Morgan Stanley Institutional Fund Trust - Proxy Direct · INVESTMENT MANAGEMENT Prospectus April...

INVESTMENT MANAGEMENT

ProspectusApril 30, 2012

Morgan StanleyInstitutional Fund Trust

Mid Cap Growth Portfolio

The Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or passed upon the adequacy of thisProspectus. Any representation to the contrary is a criminal offense.

Share Class and Ticker SymbolPortfolio Class H Class LMid Cap Growth Portfolio MSKHX MSKLX

e-DELIVERY: GO PAPERLESS It’s faster, easier and greener. Sign up today at: www.icsdelivery.com/live/m.html

Merrill Corp - MS Institutional Fund Trust Mid Cap Growth Portfolio Prospectus [Funds] 04-30-2012 ED [AUX] | cmashak | 26-Apr-12 19:20 | 12-4593-4.aa | Sequence: 1CHKSUM Content: 1158 Layout: 32250 Graphics: 1607 CLEAN

JOB: 12-4593-4 CYCLE#;BL#: 26; 0 TRIM: 8.375" x 10.875" COMPOSITECOLORS: Black, ~HTML color, ~HTML color 2, ~note-color 2 GRAPHICS: edel_pro_full.eps, ms_new_k40_logo.eps, ms_text_cover_lrg_flat_30k.eps V1.5

Table of Contents Page

Portfolio Summary 1Details of the Portfolio 4Additional Information about the Portfolio’s Investment Strategies and Related Risks 6Portfolio Holdings 9Purchasing Class L Shares 10Purchasing Class H Shares 11Redeeming Shares 14Frequent Purchases and Redemptions of Shares 15General Shareholder Information 16Fund Management 18Financial Highlights 20

Mid Cap Growth Portfolio Prospectus

April 30, 2012

Merrill Corp - MS Institutional Fund Trust Mid Cap Growth Portfolio Prospectus [Funds] 04-30-2012 ED [AUX] | cmashak | 26-Apr-12 19:20 | 12-4593-4.aa | Sequence: 2CHKSUM Content: 29803 Layout: 55394 Graphics: No Graphics CLEAN

JOB: 12-4593-4 CYCLE#;BL#: 26; 0 TRIM: 8.375" x 10.875" COMPOSITECOLORS: Black, ~note-color 2 GRAPHICS: none V1.5

ObjectiveThe Mid Cap Growth Portfolio seeks long-term capital growth.

Fees and ExpensesThe table below describes the fees and expenses that you may pay ifyou buy and hold shares of the Portfolio. For shareholders of Class Hshares, you may qualify for sales charge discounts if the cumulative netasset value (“NAV”) of Class H shares of the Portfolio purchased in asingle transaction, together with the NAV of all Class H shares of aportfolio of Morgan Stanley Institutional Fund Trust (the “Fund”) orof a portfolio of Morgan Stanley Institutional Fund, Inc. held inrelated accounts, amounts to $50,000 or more. More informationabout these and other discounts is available from your financial adviserand in the “Purchasing Class H Shares” section on page 11 of thisProspectus.

Shareholder Fees (fees paid directly from your investment)

Class H Class L

Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.75%† None

Annual Portfolio Operating Expenses(expenses that you pay each year as a percentage of the value of yourinvestment)

Class H Class L

Advisory Fee 0.50% 0.50%

Distribution and/or Service (12b-1) Fee 0.25% 0.75%

Other Expenses‡ 0.20% 0.20%

Total Annual Portfolio Operating Expenses 0.95% 1.45%

ExampleThe example below is intended to help you compare the cost ofinvesting in the Portfolio with the cost of investing in other mutualfunds.

The example assumes that you invest $10,000 in the Portfolio, yourinvestment has a 5% return each year and that the Portfolio’soperating expenses remain the same. Although your actual costs maybe higher or lower, based on these assumptions your costs would be:

1 Year 3 Years

Class H $567 $763

Class L $148 $459

† The sales charge is calculated as a percentage of the offering price. Thesales charge is reduced for purchases of $50,000 and over. See“Purchasing Class H Shares.”

‡ Other expenses have been estimated for the current fiscal year.

Portfolio TurnoverThe Portfolio pays transaction costs, such as commissions, when itbuys and sells securities (or “turns over” its portfolio). A higherportfolio turnover rate may indicate higher transaction costs and may

result in higher taxes when Portfolio shares are held in a taxableaccount. These costs, which are not reflected in Total Annual PortfolioOperating Expenses or in the Example, affect the Portfolio’sperformance. During the most recent fiscal year, the Portfolio’sportfolio turnover rate was 35% of the average value of its portfolio.

Principal Investment StrategiesUnder normal circumstances, at least 80% of the Portfolio’s assets willbe invested in common stocks of mid cap companies. The Portfolio’s“Adviser,” Morgan Stanley Investment Management Inc., seeks long-term capital growth by investing primarily in established and emergingcompanies with capitalizations within the range of companies includedin the Russell Midcap® Growth Index, which as of December 31, 2011was between $117 million and $20.4 billion. The Adviser emphasizes abottom-up stock selection process, seeking attractive investments on anindividual company basis. The Adviser seeks to invest in high qualitycompanies it believes have sustainable competitive advantages and theability to redeploy capital at high rates of return. The Adviser typicallyfavors companies with rising returns on invested capital, above averagebusiness visibility, strong free cash flow generation and an attractiverisk/reward. The Portfolio may also use derivative instruments asdiscussed herein. These derivative instruments will be counted towardsthe 80% policy discussed above to the extent they have economiccharacteristics similar to the securities included within that policy.

The Portfolio may invest up to 25% of its net assets in securities offoreign issuers, including issuers located in emerging market ordeveloping countries. The securities in which the Portfolio may investmay be denominated in U.S. dollars or in currencies other than U.S. dollars. The Portfolio may invest in privately placed and restrictedsecurities. In addition, the Portfolio may invest in convertiblesecurities.

The Portfolio may utilize foreign currency forward exchange contracts,which are derivatives, in connection with its investments in foreignsecurities.

Principal RisksAn investment in the Portfolio is subject to risks, and you could losemoney on your investment in the Portfolio. There can be no assurancethat the Portfolio will achieve its investment objective. An investmentin the Portfolio is not a deposit of any bank or other insureddepository institution and is not insured or guaranteed by the FederalDeposit Insurance Corporation or any other government agency.

The Portfolio’s principal investment strategies are subject to thefollowing principal risks:

• Common Stock and Other Equity Securities. In general, stockvalues fluctuate, and sometimes widely fluctuate, in response toactivities specific to the company as well as general market, economicand political conditions. To the extent that the Portfolio invests inconvertible securities, and the convertible security’s investment value isgreater than its conversion value, its price will be likely to increasewhen interest rates fall and decrease when interest rates rise. If theconversion value exceeds the investment value, the price of the

Portfolio Summary

1morganstanley.com/im

Merrill Corp - MS Institutional Fund Trust Mid Cap Growth Portfolio Prospectus [Funds] 04-30-2012 ED [AUX] | cmashak | 26-Apr-12 19:20 | 12-4593-4.ba | Sequence: 1CHKSUM Content: 6439 Layout: 64552 Graphics: No Graphics CLEAN


2

convertible security will tend to fluctuate directly with the price of theunderlying security.

• Mid Capitalization Companies. Investments in mid cap companiesmay involve greater risk than investments in larger, more establishedcompanies. The securities issued by mid cap companies may be lessliquid, and such companies may have more limited markets, financialresources and product lines, and may lack the depth of managementof larger companies.

• Foreign and Emerging Market Securities. Investments in foreignmarkets entail special risks such as currency, political, economic andmarket risks. There also may be greater market volatility, less reliablefinancial information, higher transaction and custody costs, decreasedmarket liquidity and less government and exchange regulationassociated with investments in foreign markets. In addition,investments in certain foreign markets, which have historically beenconsidered stable, may become more volatile and subject to increasedrisk due to ongoing developments and changing conditions in suchmarkets. Moreover, the growing interconnectivity of global economiesand financial markets has increased the probability that adversedevelopments and conditions in one country or region will affect thestability of economies and financial markets in other countries orregions. The risks of investing in emerging market countries are greaterthan risks associated with investments in foreign developed countries.In addition, the Portfolio’s investments may be denominated inforeign currencies and therefore, changes in the value of a country’scurrency compared to the U.S. dollar may affect the value of thePortfolio’s investments. Hedging the Portfolio’s currency risks throughforeign currency forward exchange contracts involves the risk ofmismatching the Portfolio’s objectives under a foreign currencyforward exchange contract with the value of securities denominated ina particular currency. There is additional risk to the effect thatcurrency contracts create exposure to currencies in which thePortfolio’s securities are not denominated. The use of foreign currencyforward exchange contracts involves the risk of loss from theinsolvency or bankruptcy of the counterparty to the contract or thefailure of the counterparty to make payments or otherwise complywith the terms of the contract.

