” received by the Fund may be taxed at
reduced rates to individual shareholders (either 15%
or 20%, depending on whether the individual’s income exceeds certain threshold
amounts), if certain requirements are met by the
Fund and the shareholders. “Qualified dividends” include dividends distributed
by U.S. and certain foreign corporations
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Shareholder
Information (Con’t)
(generally,
corporations incorporated in a possession of the United States, some
corporations eligible for treaty benefits under a treaty with
the United States and corporations whose stock with respect to which such
dividend is paid is readily tradable on an established securities
market in the United States, but not including passive foreign investment
companies). Dividends paid by a Fund not attributable
to “qualified dividends” received by a Fund, including distributions of
short-term capital gains, will generally be taxed at normal
tax rates applicable to ordinary income. The maximum individual rate applicable
to long-term capital gains (including capital gain
dividends received from the Fund) is generally either 15% or 20%, depending on
whether the individual’s income exceeds certain
threshold amounts. A Fund may be able to pass through to you a credit for
foreign income taxes it pays. The Fund will tell you
annually how to treat dividends and distributions.
If
certain holding period requirements are met, corporate shareholders may be
entitled to a dividends-received deduction for the portion
of dividends they receive which are attributable to dividends received by a Fund
from U.S. corporations.
If
you redeem shares of a Fund, you may be subject to tax on any gains you earn
based on your holding period for the shares and your
marginal tax rate. An exchange of shares of a Fund for shares of another
portfolio is treated for tax purposes as a sale of the original
shares in the Fund, followed by the purchase of shares in the other portfolio.
Conversions of shares between classes will not result
in taxation.
If
you buy shares of a Fund before a distribution, you will be subject to tax on
the entire amount of the taxable distribution you receive.
Distributions are taxable to you even if they are paid from income or gain
earned by a Fund before your investment (and thus
were included in the price you paid for your Fund shares).
An
additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable
dispositions of Fund shares) of U.S. individuals, estates
and trusts to the extent that such person’s “modified adjusted gross income” (in
the case of an individual) or “adjusted gross income”
(in the case of an estate or trust) exceeds certain threshold
amounts.
Shareholders
who are not citizens or residents of the United States and certain foreign
entities will generally be subject to withholding of
U.S. tax of 30% on distributions made by a Fund of investment income and
short-term capital gains.
The
Funds are required to withhold U.S. tax (at a 30% rate) on payments of taxable
dividends made to certain non-U.S. entities that fail
to comply (or be deemed compliant) with extensive reporting and
withholding requirements designed to inform the U.S. Department
of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be
requested to provide additional information
to the Funds to enable the Funds to determine whether withholding is
required.
The
Funds (or their administrative agent) are required to report to the U.S.
Internal Revenue Service (“IRS”) and furnish to Fund shareholders
the cost basis information for sale transactions of shares purchased on or after
January 1, 2012. Shareholders may elect to
have one of several cost basis methods applied to their account when calculating
the cost basis of shares sold, including average cost,
FIFO (“first-in, first-out”) or some other specific identification method.
Unless you instruct otherwise, each Fund will use average
cost as its default cost basis method, and will treat sales as first coming from
shares purchased prior to January 1, 2012. If average
cost is used for the first sale of Fund shares covered by these rules, the
shareholder may only use an alternative cost basis method
for shares purchased prospectively. Fund shareholders should consult with their
tax advisors to determine the best cost basis method
for their tax situation.
The
Funds may be required to withhold U.S. federal income tax (currently, at a
rate of 24%) (“backup withholding”) from all taxable
distributions payable to (1) any shareholder who fails to furnish the Funds with
its correct taxpayer identification number or a certificate
that the shareholder is exempt from backup withholding, and (2) any shareholder
with respect to whom the IRS notifies a Fund
that the shareholder has failed to properly report certain interest and dividend
income to the IRS and to respond to notices to that
effect. An individual’s taxpayer identification number is his or her social
security number. The 24% backup withholding tax is not
an additional tax and may be credited against a taxpayer’s regular federal
income tax liability.
Because
each investor’s tax circumstances are unique and the tax laws may change, you
should consult your tax advisor about your investment.
