chksum graphics: merrill corp - ms european …eugspt-0715 merrill corp - ms european equity fund...

July 2, 2015

Supplement

SUPPLEMENT DATED JULY 2, 2015 TO THE PROSPECTUSES OF

Morgan Stanley European Equity Fund Inc., dated February 27, 2015Morgan Stanley Global Fixed Income Opportunities Fund, dated February 27, 2015

Morgan Stanley Mortgage Securities Trust, dated February 27, 2015Morgan Stanley Multi Cap Growth Trust, dated March 31, 2015

Morgan Stanley U.S. Government Securities Trust, dated April 30, 2015(each, a “Fund”)

The following is added as the penultimate paragraph to the section of each Fund’s Prospectus entitled “ShareholderInformation—Share Class Arrangements—Class A Shares:”

Conversion Feature. Class A shares held in certain fee-based advisory program (“Advisory Program”) accountsmay be converted to Class I shares if such Advisory Program had previously offered only Class A shares and nowoffers only Class I shares. In addition, a shareholder holding Class A shares through a brokerage account may alsoconvert its Class A shares to Class I shares if such shareholder transfers its Class A shares to an account within anAdvisory Program that offers only Class I shares. Such conversions will be on the basis of the relative net assetvalues per share, without requiring any investment minimum to be met and without the imposition of any redemptionfee or other charge. If a CDSC is applicable to such Class A shares, then the conversion may not occur until after theshareholder has held the shares for an 18 month period.

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.

EUGSPT-0715

Merrill Corp - MS European Equity Fund Inc. Pros Supp Mulitple Funds N-1A 33-33530 07-02-2015 ED | thunt | 02-Jul-15 10:38 | 15-15154-2.ba | Sequence: 1CHKSUM Content: 43858 Layout: 37112 Graphics: 13234 CLEAN

JOB: 15-15154-2 CYCLE#;BL#: 1; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, ~note-color 2 GRAPHICS: morgan_stanley_new_k_logo.eps V1.5

March 16, 2015

Supplement

SUPPLEMENT DATED MARCH 16, 2015 TO THE PROSPECTUSES OFMorgan Stanley European Equity Fund Inc., dated February 27, 2015

Morgan Stanley Global Fixed Income Opportunities Fund, dated February 27, 2015Morgan Stanley Mortgage Securities Trust, dated February 27, 2015

Morgan Stanley Multi Cap Growth Trust, dated March 31, 2014Morgan Stanley U.S. Government Securities Trust, dated April 30, 2014

(collectively, the “Funds”)

Effective as of the close of business on April 30, 2015, each Fund is suspending the continuous offering of its Class L sharesand thus, no further purchases of Class L shares of the Funds may be made by investors. Existing Class L shareholders maycontinue to invest through reinvestment of dividends and distributions. Class L shares of each Fund may be exchanged (i) forClass L shares of other Morgan Stanley Multi-Class Funds (as defined in the section of the Prospectus entitled “ShareholderInformation—How to Exchange Shares”) even though Class L shares are closed to investors, (ii) for shares of any MorganStanley Money Market Fund (as defined in the section of the Prospectus entitled “Shareholder Information—How to ExchangeShares”) or (iii) for Advisor Class shares of Morgan Stanley Limited Duration U.S. Government Trust, in each case if available,without the imposition of an exchange fee. Class L shares of a Fund that are exchanged for shares of a Morgan Stanley MoneyMarket Fund or Advisor Class shares of Morgan Stanley Limited Duration U.S. Government Trust may be subsequently re-exchanged for Class L shares of any other Morgan Stanley Multi-Class Fund (even though Class L shares are closed to investors).Please see “Shareholder Information—How to Exchange Shares” for further information.

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.

MSREFUNDSPT-0415

Merrill Corp - MS European Equity Fund Inc. Retail Multi Fund Class L Pros Supp N-1A 33-33530 03-31-2015 ED | pweakly | 13-Mar-15 19:49 | 15-5753-6.ba | Sequence: 1CHKSUM Content: 10385 Layout: 55917 Graphics: 13234 CLEAN

JOB: 15-5753-6 CYCLE#;BL#: 2; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, ~note-color 2 GRAPHICS: morgan_stanley_new_k_logo.eps V1.5

INVESTMENT MANAGEMENT

TickerShare Class SymbolClass A DINAX

Class B DINBX

Class L DINCX

Class I DINDX

Class IS MGFOX

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

Morgan StanleyGlobal Fixed IncomeOpportunities FundProspectusFebruary 27, 2015A mutual fund whose primary investment objective is to seek a highlevel of current income. As a secondary objective, the Fund seeks tomaximize total return but only to the extent consistent with itsprimary objective.

e-DELIVERY: Go PaperlessIt’s faster, easier and greener.Sign up today at: www.icsdelivery.comMay not be available for all accounts.

Merrill Corp - MS Global Fixed Income Opportunities Fund Multi Class Prospectus [Funds] 02-28-2015 ED [AUX] | thunt | 11-Feb-15 10:42 | 15-2825-2.aa | Sequence: 1CHKSUM Content: 2905 Layout: 2065 Graphics: 20392 CLEAN

JOB: 15-2825-2 CYCLE#;BL#: 4; 0 TRIM: 7.5" x 8.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: e-del_4L_60k_2013.eps, morgan_stanley_new_k_logo.eps V1.5

Contents

Fund SummaryInvestment Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Principal Investment Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Principal Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Past Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Fund Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Purchase and Sale of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Payments to Broker-Dealers and Other Financial Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Fund DetailsAdditional Information about the Fund's Investment Objectives, Strategies and Risks . . . . . . . . . . . 8Portfolio Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Fund Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Shareholder InformationPricing Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25How to Buy Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26How to Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29How to Sell Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Frequent Purchases and Redemptions of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Share Class Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

This Prospectus contains important information about the Fund. Please read it carefully and keep it for future reference.

Merrill Corp - MS Global Fixed Income Opportunities Fund Multi Class Prospectus [Funds] 02-28-2015 ED [AUX] | thunt | 11-Feb-15 10:42 | 15-2825-2.aa | Sequence: 2CHKSUM Content: 57056 Layout: 10387 Graphics: No Graphics CLEAN

JOB: 15-2825-2 CYCLE#;BL#: 4; 0 TRIM: 7.5" x 8.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, ~note-color 2 GRAPHICS: none V1.5

Investment ObjectivesMorgan Stanley Global Fixed Income Opportunities Fund (the“Fund”) seeks a high level of current income as its primaryinvestment objective. As a secondary objective, the Fund seeks tomaximize total return but only to the extent consistent with itsprimary objective.

Fees and ExpensesThe table below describes the fees and expenses that you maypay if you buy and hold shares of the Fund. For purchases ofClass A shares, you may qualify for a sales charge discount if thecumulative net asset value (“NAV”) of Class A shares of theFund purchased in a single transaction, together with the NAVof all Class A shares of other Morgan Stanley Multi-Class Funds (as defined in the section of this Prospectusentitled “Shareholder Information—How to ExchangeShares—Permissible Fund Exchanges”) held in RelatedAccounts (as defined in the section of this Prospectus entitled“Shareholder Information—Share Class Arrangements”),amounts to $25,000 or more. More information about thiscombined purchase discount and other discounts is availablefrom your financial intermediary and in the section of thisProspectus entitled “Shareholder Information—ShareClass Arrangements.”

Shareholder Fees (fees paid directly from your investment)

Class A Class B Class L Class I Class IS

Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.25% None None None None

Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or NAV at redemption) None1 5.00%2 None None None

Annual Fund Operating Expenses (expenses that you pay eachyear as a percentage of the value of your investment)

Class A Class B Class L Class I Class IS

Advisory Fee 0.32% 0.32% 0.32% 0.32% 0.32%

Distribution and/or ShareholderService (12b-1) Fee 0.25% 0.85% 0.50% None None

Other Expenses 0.63% 0.85% 0.62% 0.54% 0.65%

Total Annual FundOperating Expenses3 1.20% 2.02% 1.44% 0.86% 0.97%

Fee Waiver and/or Expense Reimbursement3 0.15% 0.33% 0.10% 0.16% 0.30%

Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement3 1.05% 1.69% 1.34% 0.70% 0.67%

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

The example assumes that you invest $10,000 in the Fund,your investment has a 5% return each year, and the Fund’soperating expenses remain the same (except for the ten-yearamounts for Class B shares which reflect the conversion toClass A shares eight years after the end of the calendar monthin which the shares were purchased). Although your actual

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Fund Summary

Merrill Corp - MS Global Fixed Income Opportunities Fund Multi Class Prospectus [Funds] 02-28-2015 ED [AUX] | lmckinl | 27-Feb-15 03:56 | 15-2825-2.ba | Sequence: 1CHKSUM Content: 2712 Layout: 47260 Graphics: No Graphics CLEAN


costs may be higher or lower, based on these assumptions yourcosts would be:

If You SOLD Your Shares:

1 Year 3 Years 5 Years 10 Years

Class A $528 $745 $980 $1,653

Class B $672 $833 $1,118 $1,828

Class L $136 $425 $734 $1,613

Class I $72 $224 $390 $871

Class IS $68 $214 $373 $835

If You HELD Your Shares:

1 Year 3 Years 5 Years 10 Years

Class A $528 $745 $980 $1,653

Class B $172 $533 $918 $1,828

Class L $136 $425 $734 $1,613

Class I $72 $224 $390 $871

Class IS $68 $214 $373 $835(1) Investments that are not subject to any sales charges at the time

of purchase are subject to a contingent deferred sales charge(“CDSC”) of 0.50% that will be imposed if you sell your shareswithin 18 months after the last day of the month of purchase,except for certain specific circumstances. See “ShareholderInformation—Share Class Arrangements” for further informationabout the CDSC waiver categories.

(2) The Class B CDSC is scaled down to 1.00% during the sixthyear, reaching zero thereafter. See “Shareholder Information—Share Class Arrangements” for a complete discussion ofthe CDSC.

(3) The Fund’s “Adviser” and “Administrator,” Morgan StanleyInvestment Management Inc., has agreed to reduce its advisoryfee, its administration fee and/or reimburse the Fund so thatTotal Annual Fund Operating Expenses, excluding certaininvestment related expenses, taxes, interest and otherextraordinary expenses (including litigation), will not exceed1.05% for Class A, 1.69% for Class B, 1.34% for Class L, 0.70%for Class I and 0.67% for Class IS. The fee waivers and/orexpense reimbursements will continue for at least one year oruntil such time as the Fund’s Board of Trustees acts todiscontinue all or a portion of such waivers and/orreimbursements when it deems such action is appropriate.

Portfolio TurnoverThe Fund pays transaction costs when it buys and sells securities(or “turns over” its portfolio). A higher portfolio turnover ratemay indicate higher transaction costs and may result in higher

taxes when Fund shares are held in a taxable account. Thesecosts, which are not reflected in Total Annual Fund OperatingExpenses or in the Example, affect the Fund’s performance.During the most recent fiscal year, the Fund’s portfolio turnoverrate was 83% of the average value of its portfolio.

Principal Investment StrategiesThe Fund will normally invest at least 80% of its assets in aportfolio of fixed-income securities. The Fund’s Adviser and/or“Sub-Adviser,” Morgan Stanley Investment ManagementLimited, will allocate the Fund’s investments among thefollowing asset classes or market segments: (1) corporatesecurities, (2) residential and commercial mortgage-backedsecurities, (3) asset-backed securities, (4) emerging marketsecurities, (5) convertible securities, (6) U.S. governmentsecurities and foreign sovereign debt, and (7) currencyderivatives. Securities may be rated either investment grade orbelow investment grade and denominated in any currency,hedged or un-hedged. The amount of the Fund’s assetscommitted to any one asset class or market segment willfluctuate. However, the Fund may invest up to 65% of its netassets in any one asset class or market segment. The Adviser andSub-Adviser have the flexibility to select any combination of atleast two asset classes of the aforementioned groups dependingupon market conditions and the current economicenvironment and, as a result, at any given time the Fund’s assetsmay be invested in certain groups and not others.

The corporate securities in which the Fund will invest mayinclude fixed-income securities issued by corporations located inor outside of the United States, certificates of deposit and bankers’acceptances issued or guaranteed by, or time deposits maintainedat, banks, commercial paper and convertibles securities.

The types of mortgage-backed securities in which the Fundmay invest include mortgage pass-through securities,collateralized mortgage obligations (“CMOs”), strippedmortgage-backed securities (“SMBS”) and commercialmortgage-backed securities (“CMBS”). Mortgage pass-throughsecurities provide for monthly payments that are a “pass-through” of the monthly interest and principal payments madeby the individual borrowers on the pooled mortgage loans.CMOs are debt obligations collateralized by mortgage loans ormortgage pass-through securities (collectively “MortgageAssets”). CMOs are issued in multiple classes and each class hasa fixed or floating rate and a stated maturity or final

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distribution date. Certain classes will have more predictablecash flows than others. The Fund may invest in any class ofCMO. SMBS are derivative multi-class mortgage securities. Acommon type of stripped mortgage security will have one classreceiving some of the interest and most of the principal fromthe Mortgage Assets, while the other class receives most of theinterest and the remainder of the principal. In the mostextreme case, one class will receive all of the interest (theinterest-only or “IO” class), while the other class will receive allof the principal (the principal-only or “PO” class). CMBS aregenerally multi-class or pass-through securities backed by amortgage loan or a pool of mortgage loans secured bycommercial property, such as industrial and warehouseproperties, office buildings, retail space and shopping malls,multifamily properties and cooperative apartments. Inaddition, the Fund may invest in to-be-announced pass-through mortgage securities, which settle on a delayeddelivery basis (“TBAs”).

Asset-backed securities represent an interest in a pool of assetssuch as, but not limited to, automobile loans, credit cardreceivables, student loans or home equity (prime and subprime)loans that have been securitized in pass-through structuressimilar to mortgage-backed securities.

The Fund may invest in fixed-income securities issued orguaranteed by the U.S. Government, its agencies orinstrumentalities or in fixed-income securities issued orguaranteed by foreign governments or supranationalorganizations or any of their instrumentalities, including debtobligations of governmental issuers located in emerging marketor developing countries and sovereign debt. The Fund may alsoinvest generally in foreign securities that are denominated inU.S. dollars or in currencies other than U.S. dollars.

In pursuit of its investment objective, the Fund may regularlyenter into currency derivatives, including, but not limited to,foreign currency forward exchange contracts, and currency andcurrency index futures and options contracts for hedging andnon-hedging purposes. The use of these currency derivativesmay allow the Fund to obtain net long or net negative (short)exposure to selected currencies. At times, the Fund may enterinto “cross-currency” transactions involving currencies otherthan those in which securities held or proposed to be purchasedare denominated.

In addition to its use of currency derivatives, the Fund may, butit is not required to, use derivative instruments for a variety ofpurposes, including hedging, risk management, portfoliomanagement or to earn income. The Fund’s use of derivativesmay involve the purchase and sale of derivative instrumentssuch as futures, options, swaps and other related instrumentsand techniques. These derivative instruments will be countedtoward the Fund’s 80% policy discussed above to the extentthey have economic characteristics similar to the securitiesincluded within that policy.

The Fund may invest up to 20% of its assets in public bank loansmade by banks or other financial institutions. The public bankloans may be rated investment grade or below investment grade.The Fund may also invest in restricted and illiquid securities.

Principal RisksThere is no assurance that the Fund will achieve its investmentobjectives and you can lose money investing in this Fund. Theprincipal risks of investing in the Fund include:

• Fixed-Income Securities. Fixed-income securities are subjectto the risk of the issuer’s inability to meet principal andinterest payments on its obligations (i.e., credit risk) and aresubject to price volatility resulting from, among other things,interest rate sensitivity, market perception of thecreditworthiness of the issuer and general market liquidity(i.e., market risk). The historically low interest rateenvironment increases the risks associated with rising interestrates, including the potential for periods of volatility andincreased redemptions. The Fund may face a heightened levelof interest rate risk, especially since the Federal ReserveBoard has ended its quantitative easing program and maybegin to raise rates. The Fund may be subject to certainliquidity risks, which may result from the lack of an activemarket and the reduced number and capacity of traditionalmarket participants to make a market in fixed-incomesecurities. The Fund is not limited as to the maturities of thesecurities in which it may invest. Securities with longerdurations are likely to be more sensitive to changes in interestrates, generally making them more volatile than securitieswith shorter durations. Lower rated fixed-income securitieshave greater volatility because there is less certainty thatprincipal and interest payments will be made as scheduled.

• Foreign and Emerging Market Securities. Investments inforeign markets entail special risks such as currency, political,

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economic and market risks. There also may be greater marketvolatility, less reliable financial information, highertransaction and custody costs, decreased market liquidity andless government and exchange regulation associated withinvestments in foreign markets. In addition, investments incertain foreign markets, which have historically beenconsidered stable, may become more volatile and subject toincreased risk due to ongoing developments and changingconditions in such markets. Moreover, the growinginterconnectivity of global economies and financial marketshas increased the probability that adverse developments andconditions in one country or region will affect the stability ofeconomies and financial markets in other countries orregions. The risks of investing in emerging market countriesare greater than risks associated with investments in foreigndeveloped countries. In addition, the Fund’s investments inforeign issuers may be denominated in foreign currencies andtherefore, to the extent unhedged, the value of the investmentwill fluctuate with the U.S. dollar exchange rates.

• Mortgage-Backed Securities. Mortgage-backed securitiesentail prepayment risk, which generally increases during aperiod of falling interest rates. Rising interest rates tend todiscourage refinancings, with the result that the average lifeand volatility of mortgage securities will increase and marketprice will decrease. Rates of prepayment, faster or slowerthan expected by the Adviser, could reduce the Fund’s yield,increase the volatility of the Fund and/or cause a decline inNAV. Certain mortgage-backed securities may be morevolatile and less liquid than other traditional types of debtsecurities. In addition, an unexpectedly high rate of defaultson the mortgages held by a mortgage pool may adverselyaffect the value of a mortgage-backed security and couldresult in losses to the Fund. The risk of such defaults isgenerally higher in the case of mortgage pools that includesubprime mortgages. Investments in TBAs may give rise to aform of leverage and may cause the Fund’s portfolio turnoverrate to appear higher. Leverage may cause the Fund to bemore volatile than if the Fund had not been leveraged.