• Privately Placed and Restricted Securities. The Portfolio’sinvestments may also include privately placed securities, which aresubject to resale restrictions. These securities will have the effect ofincreasing the level of Portfolio illiquidity to the extent the Portfoliomay be unable to sell or transfer these securities due to restrictions ontransfers or on the ability to find buyers interested in purchasing thesecurities. The illiquidity of the market, as well as the lack of publiclyavailable information regarding these securities, may also adverselyaffect the ability to arrive at a fair value for certain securities at certaintimes and could make it difficult for the Portfolio to sell certainsecurities.

Performance InformationThe bar chart and table below provide some indication of the risks ofinvesting in the Portfolio by showing changes in the Portfolio’s Class Ishares’ performance from year-to-year and by showing how thePortfolio’s average annual returns for the past one, five and 10 yearperiods compare with those of a broad measure of market performance,as well as an index that represents a group of similar mutual funds, overtime. The performance of the other Classes will differ because theClasses have different ongoing fees. The Portfolio’s past performance,before and after taxes, is not necessarily an indication of how thePortfolio will perform in the future. Updated performance informationis available online at www.morganstanley.com/im.

Annual Total Returns—Calendar Years (Class I)*

High Quarter 6/30/09 26.71%Low Quarter 12/31/08 –26.68%

Average Annual Total Returns For Periods Ended December 31, 2011

Past Past Past One Year Five Years Ten Years

Class I*

Return before Taxes –6.89% 5.15% 7.27%

Return after Taxes on Distributions –7.68% 4.95% 7.16%

Return after Taxes on Distributionsand Sale of Fund Shares –3.55% 4.43% 6.42%

Class H*

Return before Taxes N/A N/A N/A

Class L*

Return before Taxes N/A N/A N/A

Russell Midcap® Growth Index(reflects no deduction forfees, expenses or taxes)1 –1.65% 2.44% 5.29%

Lipper Multi-Cap Growth FundsIndex (reflects no deductionsfor taxes)2 –4.02% 0.87% 2.78%

*Class I shares are not offered in this Prospectus. As of December 31, 2011, theFund had not commenced offering Class H and Class L shares of the Portfolio.The returns for Class H and Class L shares would be lower than the returns forClass I shares of the Portfolio as expenses of Class H and Class L are higher.Return information for the Portfolio’s Class H and Class L shares will be shownin future prospectuses offering the Portfolio’s Class H and Class L shares afterthe Portfolio’s Class H and Class L shares have a full calendar year of returninformation to report.

1 The Russell Midcap® Growth Index measures the performance of the mid-capgrowth segment of the U.S. equity universe. It includes those Russell Midcap®

Index companies with higher price-to-book ratios and higher forecasted growthvalues. The Russell Midcap® Index is a subset of the Russell 1000® Index andincludes approximately 800 of the smallest securities in the Russell 1000® Index,which in turn consists of approximately 1,000 of the largest U.S. securities basedon a combination of market capitalization and current index membership. It isnot possible to invest directly in an index.

2 The Lipper Multi-Cap Growth Funds Index is an equally weighted performanceindex of the largest qualifying funds (based on net assets) in the Lipper Multi-Cap Growth Funds classification. There are currently 30 funds represented inthis Index.

The after-tax returns shown in the table above are calculated using thehistorical highest individual federal marginal income tax rates duringthe period shown and do not reflect the impact of state and localtaxes. After-tax returns for the Portfolio’s other Classes will vary fromClass I shares’ returns. Actual after-tax returns depend on theinvestor’s tax situation and may differ from those shown, and after-taxreturns are not relevant to investors who hold their Portfolio shares

70%

50%

30%

10%

-10%

-30%

-50%

–30.77

–6.89

42.47

22.02 18.3810.14

22.87

–47.22

60.19

32.94

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Merrill Corp - MS Institutional Fund Trust Mid Cap Growth Portfolio Prospectus [Funds] 04-30-2012 ED [AUX] | cmashak | 26-Apr-12 19:20 | 12-4593-4.ba | Sequence: 2CHKSUM Content: 49088 Layout: 38459 Graphics: 36724 CLEAN

JOB: 12-4593-4 CYCLE#;BL#: 26; 0 TRIM: 8.375" x 10.875" COMPOSITECOLORS: Black, ~note-color 2 GRAPHICS: 4593-4 midcap grow bar.eps V1.5

through tax deferred arrangements such as 401(k) plans or individualretirement accounts. After-tax returns may be higher than before-taxreturns due to foreign tax credits and/or an assumed benefit fromcapital losses that would have been realized had Portfolio shares beensold at the end of the relevant periods, as applicable.

Adviser. Morgan Stanley Investment Management Inc.

Portfolio Managers. The Portfolio is managed by members of theGrowth team. Information about the members jointly and primarilyresponsible for the day-to-day management of the Portfolio isshown below:

Date Began ManagingName Title with Adviser Portfolio

Dennis P. Lynch Managing Director January 2002

David S. Cohen Managing Director January 2002

Sam G. Chainani Managing Director June 2004

Alexander T. Norton Executive Director July 2005

Jason C. Yeung Managing Director September 2007

Armistead B. Nash Executive Director September 2008

Purchase and Sale of Fund SharesThe Fund is not currently offering Class H and Class L shares of thePortfolio. The Fund may commence offering Class H and Class Lshares of the Portfolio in the future. Any such offerings of thePortfolio’s Class H and Class L shares may commence and terminatewithout any prior notice.

The minimum initial investment generally is $25,000 for each ofClass H and Class L shares of the Portfolio. You may not be subject tothe minimum investment requirements under certain circumstances.For more information, please refer to the “Purchasing Class L Shares—Share Class Arrangements,” “—Other Purchase Information” and

“Purchasing Class H Shares” sections beginning on pages 10, 11 and11, respectively, of this Prospectus.

Class L shares may be purchased or sold on any day the New YorkStock Exchange (“NYSE”) is open for business directly throughMorgan Stanley Institutional Fund Trust (the “Fund”) by mail(c/o Morgan Stanley Services Company Inc., P.O. Box 219804,Kansas City, MO 64121-9804) or by telephone (1-800-548-7786)or by contacting your financial intermediary.

For more information, please refer to the “Purchasing Class L Shares”and “Redeeming Shares” sections beginning on pages 10 and 14,respectively, of this Prospectus.

Class H shares of the Portfolio may be purchased or redeemed bycontacting your authorized financial representative.

Tax InformationThe Portfolio intends to make distributions that may be taxed asordinary income or capital gains, unless you are investing through atax-deferred arrangement, such as a 401(k) plan or an individualretirement account.

Payments to Broker-Dealers and Other FinancialIntermediariesIf you purchase the Portfolio through a broker-dealer or otherfinancial intermediary (such as a bank), the Adviser and/or thePortfolio’s “Distributor,” Morgan Stanley Distribution, Inc. may paythe intermediary for the sale of Portfolio shares and related services.These payments, which may be significant in amount, may create aconflict of interest by influencing the broker-dealer or otherintermediary and your salesperson to recommend the Portfolio overanother investment. Ask your salesperson or visit your financialintermediary’s web site for more information.

3morganstanley.com/im

Merrill Corp - MS Institutional Fund Trust Mid Cap Growth Portfolio Prospectus [Funds] 04-30-2012 ED [AUX] | cmashak | 26-Apr-12 19:20 | 12-4593-4.ba | Sequence: 3CHKSUM Content: 58546 Layout: 2180 Graphics: No Graphics CLEAN


4

Details of the PortfolioObjectiveThe Mid Cap Growth Portfolio seeks long-term capitalgrowth.

ApproachThe Adviser seeks long-term capital growth byinvesting primarily in established and emergingcompanies with capitalizations within the range ofcompanies included in the Russell MidCap® GrowthIndex.

The Portfolio may invest up to 25% of its net assetsin securities of foreign issuers, including issuerslocated in emerging market or developing countries.The securities in which the Portfolio may invest maybe denominated in U.S. dollars or in currencies otherthan U.S. dollars.

ProcessThe Adviser emphasizes a bottom-up stock selectionprocess, seeking attractive investments on anindividual company basis. The Adviser seeks to investin high quality companies it believes have sustainablecompetitive advantages and the ability to redeploycapital at high rates of return. The Adviser typicallyfavors companies with rising returns on investedcapital, above average business visibility, strong freecash flow generation and an attractive risk/reward.The Adviser generally considers selling a portfolioholding when it determines that the holding nolonger satisfies its investment criteria.

Under normal circumstances, at least 80% of thePortfolio’s assets will be invested in common stocksof mid cap companies. This policy may be changedwithout shareholder approval; however, you would benotified in writing of any changes. The Portfolio mayalso use derivative instruments as discussed herein.These derivative instruments will be counted towardthe 80% policy discussed above to the extent theyhave economic characteristics similar to the securitiesincluded within that policy.