Potential
Conflicts of Interest
As
a diversified global financial services firm, Morgan Stanley, the parent company
of the Adviser, engages in a broad spectrum of activities,
including financial advisory services, investment management activities,
lending, commercial banking, sponsoring and managing
private investment funds, engaging in broker-dealer transactions and principal
securities, commodities and foreign exchange
transactions, research publication and other activities. In the ordinary course
of its business, Morgan Stanley is a full-service investment
banking and financial services firm and therefore engages in activities where
Morgan Stanley’s interests or the interests of its
clients may conflict with the interests of a Fund. Morgan Stanley advises
clients and sponsors, manages or advises other investment funds
and investment programs, accounts and businesses (collectively, together with
any new or successor funds, programs, accounts
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Shareholder
Information (Con’t)
or
businesses, the ‘‘Affiliated Investment Accounts’’) with a wide variety of
investment objectives that in some instances may overlap or
conflict with a Fund’s investment objectives and present conflicts of interest.
In addition, Morgan Stanley may also from time to time
create new or successor Affiliated Investment Accounts that may compete with a
Fund and present similar conflicts of interest. The
discussion below enumerates certain actual, apparent and potential conflicts of
interest. There is no assurance that conflicts of interest
will be resolved in favor of Fund shareholders and, in fact, they may not be.
Conflicts of interest not described below may also
exist.
For
more information about conflicts of interest, see the section entitled
“Potential Conflicts of Interest” in the SAI.
Material
Nonpublic Information.
It is expected that confidential or material nonpublic information regarding an
investment or potential
investment opportunity may become available to the Adviser. If such information
becomes available, the Adviser may be precluded
(including by applicable law or internal policies or procedures) from pursuing
an investment or disposition opportunity with
respect to such investment or investment opportunity. Morgan Stanley has
established certain information barriers and other policies
to address the sharing of information between different businesses within Morgan
Stanley. In limited circumstances, however,
including for purposes of managing business and reputational risk, and subject
to policies and procedures and any applicable
regulations, personnel, including personnel of the investment adviser, on one
side of an information barrier may have access
to information and personnel on the other side of the information barrier
through “wall crossings.” The Adviser faces conflicts of
interest in determining whether to engage in such wall crossings. Information
obtained in connection with such wall crossings may limit
or restrict the ability of the Adviser to engage in or otherwise effect
transactions on behalf of the Funds (including purchasing or selling
securities that the Adviser may otherwise have purchased or sold for a Fund in
the absence of a wall crossing).
Investments
by Morgan Stanley and its Affiliated Investment Accounts.
In serving in multiple capacities to Affiliated Investment Accounts,
Morgan Stanley, including the Adviser and the Investment team, may have
obligations to other clients or investors in Affiliated
Investment Accounts, the fulfillment of which may not be in the best interests
of a Fund or its shareholders. A Fund’s investment
objectives may overlap with the investment objectives of certain Affiliated
Investment Accounts. As a result, the members of
an Investment team may face conflicts in the allocation of investment
opportunities among a Fund and other investment funds, programs,
accounts and businesses advised by or affiliated with the Adviser. Certain
Affiliated Investment Accounts may provide for higher
management or incentive fees or greater expense reimbursements or overhead
allocations, all of which may contribute to this conflict
of interest and create an incentive for the Adviser to favor such other
accounts. To seek to reduce potential conflicts of interest
and to attempt to allocate such investment opportunities in a fair and equitable
manner, the Adviser has implemented allocation
policies and procedures. These policies and procedures are intended to give all
clients of the Adviser, including the Funds, fair
access to investment opportunities consistent with the requirements of
organizational documents, investment strategies, applicable
laws and regulations, and the fiduciary duties of the
Adviser.
Payments
to Broker-Dealers and Other Financial Intermediaries.
The Adviser and/or the Distributor may pay compensation, out of their
own funds and not as an expense of a Fund, to certain Financial Intermediaries
(which may include affiliates of the Adviser and Distributor),
including recordkeepers and administrators of various deferred compensation
plans, in connection with the sale, distribution,
marketing and retention of shares of the Fund and/or shareholder servicing. The
prospect of receiving, or the receipt of, additional
compensation, as described above, by Financial Intermediaries may provide such
Financial Intermediaries and their financial
advisors and other salespersons with an incentive to favor sales of shares of a
Fund over other investment options with respect
to which these Financial Intermediaries do not receive additional compensation
(or receives lower levels of additional compensation).
