Share
Class and Ticker Symbol | |||||
Fund |
Class
I |
Class
A |
Class
L |
Class
C |
Class
R6 |
Active
International Allocation Portfolio |
MSACX |
MSIBX |
MSLLX |
MSAAX |
MAIJX |
China
Equity Portfolio |
MAKIX |
MAKAX |
— |
MAKCX |
MAKSX |
Emerging
Markets Leaders Portfolio |
MELIX |
MELAX |
— |
MEMLX |
MELSX |
Emerging
Markets Portfolio |
MGEMX |
MMKBX |
MSELX |
MSEPX |
MMMPX |
Global
Franchise Portfolio |
MSFAX |
MSFBX |
MSFLX |
MSGFX |
MGISX |
Global
Sustain Portfolio |
MGQIX |
MGQAX |
MGQLX |
MSGQX |
MGQSX |
International
Equity Portfolio |
MSIQX |
MIQBX |
MSQLX |
MSECX |
MIQPX |
Next
Gen Emerging Markets Portfolio |
MFMIX |
MFMPX |
MFMLX |
MSFEX |
MSRFX |
Page | |
Class
I |
Class
A |
Class
L |
Class
C |
Class
R6 |
||
Maximum
sales charge (load) imposed on purchases
(as a percentage of offering price) |
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|
|
|
|
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Maximum
deferred sales charge (load) (as a percentage
based on the lesser of the offering price
or NAV at redemption) |
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|
|
Class
I |
Class
A |
Class
L |
Class
C |
Class
R6 | |
Advisory
Fee |
|
|
|
|
|
Distribution
and/or Shareholder Service (12b-1) Fee |
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|
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Other
Expenses |
|
|
|
|
|
Total
Annual Fund Operating Expenses3
|
|
|
|
|
|
Fee
Waiver and/or Expense Reimbursement3
|
|
|
|
|
|
Total
Annual Fund Operating Expenses After Fee Waiver
and/or Expense Reimbursement3
|
|
|
|
|
|
|
|||||
1
Year |
3
Years |
5
Years |
10
Years |
||
Class
I |
$ |
$ |
$ |
$ |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
L |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
|
|||||
1
Year |
3
Years |
5
Years |
10
Years |
||
Class
I |
$ |
$ |
$ |
$ |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
L |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
1 | Investments
in Class A shares that are not subject to any sales charges at the time of
purchase are subject to a contingent deferred sales charge (“CDSC”)
of 1.00% that will be imposed if you sell your shares within 12 months,
except for certain specific circumstances. See “Shareholder Information—How
To Redeem Fund Shares” for further information about the CDSC waiver
categories. |
2 | The
Class C CDSC is only applicable if you sell your shares within one year
after the last day of the month of purchase. See “Shareholder
Information—How
To Redeem Fund Shares” for a complete discussion of the
CDSC. |
3 | The Fund’s “Adviser,” Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.90% for Class I, 1.25% for Class A, 1.75% for Class L, 2.00% for Class C and 0.85% for Class R6. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Directors of Morgan Stanley Institutional Fund, Inc. (the “Company”) acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |
• |
Equity
Securities. In
general, prices of equity securities are more volatile than those of
fixed-income securities. The prices of equity securities
fluctuate, and sometimes widely fluctuate, in response to activities
specific to the issuer of the security as well as factors unrelated
to the fundamental condition of the issuer, including general market,
economic and political conditions. To the extent that
the Fund invests in convertible securities, and the convertible security’s
investment value is greater than its conversion value, its
price will be likely to increase when interest rates fall and decrease
when interest rates rise. If the conversion value exceeds the investment
value, the price of the convertible security will tend to fluctuate
directly with the price of the underlying
security. |
• |
Foreign
and Emerging Market Securities.