In accordance with the Portfolio’s investment strategyof investing in mid cap companies, the capitalizationrange of securities in which the Portfolio may investis consistent with the capitalization range of theRussell Midcap® Growth Index, which as ofDecember 31, 2011 was between $117 million and

$20.4 billion. The market capitalization limit issubject to adjustment annually based upon theAdviser’s assessment as to the capitalization range ofcompanies which possess the fundamentalcharacteristics of mid cap companies. The Portfoliomay invest in convertible securities. The Portfoliomay invest up to 10% of its assets in real estateinvestment trusts (“REITs”). The Portfolio may alsoinvest in privately placed and restricted securities.

The Portfolio may utilize foreign currency forwardexchange contracts, which are derivatives, inconnection with its investments in foreign securities.

Principal RisksThe Portfolio’s principal investment strategies aresubject to the following principal risks:

The Portfolio is subject to various risks that couldadversely affect its NAV and total return. It ispossible for an investor to lose money by investing inthe Portfolio.

The prices of common stocks rise and fall in responseto events that affect entire financial markets orindustries, and to events that affect a particular issuer.Investments in mid cap companies may involvegreater risk than investments in larger, moreestablished companies. The securities issued by midcap companies may be less liquid and their pricessubject to more abrupt or erratic price movements. Inaddition, mid cap companies may have more limitedmarkets, financial resources and product lines, andmay lack the depth of management of largercompanies.

To the extent that the Portfolio invests in convertiblesecurities, and the convertible security’s investmentvalue is greater than its conversion value, its price willbe likely to increase when interest rates fall anddecrease when interest rates rise. If the conversionvalue exceeds the investment value, the price of theconvertible security will tend to fluctuate directlywith the price of the underlying security.

Investing in the securities of foreign issuers,particularly those located in emerging market ordeveloping countries, entails the risk that news andevents unique to a country or region will affect thosemarkets and their issuers. The value of the Portfolio’s

Merrill Corp - MS Institutional Fund Trust Mid Cap Growth Portfolio Prospectus [Funds] 04-30-2012 ED [AUX] | cmashak | 26-Apr-12 19:20 | 12-4593-4.ca | Sequence: 1CHKSUM Content: 51281 Layout: 56588 Graphics: No Graphics CLEAN


5


Details of the Portfolio (Cont’d)shares may vary widely in response to political andeconomic factors affecting companies in foreigncountries. These same events will not necessarily havean effect on the U.S. economy or similar issuerslocated in the United States. In addition, investmentsin certain foreign markets, which have historicallybeen considered stable, may become more volatileand subject to increased risk due to ongoingdevelopments and changing conditions in suchmarkets. Moreover, the growing interconnectivity ofglobal economies and financial markets has increasedthe probability that adverse developments andconditions in one country or region will affect thestability of economies and financial markets in othercountries or regions.

The Portfolio’s investments may be denominated inforeign currencies. As a result, changes in the value ofa country’s currency compared to the U.S. dollar mayaffect the value of the Portfolio’s investments. Thesechanges may occur separately from and in response toevents that do not otherwise affect the value of thesecurity in the issuer’s home country. Hedging thePortfolio’s currency risks through foreign currencyforward exchange contracts involves the risk ofmismatching the Portfolio’s objectives under aforeign currency forward exchange contract with thevalue of securities denominated in a particularcurrency. Furthermore, such transactions reduce orpreclude the opportunity for gain if the value of thecurrency should move in the direction opposite to theposition taken. There is additional risk to the effectthat currency contracts create exposure to currenciesin which the Portfolio’s securities are notdenominated. Unanticipated changes in currencyprices may result in poorer overall performance forthe Portfolio than if it had not entered into suchcontracts. The use of foreign currency forwardexchange contracts involves the risk of loss from theinsolvency or bankruptcy of the counterparty to the

contract or the failure of the counterparty to makepayments or otherwise comply with the terms of thecontract.

REITs pool investors’ funds for investments primarilyin real estate properties. Like mutual funds, REITshave expenses, including advisory and administrationfees, that are paid by their shareholders. As a result,shareholders will absorb duplicate levels of fees whenthe Portfolio invests in REITs. The performance ofany Portfolio REIT holdings ultimately depends onthe types of real property in which the REITs investand how well the property is managed. A generaldownturn in real estate values also can hurt REITperformance. In addition, REITs are subject tocertain provisions under federal tax law. The failure ofa company to qualify as a REIT could have adverseconsequences for the Portfolio, including significantlyreducing return to the Portfolio on its investment insuch company.

The Portfolio’s investments may also includeprivately placed securities, which are subject to resalerestrictions. These securities will have the effect ofincreasing the level of Portfolio illiquidity to theextent the Portfolio may be unable to sell or transferthese securities due to restrictions on transfers or onthe ability to find buyers interested in purchasing thesecurities. The illiquidity of the market, as well as thelack of publicly available information regarding thesesecurities, may also adversely affect the ability to arriveat a fair value for certain securities at certain timesand could make it difficult for the Portfolio to sellcertain securities.

Please see “Additional Information about thePortfolio’s Investment Strategies and Related Risks”for further information about these and other risks ofinvesting in the Portfolio.

April 30, 2012



6

Additional Information about the Portfolio’s InvestmentStrategies and Related RisksThis section discusses additional information relating tothe Portfolio’s investment strategies, other types ofinvestments that the Portfolio may make and related riskfactors. The Portfolio’s investment practices andlimitations are also described in more detail in theStatement of Additional Information (“SAI”), which isincorporated by reference and legally is a part of thisProspectus. For details on how to obtain a copy of theSAI and other reports and information, see the backcover of this Prospectus.

Equity SecuritiesEquity securities may include common and preferredstocks, convertible securities and equity-linkedsecurities, rights and warrants to purchase commonstocks, American Depositary Receipts (“ADRs”),limited partnership interests, other specialty securitieshaving equity features and shares of investmentcompanies. The Portfolio may invest in equitysecurities that are publicly traded on securitiesexchanges or over-the-counter or in equity securitiesthat are not publicly traded. Securities that are notpublicly traded may be more difficult to sell and theirvalue may fluctuate more dramatically than othersecurities. For purposes of the Portfolio, companiestraded on a U.S. exchange include companies listedon Nasdaq.

ADRs are U.S. dollar-denominated securities thatrepresent claims to shares of foreign stocks. ThePortfolio treats ADRs as U.S. securities for purposesof foreign investment limitations.

Growth stocks generally have higher growth rates,betas and price/earnings ratios, and lower yields thanthe stock market in general as measured by anappropriate stock market index. Value stocks arestocks that are deemed by the Adviser to beundervalued relative to the stock market in general.The Adviser makes value decisions guided by theappropriate market index, based on valuecharacteristics such as price/earnings and price/bookratios. Value stocks generally are dividend payingcommon stocks. However, non-dividend payingstocks also may be selected for their valuecharacteristics.

IPOsThe Portfolio may purchase shares issued as part of,or a short period after, companies’ initial public

offerings (“IPOs”), and may at times dispose of thoseshares shortly after their acquisition. The Portfolio’spurchase of shares issued in IPOs exposes it to therisks associated with companies that have littleoperating history as public companies, as well as tothe risks inherent in those sectors of the marketwhere these new issuers operate. The market for IPOissuers has been volatile, and share prices of newly-public companies have fluctuated in significantamounts over short periods of time. The purchase ofshares issued in IPOs may have a greater impact uponthe Portfolio’s total returns during any period thatthe Portfolio has a small asset base. As the Portfolio’sassets grow, any impact of IPO investments on thePortfolio’s total return may decline.

Fixed Income SecuritiesFixed income securities are securities that pay a fixedor a variable rate of interest until a stated maturitydate. Fixed income securities include U.S.government securities, securities issued by federal orfederally sponsored agencies and instrumentalities(“agencies”), corporate bonds and notes, asset-backedsecurities, mortgage securities, high yield securities(commonly referred to as “junk bonds” or high risksecurities), municipal bonds, loan participationsand assignments, zero coupon bonds, convertiblesecurities, Eurobonds, Brady Bonds, Yankee Bonds,repurchase agreements, commercial paper and cashequivalents.

These securities are subject to risks related to changesin interest rates and in the financial health or creditrating of the issuers. The maturity and duration of afixed income instrument also affects the extent towhich the price of the security will change inresponse to these and other factors. Longer termsecurities tend to experience larger price changes thanshorter term securities because they are more sensitiveto changes in interest rates or in the credit ratings ofthe issuers.

Fixed income securities may be called (i.e., redeemedby the issuer) prior to final maturity. If a callablesecurity is called, the Portfolio may have to reinvestthe proceeds at a lower rate of interest.