These payment arrangements, however, will not change the price that an investor
pays for shares of a Fund or the amount
that the Fund receives to invest on behalf of an investor. Investors may wish to
take such payment arrangements into account when
considering and evaluating any recommendations relating to Fund shares and
should review carefully any disclosures provided by
Financial Intermediaries as to their compensation. In addition, in certain
circumstances, the Adviser restricts, limits or reduces the amount
of a Fund’s investment, or restricts the type of governance or voting rights it
acquires or exercises, where the Fund (potentially
together with Morgan Stanley) exceeds a certain ownership interest, or possesses
certain degrees of voting or control or has
other interests.
Morgan
Stanley Trading and Principal Investing Activities.
Notwithstanding anything to the contrary herein, Morgan Stanley will
generally
conduct its sales and trading businesses, publish research and analysis, and
render investment advice without regard for a Fund’s
holdings, although these activities could have an adverse impact on the value of
one or more of the Fund’s investments, or could
cause Morgan Stanley to have an interest in one or more portfolio investments
that is different from, and potentially adverse to,
that of a Fund.
Morgan
Stanley’s Investment Banking and Other Commercial Activities.
Morgan Stanley advises clients on a variety of mergers, acquisitions,
restructuring, bankruptcy and financing transactions. Morgan Stanley may act as
an advisor to clients, including other investment
funds that may compete with a Fund and with respect to investments that a Fund
may hold. Morgan Stanley may give advice
and take action with respect to any of its clients or proprietary accounts that
may differ from the advice given, or may involve an
action of a different timing or nature than the action taken, by a Fund. Morgan
Stanley may give advice and provide recommendations
to persons competing with a Fund and/or any of a Fund’s investments that are
contrary to the Fund’s best interests
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Shareholder
Information (Con’t)
and/or
the best interests of any of its investments. Morgan Stanley’s activities on
behalf of its clients (such as engagements as an underwriter
or placement agent) may restrict or otherwise limit investment opportunities
that may otherwise be available to a Fund.
Morgan
Stanley may be engaged to act as a financial advisor to a company in connection
with the sale of such company, or subsidiaries
or divisions thereof, may represent potential buyers of businesses through its
mergers and acquisition activities and may provide
lending and other related financing services in connection with such
transactions. Morgan Stanley’s compensation for such activities
is usually based upon realized consideration and is usually contingent, in
substantial part, upon the closing of the transaction.
Under these circumstances, the Fund may be precluded from participating in a
transaction with or relating to the company
being sold or participating in any financing activity related to a merger or an
acquisition.
Morgan
Stanley Institutional Fund, Inc. Prospectus | Shareholder
Information
Shareholder
Information (Con’t)
The
Company currently consists of the following funds:
U.S.
Equity
Advantage
Portfolio
American
Resilience Portfolio*
Growth
Portfolio
Inception
Portfolio
Permanence
Portfolio*
US
Core Portfolio*
Vitality
Portfolio*
Global
and International Equity
Asia
Opportunity Portfolio*
Counterpoint
Global Portfolio*
Developing
Opportunity Portfolio*
Emerging
Markets ex
China Portfolio*
Emerging
Markets Leaders
Portfolio*
Emerging
Markets Portfolio
Global
Concentrated Portfolio*
Global
Core Portfolio*
Global
Endurance Portfolio*
Global
Franchise Portfolio
Global
Insight Portfolio
Global
Opportunity Portfolio
Global
Permanence Portfolio*
Global
Sustain Portfolio
International
Advantage Portfolio
International
Equity Portfolio
International
Opportunity Portfolio
International
Resilience Portfolio*
Next
Gen Emerging Markets Portfolio
Passport
Overseas Equity Portfolio
Listed
Real Asset
Global
Focus Real Estate Portfolio*
Global
Infrastructure Portfolio
Global
Real Estate Portfolio
U.S.
Focus Real Estate Portfolio*
U.S.
Real Estate Portfolio
Asset
Allocation
Multi-Asset
Real Return Portfolio*
The
Company has suspended offering Class L shares of each fund to all
investors.
|
*
The American Resilience, Asia Opportunity, Counterpoint Global, Developing
Opportunity, Emerging Markets Leaders, Global
Concentrated, Global Core, Global Endurance, Global Focus Real Estate,
Global Permanence, International Resilience, Multi-Asset
Real Return, Permanence, Emerging
Markets
ex China,
US Core, U.S. Focus Real Estate and Vitality Portfolios do not
offer Class L shares. |
Morgan
Stanley Institutional Fund, Inc. Prospectus |
Consolidated Financial
Highlights
Consolidated
Financial Highlights
The
consolidated financial highlights tables that follow are intended to help you
understand the financial performance of the Class IR shares
of each Fund for
the past five years.