• CMOs. CMOs are comprised of various tranches, theexpected cash flows of which have varying degrees ofpredictability as compared with the underlying MortgageAssets. The less predictable the cash flow, the higher the yieldand the greater the risk. In addition, if the collateral securingCMOs or any third-party guarantees is insufficient to makepayments, the Fund could sustain a loss.

• SMBS. Investments in each class of SMBS are extremelysensitive to changes in interest rates. IOs tend to decrease invalue substantially if interest rates decline and prepaymentrates become more rapid. POs tend to decrease in valuesubstantially if interest rates increase and the rate ofprepayment decreases. If the Fund invests in SMBS andinterest rates move in a manner not anticipated by Fundmanagement, it is possible that the Fund could lose all orsubstantially all of its investment.

• CMBS. CMBS are subject to credit risk and prepaymentrisk. Although prepayment risk is present, it is of a lesserdegree in CMBS than in the residential mortgage market;commercial real estate property loans often containprovisions which substantially reduce the likelihood thatsuch securities will be prepaid (e.g., significant prepaymentpenalties on loans and, in some cases, prohibition onprincipal payments for several years following origination).

• Asset-Backed Securities. Asset-backed securities involve therisk that various federal and state consumer laws and otherlegal and economic factors may result in the collateralbacking the securities being insufficient to support paymenton the securities. Some asset-backed securities also entailprepayment risk, which may vary depending on the typeof asset.

• High Yield Securities (“Junk Bonds”). The Fund’sinvestments in high yield securities expose it to a substantialdegree of credit risk. High yield securities may be issued bycompanies that are restructuring, are smaller and lesscreditworthy or are more highly indebted than othercompanies, and therefore they may have more difficultymaking scheduled payments of principal and interest. Highyield securities may experience reduced liquidity, and suddenand substantial decreases in price. An economic downturnaffecting an issuer of high yield securities may result in anincreased incidence of default. In the event of a default, theFund may incur additional expenses to seek recovery.

• U.S. Government Securities. The U.S. governmentsecurities in which the Fund invests can be subject to twotypes of risk: credit risk and interest rate risk. When thegeneral level of interest rates goes up, the prices of mostfixed-income securities go down. When the general level ofinterest rates goes down, the prices of most fixed-incomesecurities go up. While the credit risk associated with U.S.government securities generally is considered to be minimal,the interest rate risk can be substantial. With respect to U.S.government securities that are not backed by the full faithand credit of the United States, there is the risk that the U.S.

4



Government will not provide financial support to such U.S.government agencies, instrumentalities or sponsoredenterprises if it is not obligated to do so by law.

• Foreign Sovereign Debt. Investing in foreign sovereign debtsecurities will expose the Fund to the direct or indirectconsequences of political, social or economic changes in thecountries that issue the securities. The issuer or governmentalauthority that controls the repayment of sovereign debt maynot be willing or able to repay the principal and/or pay interestwhen it becomes due, due to factors such as debt serviceburden, political constraints, cash flow problems and othernational economic factors. In addition, foreign governmentsmay default on their debt securities, which may requireholders of such securities to participate in debt rescheduling oradditional lending to defaulting governments. Moreover, thereis no bankruptcy proceeding by which defaulted sovereigndebt may be collected in whole or in part.

• Currency Derivatives. Investments in currency derivativesmay substantially change the Fund’s exposure to currencyexchange rates and could result in losses to the Fund ifcurrencies do not perform as the Adviser and/or Sub-Adviserexpect. Foreign currency forward exchange contracts andcurrency futures and options contracts create exposure tocurrencies in which the Fund’s securities are not denominated.To the extent hedged by the use of foreign currency forwardexchange contracts, the precise matching of the foreigncurrency forward exchange contract amounts and the value ofthe securities involved will not generally be possible because thefuture value of such securities in foreign currencies will changeas a consequence of market movements in the value of thosesecurities between the date on which the contract is enteredinto and the date it matures. There is additional risk that suchtransactions reduce or preclude the opportunity for gain ifthe value of the currency should move in the directionopposite to the position taken and that foreign currencyforward exchange contracts create exposure to currencies inwhich the Fund’s securities are not denominated. The use offoreign currency forward exchange contracts involves the riskof loss from the insolvency or bankruptcy of the counterpartyto the contract or the failure of the counterparty to makepayments or otherwise comply with the terms of the contract.

• Public Bank Loans. Certain public bank loans are illiquid,meaning the Fund may not be able to sell them quickly at afair price. To the extent a bank loan has been deemed illiquid,it will be subject to the Fund’s restrictions on investment inilliquid securities. The secondary market for bank loans maybe subject to irregular trading activity, wide bid/ask spreads

and extended trade settlement periods. Bank loans are subjectto the risk of default in the payment of interest or principalon a loan, which will result in a reduction of income to theFund, and a potential decrease in the Fund’s NAV. The risk ofdefault will increase in the event of an economic downturn ora substantial increase in interest rates. Because public bankloans usually rank lower in priority of payment to seniorloans, they present a greater degree of investment risk. Thesebank loans may exhibit greater price volatility as well.

• Liquidity. The Fund’s investments in restricted and illiquidsecurities may entail greater risk than investments in publiclytraded securities. These securities may be more difficult tosell, particularly in times of market turmoil. Illiquidsecurities may be more difficult to value. If the Fund is forcedto sell an illiquid security to fund redemptions or for othercash needs, it may be forced to sell the security at a loss.

• Other Derivatives. A derivative instrument often has riskssimilar to its underlying asset and may have additional risks,including imperfect correlation between the value of thederivative and the underlying asset, risks of default by thecounterparty to certain transactions, magnification of lossesincurred due to changes in the market value of the securities,instruments, indices or interest rates to which they relate andrisks that the transactions may not be liquid. Certain derivativetransactions may give rise to a form of leverage. Leveragemagnifies the potential for gain and the risk of loss.

Shares of the Fund are not bank deposits and are not guaranteedor insured by the Federal Deposit Insurance Corporation or anyother government agency.

Past PerformanceThe bar chart and table below provide some indication of therisks of investing in the Fund by showing changes in the Fund’sClass A shares’ performance from year-to-year and by showinghow the Fund’s average annual returns for the one, five and10 year periods and since inception compare with those of abroad measure of market performance, as well as an index thatrepresents a group of similar mutual funds, over time. Theperformance of the other Classes, which is shown in the tablebelow, will differ because the Classes have different ongoingfees. The performance information in the bar chart does notreflect the deduction of sales charges; if these amounts werereflected, returns would be less than shown. The Fund’s returnsin the table include the maximum applicable sales charge foreach Class and assume you sold your shares at the end of eachperiod (unless otherwise noted). The Fund’s past performance(before and after taxes) is not necessarily an indication of how

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the Fund will perform in the future. Updated performanceinformation is available online at www.morganstanley.com/imor by calling toll-free (800) 548-7786.

Annual Total Returns—Calendar Years

High Quarter 9/30/09 9.65%Low Quarter 12/31/08 –8.63%

Average Annual Total Returns For Periods EndedDecember 31, 2014

Past 1 Past 5 Past 10 Since Year Years Years Inception

Class A: Return Before Taxes 0.41% 6.46% 4.87% 3.93%

Returns After Taxes on Distributions1 –1.41% 4.45% 2.52% 1.40%

Returns After Taxes on Distributions and Sale of Fund Shares 0.23% 4.18% 2.76% 1.85%

Class B: Return Before Taxes –0.89% 6.41% 4.81%* 4.59%*

Class L: Return Before Taxes 4.61% 6.90% 4.75% 3.59%

Class I: Return Before Taxes 5.15% 7.74% 5.62% 4.46%

Class IS: Return Before Taxes 5.17% N/A N/A 7.41%

Barclays Global Aggregate Index (reflects no deduction for fees, expenses or taxes)2 0.59% 2.65% 3.60% 5.11%4

Lipper Global Income Funds Index (reflects no deduction for taxes)3 2.69% 4.15% 4.18% 4.96%4

* Effective April 2005, Class B shares will generally convert toClass A shares approximately eight years after the end of thecalendar month in which the shares were purchased. The “Past 10Years” and “Since Inception” performance for Class B sharesreflects this conversion.

(1) These returns do not reflect any tax consequences from a saleof your shares at the end of each period, but they do reflect anyapplicable sales charges on such a sale.

(2) The Barclays Global Aggregate Index provides a broad-basedmeasure of the global investment grade fixed-rate debt markets.Total Returns shown in unhedged USD. It is not possible to investdirectly in an index.

(3) The Lipper Global Income Funds Index is an equally weightedperformance index of the largest qualifying funds (based on netassets) in the Lipper Global Income Funds classification. There arecurrently 30 funds represented in this Index.

(4) Since Inception reflects the inception date of Class A.

The after-tax returns shown in the table above are calculatedusing the historical highest individual federal marginal incometax rates during the period shown and do not reflect the impactof state and local taxes. After-tax returns for the Fund’s otherClasses will vary from the Class A shares’ returns. Actual after-tax returns depend on an investor’s tax situation and may differfrom those shown, and after-tax returns are not relevant toinvestors who hold their Fund shares through tax-deferredarrangements, such as 401(k) plans or individual retirementaccounts. After-tax returns may be higher than before-taxreturns due to foreign tax credits and/or an assumed benefitfrom capital losses that would have been realized had Fundshares been sold at the end of the relevant periods, as applicable.

Fund ManagementAdviser. Morgan Stanley Investment Management Inc.

Sub-Adviser. Morgan Stanley Investment ManagementLimited

Portfolio Managers. The Fund is managed by members of theGlobal Fixed Income team. Information about the currentmembers jointly and primarily responsible for the day-to-dayimplementation of the Fund’s overall strategy and portfolioconstruction is shown below:

Title with Adviser/ Date BeganName Sub-Adviser Managing Fund

Jim Caron Managing Director October 2014

Richard Ford Managing Director October 2014

Michael Kushma Managing Director April 2014

Christian G. Roth Managing Director March 2010

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-30%-20%

0%

-10%

20%10%

30%

40%

-30

40

4.33%4.33%

27.31%27.31%

7.49%7.49% 9.91%9.91%5.75%5.75%

15.02%15.02%4.86%4.86%1.94%1.94%3.31%3.31%

-20.32%-20.32%

6

Merrill Corp - MS Global Fixed Income Opportunities Fund Multi Class Prospectus [Funds] 02-28-2015 ED [AUX] | lmckinl | 27-Feb-15 03:56 | 15-2825-2.ba | Sequence: 6CHKSUM Content: 21337 Layout: 34260 Graphics: 60096 CLEAN

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Purchase and Sale of Fund SharesClass B shares of the Fund are closed to new investments. TheClass B shareholders of the Fund do not have the option ofpurchasing additional Class B shares. However, the existing Class Bshareholders may invest through dividend reinvestments.

The minimum initial investment generally is $5 million forClass I shares and $1,000 for each of Class A and Class L sharesof the Fund. To purchase Class IS shares, an investor must meeta minimum initial investment of $10,000,000 or be a definedcontribution, defined benefit or other employer sponsoredemployee benefit plan with minimum plan assets of$250,000,000, whether or not qualified under the InternalRevenue Code of 1986, as amended (the “Code”), in each casesubject to the discretion of the Adviser. The minimuminvestment requirements may be waived for certaininvestments. For more information, please refer to the sectionof this Prospectus entitled “Shareholder Information—How toBuy Shares—Minimum Investment Amounts.”

You can purchase or sell Fund shares on any day the New YorkStock Exchange (“NYSE”) is open for business directly fromthe Fund by mail (c/o Boston Financial Data Services, Inc.,P.O. Box 219804, Kansas City, MO 64121-9804), bytelephone ((800) 548-7786) or by contacting your MorganStanley Financial Advisor or other authorized third-party, suchas a broker, dealer or other financial intermediary that hasentered into a selling agreement with the Fund’s “Distributor,”Morgan Stanley Distribution, Inc. (each, a “FinancialIntermediary”). In addition, you can sell Fund shares at anytime by enrolling in a systematic withdrawal plan. Your shareswill be sold at the next price calculated after we receive yourorder to redeem. If you sell Class A or Class B shares, your netsale proceeds are reduced by the amount of any applicableCDSC. For more information, please refer to the sections ofthis Prospectus entitled “Shareholder Information—How toBuy Shares” and “—How to Sell Shares.”

To contact a Morgan Stanley Financial Advisor, call toll-free1-866-MORGAN8 for the telephone number of the MorganStanley office nearest you or access our office locator atwww.morganstanley.com.

Tax InformationThe Fund intends to make distributions that may be taxed asordinary income or capital gains, unless you are investingthrough a tax-deferred arrangement, such as a 401(k) plan oran individual retirement account.

Payments to Broker-Dealers and Other Financial IntermediariesIf you purchase Fund shares through a Financial Intermediary(such as a bank), the Adviser and/or the Distributor may paythe Financial Intermediary for the sale of Fund shares andrelated services. These payments, which may be significant inamount, may create a conflict of interest by influencing theFinancial Intermediary and your salesperson to recommend theFund over another investment. Ask your salesperson or visityour Financial Intermediary’s web site for more information.



Income

An investment objectivehaving the goal ofselecting securities topay out income ratherthan rise in price; as asecondary objective,the Fund seeks totalreturn.

Fund Details

8

Additional Information about the Fund’s Investment Objectives, Strategiesand Risks

Investment Objectives

Morgan Stanley Global Fixed Income Opportunities Fund seeks a high level of current income as itsprimary investment objective. As a secondary investment objective, the Fund seeks to maximize totalreturn but only to the extent consistent with its primary objective.

Principal Investment Strategies

The Fund will normally invest at least 80% of its assets in a portfolio of fixed-income securities. TheAdviser and/or Sub-Adviser will allocate the Fund’s investments among the following asset classes ormarket segments: (1) corporate securities, (2) residential and commercial mortgage-backed securities,(3) asset-backed securities, (4) emerging market securities, (5) convertible securities, (6) U.S.government securities and foreign sovereign debt, and (7) currency derivatives. Securities may berated either investment grade or below investment grade and denominated in any currency, hedgedor un-hedged. The amount of the Fund’s assets committed to any one asset class or market segmentwill fluctuate. However, the Fund may invest up to 65% of its net assets in any one asset class ormarket segment. The Adviser and Sub-Adviser have the flexibility to select any combination of atleast two asset classes of the aforementioned groups depending upon market conditions and thecurrent economic environment and, as a result, at any given time the Fund’s assets may be invested incertain groups and not others. The Fund may also use derivative instruments as discussed below.These derivative instruments will be counted toward the Fund’s 80% policy discussed above to theextent they have economic characteristics similar to the securities included within that policy.

1. Corporate Securities.

n Fixed-income securities issued by a corporation located in or outside of the United States;n Certificates of deposit and bankers’ acceptances issued or guaranteed by, or time deposits

maintained at, banks; andn Commercial paper issued by U.S. or foreign companies.

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2. Residential and Commercial Mortgage-Backed Securities. The residential and commercial mortgage-backed securities that the Fund may purchase include:

n Fixed-rate and adjustable rate mortgage-backed securities that are issued or guaranteed by the U.S. Government, itsagencies or instrumentalities; and

n Privately issued fixed-rate and adjustable rate mortgage-backed securities.

The types of mortgage-backed securities in which the Fund may invest include mortgage pass-through securities,including TBAs, which settle on a delayed delivery basis, CMOs, SMBS and CMBS.

CMOs are debt obligations collateralized by Mortgage Assets. Payments of principal and interest on the Mortgage Assetsand any reinvestment income are used to make payments on the CMOs. CMOs are issued in multiple classes. Each classhas a fixed or floating coupon rate and a stated maturity or final distribution date. The principal and interest on theMortgage Assets may be allocated among the classes in a number of different ways. Certain classes will, as a result of theallocation, have more predictable cash flows than others. As a general matter, the more predictable the cash flow, thelower the yield relative to other Mortgage Assets. The less predictable the cash flow, the higher the yield and the greaterthe risk. The Fund may invest in any class of CMOs.

SMBS are derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of theU.S. Government, or by private originators. A common type of SMBS will have one class receiving some of the interestand most of the principal from the Mortgage Assets, while the other class receives most of the interest and the remainderof the principal. In the most extreme case, one class will receive all of the interest (the interest-only or “IO” class), whilethe other class will receive all of the principal (the principal-only or “PO” class).

CMBS are generally multi-class or pass-through securities backed by a mortgage loan or a pool of mortgage loanssecured by commercial property, such as industrial and warehouse properties, office buildings, retail space and shoppingmalls, multifamily properties and cooperative apartments. The commercial mortgage loans that underlie CMBS aregenerally not amortizing or not fully amortizing. That is, at their maturity date, repayment of their remaining principalbalance or “balloon” is due and is repaid through the attainment of an additional loan or sale of the property. Anextension of a final payment on commercial mortgages will increase the average life of the CMBS, generally resulting ina lower yield for discount bonds and a higher yield for premium bonds.

3. Asset-Backed Securities. The Fund may invest in asset-backed securities. Asset-backed securities represent aninterest in a pool of assets such as, but not limited to, automobile loans, credit card receivables, student loans or homeequity (prime and subprime) loans that have been securitized in pass-through structures similar to mortgage-backedsecurities. These types of pass-through securities provide for monthly payments that are a “pass-through” of the monthlyinterest and principal payments made by the individual borrowers on the pooled receivables.

4. Emerging Market Securities. The Fund may invest in debt securities of companies, foreign governments orsupranational organizations or any of their instrumentalities located in emerging market or developing countries. Thesesecurities may be rated below investment grade and may be considered high yield securities. Emerging market ordeveloping countries are countries that major financial institutions, such as the World Bank or the Fund’s benchmarkindex, generally consider to be less economically mature than developed nations, such as the United States or most



10

nations in Western Europe. The Fund’s investments in emerging market securities may include Brady Bonds, which aresecurities that are created by exchanging existing commercial bank loans to foreign entities for new obligations for thepurpose of restructuring the issuers’ debts.