Investments in foreign markets entail special risks such as currency,
political, economic and
market risks. There also may be greater market volatility, less reliable
financial information, 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 ongoing developments and changing
conditions in such markets. Moreover, the growing interconnectivity of
global economies and financial markets has increased
the probability that adverse developments and conditions in one country or
region will affect the stability of economies and
financial markets in other countries or regions. 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 markets 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. |
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 Chinse 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. |
• |
Liquidity. The
Fund may make investments that are illiquid or restricted or that may
become 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. |
• |
Derivatives. A
derivative instrument often has risks similar to its underlying asset and
may have additional risks, including imperfect
correlation between the value of the derivative and the underlying asset,
risks of default by the counterparty to certain transactions,
magnification of losses incurred due to changes in the market value of the
securities, instruments, indices or interest rates
to which the derivative instrument relates,
risks
that the transactions may not be liquid,
risks arising from margin requirements
and risks arising from mispricing or valuation complexity. Certain
derivative transactions may give rise to a form of leverage.
Leverage magnifies the potential for gain and the risk of
loss. |
• |
Market
and Geopolitical Risk. The
value of your investment in the Fund is based on the values of the Fund’s
investments, which may
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 and social unrest) 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. |
|
|
|
|
|
- |
Past
One Year |
Past
Five Years |
Past
Ten Years |
Since
Inception | |
Class
I
(commenced operations on 1/17/1992) | ||||
Return
Before Taxes |
|
|
|
|
Return
After Taxes on Distributions1
|
|
|
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares |
|
|
|
|
Class
A
(commenced operations on 1/2/1996) | ||||
Return
Before Taxes |
- |
|
|
|
Class
L
(commenced operations on 6/14/2012) | ||||
Return
Before Taxes |
|
|
|
|
Class
C
(commenced operations on 4/30/2015) | ||||
Return
Before Taxes |
|
|
|
|
Class
R6
(commenced operations on 10/31/2019) |
||||
Return
Before Taxes |
|
|
|
|
MSCI
All Country World ex USA Index (reflects no deduction
for fees, expenses or taxes)2
|
|
|
|
|
Active
International Allocation Blend Index (reflects
no deduction for fees, expenses or taxes)4
|
|
|
|
|
Lipper
International Large-Cap Growth Funds Index
(reflects no deduction for taxes)5
|
|
|
|
|
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 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. Returns, including periods prior to January 1, 2001, are calculated using the return data of the MSCI All Country World ex USA Index (gross dividends) through December 31, 2000 and the return data of the MSCI All Country World ex USA Index (net dividends) after December 31, 2000. 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 I. |
4 | The Active International Allocation Blend Index is a performance linked benchmark of the old and new benchmark of the Fund, the old benchmark represented by MSCI EAFE Index (index that is designed to measure the international equity market performance of developed markets, excluding the United States and Canada) from the Fund’s inception to December 31, 2016 and the new benchmark represented by MSCI All Country World ex USA Index for periods thereafter. It is not possible to invest directly in an index. |
5 | The Lipper International Large-Cap Growth Funds Index is an equally-weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Large-Cap Growth Funds classification. There are currently 30 funds represented in this index. |
Name |
Title
with Adviser |
Date
Began Managing Fund |
Ben
V. Rozin |
Executive
Director of the Adviser |
April
2017 |
Jitania
Kandhari |
Managing
Director of the Adviser |
April
2017 |
Class
I |
Class
A |
Class
C |
Class
R6 |
||
Maximum
sales charge (load) imposed on purchases (as a percentage
of offering price) |
|
|
|
|
|
Maximum
deferred sales charge (load) (as a percentage based on
the lesser of the offering price or NAV at redemption) |
|
|
|
|
|
Redemption
Fee (as a percentage of the amount redeemed on redemptions
made within 30 days of purchase) |
|
|
|
|
Class
I |
Class
A |
Class
C |
Class
R6 |
||
Advisory
Fee |
|
|
|
|
|
Distribution
and/or Shareholder Service (12b-1) Fee |
|
|
|
|
|
Other
Expenses |
|
|
|
|
|
Total
Annual Fund Operating Expenses 3
|
|
|
|
|
|
Fee
Waiver and/or Expense Reimbursement3
|
|
|
|
|
|
Total
Annual Fund Operating Expenses After Fee Waiver
and/or Expense Reimbursement3
|
|
|
|
|
|
|||||
1
Year |
3
Years |
5
Years |
10
Years |
||
Class
I |
$ |
$ |
$ |
$ |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
|
|||||
1
Year |
3
Years |
5
Years |
10
Years |
||
Class
I |
$ |
$ |
$ |
$ |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
1 | Investments
in Class A shares that are not subject to any sales charges at the time of
purchase are subject to a contingent deferred sales charge (“CDSC”)
of 1.00% that will be imposed if you sell your shares within 12 months,