Foreign SecuritiesForeign issuers generally are subject to differentaccounting, auditing and financial reporting



7


standards than U.S. issuers. There may be lessinformation available to the public about foreignissuers. Securities of foreign issuers can be less liquidand experience greater price movements. In addition,the prices of such securities may be susceptible toinfluence by large traders, due to the limited size ofmany foreign securities markets. Moreover,investments in certain foreign markets, which havehistorically been considered stable, may become morevolatile and subject to increased risk due to ongoingdevelopments and changing conditions in suchmarkets. Also, the growing interconnectivity of globaleconomies and financial markets has increased theprobability that adverse developments and conditionsin one country or region will affect the stability ofeconomies and financial markets in other countries orregions. In some foreign countries, there is also therisk of government expropriation, excessive taxation,political or social instability, the imposition ofcurrency controls, or diplomatic developments thatcould affect an investing portfolio’s investment.There also can be difficulty obtaining and enforcingjudgments against issuers in foreign countries.Foreign stock exchanges, broker-dealers and listedissuers may be subject to less government regulationand oversight. The cost of investing in foreignsecurities, including brokerage commissions andcustodial expenses, can be higher than in the UnitedStates.

In connection with its investments in foreignsecurities, the Portfolio also may enter into contractswith banks, brokers or dealers to purchase or sellsecurities or foreign currencies at a future date. Aforeign currency forward contract is a negotiatedagreement between the contracting parties toexchange a specified amount of currency at aspecified future time at a specified rate. The rate canbe higher or lower than the spot rate between thecurrencies that are the subject of the contract. Foreigncurrency forward exchange contracts may be used toprotect against uncertainty in the level of futureforeign currency exchange rates or to gain or modifyexposure to a particular currency. In addition, thePortfolio may use cross currency hedging or proxyhedging with respect to currencies in which thePortfolio has or expects to have portfolio or currencyexposure. Cross currency hedges involve the sale ofone currency against the positive exposure to adifferent currency and may be used for hedging

purposes or to establish an active exposure to theexchange rate between any two currencies.

Foreign CurrencyThe Portfolio’s investments may be denominated inforeign currencies. The value of foreign currenciesfluctuates relative to the value of the U.S. dollar.Since the Portfolio may invest in such non-U.S.dollar-denominated securities, and therefore mayconvert the value of such securities into U.S. dollars,changes in currency exchange rates can increase ordecrease the U.S. dollar value of the Portfolio’s assets.The Adviser may use derivatives to reduce this risk.The Adviser may in its discretion choose not tohedge against currency risk. In addition, certainmarket conditions may make it impossible oruneconomical to hedge against currency risk.

Emerging Market SecuritiesInvesting in emerging market securities enhances therisks of foreign investing. In addition, emergingmarket securities generally are less liquid and subjectto wider price and currency fluctuations thansecurities issued in more developed countries. Incertain countries, the market may be dominated by afew issuers or sectors. Investment funds andstructured investments are mechanisms for U.S. andother investors to invest in certain emerging marketsthat have laws precluding or limiting directinvestments by foreign investors.

Convertible SecuritiesA convertible security is a bond, debenture, note,preferred stock, right, warrant or other security thatmay be converted into or exchanged for a prescribedamount of common stock or other security of thesame or a different issuer or into cash within aparticular period of time at a specified price orformula. A convertible security generally entitles theholder to receive interest paid or accrued on debtsecurities or the dividend paid on preferred stockuntil the convertible security matures or is redeemed,converted or exchanged. Before conversion,convertible securities generally have characteristicssimilar to both debt and equity securities. The valueof convertible securities tends to decline as interestrates rise and, because of the conversion feature, tendsto vary with fluctuations in the market value of theunderlying securities. Convertible securities ordinarily

April 30, 2012



8

provide a stream of income with generally higheryields than those of common stock of the same orsimilar issuers. Convertible securities generally ranksenior to common stock in a corporation’s capitalstructure but are usually subordinated to comparablenonconvertible securities. Convertible securitiesgenerally do not participate directly in any dividendincreases or decreases of the underlying securitiesalthough the market prices of convertible securitiesmay be affected by any dividend changes or otherchanges in the underlying securities.

DerivativesThe Portfolio may, but is not required to, usederivative instruments for a variety of purposes,including hedging, risk management, portfoliomanagement or to earn income. Derivatives arefinancial instruments whose value is based on thevalue of an underlying asset, interest rate, index orfinancial instrument. A derivative instrument oftenhas risks similar to its underlying asset and may haveadditional risks, including imperfect correlationbetween the value of the derivative and theunderlying asset, risks of default by the counterpartyto certain transactions, magnification of lossesincurred due to changes in the market value of thesecurities, instruments, indices or interest rates towhich they relate, and risks that the transactions maynot be liquid. The use of derivatives involves risksthat are different from, and possibly greater than, therisks associated with other portfolio investments.Derivatives may involve the use of highly specializedinstruments that require investment techniques andrisk analyses different from those associated withother portfolio investments.

Certain derivative transactions may give rise to aform of leverage. Leverage magnifies the potential forgain and the risk of loss. Leverage associated withderivative transactions may cause the Portfolio toliquidate portfolio positions when it may not beadvantageous to do so to satisfy its obligations or tomeet earmarking or segregation requirements,pursuant to applicable SEC rules and regulations, ormay cause a Portfolio to be more volatile than if thePortfolio had not been leveraged. Although theAdviser seeks to use derivatives to further thePortfolio’s investment objectives, there is noassurance that the use of derivatives will achieve thisresult.

The derivative instruments and techniques that thePortfolio may use include:

Futures. A futures contract is a standardized,exchange-traded agreement to buy or sell a specificquantity of an underlying instrument at a specificprice at a specific future time. The value of a futurescontract tends to increase and decrease in tandemwith the value of the underlying instrument.Depending on the terms of the particular contract,futures contracts are settled through either physicaldelivery of the underlying instrument on thesettlement date or by payment of a cash settlementamount on the settlement date. A decision as towhether, when and how to use futures involves theexercise of skill and judgment and even a well-conceived futures transaction may be unsuccessfulbecause of market behavior or unexpected events. Inaddition to the derivatives risks discussed above, theprices of futures can be highly volatile, using futurescan lower total return, and the potential loss fromfutures can exceed the Portfolio’s initial investmentin such contracts.

Options. If the Portfolio buys an option, it buys alegal contract giving it the right to buy or sell aspecific amount of the underlying instrument orfutures contract on the underlying instrument at anagreed-upon price typically in exchange for apremium paid by the Portfolio. If the Portfolio sellsan option, it sells to another person the right to buyfrom or sell to the Portfolio a specific amount of theunderlying instrument or futures contract on theunderlying instrument at an agreed-upon pricetypically in exchange for a premium received by thePortfolio. A decision as to whether, when and howto use options involves the exercise of skill andjudgment and even a well-conceived optiontransaction may be unsuccessful because of marketbehavior or unexpected events. The prices ofoptions can be highly volatile and the use of optionscan lower total returns.

Swaps. An over-the-counter (“OTC”) swap contractis an agreement between two parties pursuant towhich the parties exchange payments at specifieddates on the basis of a specified notional amount,with the payments calculated by reference to specifiedsecurities, indices, reference rates, currencies or otherinstruments. A small percentage of swap contracts are



9


cleared through a central clearinghouse. Most swapagreements provide that when the period paymentdates for both parties are the same, the payments aremade on a net basis (i.e., the two payment streamsare netted out, with only the net amount paid by oneparty to the other). The Portfolio’s obligations orrights under a swap contract entered into on a netbasis will generally be equal only to the net amountto be paid or received under the agreement, based onthe relative values of the positions held by eachcounterparty. Most swap agreements are not enteredinto or traded on exchanges and often there is nocentral clearing or guaranty function for swaps. TheseOTC swaps are often subject to credit risk or the riskof default or non-performance by the counterparty.Swaps could result in losses if interest rate or foreigncurrency exchange rates or credit quality changes arenot correctly anticipated by the Portfolio or if thereference index, security or investments do notperform as expected.

Structured Investments. The Portfolio also may invest aportion of its assets in structured investments. Astructured investment is a derivative security designedto offer a return linked to a particular underlyingsecurity, currency, commodity or market. Structuredinvestments may come in various forms includingnotes, warrants and options to purchase securities.The Portfolio will typically use structuredinvestments to gain exposure to a permitted

underlying security, currency or market when directaccess to a market is limited or inefficient from a taxor cost standpoint. Investments in structuredinvestments involve risks including issuer risk,counterparty risk and market risk. Holders ofstructured investments bear risks of the underlyinginvestment and are subject to issuer or counterpartyrisk because the Portfolio is relying on thecreditworthiness of such issuer or counterparty andhas no rights with respect to the underlyinginvestment. Certain structured investments may bethinly traded or have a limited trading market andmay have the effect of increasing the Portfolio’silliquidity to the extent that the Portfolio, at aparticular point in time, may be unable to findqualified buyers for these securities.

Temporary Defensive InvestmentsWhen the Adviser believes that changes in economic,financial or political conditions warrant, the Portfoliomay invest without limit in fixed income securitiesfor temporary defensive purposes that may beinconsistent with the Portfolio’s principal investmentstrategies. If the Adviser incorrectly predicts theeffects of these changes, the defensive investmentsmay adversely affect the Portfolio’s performance.Using defensive investments could cause the Portfolioto fail to meet its investment objective.