5. Convertible Securities. A convertible security is a bond, debenture, note, preferred stock, right, warrant or othersecurity that may be converted into or exchanged for a prescribed amount of common stock or other security of thesame or a different issuer or into cash within a particular period of time at a specified price or formula. A convertiblesecurity generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid onpreferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion,convertible securities generally have characteristics similar to both debt and equity securities. The value of convertiblesecurities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations inthe market value of the underlying securities. Convertible securities ordinarily provide a stream of income with generallyhigher yields than those of common stock of the same or similar issuers. Convertible securities generally rank senior tocommon stock in a corporation’s capital structure but are usually subordinated to comparable nonconvertible securities.Convertible securities generally do not participate directly in any dividend increases or decreases of the underlyingsecurities although the market prices of convertible securities may be affected by any dividend changes or other changesin the underlying securities.

6. U.S. Government Securities and Foreign Sovereign Debt.

n U.S. Treasury securities, such as bills, notes, bonds and zero coupon securities (without restrictions as to remainingmaturity at time of purchase);

n U.S. government agency securities, such as discount notes, medium-term notes, debentures and zero couponsecurities, which are purchased at a discount and generally accrue interest, but make no payments until maturity(without restrictions as to remaining maturity at time of purchase); and

n Fixed-income securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities or fixed-incomesecurities issued or guaranteed by a foreign government or supranational organization or any of their instrumentalities,including debt obligations of governmental issuers located in emerging market or developing countries andsovereign debt.

7. Currency Derivatives. In pursuing its investment objective, the Fund may regularly enter into currencyderivatives, including, but not limited to, foreign currency forward exchange contracts, and currency and currency indexfutures and options contracts for hedging and non-hedging purposes. The use of currency derivatives may allow theFund to obtain net long or net negative (short) exposure to selected currencies. The results of such transactions may alsorepresent, from time to time, a significant component of the Fund’s investment returns. The Fund is not required tohedge any portfolio holding with the use of currency derivatives. Accordingly, Fund shareholders would bear the risk ofcurrency fluctuations with respect to unhedged portfolio positions.

Foreign currency forward exchange contracts are transactions involving the Fund’s obligation to purchase or sell aspecific currency at a future date at a specified price. Foreign currency forward exchange contracts may be used by theFund for hedging purposes to protect against uncertainty in the level of future non-U.S. currency exchange rates, such aswhen the Fund anticipates purchasing or selling a non-U.S. security. This technique would allow the Fund to “lock in”the U.S. dollar price of the security. Foreign currency forward exchange contracts may also be used to attempt to protect



11

the value of the Fund’s existing holdings of non-U.S. securities. Imperfect correlation may exist, however, between theFund’s non-U.S. securities holdings and the foreign currency forward exchange contracts entered into with respect tothose holdings. Foreign currency forward exchange contracts may be used for non-hedging purposes in seeking to meetthe Fund’s investment objectives, such as when the Adviser and/or Sub-Adviser anticipate that particular non-U.S.currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not thenheld in the Fund’s investment portfolio. At times, the Fund may enter into “cross-currency” transactions involvingcurrencies other than those in which securities held or proposed to be purchased are denominated.

Currency futures contracts are similar to foreign currency forward exchange contracts, except that they are traded on anexchange and standardized as to contract size and delivery date. Most currency futures contracts call for payment ordelivery in U.S. dollars.

Options on foreign currencies operate similarly to options on securities. Rather than the right to buy or sell a singlesecurity at a specified price, options on foreign currencies give the holder the right to buy or sell foreign currency for afixed amount in U.S. dollars or other base currency. Options on foreign currencies are traded primarily in the over-the-counter market, but may also be traded on U.S. and foreign exchanges.

***

The Fund may invest in high yield, high risk, fixed-income securities rated Baa3 or lower by Moody’s Investors Service,Inc. (“Moody’s”) or BBB- or lower by Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies,Inc. (“S&P”), or if unrated considered by the Adviser and/or Sub-Adviser to be of equivalent quality. Fixed-incomesecurities rated Ba or lower by Moody’s or BB or lower by S&P are considered speculative investments and arecommonly known as “junk bonds.” The securities in this group may include both convertible and non-convertible debtsecurities and preferred stock. They also may include “Rule 144A” securities, which are subject to resale restrictions. TheFund does not have any minimum quality rating standard for this group of investments. Thus, the Fund may invest infixed-income securities that may already be in default on payment of interest or principal.

Fixed-income securities are debt securities and can take the form of bonds, notes or commercial paper. The issuer of thedebt security borrows money from the investor who buys the security. Most debt securities pay either fixed or adjustablerates of interest at regular intervals until they mature, at which point investors get their principal back.

The Fund may also invest generally in foreign securities. Securities of such foreign issuers may be denominated in U.S.dollars or in currencies other than U.S. dollars.

In addition to its use of currency derivatives, the Fund may, but it is not required to, use derivative instruments for avariety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives arefinancial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financialinstrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivativeinstruments. The Fund’s use of derivatives may involve the purchase and sale of derivative instruments such as futures,options, swaps and other related instruments and techniques.



12

The Fund may invest up to 20% of its assets in public bank loans made by banks or other financial institutions. Thesepublic bank loans may be rated investment grade or below investment grade. Public bank loans are privately negotiatedloans for which information about the issuer has been made publicly available. Public bank loans are not registeredunder the Securities Act of 1933, as amended, and are not publicly traded. Bank loans are usually second lien loans,which are lower in priority to senior loans, but have seniority in a company’s capital structure to other liabilities, so thatthe company is required to pay down these second lien loans prior to other lower-ranked claims on their assets. Bankloans normally pay interest at floating rates, and as a result, may protect investors from increases in interest rates.

The Fund may purchase certain non-publicly traded “restricted” securities. These securities may include “Rule 144A”securities, which are exempt from registration and may only be resold to qualified institutional buyers. The Fund mayinvest in illiquid securities, including restricted securities that are illiquid. The Fund may invest an unlimited amount inrestricted securities that are considered by the Adviser and/or Sub-Adviser to be liquid and otherwise are consistent withthe Fund’s investment policies.

The Fund may also invest in common stocks and other equity securities, inverse floaters and municipal securities.

In pursuing the Fund’s investment objectives, the Adviser and/or Sub-Adviser have considerable leeway in decidingwhich investments they buy, hold or sell on a day-to-day basis and which trading strategies they use. For example, theAdviser and/or Sub-Adviser in their discretion may determine to use some permitted trading strategies while not usingothers.

Additional Investment Strategy Information

This section provides additional information relating to the Fund’s investment strategies.

Common Stock and Other Equity Securities. The Fund may invest up to 20% of its assets in common stocksor other equity securities. The Fund may acquire stock, among other ways, directly or upon exercise of warrants attachedto other securities or included in a unit with fixed-income securities or acquired upon conversions of fixed-incomesecurities.

Inverse Floaters. Inverse floating rate obligations are obligations which pay interest at rates that vary inversely withchanges in market rates of interest. Because the interest rate paid to holders of such obligations is generally determinedby subtracting a variable or floating rate from a predetermined amount, the interest rate paid to holders of suchobligations will decrease as such variable or floating rate increases and increase as such variable or floating rate decreases.

Municipal Securities. The Fund may invest in municipal securities. Municipal securities are fixed-income securitiesissued by local, state and regional governments that provide interest income, which is exempt from federal income taxes.However, the Fund may purchase municipal bonds that pay interest that is subject to the federal alternative minimumtax, and securities on which the interest payments are taxable. General obligation bonds are secured by the issuer’s fullfaith and credit including its taxing power for payment of principal and interest. Revenue bonds, however, are generallypayable from a specific revenue source. They are issued for a wide variety of projects such as financing public utilities,hospitals, housing, airports, highways and educational facilities. Municipal notes are issued to meet the short-termfunding requirements of local, regional and state governments.



13

Defensive Investing. The Fund may take temporary “defensive” positions in attempting to respond to adversemarket, economic, political or other conditions. The Fund may invest any amount of its assets in cash, cash equivalentsor other fixed-income securities in a defensive posture that may be inconsistent with the Fund’s principal investmentstrategies when the Adviser and/or Sub-Adviser believe it is advisable to do so.

Although taking a defensive posture is designed to protect the Fund from an anticipated market downturn, it could havethe effect of reducing the benefit from any upswing in the market. When the Fund takes a defensive position, it may notachieve its investment objectives.

Portfolio Turnover. The Fund may engage in active and frequent trading of its portfolio securities. The FinancialHighlights Table at the end of this Prospectus shows the Fund’s portfolio turnover rates during recent fiscal years. Aportfolio turnover rate of 200%, for example, is equivalent to the Fund buying and selling all of its securities two timesduring the course of the year. A high portfolio turnover rate (over 100%) could result in high brokerage costs and anincrease in distributions of short-term capital gains to the shareholders. See the sections of this Prospectus entitled“Shareholder Information—Distributions” and “Shareholder Information—Tax Consequences.”

***

The percentage limitations relating to the composition of the Fund’s portfolio apply at the time the Fund acquires aninvestment. Subsequent percentage changes that result from market fluctuations generally will not require the Fund tosell any portfolio security. However, the Fund may be required to reduce its borrowings, if any, in response tofluctuations in the value of such holdings. The Fund may change its principal investment strategies without shareholderapproval; however, you would be notified of any changes.

Principal Risks

There is no assurance that the Fund will achieve its investment objectives. The Fund’s share price and yield will fluctuatewith changes in the market value and/or yield of the Fund’s portfolio securities. Neither the value nor the yield of theU.S. government securities in which the Fund invests (or the value or yield of the Fund’s shares) is guaranteed by theU.S. Government. When you sell Fund shares, they may be worth less than what you paid for them and, accordingly,you can lose money investing in this Fund.

Fixed-Income Securities. Fixed-income securities are subject to the risk of the issuer’s inability to meet principaland interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among otherthings, interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity (i.e.,market risk). The historically low interest rate environment increases the risks associated with rising interest rates,including the potential for periods of volatility and increased redemptions. The Fund may face a heightened level of risk,especially since the Federal Reserve Board has ended its quantitative easing program and may begin to raise rates. TheFund may be subject to certain liquidity risks, which may result from the lack of an active market and the reducednumber and capacity of traditional market participants to make a market in fixed-income securities. The Fund is notlimited as to the maturities of the securities in which it may invest. Securities with longer durations are likely to be moresensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Zerocoupon securities (which are purchased at a discount and generally accrue interest, but make no payments untilmaturity) are typically subject to greater price fluctuations than comparable securities that pay current interest. Lower



14

rated fixed-income securities have greater volatility because there is less certainty that principal and interest paymentswill be made as scheduled.

Investments in convertible securities subject the Fund to the risks associated with both fixed-income securities andcommon stocks. To the extent that a convertible security’s investment value is greater than its conversion value, its pricewill be likely to increase when interest rates fall and decrease when interest rates rise, as with a fixed-income security. Ifthe conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directlywith the price of the underlying equity security.

Foreign Securities. The Fund’s investments in foreign securities involve risks that are in addition to the risksassociated with domestic securities. One additional risk is currency risk. While the price of Fund shares is quoted in U.S.dollars, the Fund may convert U.S. dollars to a foreign market’s local currency to purchase a security in that market. Ifthe value of that local currency falls relative to the U.S. dollar, the U.S. dollar value of the foreign security will decrease.This is true even if the foreign security’s local price remains unchanged.

Foreign securities also have risks related to economic and political developments abroad, including expropriations,confiscatory taxation, exchange control regulation, limitations on the use or transfer of Fund assets and any effects offoreign social, economic or political instability. Foreign companies, in general, are not subject to the regulatoryrequirements of U.S. companies and, as such, there may be less publicly available information about these companies.Moreover, foreign accounting, auditing and financial reporting standards generally are different from those applicable toU.S. companies. Finally, in the event of a default of any foreign debt obligations, it may be more difficult for the Fundto obtain or enforce a judgment against the issuers of the securities.

Securities of foreign issuers may be less liquid than comparable securities of U.S. issuers and, as such, their price changesmay be more volatile. In addition, the prices of such securities may be susceptible to influence by large traders, due tothe limited size of many foreign securities markets. Moreover, investments in certain foreign markets, which havehistorically been considered stable, may become more volatile and subject to increased risk due to ongoing developmentsand changing conditions in such markets. Also, the growing interconnectivity of global economies and financial marketshas increased the probability that adverse developments and conditions in one country or region will affect the stabilityof economies and financial markets in other countries or regions. Furthermore, foreign exchanges and broker-dealers aregenerally subject to less government and exchange scrutiny and regulation than their U.S. counterparts. In addition,differences in clearance and settlement procedures in foreign markets may cause delays in settlement of the Fund’s tradeseffected in those markets and could result in losses to the Fund due to subsequent declines in the value of the securitiessubject to the trades.

Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. Inaddition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositaryreceipts, are under no obligation to distribute shareholder communications to the holders of such receipts, or to passthrough to them any voting rights with respect to the deposited securities.

Emerging Market Securities. The foreign securities in which the Fund may invest may be issued by issuers locatedin emerging market or developing countries. Compared to the United States and other developed countries, emergingmarket or developing countries may have relatively unstable governments, economies based on only a few industries andsecurities markets that trade a small number of securities. Securities issued by companies located in these countries tend



15

to be especially volatile and may be less liquid than securities traded in developed countries. In the past, securities inthese countries have been characterized by greater potential loss than securities of companies located in developedcountries. A portion of the Fund’s investments in emerging markets securities may include investments in microfinanceloans. Microfinance loans are typically very small loans (microcredit) made for providing the means for people who arenot served by traditional banking systems to expand their business or finance their families’ basic needs by providingaccess to affordable credit. Microfinance loans carry many of the same risks associated with investing in emergingmarkets countries, but because some of the microfinance loans may be used to fund crop growing and livestock,microfinance loans may also be subject to climate and geography risk. In addition, most micro-clients have low incomesand little or no previous credit history. As a result, there is no assurance that microcredit clients will be able to repay themicrofinance loans.

Mortgage-Backed Securities. Mortgage-backed securities in which the Fund may invest have different riskcharacteristics than traditional debt securities. Although, generally, the value of fixed-income securities increases duringperiods of falling interest rates and decreases during periods of rising interest rates, this is not always the case withmortgage-backed securities. This is due to the fact that principal on underlying mortgages may be prepaid at any time aswell as other factors. Generally, prepayments will increase during a period of falling interest rates and decrease during aperiod of rising interest rates. The rate of prepayments also may be influenced by economic and other factors.Prepayment risk includes the possibility that, as interest rates fall, securities with stated interest rates may have theprincipal prepaid earlier than expected, requiring the Fund to invest the proceeds at generally lower interest rates.

Investments in mortgage-backed securities are made based upon, among other things, expectations regarding the rateof prepayments on underlying mortgage pools. Rates of prepayment, faster or slower than expected by the Adviserand/or Sub-Adviser, could reduce the Fund’s yield, increase the volatility of the Fund and/or cause a decline in NAV.Certain mortgage-backed securities may be more volatile and less liquid than other traditional types of debt securities.

The Fund may invest in mortgage pass-through securities that are issued or guaranteed by the U.S. Government, itsagencies or instrumentalities. These securities are either direct obligations of the U.S. Government or the issuing agencyor instrumentality has the right to borrow from the U.S. Treasury to meet its obligations although the U.S. Treasury isnot legally required to extend credit to the agency or instrumentality. Certain of these mortgage securities purchased bythe Fund are not backed by the full faith and credit of the United States and there is a risk that the U.S. Governmentwill not provide financial support to these agencies if it is not obligated to do so by law. It is possible that these issuerswill not have the funds to meet their payment obligations in the future.

To the extent the Fund invests in mortgage securities offered by non-governmental issuers, such as commercial banks,savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary marketissuers, the Fund may be subject to additional risks. Pools created by such non-governmental issuers generally offer ahigher rate of interest than government and government-related pools because there are no direct or indirect governmentor agency guarantees of payments in such pools. However, timely payment of interest and principal of these pools maybe supported by various forms of private insurance or guarantees, including individual loan, title, pool and hazardinsurance and letters of credit. The insurance and guarantees are issued by governmental entities, private insurers and themortgage poolers. There can be no assurance that the private insurers or guarantors can meet their obligations under theinsurance policies or guarantee arrangements.



16

Mortgage pools underlying mortgage securities offered by non-governmental issuers more frequently include secondmortgages, high loan-to-value ratio mortgages and manufactured housing loans, in addition to commercial mortgagesand other types of mortgages where a government or government-sponsored entity guarantee is not available. Anunexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of amortgage-backed security and could result in losses to the Fund. The risk of such defaults is generally higher in the caseof mortgage pools that include subprime mortgages. Subprime mortgages refer to loans made to borrowers withweakened credit histories or with a lower capacity to make timely payments on their mortgages. For these reasons, theloans underlying these securities have had in many cases higher default rates than those loans that meet governmentunderwriting requirements. The risk of non-payment is greater for mortgage-related securities that are backed by loansthat were originated under weak underwriting standards, including loans made to borrowers with limited means tomake repayment. A level of risk exists for all loans, although, historically, the poorest performing loans have been thoseclassified as subprime. Other types of privately issued mortgage-related securities, such as those classified as pay-optionadjustable rate or Alt-A, have also performed poorly. Even loans classified as prime have experienced higher levels ofdelinquencies and defaults. The rise in the rate of foreclosures of residential mortgage loans in certain states or localitieshas resulted in legislative, regulatory and enforcement action in such states or localities seeking to prevent or restrictforeclosures. Any such governmental actions that interfere with the foreclosure process could increase the costs of suchforeclosures or exercise of other remedies in respect of residential mortgage loans which collateralize mortgage-backedsecurities held by the Fund, delay the timing or reduce the amount of recoveries on defaulted residential mortgage loanswhich collateralize mortgage-backed securities held by the Fund, and consequently, could adversely impact the yieldsand distributions the Fund may receive.