except for certain specific circumstances. See “Shareholder Information—How
To Redeem Fund Shares” for further information about the CDSC waiver
categories. |
2 | The
Class C CDSC is only applicable if you sell your shares within one year
after the last day of the month of purchase. See “Shareholder
Information—How
To Redeem Fund Shares” for a complete discussion of the
CDSC. |
3 | The Fund’s “Adviser,” Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.20% for Class I, 1.55% for Class A, 2.30% for Class C and 1.15% for Class R6. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Directors of Morgan Stanley Institutional Fund, Inc. (the “Company”) acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |
• |
Equity
Securities. In
general, prices of equity securities are more volatile than those of
fixed-income securities. The prices of equity securities
fluctuate, and sometimes widely fluctuate, in response to activities
specific to the issuer of the security as well as factors unrelated
to the fundamental condition of the issuer, including general market,
economic and political conditions. To the extent that
the Fund invests in convertible securities, and the convertible security’s
investment value is greater than its conversion value, its
price will be likely to increase when interest rates fall and decrease
when interest rates rise. If the conversion value exceeds the investment
value, the price of the convertible security will tend to fluctuate
directly with the price of the underlying
security. |
• |
China
Risk.
Investments in securities of Chinese issuers, including A-shares, involve
risks and special considerations not typically associated
with investments in the U.S. securities markets. These risks include,
among others, (i) more frequent (and potentially widespread)
trading suspensions and government interventions with respect to Chinese
issuers, resulting in lack of liquidity and in price
volatility, (ii) currency revaluations and other currency exchange rate
fluctuations or blockage, (iii) the nature and extent of intervention
by the Chinese government in the Chinese securities markets (including
both direct and indirect market stabilization efforts,
which may affect valuations of Chinese issuers), whether such intervention
will continue and the impact of such intervention
or its discontinuation, (iv) the risk of nationalization or expropriation
of assets, (v) the risk that the Chinese government
may decide not to continue to support economic reform programs, (vi)
limitations on the use of brokers (or action by the
Chinese government that discourages brokers from serving international
clients), (vii) higher rates of inflation, (viii) greater political,
economic and social uncertainty, (ix) market volatility caused by any
potential regional or territorial conflicts or natural disasters,
(x) the risk of increased trade tariffs, embargoes, sanctions and other
trade limitations, (xi) custody risks associated with investing
via the Stock Connect program, (xii) both interim and permanent market
regulations which may affect the ability of certain
stockholders to sell Chinese securities when it would otherwise be
advisable and (xiii) foreign ownership limits of any listed Chinese
company. |
The
economy of China differs, often unfavorably, from the U.S. economy in such
respects as structure, general development, government
involvement, wealth distribution, rate of inflation, growth rate, interest
rates, allocation of resources and capital reinvestment,
among others. The Chinese central 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 from time to time taken actions that influence the prices at which
certain goods may be sold, encourage companies
to invest or concentrate in particular industries, induce mergers between
companies in certain industries and induce private
companies to publicly offer their securities to increase or continue the
rate of economic growth, control the rate of inflation
or otherwise regulate economic expansion. It may do so in the future as
well, potentially having a significant adverse effect
on economic conditions in
China. |
The
Chinese securities markets are emerging markets characterized by greater
price volatility relative to U.S. markets. Liquidity risks
may be more pronounced for the A-share market than for Chinese securities
markets generally because the A-share market is subject
to greater government restrictions and control. The A-share market is
volatile with a risk of suspension of trading in a particular
security or government intervention. Securities on the A-share market may
be suspended from trading without an indication
of how long the suspension will last, which may impair the liquidity of
such securities. Price fluctuations of A-shares are limited
per trading day. In addition, there is less regulation and monitoring of
Chinese securities markets and the activities of investors,
brokers and other participants than in the United States. Accounting,
auditing and financial reporting standards in China
are different from U.S. standards and, therefore, disclosure of certain
material information may not be made. In addition,
|
less
information may be available to the Fund and other investors than would be
the case if the Fund’s investments were restricted to
securities of U.S. issuers. There is also generally less governmental
regulation of the securities industry in China, and less enforcement
of regulatory provisions relating thereto, than in the United States.