Certain information reflects financial results for a single Fund share. The
total returns in the
tables represent the rate that an investor would have earned (or lost) on an
investment in each Fund (assuming reinvestment of all dividends
and distributions).
The
ratio of expenses to average net assets listed in the tables below for Class IR
shares of the
Funds are
based on the average net assets
of such Fund for each
of the
periods listed in the tables. To the extent that a Fund’s average net assets
decrease over the Fund’s next
fiscal year, such expense ratios can be expected to increase, potentially
significantly, because certain fixed costs will be spread over
a smaller amount of assets.
The
information below has been derived from the consolidated financial statements
audited by Ernst & Young LLP, the Funds’ independent
registered public accounting firm. Ernst & Young LLP’s reports, along with
each Fund’s consolidated financial statements,
are incorporated by reference into the Funds’ SAI. The Annual Reports to
Shareholders (which include each Fund’s consolidated
financial statements) and SAI are available at no cost from the Company at the
toll-free number noted on the back cover
to this Prospectus.
Morgan
Stanley Institutional Fund, Inc. Prospectus |
Consolidated Financial
Highlights
Global
Opportunity Portfolio
|
|
|
|
|
|
|
|
|
| |
|
|
Class
IR |
|
Year
Ended December 31, |
Selected
Per Share Data and Ratios |
2023 |
2022 |
2021 |
2020(1)
|
2019(1)
|
Net
Asset Value, Beginning of Period |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
Income
(Loss) from Investment Operations: |
Net
Investment Loss(2)
|
|
|
|
|
|
|
|
|
|
|
Net
Realized and Unrealized Gain (Loss) |
|
|
|
|
|
|
|
|
|
|
Total
from Investment Operations |
|
|
|
|
|
|
|
|
|
|
Distributions
from and/or in Excess of: |
Net
Realized Gain |
|
|
|
|
|
|
|
|
|
|
Net
Asset Value, End of Period |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
Total
Return(3)
|
|
|
|
|
|
|
|
|
|
|
Ratios
to Average Net Assets and Supplemental Data: |
Net
Assets, End of Period (Thousands) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
Ratio
of Expenses Before Expense Limitation |
|
|
|
|
|
|
|
|
|
|
Ratio
of Expenses After Expense Limitation |
|
|
|
|
|
|
|
|
|
|
Ratio
of Expenses After Expense Limitation Excluding Interest
Expenses |
|
|
|
|
|
|
|
|
|
|
Ratio
of Net Investment Loss |
|
|
|
|
|
|
|
|
|
|
Ratio
of Rebate from Morgan Stanley Affiliates |
|
|
|
|
|
|
|
|
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(1) |
Not
consolidated. |
(2) |
Per
share amount is based on average shares outstanding. |
(3) |
Calculated
based on the net asset value as of the last business day of the
period. |
(4) |
Performance
was positively impacted by approximately 0.05% for Class IR shares due to
the reimbursement of transfer agency fees from prior years. Had this
reimbursement
not occurred, the total return for Class IR shares would have been 49.80%.