In addition, the Fund may invest in TBAs. Investments in TBAs may give rise to a form of leverage. Leverage may causethe Fund to be more volatile than if the Fund had not been leveraged. Further, TBAs may cause the Fund’s portfolioturnover rate to appear higher.

Collateralized Mortgage Obligations. The principal and interest on the Mortgage Assets comprising a CMOmay be allocated among the several classes of a CMO in many ways. The general goal in allocating cash flows onMortgage Assets to the various classes of a CMO is to create certain tranches on which the expected cash flows have ahigher degree of predictability than do the underlying Mortgage Assets. As a general matter, the more predictable thecash flow is on a particular CMO tranche, the lower the anticipated yield on that tranche at the time of issue will berelative to the prevailing market yields on the Mortgage Assets. As part of the process of creating more predictable cashflows on certain tranches of a CMO, one or more tranches generally must be created that absorb most of the changes inthe cash flows on the underlying Mortgage Assets. The yields on these tranches are generally higher than prevailingmarket yields on other mortgage related securities with similar average lives. Principal prepayments on the underlyingMortgage Assets may cause the CMOs to be retired substantially earlier than their stated maturities or final distributiondates. Because of the uncertainty of the cash flows on these tranches, the market prices and yields of these tranches aremore volatile and may increase or decrease in value substantially with changes in interest rates and/or the rates ofprepayment. Due to the possibility that prepayments (on home mortgages and other collateral) will alter the cash flowon CMOs, it is not possible to determine in advance the final maturity date or average life. Faster prepayment willshorten the average life and slower prepayments will lengthen it. In addition, if the collateral securing CMOs or anythird-party guarantees is insufficient to make payments, the Fund could sustain a loss.

Stripped Mortgage-Backed Securities. Investments in each class of SMBS are extremely sensitive to changes ininterest rates. IOs tend to decrease in value substantially if interest rates decline and prepayment rates become more



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rapid. POs tend to decrease in value substantially if interest rates increase and the rate of prepayment decreases. If theFund invests in SMBS and interest rates move in a manner not anticipated by Fund management, it is possible that theFund could lose all or substantially all of its investment.

Commercial Mortgage-Backed Securities. CMBS are subject to credit risk and prepayment risk. Althoughprepayment risk is present, it is of a lesser degree in CMBS than in the residential mortgage market; commercial realestate property loans often contain provisions which substantially reduce the likelihood that such securities will beprepaid (e.g., significant prepayment penalties on loans and, in some cases, prohibition on principal payments for severalyears following origination).

U.S. Government Securities. The U.S. government securities in which the Fund invests can be subject to two typesof risk: credit risk and interest rate risk. Credit risk refers to the possibility that the issuer of a security will be unable tomake interest payments and/or repay the principal on its debt. Interest rate risk refers to fluctuations in the value of afixed-income security resulting from changes in the general level of interest rates. When the general level of interest ratesgoes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, theprices of most fixed-income securities go up. While the credit risk associated with U.S. government securities generally isconsidered to be minimal, the interest rate risk can be substantial. The Fund is not limited as to the maturities of thesecurities in which it may invest. Thus, a rise in the general level of interest rates may cause the price of the Fund’sportfolio securities to fall substantially.

The U.S. government securities that the Fund may purchase include U.S. Treasury bills, notes and bonds, all of whichare direct obligations of the U.S. Government. In addition, the Fund may purchase securities issued by agencies orinstrumentalities of the U.S. Government which are backed by the full faith and credit of the United States. Among theagencies or instrumentalities issuing these obligations are the Government National Mortgage Association (“GinnieMae”) and the Federal Housing Administration. The Fund may also purchase securities issued by agencies orinstrumentalities which are not backed by the full faith and credit of the United States, but whose issuing agency orinstrumentality has the right to borrow from the U.S. Treasury to meet its obligations. Among these agencies orinstrumentalities are the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan MortgageCorporation (“Freddie Mac”) and the Federal Home Loan Banks. In September 2008, the U.S. Treasury Departmentannounced that the U.S. Government would be taking over Fannie Mae and Freddie Mac and placing the companiesinto a conservatorship. In addition, the U.S. Treasury announced additional steps that it intended to take with respect tothe debt and mortgage-backed securities issued by Fannie Mae and Freddie Mac in order to support the conservatorship.Fannie Mae and Freddie Mac are continuing to operate as going concerns while in conservatorship and each remainsliable for all of its respective obligations, including its guaranty obligations, associated with its mortgage-backedsecurities. No assurance can be given that these initiatives will be successful. Further, the Fund may purchase securitiesissued by agencies or instrumentalities, which are backed solely by the credit of the issuing agency or instrumentality.Among these agencies or instrumentalities is the Federal Farm Credit System. Because these securities are not backed bythe full faith and credit of the United States, there is a risk that the U.S. Government will not provide financial support tothese agencies if it is not obligated to do so by law. The maximum potential liability of the issuers of some U.S. governmentsecurities held by the Fund may greatly exceed their current resources, including their legal right to support from theU.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.



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Foreign Sovereign Debt. Investing in foreign sovereign debt securities will expose the Fund to the direct or indirectconsequences of political, social or economic changes in the countries that issue the securities. The ability of a foreignsovereign obligor to make timely payments on its external debt obligations will also be strongly influenced by theobligor’s balance of payments, including export performance, its access to international credits and investments,fluctuations in interest rates and the extent of its foreign reserves. Countries such as those in which the Fund may investhave historically experienced, and may continue to experience, high rates of inflation, high interest rates, exchange rateor trade difficulties and extreme poverty and unemployment. Many of these countries are also characterized by politicaluncertainty or instability. Uncertainty surrounding the level and sustainability of sovereign debt of certain countries thatare part of the European Union, including Greece, Spain, Portugal, Ireland and Italy, has increased volatility in thefinancial markets. The ongoing bailout program on behalf of Greece exacerbates these concerns. In addition, a numberof Latin American countries are among the largest debtors of developing countries and have a long history of reliance onforeign debt. Most recently, Argentina defaulted on certain sovereign debt securities, which, among other things, hasrestricted its ability to issue new debt and increases the risk of additional defaults on other sovereign debt securitiesoutstanding. Additional factors that may influence the ability or willingness to service debt include, but are not limitedto, a country’s cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, therelative size of its debt service burden to the economy as a whole and its government’s policy towards the InternationalMonetary Fund, the World Bank and other multilateral agencies. A country whose exports are concentrated in a fewcommodities or whose economy depends on certain strategic imports could be vulnerable to fluctuations ininternational prices of these commodities or imports. If a foreign sovereign obligor cannot generate sufficient earningsfrom foreign trade to service its external debt, it may need to depend on continuing loans and aid from foreigngovernments, commercial banks and multilateral organizations, and inflows of foreign investment. The commitment onthe part of these foreign governments, multilateral organizations and others to make such disbursements may beconditioned on the government’s implementation of economic reforms and/or economic performance and the timelyservice of its obligations. Failure to implement such reforms, achieve such levels of economic performance or repayprincipal or interest when due may result in the cancellation of such third-parties’ commitments to lend funds, whichmay further impair the foreign sovereign obligor’s ability or willingness to timely service its debts. In addition, there isno legal process for collecting on a sovereign debt that a government does not pay or bankruptcy proceeding by whichall or part of the sovereign debt that a government entity has not repaid may be collected.

Currency Derivatives. Investments in currency derivatives may substantially change the Fund’s exposure to currencyexchange rates and could result in losses to the Fund if currencies do not perform as the Adviser and/or Sub-Adviserexpect. In addition, investments in currency derivatives, to the extent that they reduce the Fund’s exposure to currencyrisks, may also reduce the Fund’s ability to benefit from favorable changes in currency exchange rates. The Fund is notrequired to hedge any portfolio holding with the use of currency derivatives. Accordingly, Fund shareholders would bearthe risk of currency fluctuations with respect to unhedged portfolio positions.

Foreign currency derivatives may involve, for example, the purchase of foreign currencies for U.S. dollars or themaintenance of short positions in foreign currencies. Foreign currency derivatives may involve the Fund agreeing toexchange an amount of a currency it does not currently own for another currency at a future date. The Fund wouldtypically engage in such a transaction in anticipation of a decline in the value of the currency it sells relative to thecurrency that the Fund has contracted to receive in the exchange. The Adviser’s and/or Sub-Adviser’s success in these



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transactions will depend principally on their ability to predict accurately the future exchange rates between foreigncurrencies and the U.S. dollar.

The Fund may enter into foreign currency forward exchange contracts, and currency and currency index futures and optionscontracts for hedging and non-hedging purposes in pursuing its investment objective. Foreign currency forward exchangecontracts are transactions involving the Fund’s obligation to purchase or sell a specific currency at a future date at a specifiedprice. Foreign currency forward exchange contracts may be used by the Fund for hedging purposes to protect againstuncertainty in the level of future non-U.S. currency exchange rates, such as when the Fund anticipates purchasing or selling anon-U.S. security. This technique would allow the Fund to “lock in” the U.S. dollar price of the security. Foreign currencyforward exchange contracts may also be used to attempt to protect the value of the Fund’s existing holdings of non-U.S.securities. Imperfect correlation may exist, however, between the Fund’s non-U.S. securities holdings and the foreign currencyforward exchange contracts entered into with respect to those holdings. To the extent hedged by the use of foreign currencyforward exchange contracts, the precise matching of the foreign currency forward exchange contract amounts and thevalue of the securities involved will not generally be possible because the future value of such securities in foreigncurrencies will change as a consequence of market movements in the value of those securities between the date on whichthe contract is entered into and the date it matures. Furthermore, such transactions reduce or preclude the opportunityfor gain if the value of the currency should move in the direction opposite to the position taken. Currency futurescontracts are similar to foreign currency forward exchange contracts, except that they are traded on an exchange andstandardized as to contract size and delivery date. Most currency futures contracts call for payment or delivery in U.S. dollars.The value of a foreign currency option is dependent upon the value of the underlying foreign currency relative to the U.S.dollar. The price of the option may vary with changes in the value of either or both currencies and has no relationship to theinvestment merits of a foreign security. Options on foreign currencies are affected by all of those factors which influence foreignexchange rates and foreign investment generally. Unanticipated changes in currency prices may result in losses to the Fund andpoorer overall performance for the Fund than if it had not entered into such contracts. The use of foreign currency forwardexchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or thefailure of the counterparty to make payments or otherwise comply with the terms of the contract.

Foreign currency forward exchange contracts and currency futures and options contracts may be used for non-hedgingpurposes in seeking to meet the Fund’s investment objectives, such as when the Adviser and/or Sub-Adviser anticipatethat particular non-U.S. currencies will appreciate or depreciate in value, even though securities denominated in thosecurrencies are not then held in the Fund’s investment portfolio. Investing in foreign currencies for purposes of gaining fromprojected changes in exchange rates, as opposed to hedging currency risks applicable to the Fund’s holdings, further increasesthe Fund’s exposure to foreign securities losses. There is no assurance that the Adviser’s and/or Sub-Adviser’s use of currencyderivatives will benefit the Fund or that they will be, or can be, used at appropriate times.

Asset-Backed Securities. Asset-backed securities involve the risk that various federal and state consumer laws andother legal and economic factors may result in the collateral backing the securities being insufficient to support paymenton the securities. Asset-backed securities also have certain risk characteristics similar to mortgage-backed securities. Likemortgage-backed securities, they generally decrease in value as a result of interest rate increases, but may benefit less thanother fixed-income securities from declining interest rates, principally because of prepayments. Also, as in the case ofmortgage-backed securities, prepayments generally increase during a period of declining interest rates, although otherfactors, such as changes in credit card use and payment patterns, may also influence prepayment rates.



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High Yield Securities. The Fund’s investments in high yield securities, commonly known as “junk bonds,” expose it toa substantial degree of credit risk. These investments are considered speculative under traditional investment standards.High yield securities range from those for which the prospect of repayment of principal and interest is predominantlyspeculative to those which are currently in default on principal or interest payments. The prices of high yield securities arelikely to be more sensitive to adverse economic changes or individual corporate developments than higher-rated securities.During an economic downturn or substantial period of rising interest rates, junk bond issuers and, in particular, highlyleveraged issuers may experience financial stress that would adversely affect their ability to service their principal and interestpayment obligations, to meet their projected business goals or to obtain additional financing. An economic downturnaffecting an issuer of high yield securities may result in an increased incidence of default. In the event of a default, the Fundmay incur additional expenses to seek recovery.

Public Bank Loans. Certain public bank loans are illiquid, meaning the Fund may not be able to sell them quickly ata fair price. Illiquid securities are also difficult to value. To the extent a bank loan has been deemed illiquid, it will besubject to the Fund’s restrictions on investment in illiquid securities. The secondary market for bank loans may besubject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. Bank loans are subjectto the risk of default in the payment of interest or principal on a loan, which will result in a reduction of income to theFund, and a potential decrease in the Fund’s NAV. The risk of default will increase in the event of an economicdownturn or a substantial increase in interest rates. Bank loans that are rated below investment grade share the samerisks of other below investment grade securities. Because public bank loans usually rank lower in priority of payment tosenior loans, they present a greater degree of investment risk due to the fact that the cash flow or other property of theborrower securing the bank loan may be insufficient to meet scheduled payments after meeting the senior securedpayment obligations of the borrower. These bank loans may exhibit greater price volatility as well.

Liquidity. The Fund’s investments in restricted and illiquid securities may entail greater risk than investments inpublicly traded securities. These securities may be more difficult to sell, particularly in times of market turmoil.Additionally, the market for certain investments deemed liquid at the time of purchase may become illiquid underadverse market or economic conditions. Illiquid securities may be more difficult to value. If the Fund is forced to sell anilliquid security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss.

Other Derivatives. A derivative instrument often has risks similar to its underlying asset and may have additionalrisks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by thecounterparty to certain transactions, magnification of losses incurred due to changes in the market value of thesecurities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions maynot be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from,and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highlyspecialized instruments that require investment techniques and risk analyses different from those associated with otherportfolio investments. Certain derivative transactions may give rise to a form of leverage. Leverage magnifies thepotential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidateportfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking orsegregation requirements, pursuant to applicable SEC rules and regulations, or may cause the Fund to be more volatilethan if the Fund had not been leveraged. Although the Adviser and/or Sub-Adviser seek to use derivatives to further theFund’s investment objectives, there is no assurance that the use of derivatives will achieve this result.



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The derivative instruments and techniques that the Fund may use include:

Futures. A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of anunderlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tendsto increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of theparticular contract, futures contracts are settled through either physical delivery of the underlying instrument on thesettlement date or by payment of a cash settlement amount on the settlement date. A decision as to whether, when andhow to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transactionmay be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussedabove, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and thepotential loss from futures contracts can exceed the Fund’s initial investment in such contracts. No assurance can begiven that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of lossby the Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in thefutures contract.

Options. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of theunderlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchangefor a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell tothe Fund a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreedupon price typically in exchange for a premium received by the Fund. When options are purchased over-the-counter(“OTC”), the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform itsobligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out itsposition. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even awell-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices ofoptions can be highly volatile and the use of options can lower total returns.

Swaps. The Fund may enter into OTC swap contracts or cleared swap transactions. An OTC swap contract is anagreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of aspecified notional amount, with the payments calculated by reference to specified securities, indices, reference rates,currencies or other instruments. Typically swap agreements provide that when the period payment dates for both partiesare the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the netamount paid by one party to the other). The Fund’s obligations or rights under a swap contract entered into on a net basiswill generally be equal only to the net amount to be paid or received under the agreement, based on the relative values ofthe positions held by each party. Cleared swap transactions may help reduce counterparty credit risk. In a cleared swap,the Fund’s ultimate counterparty is a clearinghouse rather than a swap dealer, bank or financial institution. OTC swapagreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function forswaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty.Both OTC and cleared swaps could result in losses if interest rates or foreign currency exchange rates or credit qualitychanges are not correctly anticipated by the Fund or if the reference index, security or investments do not perform asexpected. The Fund’s use of swaps may include those based on the credit of an underlying security, commonly referred toas “credit default swaps.” Where the Fund is the buyer of a credit default swap contract, it would typically be entitled toreceive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only inthe event of a default or similar event by the issuer of the debt obligation. If no default occurs, the Fund would have paid



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to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract.When the Fund is the seller of a credit default swap contract, it typically receives the stream of payments but is obligatedto pay an amount equal to the par (or other agreed-upon) value of a referenced debt obligation upon the default or similarevent of the issuer of the referenced debt obligation. The Dodd-Frank Wall Street Reform and Consumer Protection Actand related regulatory developments require the clearing and exchange-trading of certain standardized swap transactions.Mandatory exchange-trading and clearing is occurring on a phased-in basis.

Other Risks. The performance of the Fund also will depend on whether or not the Adviser and/or Sub-Adviser issuccessful in applying the Fund’s investment strategies. The Fund is also subject to other risks from its permissibleinvestments, including the risks associated with its investments in common stock and other equity securities, inversefloaters and municipal securities. For more information about these risks, see the “Additional Risk Information” section.

Additional Risk Information

This section provides additional information relating to the risks of investing in the Fund.

Common Stock and Other Equity Securities. The Fund’s investments in common stocks and other equitysecurities involve risks. In general, the values of common stock and other equity securities are more volatile than those offixed-income securities. The values of common stock and other securities fluctuate, and sometimes widely fluctuate, inresponse to activities specific to the issuer of the security as well as factors unrelated to the fundamental condition of theissuer, including general market, economic and political conditions.

Inverse Floaters. Like most other fixed-income securities, the value of inverse floaters will decrease as interest ratesincrease. They are more volatile, however, than most other fixed-income securities because the coupon rate on an inversefloater typically changes at a multiple of the change in the relevant index rate. Thus, any rise in the index rate (as aconsequence of an increase in interest rates) causes a correspondingly greater drop in the coupon rate of an inversefloater while a drop in the index rate causes a correspondingly greater increase in the coupon of an inverse floater. Someinverse floaters may also increase or decrease substantially because of changes in the rate of prepayments.