Moreover, it may be more difficult to obtain a judgment
in a court outside the United
States. |
The
Chinese government strictly regulates the payment of foreign currency
denominated obligations and sets monetary policy. In addition,
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. International trade tensions involving China and its
trading counterparties may arise from time to time which
can result in trade tariffs, embargoes, trade limitations, trade wars and
other negative consequences. Such actions and consequences
may ultimately result in a significant reduction in international trade,
an oversupply of certain manufactured goods, devaluations
of existing inventories and potentially the failure of individual
companies and/or large segments of China’s export industry
with a potentially severe negative impact to the Fund. 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 the Fund may be forced to sell such restricted
securities and incur a loss as a
result. |
Emerging
markets such as China can experience high rates of inflation, deflation
and currency devaluation. The value of the renminbi
(“RMB”) may be subject to a high degree of fluctuation due to, among other
things, changes in interest rates, the effects of
monetary policies issued by China, the United States, foreign governments,
central banks or supranational entities, the imposition
of currency controls or other national or global political or economic
developments. |
Investments
in China and Hong Kong involve risk of a total loss due to government
action or inaction. China has committed by treaty
to preserve Hong Kong’s autonomy and its economic, political and social
freedoms for 50 years from the July 1, 1997 transfer
of sovereignty from Great Britain to China. However, as
of July 2020, the Chinese Standing Committee of the National People’s
Congress enacted the law of the PRC on Safeguarding National Security in
the Hong Kong Special Administrative Region.
As of the same month, Hong Kong is no longer afforded preferential
economic treatment by the United States under U.S. law,
and there is uncertainty as to how the economy of Hong Kong will be
affected. If China
would exert its authority so as to alter
the economic, political or legal structures or the existing social policy
of Hong Kong, investor and business confidence in Hong
Kong could be negatively affected, which in turn could negatively affect
markets and business performance. In
addition, the Hong
Kong dollar trades within a fixed trading band rate to (or is “pegged” to)
the USD. This fixed exchange rate has contributed to
the growth and stability of the Hong Kong economy. However, some market
participants have questioned the continued viability
of the currency peg. It is uncertain what affect any discontinuance of the
currency peg and the establishment of an alternative
exchange rate system would have on capital markets generally and the Hong
Kong economy. |
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. 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
the 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 the Fund. Furthermore,
securities purchased via Stock Connect will be held via a book entry
omnibus account in the name of HKSCC, Hong
Kong’s clearing entity, at the CSDCC. The 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. The Fund may
therefore depend on HKSCC’s ability or willingness as record-holder of
Stock Connect securities to enforce the 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. |
A
primary feature of Stock Connect is the application of the home market’s
laws and rules applicable to investors in A-shares. Therefore,
the Fund’s investments in Stock Connect A-shares are generally subject to
Chinese securities regulations and listing rules,
among other restrictions. For
defaults by Hong Kong brokers occurring on or after January 1, 2020, the
Hong Kong Investor
Compensation Fund will cover losses incurred by investors with a cap at
HK$500,000 per investor with respect to securities
traded on a stock market operated by the Shanghai Stock Exchange and/or
Shenzhen Stock Exchange and in respect of which
an order for sale or purchase is permitted to be routed through the
northbound link of the Stock Connect.