Refer to Note B in the Notes to Consolidated Financial
Statements. |
(5) |
If
the Fund had not received the reimbursement of transfer agency fees from
the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of
Net Investment
Loss, would have been as follows for Class IR shares: |
|
Period
Ended |
Expense Ratio |
Net
Investment Loss
Ratio |
|
December
31, 2023 |
0.86% |
(0.48)% |
|
(6) |
The
Ratio of Expenses After Expense Limitation and Ratio of Net Investment
Loss reflect the rebate of certain Fund expenses in connection with the
investments in
Morgan Stanley affiliates during the period. The effect of the rebate on
the ratios is disclosed in the above table as “Ratio of Rebate from Morgan
Stanley Affiliates.” |
(7) |
Amount
is less than 0.005%. |
Morgan
Stanley Institutional Fund, Inc. Prospectus |
Consolidated Financial
Highlights
International
Opportunity Portfolio
|
|
|
|
|
|
|
|
|
| |
|
|
Class
IR |
|
Year
Ended December 31, |
Selected
Per Share Data and Ratios |
2023 |
2022 |
2021 |
2020(1)
|
2019(1)
|
Net
Asset Value, Beginning of Period |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
Income
(Loss) from Investment Operations: |
Net
Investment Loss(2)
|
|
|
|
|
|
|
|
|
|
|
Net
Realized and Unrealized Gain (Loss) |
|
|
|
|
|
|
|
|
|
|
Total
from Investment Operations |
|
|
|
|
|
|
|
|
|
|
Distributions
from and/or in Excess of: |
Net
Realized Gain |
|
|
|
|
|
|
|
|
|
|
Redemption
Fees |
|
|
|
|
|
|
|
|
|
|
Net
Asset Value, End of Period |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
Total
Return(4)
|
|
|
|
|
|
|
|
|
|
|
Ratios
to Average Net Assets and Supplemental Data: |
Net
Assets, End of Period (Thousands) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
Ratio
of Expenses Before Expense Limitation |
|
|
|
|
|
|
|
|
|
|
Ratio
of Expenses After Expense Limitation |
|
|
|
|
|
|
|
|
|
|
Ratio
of Expenses After Expense Limitation Excluding Interest
Expenses |
|
|
|
|
|
|
|
|
|
|
Ratio
of Net Investment Loss |
|
|
|
|
|
|
|
|
|
|
Ratio
of Rebate from Morgan Stanley Affiliates |
|
|
|
|
|
|
|
|
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(1) |
Not
consolidated. |
(2) |
Per
share amount is based on average shares outstanding. |
(3) |
Amount
is less than $0.005 per share. |
(4) |
Calculated
based on the net asset value as of the last business day of the
period. |
(5) |
Refer
to Note B in the Notes to Consolidated Financial Statements for discussion
of prior period transfer agency fees that were reimbursed in the current
period. The
amount of the reimbursement was immaterial on a per share basis and the
impact was less than 0.005% to the total return of Class IR
shares. |
(6) |
If
the Fund had not received the reimbursement of transfer agency fees from
the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of
Net Investment
Loss, would have been as follows for Class IR shares: |
|
Period
Ended |
Expense Ratio |
Net
Investment Loss
Ratio |
|
December
31, 2023 |
0.94% |
(0.24)% |
|
(7) |
The
Ratio of Expenses After Expense Limitation and Ratio of Net Investment
Loss reflect the rebate of certain Fund expenses in connection with the
investments in
Morgan Stanley affiliates during the period. The effect of the rebate on
the ratios is disclosed in the above table as “Ratio of Rebate from Morgan
Stanley Affiliates.” |
(8) |
Amount
is less than 0.005%. |
(This
page intentionally left blank)
Where
to Find Additional Information
In
addition to this Prospectus, the Funds have an SAI, dated April 30,
2024 (as
may be supplemented from time to time), which contains
additional, more detailed information about the Company and the Funds. The SAI
is incorporated by reference into this Prospectus
and, therefore, legally forms a part of this Prospectus.
The
Company publishes Annual and Semi-Annual Reports (“Shareholder Reports”) that
contain additional information about the respective
Fund’s investments. In each Fund’s Annual Report to Shareholders you will find a
discussion of the market conditions and the
investment strategies that significantly affected such Fund’s performance during
the last fiscal year. For additional Company information,
including information regarding the investments comprising each of the Funds,
please call the toll-free number below.
You
may obtain the SAI and Shareholder Reports without charge by contacting the
Company at the toll-free number below or on our
Internet site at: www.morganstanley.com/im. If you purchased shares through a
Financial Intermediary, you may also obtain these
documents, without charge, by contacting your Financial
Intermediary.
Shareholder
Reports and other information about the Fund are available on the EDGAR Database
on the SEC’s Internet site at http://www.sec.gov,
and copies of this information may be obtained, after paying a duplicating fee,
by electronic request at the following
e-mail address: [email protected].
Morgan
Stanley Institutional Fund, Inc.
c/o
SS&C Global Investor and Distribution Solutions, Inc.
P.O.
Box 219804
Kansas
City, MO 64121-9804
For
Shareholder Inquiries,
call
toll-free 1-800-869-6397.
Prices
and Investment Results are available at www.morganstanley.com/im.
The
Company’s 1940 Act registration number is 811-05624.