Municipal Securities. Municipal securities may be general obligations or revenue bonds. General obligation bonds aresecured by the issuer’s full faith and credit as well as its taxing power for payment of principal or interest. Revenue bonds arepayable solely from the revenues derived from a specified revenue source. These bonds involve the risk that the revenues soderived will not be sufficient to meet interest and/or principal payment obligations. The value of municipal securities maybe affected by political changes as well as uncertainties related to taxation, legislative developments and the rights ofmunicipal security holders. Municipal securities and issuers of municipal securities may be more susceptible todowngrade, default and bankruptcy as a result of recent periods of economic stress. Municipal securities involve the riskthat an issuer may call securities for redemption, which could force the Fund to reinvest the proceeds at a lower rate ofinterest.

Portfolio Holdings

A description of the Fund’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities isavailable in the Fund’s SAI.



Fund Management

The Fund has retained the Adviser—Morgan Stanley Investment Management Inc.—to provideinvestment advisory services. The Adviser is a wholly-owned subsidiary of Morgan Stanley (NYSE:“MS”), a preeminent global financial services firm engaged in securities trading and brokerageactivities, as well as providing investment banking, research and analysis, financing and financialadvisory services. The Adviser’s address is 522 Fifth Avenue, New York, NY 10036.

The Adviser has entered into a sub-advisory agreement with Morgan Stanley Investment ManagementLimited, located at 25 Cabot Square, Canary Wharf, London, E14 4QA, England. The Sub-Adviser is awholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with investmentadvisory services subject to the overall supervision of the Adviser and the Fund’s Officers and Trustees.The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviserreceives from the Fund.

The Fund is managed by members of the Global Fixed Income team. The team consists of portfoliomanagers, analysts and traders. Current members of the team jointly and primarily responsible for theday-to-day implementation of the Fund’s overall strategy and portfolio construction are Jim Caron,Richard Ford, Michael Kushma and Christian G. Roth. In managing the Fund’s portfolio,Messrs. Caron, Ford, Kushma and Roth may utilize the input of other members of the Advisor’s GlobalFixed Income team including, but not limited to, the Fixed Income Asset Allocation team.

Mr. Caron has been associated with Morgan Stanley since 2006 and with the Adviser in aninvestment management capacity since June 2012. Prior to June 2012, he was global head of interestrates, foreign exchange and emerging markets strategy for Morgan Stanley. Mr. Ford is the head ofEuropean Fixed Income and has been associated with Morgan Stanley since 1991 and with the Sub-Adviser in an investment management capacity since 2002. Mr. Kushma is Chief Investment Officerof Global Fixed Income for the Adviser. He joined Morgan Stanley in 1987 and the Adviser in 1994.He has 26 years of investment experience. From 1987 to 1994, he was a global fixed income strategistfor Morgan Stanley’s Fixed Income Division. Prior to joining Morgan Stanley, he was a senior lecturerof economics at Columbia University. Michael received an A.B. in economics from PrincetonUniversity, an M.Sc. in economics from the London School of Economics and an M.Phil. ineconomics from Columbia University. Mr. Roth has been associated with the Adviser or itsinvestment management affiliates in an investment management capacity since 1991.

Members of the team collaborate to manage the assets of the Fund. Each member is responsible forspecific sectors. All team members are responsible for the execution of the overall strategy of theFund.

The Fund’s SAI provides additional information about the portfolio managers’ compensationstructure, other accounts managed by the portfolio managers and the portfolio managers’ ownershipof securities in the Fund.

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Morgan StanleyInvestmentManagement Inc.

The Adviser, togetherwith its affiliated assetmanagementcompanies, hadapproximately$403 billion in assetsunder management orsupervision as ofDecember 31, 2014.



The composition of the team may change from time to time.

The Fund pays the Adviser a monthly advisory fee as full compensation for the services and facilities furnished to theFund, and for Fund expenses assumed by the Adviser. The fee is based on the Fund’s average daily net assets. For thefiscal year ended October 31, 2014, the Fund paid total investment advisory compensation (net of fee waivers and/oraffiliated rebates, if applicable) amounting to 0.30% of the Fund’s average daily net assets.

Morgan Stanley Investment Management Inc., as the Adviser and the Administrator, has agreed to reduce its advisoryfee, its administration fee, and/or reimburse the Fund, if necessary, if such fees would cause the total annual operatingexpenses of the Fund to exceed 1.05% for Class A, 1.69% for Class B, 1.34% for Class L, 0.70% for Class I and 0.67%for Class IS. In determining the actual amount of fee waiver and/or expense reimbursement for the Fund, if any, theAdviser and Administrator exclude from total annual operating expenses certain investment related expenses, taxes,interest and other extraordinary expenses (including litigation). The fee waivers and/or expense reimbursements willcontinue for at least one year or until such time as the Fund’s Board of Trustees acts to discontinue all or a portion ofsuch waivers and/or reimbursements when it deems such action is appropriate.

A discussion regarding the Board of Trustees’ approval of the investment advisory agreement and sub-advisoryagreement is available in the Fund’s Annual Report to Shareholders for the fiscal year ended October 31, 2014.

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Pricing Fund Shares

The price of Fund shares (excluding sales charges), called NAV, is based on the value of the Fund’sportfolio securities. While the assets of each Class are invested in a single portfolio of securities, theNAV of each Class will differ because the Classes have different ongoing distribution fees.

The NAV per share of the Fund is determined once daily at the NYSE close (normally 4:00 p.m.Eastern time) on each day that the NYSE is open. Shares will generally not be priced on days that theNYSE is closed. The Fund may, however, elect to remain open and price its shares on days when theNYSE is closed but the primary securities markets on which the Fund’s securities trade remain open.On any business day when the Securities Industry and Financial Markets Association (“SIFMA”)recommends that the bond markets close early, the Fund reserves the right to close at or prior to theSIFMA recommended closing time. If the Fund does so, it will cease granting same day credit forpurchase and redemption orders received after the Fund’s closing time and credit will be given on thenext business day.

Trading of securities that are primarily listed on foreign exchanges may take place on weekends andother days when the Fund does not price its shares. Therefore, to the extent, if any, that the Fundinvests in securities primarily listed on foreign exchanges, the value of the Fund’s portfolio securitiesmay change on days when you will not be able to purchase or sell your shares.

The value of the Fund’s portfolio securities is based on the securities’ market price when available.When a market price is not readily available, including circumstances under which the Adviserand/or Sub-Adviser determine that a security’s market price is not accurate, a portfolio security isvalued at its fair value, as determined under procedures established by the Fund’s Board of Trustees.

In addition, with respect to securities that primarily are listed on foreign exchanges, when an eventoccurs after the close of such exchanges that is likely to have changed the value of the securities (e.g.,a percentage change in value of one or more U.S. securities indices in excess of specified thresholds),such securities will be valued at their fair value, as determined under procedures established by theFund’s Board of Trustees. Securities also may be fair valued in the event of a significant developmentaffecting a country or region or an issuer-specific development which is likely to have changed thevalue of the security.

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Shareholder Information



In these cases, the Fund’s NAV will reflect certain portfolio securities’ fair value rather than their marketprice. Fair value pricing involves subjective judgment and it is possible that the fair value determined fora security is materially different than the value that could be realized upon the sale of that security. Withrespect to securities that are primarily listed on foreign exchanges, the value of the Fund’s portfoliosecurities may change on days when you will not be able to purchase or sell your shares.

To the extent the Fund invests in open-end management companies (other than exchange-tradedfunds) that are registered under the Investment Company Act of 1940, as amended (“InvestmentCompany Act”), the Fund’s NAV is calculated based upon the NAV of such funds. The prospectusesfor such funds explain the circumstances under which they will use fair value pricing and its effects.

An exception to the Fund’s general policy of using market prices concerns its short-term debtportfolio securities. Debt securities with remaining maturities of 60 days or less at the time ofpurchase are valued at amortized cost. However, if the cost does not reflect the securities’ marketvalue, these securities will be valued at their fair value.

How to Buy SharesClass B shares of the Fund are closed to new investments. The Class B shareholders of the Fund do not

have the option of purchasing additional Class B shares. However, the existing Class B shareholders may

invest through dividend reinvestments.

Because every investor has different immediate financial needs and long-term investment goals, theFund currently offers investors four Classes of shares: Classes A, L, I and IS. Class I and Class ISshares are only offered to a limited group of investors. Each Class of shares offers a distinct structureof sales charges, distribution and service fees, and other features that are designed to address a varietyof needs. Your Financial Intermediary can help you decide which Class may be most appropriate foryou. When purchasing Fund shares, you must specify which Class of shares you wish to purchase.

Minimum Investment Amounts. The minimum investment amounts for Class A shares andClass L shares are as follows:

Minimum Investment

Investment Options Initial Additional

Regular Account $1,000 $100

Individual Retirement Account $1,000 $100

EasyInvest®

(Automatically from your checking or savings account or Money Market Fund) $100* $100* * Provided your schedule of investments totals $1,000 in 12 months.

The minimum investment amount is generally $5 million for Class I shares. To be eligible to purchaseClass I shares, you must qualify under one of the investor categories specified in the “ShareholderInformation—Share Class Arrangements” section of this Prospectus.

26

Contacting a MorganStanley Financial Advisor

If you are new tothe Morgan StanleyFunds and would liketo contact a MorganStanley FinancialAdvisor, call toll-free1-866-MORGAN8 forthe telephone numberof the Morgan Stanleyoffice nearest you. Youmay also access ouroffice locator on ourInternet site at:www.morganstanley.com

EasyInvest®

A purchase plan thatallows you to transfermoney automaticallyfrom your checking orsavings account orfrom a Morgan StanleyMoney Market Fund ona semi-monthly, monthlyor quarterly basis.Contact your MorganStanley FinancialAdvisor for furtherinformation about thisservice.



27

The minimum initial and additional investment amounts for Class A, Class L and Class I may be waived for thefollowing categories: (1) sales through banks, broker-dealers and other financial institutions (including registeredinvestment advisers and financial planners) purchasing shares on behalf of their clients in (i) discretionary andnon-discretionary advisory programs, (ii) fund supermarkets, (iii) asset allocation programs, (iv) other programs in whichthe client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating inthe program or (v) certain other investment programs that do not charge an asset-based fee; (2) qualified state tuitionplans described in Section 529 of the Code, and donor-advised charitable gift funds (subject to all applicable terms andconditions); (3) defined contribution, defined benefit and other employer-sponsored employee benefit plans, whether ornot qualified under the Code; (4) certain retirement and deferred compensation programs established by Morgan StanleyInvestment Management or its affiliates for their employees or the Fund’s Trustees; (5) current or retired directors, officersand employees of Morgan Stanley and any of its subsidiaries, such persons’ spouses, and children under the age of 21, andtrust accounts for which any of such persons is a beneficiary; (6) current or retired Directors or Trustees of the MorganStanley Funds, such persons’ spouses, and children under the age of 21, and trust accounts for which any of such personsis a beneficiary; (7) certain other registered open-end investment companies whose shares are distributed by theDistributor; (8) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser;(9) the reinvestment of dividends in additional Fund shares; or (10) certain other institutional investors based on assetsunder management or other considerations at the discretion of the Adviser.

To purchase Class IS shares, an investor must meet a minimum initial investment of $10,000,000 or be a definedcontribution, defined benefit or other employer sponsored employee benefit plan with minimum plan assets of$250,000,000, whether or not qualified under the Code, in each case subject to the discretion of the Adviser.Omnibus trades of $10 million or more shall be accepted from certain platforms, including; (i) banks and trustcompanies; (ii) insurance companies; and (iii) registered investment advisory firms. The $10,000,000 minimum initialinvestment amount may be waived for Class IS shares purchased by or through: (1) certain registered open-endinvestment companies whose shares are distributed by the Distributor; or (2) investments made in connection withcertain mergers and/or reorganizations as approved by the Adviser. If the value of your account falls below theminimum initial investment requirements for Class IS shares as a result of share redemptions or you no longer meetone of the waiver criteria set forth above, your account may be subject to involuntary conversion or involuntaryredemption, as applicable. You will be notified prior to any such conversions or redemptions. See “How to SellShares—Conversion to a New Share Class” and “—Involuntary Sales.”

Purchasing Shares Through a Financial Intermediary. You may open a new account and purchaseFund shares through your Financial Intermediary. Your Financial Intermediary will assist you with the procedures toinvest in shares of the Fund. Your Financial Intermediary may charge transaction-based or other fees in connection withthe purchase or sale of Fund shares. Please consult your Financial Intermediary for more information regarding any suchfees and for purchase instructions.

Purchasing Shares Directly from the Fund.

Initial Purchase by MailYou may open a new account, subject to acceptance by the Fund, and purchase Class A, Class L, Class I and Class ISshares by completing and signing a New Account Application provided by Boston Financial Data Services, Inc. (the



28

“Transfer Agent”), which you can obtain by calling the Transfer Agent at (800) 548-7786 (our automated telephonesystem (which is generally accessible 24 hours a day, seven days a week)) and mailing it to Morgan Stanley Global FixedIncome Opportunities Fund, c/o Boston Financial Data Services, Inc., P.O. Box 219804, Kansas City, MO 64121-9804together with a check payable to Morgan Stanley Global Fixed Income Opportunities Fund.

Please note that payments to investors who redeem Class A, Class L, Class I and Class IS shares purchased by check willnot be made until payment of the purchase has been collected, which may take up to 15 calendar days after purchase.You can avoid this delay by purchasing Class A, Class L, Class I and Class IS shares by wire.

Initial Purchase by WireYou may purchase Class A, Class L, Class I and Class IS shares by wiring Federal Funds (monies credited by a FederalReserve Bank) to State Street Bank and Trust Company (the “Custodian”). You must forward a completed New AccountApplication to the Transfer Agent in advance of the wire by following the instructions under “Initial Purchase by Mail.”You should instruct your bank to send a Federal Funds wire in a specified amount to the Custodian using the followingwire instructions:

State Street Bank and Trust CompanyOne Lincoln StreetBoston, MA 02111-2101ABA #011000028DDA #99060238Attn: Morgan Stanley Funds Subscription AccountRef: (Fund Name, Account Number, Account Name)

Additional Investments. You may purchase additional Fund shares for your account at any time by contacting yourFinancial Intermediary, or, in the case of Class A, Class L, Class I and Class IS shares, by contacting the Fund directly.For additional Class A, Class L, Class I and/or Class IS share purchases directly from the Fund, you should write a“letter of instruction” that includes your account name, account number, the Fund name and the Class selected, signedby the account owner(s), to assure proper crediting to your account. The letter must be mailed along with a check inaccordance with the instructions under “Initial Purchase by Mail.” Instead of a letter you may mail a check along withthe payment stub attached to the bottom portion of your account statement. You may also purchase additional Class A,Class L, Class I and Class IS shares by wire by following the instructions under “Initial Purchase by Wire.”

General. To help the U.S. Government fight the funding of terrorism and money laundering activities, federal lawrequires all financial institutions to obtain, verify and record information that identifies each person who opens anaccount. What this means to you: when you open an account, we will ask your name, address, date of birth and otherinformation that will allow us to identify you. If we are unable to verify your identity, we reserve the right to restrictadditional transactions and/or liquidate your account at the next calculated NAV after your account is closed (less anyapplicable sales/account charges and/or tax penalties) or take any other action required by law. In accordance withfederal law requirements, the Fund has implemented an anti-money laundering compliance program, which includesthe designation of an anti-money laundering compliance officer.

When you buy Fund shares, the shares are purchased at the next share price calculated (plus any applicable sales chargefor Class A shares) after we receive your purchase order. Your payment is due on the third business day after you placeyour purchase order. We reserve the right to reject any order for the purchase of Fund shares for any reason.



29

How to Exchange Shares

Permissible Fund Exchanges. You may exchange shares of any class of the Fund for the same Class of shares ofMorgan Stanley European Equity Fund Inc., Morgan Stanley Global Infrastructure Fund, Morgan Stanley LimitedDuration U.S. Government Trust, Morgan Stanley Multi Cap Growth Trust, Morgan Stanley Mortgage Securities Trustand Morgan Stanley U.S. Government Securities Trust (each, a “Morgan Stanley Retail Fund”), if available, without theimposition of an exchange fee. You may also exchange shares of any class of the Fund for the same Class of shares of anyportfolio of Morgan Stanley Institutional Fund, Inc. (“MSIF”) or Morgan Stanley Institutional Fund Trust (“MSIFT”and, collectively with MSIF and the Morgan Stanley Retail Funds, the “Morgan Stanley Multi-Class Funds”), if available,without the imposition of an exchange fee. Front-end sales charges (loads) are not imposed on exchanges of Class Ashares. Class B shares of the Fund may be exchanged for Class B shares of any Morgan Stanley Retail Fund even thoughClass B shares are closed to investors. In addition, you may exchange shares of any Class of the Fund for shares of MorganStanley California Tax-Free Daily Income Trust, Morgan Stanley Liquid Asset Fund Inc., Morgan Stanley New YorkMunicipal Money Market Trust, Morgan Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. GovernmentMoney Market Trust (each, a “Morgan Stanley Money Market Fund” and, together with the Morgan Stanley Multi-Class Funds, the “Morgan Stanley Funds”) or for Advisor Class shares of Morgan Stanley Limited Duration U.S.Government Trust, if available, without the imposition of an exchange fee. Class B shares of the Fund that are exchangedfor shares of a Morgan Stanley Money Market Fund or Advisor Class shares of Morgan Stanley Limited Duration U.S.Government Trust may be subsequently re-exchanged for Class B shares of the Fund or any other Morgan Stanley RetailFund (even though Class B shares are closed to investors). If you purchased Fund shares through a Financial Intermediary,certain Morgan Stanley Funds may be unavailable for exchange. Contact your Financial Intermediary to determine whichMorgan Stanley Funds are available for exchange.