Portfolio HoldingsA description of the policies and procedures of theFund with respect to the disclosure of the Portfolio’ssecurities is available in the Fund’s SAI.

April 30, 2012



10

Purchasing Class L SharesThe Fund is not currently offering Class L shares ofthe Portfolio. The Fund may commence offeringClass L shares of the Portfolio in the future. Any suchofferings of the Portfolio’s Class L shares maycommence and terminate without any prior notice.

Share Class ArrangementsThe minimum initial investment generally is $25,000for Class L shares of the Portfolio.

Class L shares are subject to a monthly distributionfee at an annual rate of up to 0.50% of the Portfolio’saverage daily net assets attributable to Class L sharesand a monthly shareholder servicing fee at an annualrate of up to 0.25% of the Portfolio’s average dailynet assets attributable to Class L shares.

GeneralShares of the Portfolio may be purchased directlyfrom the Fund or through a financial intermediary.Investors purchasing shares through a financialintermediary may be charged a transaction-based orother fee by the financial intermediary for its services.If you are purchasing shares through a financialintermediary, please consult your intermediary forpurchase instructions.

Shares of the Portfolio may, in the Fund’s discretion,be purchased with investment securities (in lieu of, orin conjunction with, cash) acceptable to the Fund.The securities would be accepted by the Fund at theirmarket value in return for shares of the Portfolio.

Shares of the Portfolio may be purchased at the NAVnext determined after we receive your purchase order.The NAV of the Portfolio is determined as of theclose of the NYSE (normally 4:00 p.m. EasternTime) on each day the NYSE is open for business.

To help the U.S. Government fight the funding ofterrorism and money laundering activities, federal lawrequires all financial institutions to obtain, verify andrecord information that identifies each person whoopens an account. What this means to you is thatwhen you open an account, we will ask your name,address, date of birth and other information that willallow us to identify you. If we are unable to verifyyour identity, we reserve the right to restrictadditional transactions and/or liquidate your account

at the next calculated NAV after your account isclosed (less any applicable sales/account chargesand/or tax penalties) or take any other actionrequired by law. In accordance with federal lawrequirements, the Fund has implemented an anti-money laundering compliance program, whichincludes designation of an anti-money launderingcompliance officer.

Initial Purchase by MailYou may open an account, subject to acceptance bythe Fund, by completing and signing an AccountRegistration Form provided by Morgan StanleyServices Company, Inc. (“Morgan Stanley Services”),the Fund’s transfer agent, which you can obtain bycalling Morgan Stanley Services at 1-800-548-7786and mailing it to Morgan Stanley Institutional FundTrust. c/o Morgan Stanley Services Company Inc.,P.O. Box 219804, Kansas City, MO 64121-9804together with a check payable to Morgan StanleyInstitutional Fund Trust.

Please note that payments to investors who redeemshares purchased by check will not be made untilpayment of the purchase has been collected, whichmay take up to 15 business days after purchase. Youcan avoid this delay by purchasing shares by wire.

Initial Purchase by WireYou may purchase shares of the Portfolio by wiringFederal Funds (monies credited by a Federal ReserveBank) to State Street Bank and Trust Company (the“Custodian”). You should forward a completed AccountRegistration Form to Morgan Stanley Services inadvance of the wire. See the section below entitled“Valuation of Shares.” Instruct your bank to send aFederal Funds wire in a specified amount to theCustodian using the following wire instructions:

State Street Bank and Trust CompanyOne Lincoln StreetBoston, MA 02111-2101ABA #011000028DDA #00575373Attn: Morgan Stanley Institutional Fund TrustSubscription AccountRef: (Portfolio Name, Account Number, Account Name)



11


Additional InvestmentsYou may make additional investments of shares at theNAV next determined after the request is received ingood order, by mailing a check (payable to MorganStanley Institutional Fund Trust) to Morgan StanleyServices at the address noted under Initial Purchaseby Mail or by wiring Federal Funds to the Custodianas outlined above.

Other Purchase InformationThe Fund may suspend the offering of shares, or anyclass of shares, of the Portfolio or reject any purchaseorders when we think it is in the best interest of theFund. The minimum initial investment in Class Lshares may be waived for certain investments,including sales through banks, broker-dealers andother financial institutions (including registeredinvestment advisers and financial planners)purchasing shares on behalf of their clients in(i) discretionary and non-discretionary advisoryprograms, (ii) fund supermarkets, (iii) assetallocation programs or (iv) other programs in whichthe client pays an asset-based fee for advice or forexecuting transactions in Portfolio shares or forotherwise participating in the program. In addition,the minimum initial investment will be waived for:(i) certain retirement plans investing directly withthe Fund; (ii) retirement plans investing throughcertain retirement plan platforms; (iii) certainendowments, foundations and other not for profitentities investing directly with the Fund; (iv) other

registered investment companies advised by MorganStanley Investment Management or any of itsaffiliates; (v) Morgan Stanley InvestmentManagement and its affiliates with respect to sharesheld in connection with certain retirement anddeferred compensation programs established for theiremployees; (vi) the independent Trustees of theFund; and (vii) investments made in connectionwith certain reorganizations as approved by theAdviser. If the value of your account falls below theminimum initial investment amount for Class Lshares as a result of share redemptions or you nolonger meet one of the waiver criteria set forthabove, your account may be subject to involuntaryconversion or involuntary redemption. You will benotified prior to any such conversions orredemptions.

Certain patterns of past exchanges and/or purchase orsale transactions involving the Portfolio may result inthe Fund rejecting, limiting or prohibiting, at its solediscretion and without prior notice, additionalpurchases and/or exchanges and may result in ashareholder’s account being closed. Determinationsin this regard may be made based on the frequency ordollar amount of the previous exchanges or purchaseor sale transactions.

Purchases of the Portfolio’s shares will be made in fulland fractional shares of the Portfolio calculated tothree decimal places.

Purchasing Class H SharesThe Fund is not currently offering Class H shares ofthe Portfolio. The Fund may commence offeringClass H shares of the Portfolio in the future. Anysuch offerings of the Portfolio’s Class H shares maycommence and terminate without any prior notice.

Class H shares are available to investors with aminimum investment of $25,000. If the value of youraccount falls below the minimum initial investmentamount for Class H shares as a result of share

redemptions, your account may be subject toinvoluntary redemption. You will be notified prior toany such redemptions. Class H shares are subject to asales charge equal to a maximum of 4.75% calculatedas a percentage of the offering price on a singletransaction as shown in the table below. As shownbelow, the sales charge is reduced for purchases of$50,000 and over. Class H shares are subject to a

April 30, 2012



12

monthly shareholder services fee at an annual rate of up to 0.25% of the Portfolio’s average daily net assetsattributable to Class H shares.

Front-End Sales Charge

Percentage of Approximate PercentageAmount of Single Transaction Public Offering Price of Net Amount Invested$25,000 but less than $50,000 4.75% 4.99%$50,000 but less than $100,000 4.00% 4.17%$100,000 but less than $250,000 3.00% 3.09%$250,000 but less than $500,000 2.50% 2.56%$500,000 but less than $1 million 2.00% 2.04%$1 million and over 0.00% 0.00%

You may benefit from a reduced sales charge schedule(i.e., breakpoint discount) for purchases of Class Hshares of the Portfolio, by combining, in a singletransaction, your purchase with purchases of Class Hshares of the Portfolio by the following relatedaccounts:

• A single account (including an individual, trust orfiduciary account).

• A family member account (limited to spouse, andchildren under the age of 21).

• Pension, profit sharing or other employee benefitplans of companies and their affiliates.

• Employer sponsored and individual retirementaccounts (including IRAs, Keogh, 401(k), 403(b),408(k) and 457(b) Plans).

• Tax-exempt organizations.• Groups organized for a purpose other than to buy

mutual fund shares.

In addition to investments of $1 million or more,purchases of Class H shares are not subject to a front-end sales charge for accounts of employees of MorganStanley and its subsidiaries, such persons’ familymembers (limited to spouse, and children under theage of 21) and trust accounts for which any suchperson is a beneficiary.

Combined Purchase PrivilegeYou will have the benefit of reduced sales charges bycombining purchases of Class H shares of thePortfolio for any related account in a singletransaction with purchases of Class H shares ofanother portfolio of the Fund or of a portfolio ofMorgan Stanley Institutional Fund, Inc. for therelated account or any other related account. For thepurpose of this combined purchase privilege, a“related account” is:

• A single account (including an individual account,a joint account and a trust account establishedsolely for the benefit of the individual).

• A family member account (limited to spouse, andchildren under the age of 21, but including trustaccounts established solely for the benefit of aspouse, or children under the age of 21).

• An IRA and single participant retirement account(such as a Keogh).

• An UGMA/UTMA account.