Since the inception
of Stock Connect, foreign investors investing in A-shares through Stock
Connect have been temporarily exempt from Chinese
corporate income tax and value-added tax on the gains on disposal of such
A-shares. Dividends are subject to Chinese corporate
income tax on a withholding basis at 10% unless reduced under a double tax
treaty with China upon application to and
|
obtaining
approval from the competent tax authority. Additionally, uncertainties in
permanent Chinese tax rules governing taxation
of income and gains from investments in Stock Connect A-shares could
result in unexpected tax liabilities for the
Fund. |
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. 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 the Fund’s investments and
returns. |
H-Shares
Risk.
H-shares are foreign securities which, in addition to the risks described
herein, are subject to the risk that the Hong Kong
stock market may behave very differently from the mainland Chinese stock
market. There may be little to no correlation between
the performance of the Hong Kong stock market and the mainland Chinese
stock market. |
B-Shares
Risk.
The China B-share market is generally smaller, less liquid and has a
smaller issuer base than the China A-share market.
The issuers that compose the B-share market include a broad range of
companies, including companies with large, medium
and small capitalizations. Further, the B-shares market may behave very
differently from other portions of the Chinese equity
markets, and there may be little to no correlation between the performance
of the two. |
Red
Chip Companies Risk.
Red Chip shares are traded in Hong Kong dollars on the Hong Kong Stock
Exchange and may also be traded
by foreigners. Because Red Chip companies are substantially controlled by
various Chinese governmental authorities, investing
in Red Chips involves risks that political changes, social instability,
regulatory uncertainty, adverse diplomatic developments,
asset expropriation or nationalization, or confiscatory taxation could
adversely affect the performance of Red Chip companies.
Red Chip companies may be less efficiently run and less profitable than
other companies. |
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 Chinse 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. |
• |
Foreign
and Emerging Market Securities.
Investments in foreign markets entail special risks such as currency,
political, economic and
market risks. There also may be greater market volatility, less reliable
financial information, 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 ongoing developments and changing
conditions in such markets. Moreover, the growing interconnectivity of
global economies and financial markets has increased
the probability that adverse developments and conditions in one country or
region will affect the stability of economies and
financial markets in other countries or regions. 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 markets 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. |
• |
Investment
Company Securities.
Subject to the limitations set forth in the Investment Company Act of
1940, as amended (the “1940
Act”), or as otherwise permitted by the SEC, the Fund may acquire shares
in other investment companies, including foreign
investment companies and ETFs, which may be managed by the Adviser or its
affiliates. The market value of the shares of other
investment companies may differ from the NAV of the Fund. The shares of
closed-end investment companies frequently trade
at a discount to their NAV. As a shareholder in an investment company, the
Fund would bear its ratable share of that entity’s
expenses, including its investment advisory and administration fees. At
the same time, the Fund would continue to pay its own
advisory and administration fees and other expenses. As a result, the Fund
and its shareholders, in effect, will be absorbing duplicate
levels of fees with respect to investments in other investment
companies. |
• |
Liquidity. The
Fund may make investments that are illiquid or restricted or that may
become 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. |
• |
Derivatives. A
derivative instrument often has risks similar to its underlying asset and
may have additional risks, including imperfect
correlation between the value of the derivative and the underlying asset,
risks of default by the counterparty to certain transactions,
magnification of losses incurred due to changes in the market value of the
securities, instruments, indices or interest rates
to which the derivative instrument relates,
risks
that the transactions may not be liquid,
risks arising from margin requirements
and risks arising from mispricing or valuation complexity. Certain
derivative transactions may give rise to a form of leverage.