The current prospectus for each Morgan Stanley Fund describes its investment objective(s), policies and investmentminimums, and should be read before investment. Since exchanges are available only into continuously offered MorganStanley Funds, exchanges are not available into Morgan Stanley Funds or classes of Morgan Stanley Funds that are notcurrently being offered for purchase (except with respect to exchanges of Class B shares as noted above).

Exchange Procedures. You can process an exchange by contacting your Financial Intermediary. You may also writethe Transfer Agent or call toll-free (800) 548-7786 to place an exchange order.

Exchange requests received on a business day prior to the time shares of the funds involved in the request are priced willbe processed on the date of receipt. “Processing” a request means that shares of the Fund which you are exchanging willbe redeemed and shares of the Morgan Stanley Fund that you are purchasing will be purchased at the NAV per sharenext determined on the date of receipt. Exchange requests received on a business day after the time that shares of thefunds involved in the request are priced will be processed on the next business day in the manner described herein.

The Fund may terminate or revise the exchange privilege upon required notice or in certain cases without notice. See“Limitations on Exchanges.” The check writing privilege is not available for Morgan Stanley Money Market Fund sharesyou acquire in an exchange.



30

Telephone Exchanges. Morgan Stanley and its subsidiaries, the Transfer Agent, and the Fund employ proceduresconsidered by them to be reasonable to confirm that instructions communicated by telephone are genuine. Suchprocedures may include requiring certain personal identification information prior to acting upon telephone instructions,tape-recording telephone communications and providing written confirmation of instructions communicated bytelephone. If reasonable procedures are employed, none of Morgan Stanley, the Transfer Agent or the Fund will be liable forfollowing telephone instructions which it reasonably believes to be genuine. Telephone exchanges may not be available ifyou cannot reach the Transfer Agent by telephone, whether because all telephone lines are busy or for any other reason; insuch case, a shareholder would have to use the Fund’s other exchange procedures described in this section.

Telephone instructions will be accepted if received by the Transfer Agent between 9:00 a.m. and 4:00 p.m. Eastern timeon any day the NYSE is open for business. On any business day that the NYSE closes early, or when the SecuritiesIndustry and Financial Markets Association recommends that the securities markets close early, the Fund may close earlyand purchase orders received after such earlier closing times will be processed the following business day. During periodsof drastic economic or market changes, it is possible that the telephone exchange procedures may be difficult toimplement, although this has not been the case with the Fund in the past.

You automatically have the telephone exchange privilege unless you indicate otherwise by checking the applicable boxon the New Account Application. You may also opt out of telephone privileges at any time by contacting the TransferAgent at (800) 548-7786. If you hold share certificates, no exchanges may be processed until we have received allapplicable share certificates.

Margin Accounts. If you have pledged your Fund shares in a margin account, contact your Financial Intermediaryregarding restrictions on the exchange of such shares.

Tax Considerations of Exchanges. If you exchange shares of the Fund for shares of another Morgan Stanley Fund,there are important tax considerations. For tax purposes, the exchange out of the Fund is considered a sale of Fundshares and the exchange into the other fund is considered a purchase. As a result, you may realize a capital gain or loss.

You should review the “Shareholder Information—Tax Consequences” section and consult your own tax professionalabout the tax consequences of an exchange.

Limitations on Exchanges. Certain patterns of past exchanges and/or purchase or sale transactions involving theFund or other Morgan Stanley Funds may result in the Fund rejecting, limiting or prohibiting, at its sole discretion, andwithout prior notice, additional purchases and/or exchanges and may result in a shareholder’s account being closed.Determinations in this regard may be based on the frequency or dollar amount of previous exchanges or purchase or saletransactions. The Fund reserves the right to reject an exchange request for any reason.

CDSC Calculations on Exchanges. See the “Shareholder Information—Share Class Arrangements” section of thisProspectus for a discussion of how applicable CDSCs are calculated for shares of one Morgan Stanley Fund that areexchanged for shares of another.

For further information regarding exchange privileges, you should contact your Financial Intermediary or call toll-free(800) 548-7786.



31

How to Sell Shares

You can sell some or all of your Fund shares at any time. If you sell Class A or Class B shares, your net sale proceeds arereduced by the amount of any applicable CDSC. Your shares will be sold at the next price calculated after we receiveyour order to sell as described below.

Options Procedures

To sell your shares, simply call your Financial Intermediary. Payment will be sent to the address towhich the account is registered, or deposited in your brokerage account. Your FinancialIntermediary may charge transaction-based or other fees in connection with the purchase or sale ofthe Fund’s shares. Please contact your Financial Intermediary for more information regarding anysuch fees.

Contact YourMorgan StanleyFinancialAdvisor/FinancialIntermediary

You can also sell your Class A, Class B Class L, Class I and/or Class IS shares by telephone and havethe proceeds sent to the address of record or wired to your bank account on record. Youautomatically have the telephone redemption privilege unless you indicate otherwise by checkingthe applicable box on the New Account Application. You may also opt out of telephone privileges atany time by contacting the Transfer Agent at (800) 548-7786.

Before processing a telephone redemption, keep the following information in mind:n You can establish this option at the time you open the account by completing the New Account

Application or subsequently by calling toll-free (800) 548-7786.n Call toll-free (800) 548-7786 to process a telephone redemption using our automated

telephone system which is generally accessible 24 hours a day, seven days a week.n Your request must be received prior to market close, generally 4:00 p.m. Eastern time.n If your account has multiple owners, the Transfer Agent may rely on the instructions of any one

owner.n Proceeds must be made payable to the name(s) and address in which the account is registered.n You may redeem amounts of $50,000 or less daily if the proceeds are to be paid by check or by

Automated Clearing House.n This privilege is not available if the address on your account has changed within 15 calendar

days prior to your telephone redemption request.n Telephone redemption is available for most accounts other than accounts with shares

represented by certificates.

If you request to sell shares that were recently purchased by check, the proceeds of that sale maynot be sent to you until it has been verified that the check has cleared, which may take up to 15calendar days from the date of purchase.

Contact the FundBy Telephone



32

Options Procedures

Morgan Stanley and its subsidiaries, the Transfer Agent and the Fund employ proceduresconsidered by them to be reasonable to confirm that instructions communicated by telephone aregenuine. Such procedures may include requiring certain personal identification information priorto acting upon telephone instructions, tape-recording telephone communications and providingwritten confirmation of instructions communicated by telephone. If reasonable procedures areemployed, none of Morgan Stanley, the Transfer Agent or the Fund will be liable for followingtelephone instructions which it reasonably believes to be genuine. Telephone redemptions may notbe available if a shareholder cannot reach the Transfer Agent by telephone, whether because alltelephone lines are busy or for any other reason; in such case, a shareholder would have to use theFund’s other redemption procedures described in this section.

Contact the FundBy Telephone(continued)

You can also sell your Class A, Class B, Class L, Class I and/or Class IS shares by writing a “letterof instruction” that includes:n the name on your account and account number;n the name of the Fund;n the dollar amount or the number of shares you wish to sell;n the Class of shares you wish to sell;n the signature of each owner as it appears on the account; andn whether you wish to receive the redemption proceeds by check or by wire to the bank account

we have on file for you.

If you are requesting payment to anyone other than the registered owner(s) or that payment besent to any address other than the address of the registered owner(s) or pre-designated bankaccount, you will need a signature guarantee. You can obtain a signature guarantee from an eligibleguarantor acceptable to the Transfer Agent. (You should contact the Transfer Agent toll-free at(800) 548-7786 for a determination as to whether a particular institution is an eligible guarantor.)A notary public cannot provide a signature guarantee. Additional documentation may be requiredfor shares held by a corporation, partnership, trustee or executor.

Mail the letter to Boston Financial Data Services, Inc. at P.O. Box 219804, Kansas City, MO64121-9804. If you hold share certificates, you must return the certificates, along with the letter andany required additional documentation. A check or wire will be sent according to your instructions.

Contact the FundBy Letter



Options Procedures

Payment for Sold Shares. After we receive your complete instructions to sell as described above, a check will bemailed to you or a wire will be sent to your bank within seven days, although we will attempt to make payment withinone business day. Payment may also be sent to your brokerage account.

Payment may be postponed or the right to sell your shares suspended under unusual circumstances. If you request to sellshares that were recently purchased by check, the proceeds of the sale may not be sent to you until it has been verifiedthat the check has cleared, which may take up to 15 calendar days from the date of purchase.

Payments-in-Kind. If we determine that it is in the best interest of the Fund not to pay redemption proceeds incash, we may pay you partly or entirely by distributing to you securities held by the Fund. If the Fund redeems yourshares in-kind, you will bear any market risks associated with the securities paid as redemption proceeds. Such in-kindsecurities may be illiquid and difficult or impossible for a shareholder to sell at a time and at a price that a shareholderwould like. Redemptions paid in such securities generally will give rise to income, gain or loss for income tax purposesin the same manner as redemptions paid in cash. In addition you may incur brokerage costs and a further gain or lossfor income tax purposes when you ultimately sell the securities.

Tax Considerations. Normally, your sale of Fund shares is subject to federal and state income tax. You shouldreview the “Shareholder Information—Tax Consequences” section of this Prospectus and consult your own taxprofessional about the tax consequences of a sale.

Conversion to a New Share Class. If the value of an account containing Class IS shares falls below the Class ISinvestment minimum because of shareholder redemption(s) or the failure to meet one of the waiver criteria set forthunder “How to Buy Shares—Minimum Investment Amounts” above and, if the account value remains below suchinvestment minimum, the shares in such account may, at the Adviser’s discretion, convert to another class of sharesoffered by the Fund, if an account meets the minimum investment amount for such class, and will be subject to theshareholder services fee and other features applicable to such shares. Conversion to another class of shares will result inholding a share class with higher fees. The Fund will not convert to another class of shares based solely upon changes in

If your investment in all of the Morgan Stanley Funds has a total market value of at least $10,000,you may elect to withdraw amounts of $25 or more, or in any whole percentage of a fund’sbalance (provided the amount is at least $25), on a monthly, quarterly, semi-annual or annualbasis, from any fund with a balance of at least $1,000. Each time you add a fund to the plan, youmust meet the plan requirements.

Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under certaincircumstances. See the Class A and Class B waiver categories listed in the “ShareholderInformation—Share Class Arrangements” section of this Prospectus.

To sign up for the systematic withdrawal plan, contact your Morgan Stanley Financial Advisor or calltoll-free (800) 548-7786. You may terminate or suspend your plan at any time. Please remember thatwithdrawals from the plan are sales of shares, not Fund “distributions,” and ultimately may exhaustyour account balance. The Fund may terminate or revise the plan at any time.

SystematicWithdrawal Plan

33



34

Targeted DividendsSM

You may select to haveyour Fund distributionsautomatically investedin other Classes of Fundshares or Classes ofanother Morgan StanleyFund that you own.Contact your MorganStanley FinancialAdvisor for furtherinformation about thisservice.

the market that reduce the NAV of shares. Under current tax law, conversion between share classes isnot a taxable event to the shareholder. Shareholders will be notified prior to any such conversion.

Reinstatement Privilege. If you sell Fund shares and have not previously exercised thereinstatement privilege, you may, within 35 days after the date of sale, invest any portion of theproceeds in the same Class of Fund shares at their NAV and receive a pro rata credit for any CDSCpaid in connection with the sale.

Involuntary Sales. If the value of an account falls below the investment minimum for aparticular share class of the Fund because of shareholder redemption(s) or you no longer meet oneof the waiver criteria set forth under “How to Buy Shares—Minimum Investment Amounts” aboveand, if the account value remains below such investment minimums, the shares in such account maybe subject to redemption by the Fund. The Fund will not redeem shares based solely upon changesin the market that reduce the NAV of shares. If redeemed, redemption proceeds will be promptlypaid to the shareholder.

However, before the Fund sells your shares in this manner, we will notify you and allow you 60 daysto make an additional investment in an amount that will increase the value of your account to at leastthe required amount before the sale is processed. No CDSC will be imposed on any involuntary sale.

Margin Accounts. If you have pledged your Fund shares in a margin account, contact yourFinancial Intermediary regarding restrictions on the sale of such shares.

Distributions

The Fund passes substantially all of its earnings from income and capital gains along to its investorsas “distributions.” The Fund earns interest from fixed-income investments and income from stocks.These amounts are passed along to Fund shareholders as “income dividend distributions.” The Fundrealizes capital gains whenever it sells securities for a higher price than it paid for them. Theseamounts may be passed along as “capital gain distributions.”

The Fund declares income dividends separately for each Class. Distributions paid on Class A, Class Iand Class IS shares usually will be higher than for Class B and Class L shares because distribution feesthat Class B and Class L shares pay are higher. Normally, income dividends are distributed toshareholders monthly. Capital gains, if any, are usually distributed in December. The Fund, however,may retain and reinvest any long-term capital gains. The Fund may at times make payments fromsources other than income or capital gains that represent a return of a portion of your investment. Thesepayments would not be taxable to you as a shareholder, but would have the effect of reducing your basisin the Fund.

Distributions are reinvested automatically in additional shares of the same Class and automaticallycredited to your account, unless you request in writing that all distributions be paid in cash. If you electthe cash option, the Fund will mail a check to you no later than seven business days after the



35

distribution is declared. However, if you purchase Fund shares through a Financial Intermediary within three business daysprior to the record date for the distribution, the distribution will automatically be paid to you in cash, even if you did notrequest to receive all distributions in cash. No interest will accrue on uncashed checks. If you wish to change how yourdistributions are paid, your request should be received by the Transfer Agent at least five business days prior to the recorddate of the distributions.

Frequent Purchases and Redemptions of Fund Shares

Frequent purchases and redemptions of Fund shares by Fund shareholders are referred to as “market-timing” or “short-termtrading” and may present risks for other shareholders of the Fund, which may include, among other things, dilution in thevalue of Fund shares held by long-term shareholders, interference with the efficient management of the Fund’s portfolio,increased brokerage and administrative costs, incurring unwanted taxable gains and forcing the Fund to hold excess levels ofcash.

In addition, the Fund is subject to the risk that market-timers and/or short-term traders may take advantage of timezone differences between the foreign markets on which the Fund’s portfolio securities trade and the time the Fund’sNAV is calculated (“time-zone arbitrage”). For example, a market-timer may purchase shares of the Fund based onevents occurring after foreign market closing prices are established, but before the Fund’s NAV calculation, that arelikely to result in higher prices in foreign markets the following day. The market-timer would redeem the Fund’s sharesthe next day, when the Fund’s share price would reflect the increased prices in foreign markets, for a quick profit at theexpense of long-term Fund shareholders.

Investments in other types of securities also may be susceptible to short-term trading strategies. These investments includesecurities that are, among other things, thinly traded, traded infrequently or relatively illiquid, which have the risk that thecurrent market price for the securities may not accurately reflect current market values. A shareholder may seek to engage inshort-term trading to take advantage of these pricing differences (referred to as “price arbitrage”). Investments in certainfixed-income securities, such as high yield bonds, may be adversely affected by price arbitrage trading strategies.

The Fund’s policies with respect to valuing portfolio securities are described in “Shareholder Information—Pricing FundShares.”

The Fund discourages and does not accommodate frequent purchases and redemptions of Fund shares by Fundshareholders and the Fund’s Board of Trustees has adopted policies and procedures with respect to such frequentpurchases and redemptions. The Fund’s policies with respect to purchases, redemptions and exchanges of Fund sharesare described in the “Shareholder Information—How to Buy Shares,” “—How to Exchange Shares” and “—How to SellShares” sections of this Prospectus. Except as described in each of these sections, and with respect to trades that occurthrough omnibus accounts at intermediaries, as described below, the Fund’s policies regarding frequent trading of Fundshares are applied uniformly to all shareholders. With respect to trades that occur through omnibus accounts atintermediaries, such as investment managers, broker-dealers, transfer agents and third-party administrators, the Fund(i) requests assurance that such intermediaries currently selling Fund shares have in place internal policies andprocedures reasonably designed to address market-timing concerns and has instructed such intermediaries to notify theFund immediately if they are unable to comply with such policies and procedures, and (ii) requires all prospective



36

intermediaries to agree to cooperate in enforcing the Fund’s policies (or, upon prior written approval only, anintermediary’s own policies) with respect to frequent purchases, redemptions and exchanges of Fund shares.

Omnibus accounts generally do not identify customers’ trading activity to the Fund on an individual ongoing basis.Therefore, with respect to trades that occur through omnibus accounts at Financial Intermediaries, to some extent, theFund relies on the Financial Intermediary to monitor frequent short-term trading within the Fund by the FinancialIntermediary’s customers. However, the Fund or the Distributor has entered into agreements with FinancialIntermediaries whereby Financial Intermediaries are required to provide certain customer identification and transactioninformation upon the Fund’s request. The Fund may use this information to help identify and prevent market-timingactivity in the Fund. There can be no assurance that the Fund will be able to identify or prevent all market-timingactivities.

Tax Consequences

As with any investment, you should consider how your Fund investment will be taxed. The tax information in thisProspectus is provided as general information. You should consult your own tax professional about the tax consequencesof an investment in the Fund.

Unless your investment in the Fund is through a tax-deferred retirement account, such as a 401(k) plan or IRA, youneed to be aware of the possible tax consequences when:n The Fund makes distributions; andn You sell Fund shares, including an exchange to another Morgan Stanley Fund.

Your distributions are normally subject to federal income tax when they are paid, whether you take them in cash orreinvest them in Fund shares. A distribution also may be subject to state and local income tax. Depending on yourstate’s rules, however, dividends attributable to interest earned on direct obligations of the U.S. Government may beexempt from state and local taxes. Any income dividend distributions and any short-term capital gain distributions aretaxable to you as ordinary income. Any long-term capital gain distributions are taxable as long-term capital gains nomatter how long you have owned shares in the Fund.The Fund does not anticipate that it will make distributionseligible for the reduced rate of taxation applicable to qualified dividend income.