Right of AccumulationYou may benefit from a reduced sales charge if thecumulative NAV of Class H shares of the Portfoliopurchased in a single transaction, together with theNAV of all Class H shares of a portfolio of the Fundor a portfolio of Morgan Stanley Institutional Fund,Inc. held in related accounts, amounts to $50,000 ormore. For the purposes of the rights of accumulationprivilege, a related account is any one of the accountslisted under “Combined Purchase Privilege” above.

NotificationYou must notify your authorized financialrepresentative at the time a purchase order is placed,that the purchase qualifies for a reduced sales chargeunder any of the privileges discussed above. Similarnotification must be made in writing when an orderis placed by mail. The reduced sales charge will notbe granted if: (i) notification is not furnished at thetime of the order; or (ii) a review of the records ofyour authorized financial representative or the Fund’stransfer agent, Morgan Stanley Services, does notconfirm your represented holdings.

In order to obtain a reduced sales charge under anyof the privileges discussed above, it may be necessaryat the time of purchase for you to inform yourauthorized financial representative of the existence ofother accounts in which there are holdings eligible tobe aggregated to meet the sales load breakpointand/or right of accumulation threshold. In order toverify your eligibility, you may be required to provide



13

April 30, 2012


account statements and/or confirmations regardingClass H shares of the Portfolio or a portfolio ofMorgan Stanley Institutional Fund, Inc. held in allrelated accounts described above at your authorizedfinancial representative, as well as shares held byrelated parties, in order to determine whether youhave met the sales load breakpoint and/or right ofaccumulation threshold.

Letter of IntentThe above schedule of reduced sales charges for largerpurchases also will be available to you if you enterinto a written “Letter of Intent.” A Letter of Intentprovides for the purchase of Class H shares of thePortfolio or a portfolio of Morgan StanleyInstitutional Fund, Inc. within a 13-month period.The initial purchase under a Letter of Intent must beat least 5% of the stated investment goal. The Letterof Intent does not preclude the Portfolio fromdiscontinuing sales of its shares. To determine theapplicable sales charge reduction, you may alsoinclude (1) the cost of shares of other Class H shareswhich were previously purchased at a price includinga front-end sales charge during the 90-day periodprior to the Distributor receiving the Letter of Intent,and (2) the historical cost of shares of other portfoliosof the Fund or portfolios of Morgan StanleyInstitutional Fund, Inc. you currently own acquiredin exchange for shares of other portfolios of the Fundor portfolios of Morgan Stanley Institutional Fund,Inc. purchased during that period at a price includinga front-end sales charge. You may combine purchasesand exchanges by family members (limited to spouse,and children under the age of 21) during the periodsreferenced in (1) and (2) above. You should retainany records necessary to substantiate historical costsbecause the Fund, the Transfer Agent, yourauthorized financial representative and any financialintermediaries may not maintain this information.You can obtain a Letter of Intent by contacting yourauthorized financial representative. If you do notachieve the stated investment goal within the13-month period, you are required to pay thedifference between the sales charges otherwiseapplicable and sales charges actually paid, which maybe deducted from your investment. Shares acquiredthrough ,reinvestment of distributions are notaggregated to achieve the stated investment goal.

GeneralClass H shares of the Portfolio may be purchased bycontacting your authorized financial representative

who will assist you, step-by-step, with the proceduresto invest in Class H shares of the Portfolio.

Class H shares of the Portfolio may, in the Fund’sdiscretion, be purchased with investment securities (inlieu of or, in conjunction with, cash) acceptable to theFund. The securities would be accepted by the Fund attheir market value in return for shares of the Portfolio,taking into account any applicable sales charge.

Class H shares of the Portfolio may be purchased atthe NAV (plus any applicable front-end sales charge)next determined after we receive your purchase order.The NAV of the Portfolio is determined as of theclose of the NYSE (normally 4:00 p.m. EasternTime) on each day the NYSE is open for business.

Additional InvestmentsYou may make additional investments of shares at theNAV next determined after the request is received,plus any applicable sales charge, by the methoddescribed above.

Order Processing FeeYour financial intermediary may charge processing orother fees in connection with the purchase or sale ofshares of the Portfolio. Please consult your authorizedfinancial representative for more informationregarding any such fees.

Other Purchase InformationThe Fund may suspend the offering of shares, or anyclass of shares, of the Portfolio or reject any purchaseorders when we think it is in the best interest of theFund. The Fund, in its sole discretion, may waive theminimum initial and additional investment amountsin certain cases.

Certain patterns of past exchanges and/or purchase orsale transactions involving the Portfolio may result inthe Fund rejecting, limiting or prohibiting, at its solediscretion and without prior notice additionalpurchases and/or exchanges and may result in ashareholder’s account being closed. Determinationsin this regard may be made based on the frequency ordollar amount of the previous exchanges or purchaseor sale transactions.

Purchases of the Portfolio’s shares will be made in fulland fractional shares of the Portfolio calculated tothree decimal places.



14

Class LYou may redeem Class L shares of the Portfolio bymail, or, if authorized, by telephone at no charge.The value of shares redeemed may be more or lessthan the purchase price, depending on the NAV atthe time of redemption. Shares of the Portfolio will beredeemed at the NAV next determined after therequest is received in good order. If you are redeemingshares through a financial intermediary, please consultyour intermediary for redemption instructions.

By MailRequests should be addressed to Morgan StanleyInstitutional Fund Trust, c/o Morgan Stanley ServicesCompany Inc., P.O. Box 219804, Kansas City, MO64121-9804.

To be in good order, redemption requests mustinclude the following documentation:

(a) A letter of instruction, if required, or a stockassignment specifying the number of shares or dollaramount to be redeemed, signed by all registeredowners of the shares in the exact names in which theshares are registered;

(b) The share certificates, if issued;

(c) Any required signature guarantees; and

(d) Other supporting legal documents, if required, inthe case of estates, trusts, guardianships,custodianship, corporations, pension and profitsharing plans and other organizations.

By TelephoneYou automatically have telephone redemption andexchange privileges unless you indicate otherwise bychecking the applicable box on the new accountapplication form or calling Morgan Stanley Servicesto opt out of such privileges. You may request aredemption of shares by calling the Fund at1-800-548-7786 and requesting that the redemptionproceeds be wired to you. You cannot redeem sharesby telephone if you hold share certificates for thoseshares. For your protection when calling the Fund,we will employ reasonable procedures to confirm thatredemption instructions communicated over thetelephone are genuine. These procedures may includerequiring various forms of personal identificationsuch as name, mailing address, social security numberor other tax identification number. Telephoneinstructions may also be recorded. If reasonable

procedures are employed, none of Morgan Stanley,Morgan Stanley Services or the Fund will be liable forfollowing telephone instructions which it reasonablybelieves to be genuine. Telephone redemptions andexchanges may not be available if you cannot reachMorgan Stanley Services by telephone, whetherbecause all telephone lines are busy or for any otherreason; in such case, a shareholder would have to usethe Fund’s other redemption and exchangeprocedures described in this Prospectus. Duringperiods of drastic economic or market changes, it ispossible that the telephone privileges may be difficultto implement, although this has not been the casewith the Fund in the past. To opt out of telephoneprivileges, please contact Morgan Stanley Services at1-800-548-7786.

Class HYou may redeem Class H shares of the Portfolio bycontacting your authorized financial representative.The value of shares redeemed may be more or lessthan the purchase price, depending on the NAV atthe time of redemption. Class H shares of thePortfolio will be redeemed at the NAV nextdetermined after the request is received in good order.

GeneralThe Fund will ordinarily pay redemption proceeds incash within seven business days after receipt of yourrequest. The Fund may suspend the right ofredemption or postpone the payment of redemptionproceeds at times when the NYSE is closed or underother circumstances in accordance withinterpretations or orders of the SEC.

If we determine that it is in the best interest of theFund or Portfolio not to pay redemption proceeds incash, we may distribute to you securities held by thePortfolio from which you are redeeming. Such in-kind securities may be illiquid and difficult orimpossible for a shareholder to sell at a time and at aprice that a shareholder would like. If requested, wewill 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 Portfolio atthe beginning of such period. Redemptions paid ininvestment securities will give rise to income, gain orloss for income tax purposes in the same manner asredemptions paid in cash. In addition, you may incurbrokerage costs and a further gain or loss for incometax purposes when you ultimately sell the securities.

Redeeming Shares



15


Frequent Purchases and Redemptions of SharesFrequent purchases and redemptions of shares byPortfolio shareholders are referred to as “market-timing” or “short-term trading” and may presentrisks for other shareholders of the Portfolio, whichmay include, among other things, dilution in thevalue of the Portfolio’s shares held by long-termshareholders, interference with the efficientmanagement of the Portfolio, increased brokerageand administrative costs, incurring unwanted taxablegains and forcing the Portfolio to hold excess levels ofcash.