Leverage magnifies the potential for gain and the risk of
loss. |
• |
|
• |
Market
and Geopolitical Risk. The
value of your investment in the Fund is based on the values of the Fund’s
investments, which may
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 and social unrest) 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. |
|
|
|
|
|
- |
Past
One Year |
Since
Inception | ||
Class
I
(commenced operations on 10/31/2019) |
|||
Return
Before Taxes |
- |
| |
Return
After Taxes on Distributions1
|
- |
| |
Return
After Taxes on Distributions and Sale of Fund Shares |
- |
| |
Class
A
(commenced operations on 10/31/2019) |
|||
Return
Before Taxes |
- |
| |
Class
C
(commenced operations on 10/31/2019) |
|||
Return
Before Taxes |
- |
| |
Class
R6
(commenced operations on 10/31/2019) |
|||
Return
Before Taxes |
- |
| |
MSCI
China Net Index (reflects no deduction for fees, expenses or
taxes)2
|
- |
| |
Lipper
China Region Funds Index (reflects no deduction for taxes)4
|
- |
|
1 | These returns do not reflect any tax consequences from a sale of your shares at the end of each period. |
2 | The MSCI China Net Index is a free float-adjusted market capitalization index that captures large and mid cap representation across China A shares, H shares, B shares, Red chips, P chips and foreign listings (e.g. ADRs). 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 the Fund. |
4 | The Lipper China Regions Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper China Regions Funds classification. There are currently 10 funds represented in this index. |
Name |
Title
with Adviser or Sub-Adviser |
Date
Began Managing Fund |
Amay
Hattangadi |
Managing
Director of MSIM Company |
December
2020 |
Leon
Sun |
Managing
Director of Morgan Stanley Asia Limited |
March
2021 |
Class
I |
Class
A |
Class
C |
Class
R6 |
||
Maximum
sales charge (load) imposed on purchases (as a percentage
of offering price) |
|
|
|
|
|
Maximum
deferred sales charge (load) (as a percentage based
on the lesser of the offering price or NAV at redemption) |
|
|
|
|
|
Redemption
Fee (as a percentage of the amount redeemed
on redemptions made within 30 days of purchase) |
|
|
|
|
Class
I |
Class
A |
Class
C |
Class
R6 | |
Advisory
Fee |
|
|
|
|
Distribution
and/or Shareholder Service (12b-1) Fee |
|
|
|
|
Other
Expenses |
|
|
|
|
Total
Annual Fund Operating Expenses3
|
|
|
|
|
Fee
Waiver and/or Expense Reimbursement3
|
|
|
|
|
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement3
|
|
|
|
|
|
|||||
1
Year |
3
Years |
5
Years |
10
Years |
||
Class
I |
$ |
$ |
$ |
$ |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
|
|||||
1
Year |
3
Years |
5
Years |
10
Years |
||
Class
I |
$ |
$ |
$ |
$ |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
1 | Investments
in Class A shares that are not subject to any sales charges at the time of
purchase are subject to a contingent deferred sales charge (“CDSC”)
of 1.00% that will be imposed if you sell your shares within 12 months,
except for certain specific circumstances. See “Shareholder Information—How
To Redeem Fund Shares” for further information about the CDSC waiver
categories. |
2 | The
Class C CDSC is only applicable if you sell your shares within one year
after the last day of the month of purchase. See “Shareholder
Information—How
To Redeem Fund Shares” for a complete discussion of the
CDSC. |
3 | The Fund’s “Adviser,” Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.20% for Class I, 1.55% for Class A, 2.30% for Class C and 1.10% for Class R6. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Directors of Morgan Stanley Institutional Fund, Inc. (the “Company”) acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |
• |
Equity
Securities. In
general, prices of equity securities are more volatile than those of
fixed-income securities. The prices of equity securities
fluctuate, and sometimes widely fluctuate, in response to activities
specific to the issuer of the security as well as factors unrelated
to the fundamental condition of the issuer, including general market,
economic and political conditions. To the extent that
the Fund invests in convertible securities, and the convertible security’s
investment value is greater than its conversion value, its
price will be likely to increase when interest rates fall and decrease
when interest rates rise. If the conversion value exceeds the investment
value, the price of the convertible security will tend to fluctuate
directly with the price of the underlying
security. |
• |
Foreign
and Emerging Market Securities.