If certain holding period requirements are met with respect to your shares, a portion (which, if any, is not expected tobe significant) of the income dividends you receive may be taxed at the same rate as long-term capital gains. However,even if income received in the form of income dividends is taxed at the same rates as long-term capital gains, suchincome will not be considered long-term capital gains for other federal income tax purposes. For example, yougenerally will not be permitted to offset income dividends with capital losses. Short-term capital gain distributions willcontinue to be taxed at ordinary income rates.

If more than 50% of the Fund’s assets are invested in foreign securities at the end of any fiscal year, the Fund may elect topermit shareholders to take a credit or deduction on their federal income tax return for foreign taxes paid by the Fund. Ifthe Fund makes such an election, the shareholders would also include the amount of such foreign taxes in their income.



You will be sent a statement (U.S. Internal Revenue Service (“IRS”) Form 1099-DIV) by February of each year showingthe taxable distributions paid to you in the previous year. The statement provides information on your dividends andany capital gains for tax purposes.

Your sale of Fund shares normally is subject to federal and state income tax and may result in a taxable gain or loss toyou. A sale also may be subject to local income tax. Your exchange of Fund shares for shares of another Morgan StanleyFund is treated for tax purposes like a sale of your original shares and a purchase of your new shares. Thus, the exchangemay, like a sale, result in a taxable gain or loss to you and will give you a new tax basis for your new shares.

An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends andcapital gain distributions received from the Fund and net gains from redemptions or other taxable dispositions of Fundshares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in thecase of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds certain threshold amounts.

Shareholders who are not citizens or residents of the United States and certain foreign entities will generally be subject towithholding of U.S. tax of 30% on distributions made by the Fund of investment income and short-term capital gains.

The Fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends and (effective January 1,2017) redemption proceeds and certain capital gain dividends made to certain non-U.S. entities that fail to comply (orbe deemed compliant) with extensive new reporting and withholding requirements designed to inform the U.S.Department of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be requested to provideadditional information to the Fund to enable the Fund to determine whether withholding is required.

The Fund (or its administrative agent) is required to report to the IRS and furnish to Fund shareholders the cost basisinformation for sale transactions of shares purchased on or after January 1, 2012. Shareholders may elect to have one ofseveral cost basis methods applied to their account when calculating the cost basis of shares sold, including average cost,FIFO (“first-in, first-out”) or some other specific identification method. Unless you instruct otherwise, the Fund will useaverage cost as its default cost basis method, and will treat sales as first coming from shares purchased prior to January 1,2012. If average cost is used for the first sale of Fund shares covered by these new rules, the shareholder may only use analternative cost basis method for shares purchased prospectively. Fund shareholders should consult with their taxadvisors to determine the best cost basis method for their tax situation.

When you open your Fund account, you should provide your social security or tax identification number on yourinvestment application. By providing this information, you will avoid being subject to federal backup withholding taxon taxable distributions and redemption proceeds at a rate of 28%. Any withheld amount would be sent to the IRS asan advance payment of your taxes due on your income.

Share Class Arrangements

The Fund offers several Classes of shares having different distribution arrangements designed to provide you withdifferent purchase options according to your investment needs. Your Financial Intermediary can help you decide whichClass may be appropriate for you.

The general public is offered two Classes: Class A shares and Class L shares, which differ principally in terms of salescharges and ongoing expenses. A third Class, Class B shares, is closed to new investments. The Class B shareholders of

37



the Fund do not have the option of purchasing additional Class B shares. However, the existing Class B shareholdersmay invest through dividend reinvestments. A fourth Class, Class I shares, is offered only to a limited category ofinvestors. The Fund offers a fifth Class, Class IS shares, which is offered only to eligible investors meeting certainminimum investment requirements. Shares that you acquire through reinvested distributions will not be subject to anyfront-end sales charge or CDSC.

Sales personnel may receive different compensation for selling each Class of shares. The sales charges applicable to eachClass provide for the distribution financing of shares of that Class.

The chart below compares the sales charge and annual 12b-1 fee applicable to each Class:

Class Sales Charge Maximum Annual 12b-1 Fee

A Maximum 4.25% initial sales charge reduced for purchases of $25,000 or more; shares purchased without an initial sales charge are generally subject to a 0.50% CDSC if sold during the first 18 months 0.25%

B Maximum 5.00% CDSC during the first year decreasing to 0% after six years 0.85%

L None 0.50%

I None None

IS None None

While Class B and Class L shares do not have any front-end sales charges, their higher ongoing annual expenses (due tohigher 12b-1 fees) mean that over time you could end up paying more for these shares than if you were to pay front-endsales charges for Class A shares.

Certain shareholders may be eligible for reduced sales charges (i.e., breakpoint discounts), CDSC waivers and eligibilityminimums. Please see the information for each Class set forth below for specific eligibility requirements. You mustnotify your Financial Intermediary (or the Transfer Agent if you purchase shares directly through the Fund) at the time apurchase order (or in the case of Class B, a redemption order) is placed, that the purchase (or redemption) qualifies for areduced sales charge (i.e., breakpoint discount), CDSC waiver or eligibility minimum. Similar notification must bemade in writing when an order is placed by mail. The reduced sales charge, CDSC waiver or eligibility minimum willnot be granted if: (i) notification is not furnished at the time of order; or (ii) a review of the records of your FinancialIntermediary or the Transfer Agent does not confirm your represented holdings.

In order to obtain a reduced sales charge (i.e., breakpoint discount) or to meet an eligibility minimum, it may benecessary at the time of purchase for you to inform your Financial Intermediary (or the Transfer Agent if you purchaseshares directly through the Fund) of the existence of other accounts in which there are holdings eligible to be aggregatedto meet the sales load breakpoints or eligibility minimums. In order to verify your eligibility, you may be required toprovide account statements and/or confirmations regarding shares of the Fund or other Morgan Stanley Funds held inall related accounts described below at your Financial Intermediary, as well as shares held by related parties, such asmembers of the same family or household, in order to determine whether you have met a sales load breakpoint oreligibility minimum. The Fund makes available, in a clear and prominent format, free of charge, on its web site,www.morganstanley.com, information regarding applicable sales loads, reduced sales charges (i.e., breakpoint discounts),sales load waivers and eligibility minimums. The web site includes hyperlinks that facilitate access to the information.

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JOB: 15-2825-2 CYCLE#;BL#: 10; 0 TRIM: 7.5" x 8.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, ~HTML color, ~note-color 2, ~watermark GRAPHICS: none V1.5

Class A shares are sold at NAV plus an initial sales charge of up to 4.25%of the public offering price. The initial sales charge is reduced for purchases of $25,000 or moreaccording to the schedule below. Investments of $1 million or more are not subject to an initial salescharge, but are generally subject to a CDSC of 0.50% on sales made within 18 months after the lastday of the month of purchase. The CDSC will be assessed in the same manner and with the sameCDSC waivers as with Class B shares. In addition, the CDSC on Class A shares will be waived inconnection with sales of Class A shares for which no commission or transaction fee was paid by theDistributor or Financial Intermediary at the time of purchase of such shares. Class A shares are alsosubject to a distribution and shareholder services (12b-1) fee of up to 0.25% of the average daily netassets of the Class. The maximum annual 12b-1 fee payable by Class A shares is lower than themaximum annual 12b-1 fee payable by Class B or Class L shares.

The offering price of Class A shares includes a sales charge (expressed as a percentage of the publicoffering price) on a single transaction as shown in the following table:

Front-End Sales Charge Percentage of Approximate Dealer Commission Amount of Public Offering Percentage of Net as a Percentage of Single Transaction Price Amount Invested Offering Price

Less than $25,000 4.25% 4.44% 4.00%

$25,000 but less than $50,000 4.00% 4.17% 3.75%

$50,000 but less than $100,000 3.50% 3.63% 3.25%

$100,000 but less than $250,000 2.75% 2.83% 2.50%

$250,000 but less than $500,000 2.25% 2.30% 2.00%

$500,000 but less than $1 million 1.75% 1.78% 1.50%

$1 million and over 0.00% 0.00% 0.00%

You may benefit from a reduced sales charge schedule (i.e., breakpoint discount) for purchases ofClass A shares of the Fund, by combining, in a single transaction, your purchase with purchases ofClass A shares of the Fund by the following related accounts (“Related Accounts”):n A single account (including an individual, a joint account, a trust or fiduciary account).n A family member account (limited to spouse, and children under the age of 21, but including

trust accounts established solely for the benefit of a spouse, or children under the age of 21).n An UGMA/UTMA account.n An individual retirement account.

Investments made through employer-sponsored retirement plan accounts will not be aggregated withindividual accounts.

Combined Purchase Privilege. You will have the benefit of a reduced sales charge bycombining your purchase of Class A shares of the Fund in a single transaction with your purchase ofClass A shares of any other Morgan Stanley Multi-Class Fund for any Related Account.

CLASS A SHARES

Front-End SalesCharge or FSC

An initial sales chargeyou pay whenpurchasing Class Ashares that is based ona percentage of theoffering price. Thepercentage declinesbased upon the dollarvalue of Class A sharesyou purchase. We offerthree ways to reduceyour Class A salescharges—theCombined PurchasePrivilege, Right ofAccumulation andLetter of Intent.

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Right of Accumulation. You may benefit from a reduced sales charge if the cumulative NAV of Class A shares of theFund purchased in a single transaction, together with the NAV of any Class A shares of the Fund and any other MorganStanley Multi-Class Fund (including shares of Morgan Stanley Money Market Funds and Advisor Class shares of MorganStanley Limited Duration U.S. Government Trust which you acquired in an exchange from Class A shares of the Fund orClass A shares of another Morgan Stanley Multi-Class Fund) held in Related Accounts, amounts to $25,000 or more.

Notification. You must notify your Financial Intermediary (or the Transfer Agent, if you purchase shares directlythrough the Fund) at the time a purchase order is placed, that the purchase qualifies for a reduced sales charge under anyof the privileges discussed above. Similar notification must be made in writing when an order is placed by mail. Thereduced sales charge will not be granted if: (i) notification is not furnished at the time of the order; or (ii) a review of therecords of your Financial Intermediary or the Transfer Agent does not confirm your represented holdings. Certainwaivers may not be available depending on the policies at certain Financial Intermediaries. Please consult your FinancialIntermediary for more information.

In order to obtain a reduced sales charge for Class A shares of the Fund under any of the privileges discussed above, itmay be necessary at the time of purchase for you to inform your Financial Intermediary (or the Transfer Agent, if youpurchase shares directly through the Fund) of the existence of other Related Accounts in which there are holdingseligible to be aggregated to meet the sales load breakpoint and/or right of accumulation threshold. In order to verifyyour eligibility, you may be required to provide account statements and/or confirmations regarding your purchasesand/or holdings of any Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund (including shares ofMorgan Stanley Money Market Funds and Advisor Class shares of Morgan Stanley Limited Duration U.S. GovernmentTrust which you acquired in an exchange from Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund) held in all Related Accounts at your Financial Intermediary, in order to determine whether you have metthe sales load breakpoint and/or right of accumulation threshold.

Letter of Intent. The above schedule of reduced sales charges for larger purchases also will be available to you if youenter into a written “Letter of Intent.” A Letter of Intent provides for the purchase of Class A shares of the Fund andClass A shares of other Morgan Stanley Multi-Class Funds within a 13-month period. The initial purchase of Class Ashares of the Fund under a Letter of Intent must be at least 5% of the stated investment goal. The Letter of Intent doesnot preclude the Fund (or any other Morgan Stanley Multi-Class Fund) from discontinuing sales of its shares. Todetermine the applicable sales charge reduction, you may also include (1) the cost of Class A shares of the Fund or anyother Morgan Stanley Multi-Class Fund which were previously purchased at a price including a front-end sales chargeduring the 90-day period prior to the Distributor receiving the Letter of Intent and (2) the historical cost of shares ofany Morgan Stanley Money Market Fund or Advisor Class shares of Morgan Stanley Limited Duration U.S.Government Trust which you acquired in an exchange from Class A shares of the Fund or any other Morgan StanleyMulti-Class Fund purchased during that period at a price including a front-end sales charge. You may also combinepurchases and exchanges by any Related Accounts during such 90-day period. You should retain any records necessary tosubstantiate historical costs because the Fund, the Transfer Agent and your Financial Intermediary may not maintainthis information. You can obtain a Letter of Intent by contacting your Financial Intermediary or by calling toll-free(800) 548-7786. If you do not achieve the stated investment goal within the 13-month period, you are required to paythe difference between the sales charges otherwise applicable and sales charges actually paid, which may be deducted

40



from your investment. Shares acquired through reinvestment of dividends and other distributions are not aggregated toachieve the stated investment goal.

Other Sales Charge Waivers. In addition to investments of $1 million or more, your purchase of Class A shares isnot subject to a front-end sales charge if your account qualifies under one of the following categories:n Sales through banks, broker-dealers and other financial institutions (including registered investment advisers and

financial planners) purchasing shares on behalf of their clients in (i) discretionary and non-discretionary advisoryprograms, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice orfor executing transactions in Fund shares or for otherwise participating in the program or (iv) certain otherinvestment programs that do not charge an asset-based fee, as outlined in an agreement between the Distributor andsuch financial institution.

n Sales through Financial Intermediaries who have entered into an agreement with the Distributor to offer Portfolioshares to self-directed investment brokerage accounts, which may or may not charge a transaction fee.

n Qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions).n Defined contribution, defined benefit and other employer-sponsored employee benefit plans, whether or not

qualified under the Code, where such plans purchase Class A shares through a plan-level or omnibus accountsponsored or serviced by a Financial Intermediary that has an agreement with the Fund, the Distributor and/or theAdviser pursuant to which Class A shares are available to such plans without an initial sales charge.

n Certain retirement and deferred compensation programs established by Morgan Stanley Investment Management orits affiliates for their employees or the Fund’s Trustees.

n Current or retired Directors or Trustees of the Morgan Stanley Funds, such persons’ spouses, and children under theage of 21, and trust accounts for which any of such persons is a beneficiary.

n Current or retired directors, officers and employees of Morgan Stanley and any of its subsidiaries, such persons’spouses, and children under the age of 21, and trust accounts for which any of such persons is a beneficiary.

n Certain other registered open-end investment companies whose shares are distributed by the Distributor.n Investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.n The reinvestment of dividends from Class A shares in additional Class A shares of the Fund.

Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Please consult yourFinancial Intermediary for more information.

Exchanging Shares Subject to a CDSC. There are special considerations when you exchange Class A shares ofthe Fund that are subject to a CDSC. When determining the length of time you held the Class A shares, any period(starting at the end of the month) during which you held such shares will be counted. In addition, any period (startingat the end of the month) during which you held (i) Class A shares of a Morgan Stanley Multi-Class Fund; (ii) shares of aMorgan Stanley Money Market Fund or (iii) Advisor Class shares of Morgan Stanley Limited Duration U.S.Government Trust, any of which you acquired in an exchange from such Class A shares of the Fund, will also becounted; however, if you sell shares of (i) the Morgan Stanley Multi-Class Fund; (ii) the Morgan Stanley Money MarketFund; or (iii) the Advisor Class shares of Morgan Stanley Limited Duration U.S. Government Trust, before theexpiration of the CDSC “holding period,” you will be charged the CDSC applicable to such shares.

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Contingent DeferredSales Charge orCDSC

A fee you pay when yousell shares of certainMorgan Stanley Fundspurchased without aninitial sales charge. Thisfee declines the longeryou hold your shares asset forth in the table.

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Class B shares of the Fund are closed to new investments. The Class B

shareholders of the Fund do not have the option of purchasing additional Class B shares. However, the

existing Class B shareholders may invest through dividend reinvestments.

Class B shares are not subject to an initial sales charge but are subject to a CDSC, as set forth in thetable below. For the purpose of calculating the CDSC, shares are deemed to have been purchased on thelast day of the month during which they were purchased.

Year Since Purchase Payment Made CDSC as a Percentage of Amount Redeemed

First 5.0%

Second 4.0%

Third 3.0%

Fourth 2.0%

Fifth 2.0%

Sixth 1.0%

Seventh and thereafter None

The CDSC is assessed on an amount equal to the lesser of the then market value of the shares or thehistorical cost of the shares (which is the amount actually paid for the shares at the time of originalpurchase) being redeemed. Accordingly, no sales charge is imposed on increases in NAV above theinitial purchase price. In determining whether a CDSC applies to a redemption, it is assumed thatthe shares being redeemed first are any shares in the shareholder’s Fund account that are not subjectto a CDSC, followed by shares held the longest in the shareholder’s account.

Financial Intermediaries may impose a limit on the dollar value of a Class B share purchase orderthat they will accept. You should discuss with your Financial Intermediary which share class is mostappropriate for you based on the size of your investment, your expected time horizon for holdingthe shares and other factors, bearing in mind the availability of reduced sales loads on Class A sharepurchases that qualify for such reduction under the combined purchase privilege or right ofaccumulation privilege available on Class A share purchases.

CDSC Waivers. A CDSC, if otherwise applicable, will be waived in the case of:n Sales of shares held at the time you die or become disabled (within the definition in

Section 72(m)(7) of the Code which relates to the ability to engage in gainful employment), if theshares are: (i) registered either in your individual name or in the names of you and your spouse asjoint tenants with right of survivorship; (ii) registered in the name of a trust of which (a) you arethe settlor and that is revocable by you (i.e., a “living trust”) or (b) you and your spouse are thesettlors and that is revocable by you or your spouse (i.e., a “joint living trust”); or (iii) held in aqualified corporate or self-employed retirement plan, IRA or 403(b) Custodial Account; providedin each case that the sale is requested within one year after your death or initial determination ofdisability.