In addition, the Portfolio is subject to the risk thatmarket-timers and/or short-term traders may takeadvantage of time zone differences between the foreignmarkets on which the Portfolio’s securities trade andthe time as of which the Portfolio’s NAV is calculated(“time-zone arbitrage”). For example, a market-timermay purchase shares of the Portfolio based on eventsoccurring after foreign market closing prices areestablished, but before the Portfolio’s NAV calculation,that are likely to result in higher prices in foreignmarkets the following day. The market-timer wouldredeem the Portfolio’s shares the next day when thePortfolio’s share price would reflect the increased pricesin foreign markets for a quick profit at the expense oflong-term Portfolio shareholders.

Investments in other types of securities also may besusceptible to short-term trading strategies. Theseinvestments include securities that are, among otherthings, thinly traded, traded infrequently or relativelyilliquid, which have the risk that the current marketprice for the securities may not accurately reflectcurrent market values. A shareholder may seek toengage in short-term trading to take advantage of thesepricing differences (referred to as “price-arbitrage”).Investment in certain fixed income securities may beadversely affected by price arbitrage trading securities.

The Fund discourages and does not accommodatefrequent purchases and redemptions of Portfolio sharesby Portfolio shareholders and the Fund’s Board of

Trustees has adopted policies and procedures withrespect to such frequent purchases and redemptions.The Fund’s policies with respect to purchases,exchanges and redemptions of shares are described inthe “Purchasing Shares,” “General ShareholderInformation” and “Redeeming Shares” sections ofthis Prospectus. Except as described in each of thesesections, and with respect to trades that occurthrough omnibus accounts at financial intermediariesas described below, the Fund’s policies regardingfrequent trading of shares are applied uniformly to allshareholders. With respect to trades that occurthrough omnibus accounts at intermediaries, such asinvestment advisers, broker-dealers, transfer agentsand third party administrators, the Fund (i) requestsassurance that such intermediaries currently sellingshares have in place internal policies and proceduresreasonably designed to address market-timingconcerns and has instructed such intermediaries tonotify the Fund immediately if they are unable tocomply with such policies and procedures and(ii) requires all prospective intermediaries to agree tocooperate in enforcing the Fund’s policies (or, uponprior written approval only, an intermediary’s ownpolicies) with respect to frequent purchases,exchanges and redemptions of shares.

Omnibus accounts generally do not identifycustomers’ trading activity to the Fund on anindividual ongoing basis. Therefore, with respect totrades that occur through omnibus accounts atfinancial intermediaries, to some extent, the Fundrelies on the financial intermediary to monitorfrequent short-term trading within the Fund by thefinancial intermediary’s customers. However, the Fundor the Distributor has entered into agreements withfinancial intermediaries whereby intermediaries arerequired to provide certain customer identification andtransaction information upon the Fund’s request. TheFund may use this information to help identify andprevent market-timing activity in the Fund. There canbe no assurance that the Fund will be able to identifyor prevent all market-timing activities.

April 30, 2012



16

General Shareholder InformationShare ClassesThis Prospectus offers Class H and Class L shares ofthe Portfolio, each having different distributionarrangements designed to provide you with differentpurchase options according to your investment needs.Class I and Class P shares are generally restricted toinvestments in minimum amounts that aresubstantially higher than Class H and Class L shares.

Valuation of SharesThe price of the Portfolio’s shares (NAV) is based onthe value of the Portfolio’s securities. The NAV of thePortfolio is determined as of the close of the NYSE(normally 4:00 p.m. Eastern Time) on each day theNYSE is open for business.

The Portfolio values its securities at market value.When no market quotations are readily available forsecurities, including circumstances under which theAdviser determines that a security’s market price isnot accurate, we will determine the value for thosesecurities in good faith at fair value using methodsapproved by the Fund’s Board of Trustees. Inaddition, with respect to securities that primarily arelisted on foreign exchanges, when an event occursafter the close of such exchanges that is likely to havechanged the value of the securities (for example, apercentage 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, asdetermined under procedures established by theFund’s Board of Trustees. Securities also may be fairvalued in the event of a significant developmentaffecting a country or region or an issuer-specificdevelopment which is likely to have changed thevalue of the security. In these cases, a Portfolio’s NAVwill reflect certain portfolio securities’ fair valuerather than their market price.

Fair value pricing involves subjective judgment and itis possible that the fair value determined for asecurity is materially different than the value thatcould be realized upon the sale of that security.

The NAV of each Class of shares may differ fromthat of other classes because of class-specific expensesthat each class may pay and the shareholder servicingfees charged to Class H and Class L shares.

Exchange PrivilegeYou may exchange Class H and Class L shares for thesame Class of shares of other available portfolios of theFund and available portfolios of Morgan StanleyInstitutional Fund, Inc. Exchanges are based on theshares’ respective NAVs.

To obtain a prospectus for another portfolio, call theFund at 1-800-548-7786 or contact your financialintermediary. If you purchased Portfolio sharesthrough a financial intermediary, certain portfoliosmay be unavailable for exchange. Contact yourfinancial intermediary to determine which portfoliosare available for exchange. See also “Other PurchaseInformation” for certain limitations relating toexchanges.

With respect to exchanges of Class L shares, you canprocess your exchange by contacting your financialintermediary. Otherwise, you should send exchangerequests by mail to Morgan Stanley InstitutionalFund Trust, c/o Morgan Stanley Services CompanyInc., P.O. Box 219804, Kansas City, MO 64121-9804.Exchange requests can also be made by calling1-800-548-7786. With respect to Class H shares, youcan process your exchange by contacting yourauthorized financial representative.

When you exchange for shares of another portfolio,your transaction will be treated the same as an initialpurchase. You will be subject to the same minimuminitial investment and account size as an initialpurchase. The Fund, in its sole discretion, may waivethe minimum initial investment amounts in certaincases. The Fund may terminate or revise the exchangeprivilege upon required notice or in certain caseswithout notice.

Tax ConsiderationsAs with any investment, you should consider howyour Portfolio investment will be taxed. The taxinformation in this Prospectus is provided as generalinformation. You should consult your own taxprofessional about the tax consequences of aninvestment in a Portfolio. Unless your investment ina Portfolio is through a tax-deferred retirementaccount, such as a 401(k) plan or IRA, you need tobe aware of the possible tax consequences when thePortfolio makes distributions and when you sellshares, including an exchange to another MorganStanley Fund.



17


Taxation of Distributions. Your distributions normallyare subject to federal and state income tax when theyare paid, whether you take them in cash or reinvestthem in Portfolio shares. A distribution also may besubject to local income tax. Any income dividenddistributions and any short-term capital gaindistributions are taxable to you as ordinary income.Any long-term capital gain distributions are taxable aslong-term capital gains, no matter how long you haveowned shares in the Portfolio.

Under current law (through 2012), if certainholding period requirements are met with respectto your shares, a portion of the income dividendsyou receive may be taxed at the same rates as long-term capital gains. However, even if incomereceived in the form of income dividends is taxed atthe same rates as long-term capital gains, suchincome will not be considered long-term capitalgains for other federal income tax purposes. Forexample, you will not be permitted to offsetincome dividends with capital losses. Short-termcapital gain distributions will continue to be taxedat ordinary income rates.

Corporate shareholders may be entitled to a dividends-received deduction for the portion of dividends theyreceive which are attributable to dividends received bysuch portfolios from U.S. corporations.

Investment income received by the Portfolio fromsources within foreign countries may be subject toforeign income taxes.

You will be sent a statement (Internal Revenue Service(“IRS”) Form 1099-DIV) by February of each yearshowing the taxable distributions paid to you in theprevious year. The statement provides information onyour dividends and any capital gains for tax purposes.

Taxation of Sales. Your sale of Portfolio sharesnormally is subject to federal and state income taxand may result in a taxable gain or loss to you. A salealso may be subject to local income tax. Yourexchange of Portfolio shares for shares of anotherMorgan Stanley Fund is treated for tax purposes likea sale of your original shares and a purchase of yournew shares. Thus, the exchange may, like a sale, resultin a taxable gain or loss to you and will give you anew tax basis for your shares.

Due to recent legislation, the Portfolio (or itsadministrative agent) is required to report to the IRSand furnish to Portfolio shareholders the cost basisinformation for sale transactions of shares purchasedon or after January 1, 2012. Shareholders may electto have one of several cost basis methods applied totheir account when calculating the cost basis of sharessold, including average cost, FIFO (“first-in, first-out”) or some other specific identification method.Unless you instruct otherwise, the Fund will useaverage cost as its default cost basis method, and willtreat sales as first coming from shares purchased priorto January 1, 2012. If average cost is used for the firstsale of Portfolio shares covered by these new rules, theshareholder may only use an alternative cost basismethod for shares purchased prospectively. Portfolioshareholders should consult with their tax advisors todetermine the best cost basis method for their taxsituation.

When you open your account, you should provideyour social security or tax identification number onyour investment application. By providing thisinformation, you will avoid being subject to federalbackup withholding (as of the date of this Prospectusthis rate is 28% and is scheduled to increase to 31%after 2012) on taxable distributions and redemptionproceeds. Any withheld amount would be sent to theIRS as an advance payment of your taxes due on yourincome for such year.