Investments in foreign markets entail special risks such as currency,
political, economic and
market risks. There also may be greater market volatility, less reliable
financial information, 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 ongoing developments and changing
conditions in such markets. Moreover, the growing interconnectivity of
global economies and financial markets has increased
the probability that adverse developments and conditions in one country or
region will affect the stability of economies and
financial markets in other countries or regions. 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 markets 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. |
• |
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 the Fund may be forced to sell such restricted
securities
and incur a loss as a
result. |
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. |
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 Chinse 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. |
• |
Small
and Mid Cap Companies.
Investments in small and mid cap companies may involve greater risks than
investments in larger, more
established companies. The securities issued by small and mid cap
companies may be less liquid and such companies may have
more limited markets, financial resources and product lines, and may lack
the depth of management of larger
companies. |
• |
Liquidity. The
Fund may make investments that are illiquid or restricted or that may
become 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. |
• |
Derivatives. A
derivative instrument often has risks similar to its underlying asset and
may have additional risks, including imperfect
correlation between the value of the derivative and the underlying asset,
risks of default by the counterparty to certain transactions,
magnification of losses incurred due to changes in the market value of the
securities, instruments, indices or interest rates
to which the derivative instrument relates,
risks
that the transactions may not be liquid,
risks arising from margin requirements
and risks arising from mispricing or valuation complexity. Certain
derivative transactions may give rise to a form of leverage.
Leverage magnifies the potential for gain and the risk of
loss. |
• |
|
|
• |
Market
and Geopolitical Risk. The
value of your investment in the Fund is based on the values of the Fund’s
investments, which may
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 and social unrest) 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. |
* | Performance
shown for the Fund’s Class I shares reflects the performance of the
limited partnership interests of the Private Fund for periods prior to
the
Emerging Markets Leaders
Reorganization. |
|
|
|
|
|
- |
Past
One Year |
Past
Five Years |
Past
Ten Years |
Since
Inception | |
Class
I1
(commenced operations on 6/30/2011) |
||||
Return
Before Taxes1
|
|
|
|
|
Return
After Taxes on Distributions1,2
|
|
|
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares1
|
|
|
|
|
Class
A1
(commenced operations on 6/30/2011) |
||||
Return
Before Taxes1
|
- |
|
|
|
Class
C
(commenced operations on 4/30/2015) |
||||
Return
Before Taxes |
- |
|
|
|
Class
R61
(commenced operations on 6/30/2011) |
||||
Return
Before Taxes1
|
|
|
|
|
MSCI
Emerging Markets Net Index (reflects no deduction
for fees, expenses or taxes)3
|
- |
|
|
|
Lipper
Emerging Markets Funds Index (reflects no deduction
for taxes)5
|
- |
|
|
|
1 | Performance shown for the Fund’s Class I, Class A and Class R6 shares reflects the performance of the limited partnership interests of the Private Fund for periods prior to the Emerging Markets Leaders Reorganization, adjusted to reflect any applicable sales charge of the class, but not adjusted for any other differences in expenses. If adjusted for other expenses, returns would be different. |
2 | These returns do not reflect any tax consequences from a sale of your shares at the end of each period. |
3 | The MSCI Emerging Markets Net Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance of 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 MSCI Emerging Markets Net Index currently consists of 24 emerging market country indices. 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. |
4 | Since Inception reflects the inception date of Class I. |
5 | The Lipper Emerging Markets Funds Index is an equally-weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Emerging Markets Funds classification. There are currently 30 funds represented in this index. |
Name |
Title
with Sub-Adviser |
Date
Began Managing Fund |
Vishal
Gupta |
Managing
Director of MSIM Company |
November
2015 |
Class
I |
Class
A |
Class
L |
Class
C |
Class
R6 |
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Maximum
sales charge (load) imposed on purchases
(as a percentage of offering price) |
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Maximum
deferred sales charge (load) (as a percentage
based on the lesser of the offering price
or NAV at redemption) |
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Redemption
Fee (as a percentage of the amount redeemed
on redemptions made within 30 days of
purchase) |
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Class
I |
Class
A |
Class
L |
Class
C |
Class
R6 | |
Advisory
Fee |
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Distribution
and/or Shareholder Service (12b-1) Fee |
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Other
Expenses |