CLASS B SHARES



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n Sales in connection with the following retirement plan “distributions:” (i) lump-sum or other distributions from aqualified corporate or self-employed retirement plan following retirement (or, in the case of a “key employee” of a“top heavy” plan, following attainment of age 59 1⁄2); (ii) required minimum distributions and certain otherdistributions (such as those following attainment of age 59 1⁄2) from an IRA or 403(b) Custodial Account; or (iii) atax-free return of an excess IRA contribution (a “distribution” does not include a direct transfer of IRA, 403(b)Custodial Account or retirement plan assets to a successor custodian or trustee).

n Sales of shares in connection with the systematic withdrawal plan of up to 12% annually of the value of each fundfrom which plan sales are made. The percentage is determined on the date you establish the systematic withdrawalplan and based on the next calculated share price. You may have this CDSC waiver applied in amounts up to 1% permonth, 3% per quarter, 6% semi-annually or 12% annually. Shares with no CDSC will be sold first, followed bythose with the lowest CDSC. As such, the waiver benefit will be reduced by the amount of your shares that are notsubject to a CDSC. If you suspend your participation in the plan, you may later resume plan payments withoutrequiring a new determination of the account value for the 12% CDSC waiver.

The Distributor may require confirmation of your entitlement before granting a CDSC waiver. If you believe you areeligible for a CDSC waiver, please contact your Financial Intermediary or call toll-free (800) 548-7786.

Distribution Fee. Class B shares also are subject to an annual distribution and shareholder services (12b-1) fee of upto 0.85% of the average daily net assets of Class B shares. The maximum annual 12b-1 fee payable by Class B shares ishigher than the maximum annual 12b-1 fee payable by Class A and Class L shares.

Conversion Feature. After eight years, Class B shares generally will convert automatically to Class A shares of theFund with no initial sales charge. The eight-year period runs from the last day of the month in which the shares werepurchased or, in the case of Class B shares acquired through an exchange, from the last day of the month in which theoriginal Class B shares were purchased; the shares will convert to Class A shares based on their relative NAVs in themonth following the eight-year period. At the same time, an equal proportion of Class B shares acquired throughautomatically reinvested distributions will convert to Class A shares on the same basis. This conversion will besuspended during any period in which the expense ratio of the Class B shares of the Fund is lower than the expense ratioof the Class A shares of the Fund.

Exchanging Shares Subject to a CDSC. There are special considerations when you exchange Fund shares thatare subject to a CDSC. When determining the length of time you held the shares and the corresponding CDSC rate,any period (starting at the end of the month) during which you held such shares will be counted. In addition, anyperiod (starting at the end of the month) during which you held (i) shares of a Morgan Stanley Money Market Fund or(ii) Advisor Class shares of Morgan Stanley Limited Duration U.S. Government Trust, which you acquired in anexchange from such shares of the Fund, will also be counted; however, if you sell shares of such Morgan Stanley MoneyMarket Fund or the Advisor Class shares of Morgan Stanley Limited Duration U.S. Government Trust before theexpiration of the CDSC “holding period,” you will be charged the applicable CDSC rate.

For example, if you held Class B shares of the Fund for one year, exchanged to Class B of another Morgan StanleyMulti-Class Fund for another year, then sold your shares, a CDSC rate of 4% would be imposed on the shares based ona two-year holding period—one year for each fund. Similarly, if you had exchanged Class B shares of the Fund for sharesof a Morgan Stanley Money Market Fund or Advisor Class shares of Morgan Stanley Limited Duration U.S.Government Trust, then sold your shares, a CDSC rate of 4% would be imposed on the shares based on a two-yearholding period—one year for each fund.



Class L shares are sold at NAV with no initial sales charge.

Financial Intermediaries may impose a limit on the dollar value of a Class L share purchase order that they will accept.For example, a Morgan Stanley Financial Advisor generally will not accept purchase orders for Class L shares that in theaggregate amount to $250,000 or more. You should discuss with your Financial Intermediary which share class is mostappropriate for you based on the size of your investment, your expected time horizon for holding the shares and otherfactors, bearing in mind the availability of reduced sales loads on Class A share purchases that qualify for such reductionunder the combined purchase privilege or right of accumulation privilege available on Class A share purchases.

Distribution Fee. Class L shares are subject to an annual distribution and shareholder services (12b-1) fee of up to0.50% of the average daily net assets of that Class. The maximum annual 12b-1 fee payable by Class L shares is higherthan the maximum annual 12b-1 fee payable by Class A shares. Unlike Class B shares, Class L shares have no conversionfeature and, accordingly, an investor that purchases Class L shares may be subject to distribution and shareholderservices (12b-1) fees applicable to Class L shares for as long as the investor owns such shares.

Class I shares are sold at NAV without any sales charge on purchases or sales and withoutany distribution and shareholder services (12b-1) fees. Class I shares are offered only to investors meeting an initialinvestment minimum of $5 million and the following categories:n Sales through banks, broker-dealers and other financial institutions (including registered investment advisers and

financial planners) purchasing shares on behalf of their clients in (i) discretionary and non-discretionary advisoryprograms, (ii) fund supermarkets, (iii) asset allocation programs, (iv) other programs in which the client pays anasset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or(v) certain other investment programs that do not charge an asset-based fee.

n Qualified state tuition plans described in Section 529 of the Code and donor-advised charitable gift funds (subject toall applicable terms and conditions).

n Defined contribution, defined benefit and other employer-sponsored employee benefit plans, whether or notqualified under the Code.

n Certain other registered open-end investment companies whose shares are distributed by the Distributor.n Investors who were shareholders of the Dean Witter Retirement Series on September 11, 1998 for additional

purchases for their former Dean Witter Retirement Series accounts.n Certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or

its affiliates for their employees or the Fund’s Trustees.n Current or retired directors, officers and employees of Morgan Stanley and any of its subsidiaries, such persons’

spouses, and children under the age of 21, and trust accounts for which any of such persons is a beneficiary.n Current or retired Directors or Trustees of the Morgan Stanley Funds, such persons’ spouses, and children under the

age of 21, and trust accounts for which any of such persons is a beneficiary.n Investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.n The reinvestment of dividends from Class I shares in additional Class I shares of the Fund.

Meeting Class I Eligibility Minimums. To meet the $5 million initial investment to qualify to purchase Class Ishares you may combine: (1) purchases in a single transaction of Class I shares of the Fund and other Morgan StanleyMulti-Class Funds; and/or (2) previous purchases of Class A and Class I shares of Morgan Stanley Multi-Class Fundsyou currently own, along with shares of Morgan Stanley Funds you currently own that you acquired in exchange forthose shares. Shareholders cannot combine purchases made by family members or a shareholder’s other Related

CLASS I SHARES

CLASS L SHARES

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Accounts in a single transaction for purposes of meeting the $5 million initial investment minimum requirement toqualify to purchase Class I shares.

Class IS shares are offered at NAV without any sales charge on purchases or sales. Inaddition, no distribution (12b-1) or shareholder services fees, sub-accounting or other similar fees, or any finder’s feepayments are charged or paid on Class IS shares. To purchase Class IS shares, an investor must meet a minimum initialinvestment of $10,000,000 or be a defined contribution, defined benefit or other employer sponsored employee benefitplan with minimum plan assets of $250,000,000, whether or not qualified under the Code, in each case subject to thediscretion of the Adviser. Omnibus trades of $10 million or more shall be accepted from certain platforms, including;(i) banks and trust companies; (ii) insurance companies; and (iii) registered investment advisory firms. The $10,000,000minimum initial investment amount may be waived for Fund shares purchased by or through: (1) certain registeredopen-end investment companies whose shares are distributed by the Distributor; or (2) investments made in connectionwith certain mergers and/or reorganizations as approved by the Adviser.

If you receive a cash paymentrepresenting an ordinary dividend or capital gain and you reinvest that amount in the applicable Class of shares byreturning the check within 30 days of the payment date, the purchased shares would not be subject to an initial salescharge or CDSC.

The Fund has adopted a Plan of Distribution in accordancewith Rule 12b-1 under the Investment Company Act with respect to the Class A, Class B and Class L shares. (Class Iand Class IS shares are offered without any 12b-1 fee.) The Plan allows the Fund to pay distribution fees for the sale anddistribution of these shares. It also allows the Fund to pay for services to shareholders of Class A, Class B and Class Lshares. Because these fees are paid out of the Fund’s assets on an ongoing basis, over time these fees will increase the costof your investment and reduce your return in these Classes and may cost you more than paying other types of salescharges.

Additional Information

The Adviser and/or Distributor may pay compensation (out of their own funds and not as an expense of the Fund) toMorgan Stanley Smith Barney LLC or other Financial Intermediaries or service providers in connection with the sale,distribution, marketing or retention of Fund shares and/or shareholder servicing. Such compensation may be significantin amount and the prospect of receiving any such additional compensation may provide Morgan Stanley SmithBarney LLC or such other Financial Intermediary with an incentive to favor sales of shares of the Fund over otherinvestment options. Any such payments will not change the NAV or the price of the Fund’s shares. For moreinformation, please see the Fund’s SAI.

CLASS IS SHARES

NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS

PLAN OF DISTRIBUTION (RULE 12b-1 FEES)

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46

The financial highlights tables are intended to help you understand the Fund’s financial performance for the periodsindicated. Certain information reflects financial results for a single Fund share throughout each period. The totalreturns in the tables represent the rate an investor would have earned or lost on an investment in the Fund (assumingreinvestment of all dividends and distributions). The ratio of expenses to average net assets listed in the tables belowfor each class of shares of the Fund are based on the average net assets of the Fund for each of the periods listed in thetables. To the extent that the Fund’s average net assets decrease over the Fund’s next fiscal year, such expense ratios can beexpected to increase, potentially significantly, because certain fixed costs will be spread over a smaller amount of assets.This information for the years ended October 31, 2014, October 31, 2013, October 31, 2012 and October 31, 2011has been audited by Ernst & Young LLP, an independent registered public accounting firm, whose report, along withthe Fund’s financial statements, is incorporated by reference in the SAI from the Fund’s annual report, which isavailable upon request. The financial highlights for the year ended October 31, 2010 have been audited by anotherindependent registered public accounting firm.CLASS A SHARES

For the Year Ended October 31, 2014 2013 2012 2011 2010^

Selected Per Share Data:Net asset value, beginning of period $5.65 $5.70 $5.35 $5.40 $5.14

Income (loss) from investment operations:

Net investment income(1) 0.22 0.26 0.26 0.32 0.18

Net realized and unrealized gain (loss) 0.11 (0.06) 0.39 (0.07) 0.44

Total income from investment operations 0.33 0.20 0.65 0.25 0.62

Less dividends from net investment income (0.21) (0.25) (0.30) (0.30) (0.36) Net asset value, end of period $5.77 $5.65 $5.70 $5.35 $5.40

Total Return(2) 5.91% 3.53% 12.54% 4.87% 12.63%Ratios to Average Net Assets:Net expenses 1.16%(4)(5) 1.19%(4)(5) 1.09%(3)(4) 1.12%(3)(4) 1.44%(3)(4)

Net investment income 3.72%(4)(5) 4.51%(4)(5) 4.76%(3)(4) 6.02%(3)(4) 3.49%(3)(4)

Rebate from Morgan Stanley affiliate 0.00%(6) 0.00%(6) 0.00%(6) 0.00%(6) 0.00%(6)

Supplemental Data:Net assets, end of period, in thousands $106,612 $68,732 $77,573 $78,145 $83,951

Portfolio turnover rate 83% 91% 131% 74% 88%

^ Beginning with the year ended October 31, 2011, the Fund was audited by Ernst & Young LLP. The previous year was audited byanother independent registered public accounting firm.

(1) The per share amounts were computed using an average number of shares outstanding during the period.(2) Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.(3) Reflects overall Fund ratios for investment income and non-class specific expenses.(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period.

The effect of the rebate on the ratios is disclosed in the above table as “Rebate from Morgan Stanley affiliate.”(5) If the Fund had borne all of its expenses that were waived by the Adviser/Administrator, the annualized expense and net investment

income ratios, would have been as follows: EXPENSE NET INVESTMENT PERIOD ENDED RATIO INCOME RATIO October 31, 2014 1.20% 3.68% October 31, 2013 1.31 4.39(6) Amount is less than 0.005%.

Financial Highlights

Merrill Corp - MS Global Fixed Income Opportunities Fund Multi Class Prospectus [Funds] 02-28-2015 ED [AUX] | thunt | 25-Feb-15 13:55 | 15-2825-2.da | Sequence: 1CHKSUM Content: 11640 Layout: 47873 Graphics: No Graphics CLEAN


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CLASS B SHARES







Less dividends from net investment income (0.17) (0.21) (0.26) (0.27) (0.33)

Net asset value, end of period $5.79 $5.67 $5.72 $5.37 $5.42

Total Return(2) 5.15% 2.85% 11.79% 4.19% 12.11%

Ratios to Average Net Assets:Net expenses 1.84%(4)(5) 1.77%(4)(5) 1.69%(3)(4) 1.72%(3)(4) 2.04%(3)(4)





^ Beginning with the year ended October 31, 2011, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm.

(1) The per share amounts were computed using an average number of shares outstanding during the period.(2) Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.(3) Reflects overall Fund ratios for investment income and non-class specific expenses.(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period.


income ratios, would have been as follows:

EXPENSE NET INVESTMENT PERIOD ENDED RATIO INCOME RATIO October 31, 2014 2.02% 2.92% October 31, 2013 1.88 3.80

(6) Amount is less than 0.005%.



48

CLASS L SHARES









Total Return(2) 5.63% 3.16% 11.88% 4.24% 11.96%







(1) The per share amounts were computed using an average number of shares outstanding during the period.(2) Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

Effective February 25, 2013, Class C shares were renamed Class L shares. Class C shares held for less than one year were subjectto a 1.0% contingent deferred sales charge. The contingent deferred sales charge on Class L shares was eliminated effectiveFebruary 25, 2013.

(3) Reflects overall Fund ratios for investment income and non-class specific expenses.(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period.


income ratios, would have been as follows:



Financial Highlights (Continued)



49

CLASS I SHARES









Total Return(2) 6.19% 3.95% 12.91% 5.09% 12.81%



Rebate from Morgan Stanley affiliate 0.01% 0.00%(6) 0.00%(6) 0.00%(6) 0.00%(6)

Supplemental Data:Net assets, end of period, in thousands $29,761 $3,130 $1,892 $804 $879



(1) The per share amounts were computed using an average number of shares outstanding during the period.(2) Calculated based on the net asset value as of the last business day of the period.(3) Reflects overall Fund ratios for investment income and non-class specific expenses.(4) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period.

The effect of the rebate on the ratios is disclosed in the above table as “Rebate from Morgan Stanley affiliate.”(5) If the Fund had borne all of its expenses that were waived by the Adviser and Administrator, the annualized expense and net

investment income ratios, would have been as follows:





50

CLASS IS SHARES

For the Year For Period From Ended September 13, 2013^ October 31, to 2014 October 31, 2013

Selected Per Share Data:Net asset value, beginning of period $5.71 $5.55

Income from investment operations:

Net investment income(1) 0.18 0.03

Net realized and unrealized gain 0.17 0.17

Total income from investment operations 0.35 0.20

Less dividends from net investment income (0.23) (0.04)

Net asset value, end of period $5.83 $5.71

Total Return(2) 6.21% 3.70%(6)

Ratios to Average Net Assets:Net expenses 0.66%(3)(4) 0.84%(3)(4)(7)

Net investment income 3.06%(3)(4) 4.54%(3)(4)(7)

Rebate from Morgan Stanley affiliate 0.02% 0.00%(5)(7)

Supplemental Data:Net assets, end of period, in thousands $40,579 $10

Portfolio turnover rate 83% 91%(6)

^ Commencement of operations.(1) The per share amounts were computed using an average number of shares outstanding during the period.(2) Calculated based on the net asset value as of the last business day of the period.(3) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period.

The effect of the rebate on the ratios is disclosed in the above table as “Rebate from Morgan Stanley affiliate.”(4) If the Fund had borne all of its expenses that were waived by the Adviser and Administrator, the annualized expense and net

investment income ratios, would have been as follows:

EXPENSE NET INVESTMENT PERIOD ENDED RATIO INCOME RATIO October 31, 2014 0.97% 2.75% October 31, 2013 1.91% 3.47%(5) Amount is less than 0.005%.(6) Not annualized.(7) Annualized.

Financial Highlights (Continued)


JOB: 15-2825-2 CYCLE#;BL#: 8; 0 TRIM: 7.5" x 8.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5

Additional information about the Fund’s investments isavailable in the Fund’s Annual and Semiannual Reportsto Shareholders. In the Fund’s Annual Report, you willfind a discussion of the market conditions andinvestment strategies that significantly affected theFund’s performance during its last fiscal year.

The Fund’s Statement of Additional Information datedFebruary 27, 2015, also provides additional informationabout the Fund. The Statement of AdditionalInformation is incorporated herein by reference (legallyis part of this Prospectus). For a free copy of the Fund’sAnnual Report, Semiannual Report or Statement ofAdditional Information, to request other informationabout the Fund or to make shareholder inquiries, pleasecall toll-free (800) 548-7786. Free copies of thesedocuments are also available from our Internet site at:www.morganstanley.com/im.

You also may obtain information about the Fund bycalling your Financial Intermediary or by visiting ourInternet site.

Information about the Fund (including the Statement ofAdditional Information) can be reviewed and copied atthe SEC’s Public Reference Room in Washington, D.C.Information on the operation of the Public ReferenceRoom may be obtained by calling the SEC at(202) 551-8090. Shareholder reports and otherinformation about the Fund are available on theEDGAR Database on the SEC’s Internet site at:http://www.sec.gov, and copies of this information maybe obtained, after paying a duplicating fee, by electronicrequest at the following E-mail address:[email protected], or by writing to the SEC’s PublicReference Section, Washington, D.C. 20549-1520.

(THE FUND’S INVESTMENT COMPANY ACT FILE NO.IS 811-6515)

Morgan Stanley Distribution, Inc., member FINRA.© 2015 Morgan Stanley

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I N V E S T M E N T M A N A G E M E N T

Morgan StanleyGlobal FixedIncomeOpportunitiesFundProspectusFebruary 27, 2015

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Merrill Corp - MS Global Fixed Income Opportunities Fund Multi Class Prospectus [Funds] 02-28-2015 ED [AUX] | lmckinl | 27-Feb-15 03:56 | 15-2825-2.za | Sequence: 1CHKSUM Content: 3121 Layout: 54527 Graphics: 55544 CLEAN

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