Dividends and DistributionsThe Portfolio normally declares dividends anddistributes substantially all of its net investmentincome to shareholders annually.

If any net gains are realized from the sale ofunderlying securities, the Portfolio normally

distributes the gains with the last distributions for thecalendar year. All dividends and distributions areautomatically paid in additional shares of thePortfolio unless you elect otherwise. If you want tochange how your dividends are paid, you must notifythe Fund in writing.

April 30, 2012



18

Fund ManagementAdviserMorgan Stanley Investment Management Inc., withprincipal offices at 522 Fifth Avenue, New York, NY10036, conducts a worldwide portfolio managementbusiness and provides a broad range of portfoliomanagement services to customers in the United Statesand abroad. Morgan Stanley is the direct parent of theAdviser. Morgan Stanley is a preeminent global financialservices firm engaged in securities trading and brokerageactivities, as well as providing investment banking,research and analysis, financing and financial advisoryservices. As of March 31, 2012, the Adviser, togetherwith its affiliated asset management companies, hadapproximately $303.8 billion in assets undermanagement or supervision.

A discussion regarding the basis for the Board ofTrustees’ approval of the investment advisoryagreement is available in the Fund’s annual report toshareholders for the fiscal year ended September 30,2011.

Advisory FeesFor the fiscal year ended September 30, 2011, theAdviser received a fee for advisory services (net ofaffiliated rebates, if applicable) equal to 0.49% of thePortfolio’s average daily net assets.

Portfolio Management Mid Cap Growth PortfolioThe Portfolio is managed by members of the Growthteam. The team consists of portfolio managers andanalysts. Current members of the team who are jointlyand primarily responsible for the day-to-daymanagement of the Portfolio are Dennis P. Lynch,David S. Cohen, Sam G. Chainani and Jason C. Yeung,each a Managing Director of the Adviser, andAlexander T. Norton and Armistead B. Nash, each anExecutive Director of the Adviser.

Mr. Lynch has been associated with the Adviser inan investment management capacity since 1998.Mr. Cohen has been associated with the Adviser inan investment management capacity since 1993.Mr. Chainani has been associated with the Adviserin an investment management capacity since 1996.

Mr. Norton has been associated with the Adviser inan investment management capacity since 2000.Mr. Yeung has been associated with the Adviser inan investment management capacity since 2002.Mr. Nash has been associated with the Adviser in aninvestment management capacity since 2002.

Mr. Lynch is the lead portfolio manager of thePortfolio. Messrs. Cohen, Chainani, Norton, Yeungand Nash are co-portfolio managers. Members of theteam collaborate to manage the assets of the Portfolio.

The Fund’s SAI provides additional informationabout the portfolio managers’ compensationstructure, other accounts managed by the portfoliomanagers and the portfolio managers’ ownership ofsecurities in the Portfolio.

The composition of the team may change from timeto time.

DistributorShares of the Fund are distributed exclusively throughMorgan Stanley Distribution, Inc., a wholly-ownedsubsidiary of the Adviser. The Distributor has enteredinto arrangements with certain financial intermediarieswho may accept purchase and redemption orders forshares of the Portfolio on its behalf.

Shareholder Services Plan (Class H)The Fund has adopted a Shareholder Services Planfor the Portfolio’s Class H shares pursuant toRule 12b-1 under the Investment Company Act of1940, as amended (the “1940 Act”) (the “Class HService Plan”). Under the Class H Service Plan, thePortfolio may pay to the Distributor and otheraffiliated and unaffiliated broker-dealers, financialinstitutions and/or intermediaries a monthly servicefee at an annual rate of up to 0.25% of thePortfolio’s average daily net assets attributable toClass H shares. The Distributor may direct that allor any part of this fee be paid directly to its affiliatesor other broker-dealers, financial institutions and/orintermediaries that provide shareholder services toinvestors who purchase Class H shares. Over timethe shareholder servicing fees will increase the cost of



19


your investment and may cost you more than payingother types of sales charges.

Distribution and Shareholder Services Plan (Class L)The Fund has adopted a Distribution andShareholder Services Plan for the Portfolio’s Class Lshares pursuant to Rule 12b-1 under the 1940 Act(the “Class L Plan”). Under the Class L Plan, thePortfolio pays the Distributor a monthly distributionfee at an annual rate of up to 0.50% of thePortfolio’s average daily net assets attributable toClass L shares and a monthly shareholder service feeat an annual rate of up to 0.25% of the Portfolio’saverage daily net assets attributable to Class L shares.The Distributor may direct that all or any part ofthese fees be paid directly to its affiliates or otherbroker-dealers, financial institutions and/orintermediaries that provide distribution and/orshareholder support services to investors who

purchase Class L shares. Over time the distributionfees and shareholder servicing fees will increase thecost of your investment and may cost you more thanpaying other types of sales charges.

Additional InformationThe Adviser and/or Distributor may paycompensation to certain affiliated or unaffiliatedbrokers or other service providers in connection withthe sale or retention of shares of the Portfolio and/orshareholder servicing. Such compensation may besignificant in amount and the prospect of receivingany such additional compensation may provideaffiliated or unaffiliated entities with an incentive tofavor sales of shares of the Portfolio over otherinvestment options. Any such payments will notchange the NAV or the price of Portfolio shares. Formore information, please see the Fund’s SAI.

April 30, 2012



Financial HighlightsNo financial information is provided for thePortfolio’s Class H and Class L shares because theyhad not commenced operations as of the date of thisProspectus.

20

Merrill Corp - MS Institutional Fund Trust Mid Cap Growth Portfolio Prospectus [Funds] 04-30-2012 ED [AUX] | ajacksod | 25-Apr-12 00:38 | 12-4593-4.da | Sequence: 1CHKSUM Content: 23499 Layout: 57850 Graphics: No Graphics CLEAN


21

(This page intentionally left blank)

Merrill Corp - MS Institutional Fund Trust Mid Cap Growth Portfolio Prospectus [Funds] 04-30-2012 ED [AUX] | ajacksod | 25-Apr-12 00:38 | 12-4593-4.da | Sequence: 2CHKSUM Content: 40299 Layout: 49229 Graphics: No Graphics CLEAN


In addition to this Prospectus, the Fund has aStatement of Additional Information, dated April 30,2012, which contains additional, more detailedinformation about the Fund and the Portfolio. TheStatement of Additional Information is incorporated byreference into this Prospectus and, therefore, legallyforms a part of this Prospectus.

The Fund publishes Annual and Semi-Annual Reportsto Shareholders (“Shareholder Reports”) that containadditional information about the Portfolio’sinvestments. In the Fund’s Annual Report toShareholders, you will find a discussion of the marketconditions and the investment strategies thatsignificantly affected the Portfolio’s performanceduring the last fiscal year. For additional Fundinformation, including information regarding theinvestments comprising the Portfolio, please call thetoll-free number below.

You may obtain the Statement of AdditionalInformation and Shareholder Reports without chargeby contacting the Fund at the toll-free number belowor on our internet site at: www.morganstanley.com/im.If you purchased shares through a financialintermediary, you may also obtain these documents,without charge, by contacting your financialintermediary.

Information about the Fund, including the Statementof Additional Information and Shareholder Reports,

may be obtained from the SEC in any of the followingways. (1) in person: you may review and copydocuments in the SEC’s Public Reference Room inWashington D.C. (for information on the operation ofthe Public Reference Room call 1-202-551-8090);(2) on-line: you may retrieve information from theSEC’s web site at http://www.sec.gov; (3) by mail: youmay request documents, upon payment of aduplicating fee, by writing to the Securities andExchange Commission, Public Reference Section,Washington, D.C. 20549-1520; or (4) by e-mail: youmay request documents, upon payment of aduplicating fee, by e-mailing the SEC at the followingaddress: [email protected].

Morgan Stanley Institutional Fund Trust c/o Morgan Stanley Services Company Inc. P.O. Box 219804 Kansas City, MO 64121-9804

For Shareholder Inquiries, 1-800-354-7786.

Prices and Investment Results are available atwww.morganstanley.com/im.

The Fund’s Investment Company Act registration number is811-03980.

Where to Find Additional Information

IFTMCGHLPRO 4/12

Merrill Corp - MS Institutional Fund Trust Mid Cap Growth Portfolio Prospectus [Funds] 04-30-2012 ED [AUX] | ajacksod | 25-Apr-12 00:38 | 12-4593-4.za | Sequence: 1CHKSUM Content: 40823 Layout: 37447 Graphics: 8057 CLEAN

JOB: 12-4593-4 CYCLE#;BL#: 24; 0 TRIM: 8.375" x 10.875" COMPOSITECOLORS: Black, ~note-color 2 GRAPHICS: ms_new_k_logo.eps V1.5

Morgan Stanley Institutional Fund Trust - Proxy Direct · INVESTMENT MANAGEMENT Prospectus April...

Documents

Transcript of Morgan Stanley Institutional Fund Trust - Proxy Direct · INVESTMENT MANAGEMENT Prospectus April...