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Total
Annual Fund Operating Expenses 3
|
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Fee
Waiver and/or Expense Reimbursement3
|
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|
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Total
Annual Fund Operating Expenses After Fee Waiver
and/or Expense Reimbursement3
|
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|
|
|
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|||||
1
Year |
3
Years |
5
Years |
10
Years |
||
Class
I |
$ |
$ |
$ |
$ |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
L |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
|
|||||
1
Year |
3
Years |
5
Years |
10
Years |
||
Class
I |
$ |
$ |
$ |
$ |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
L |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
1 | Investments
in Class A shares that are not subject to any sales charges at the time of
purchase are subject to a contingent deferred sales charge (“CDSC”)
of 1.00% that will be imposed if you sell your shares within 12 months,
except for certain specific circumstances. See “Shareholder Information—How
To Redeem Fund Shares” for further information about the CDSC waiver
categories. |
2 | The
Class C CDSC is only applicable if you sell your shares within one year
after the last day of the month of purchase. See “Shareholder
Information—How
To Redeem Fund Shares” for a complete discussion of the
CDSC. |
3 | The Fund’s “Adviser,” Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class I, 1.40% for Class A, 1.90% for Class L, 2.15% for Class C and 0.95% for Class R6. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Directors of Morgan Stanley Institutional Fund, Inc. (the “Company”) acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |
• |
Equity
Securities. In
general, prices of equity securities are more volatile than those of
fixed-income securities. The prices of equity securities
fluctuate, and sometimes widely fluctuate, in response to activities
specific to the issuer of the security as well as factors unrelated
to the fundamental condition of the issuer, including general market,
economic and political
conditions. |
• |
Foreign
and Emerging Market Securities.
Investments in foreign markets entail special risks such as currency,
political, economic and
market risks. There also may be greater market volatility, less reliable
financial information, 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 ongoing developments and changing
conditions in such markets. Moreover, the growing interconnectivity of
global economies and financial markets has increased
the probability that adverse developments and conditions in one country or
region will affect the stability of economies and
financial markets in other countries or regions. 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 markets 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. |
• |
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 the Fund may be forced to sell such restricted
securities
and incur a loss as a
result. |
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. |
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 Chinse 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. |
• |
Liquidity. The
Fund may make investments that are illiquid or restricted or that may
become 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. |
• |
Derivatives. A
derivative instrument often has risks similar to its underlying asset and
may have additional risks, including imperfect
correlation between the value of the derivative and the underlying asset,
risks of default by the counterparty to certain transactions,
magnification of losses incurred due to changes in the market value of the
securities, instruments, indices or interest rates
to which the derivative instrument relates,
risks
that the transactions may not be liquid,
risks arising from margin requirements
and risks arising from mispricing or valuation complexity. Certain
derivative transactions may give rise to a form of leverage.
Leverage magnifies the potential for gain and the risk of
loss. |
• |
Market
and Geopolitical Risk. The
value of your investment in the Fund is based on the values of the Fund’s
investments, which may
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 and social unrest) 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. |
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- |
Past
One Year |
Past
Five Years |
Past
Ten Years |
Since
Inception | |
Class
I
(commenced operations on 9/25/1992) | ||||
Return
Before Taxes |
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Return
After Taxes on Distributions1
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Return
After Taxes on Distributions and Sale of Fund
Shares |
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Class
A
(commenced operations on 1/2/1996) | ||||
Return
Before Taxes |
- |
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Class
L
(commenced operations on 4/27/2012) | ||||
Return
Before Taxes |
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Class
C
(commenced operations on 4/30/2015) | ||||
Return
Before Taxes |
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Class
R6
(commenced operations on 9/13/2013) | ||||
Return
Before Taxes |
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MSCI
Emerging Markets Index (reflects no deduction
for fees, expenses or taxes)2
|
- |