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Morgan Stanley Wealth Management (“Morgan Stanley Wealth Management”) is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. Morgan Stanley Wealth Management does and seeks to do business with companies covered in Morgan Stanley Wealth Management Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Wealth Management Research. Investors should consider Morgan Stanley Wealth Management Research as only a single factorin making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.

PORTFOLIO STRATEGY & RESEARCH GROUP April 22, 2013

Exchange-Traded FundsNORTH AMERICA

As with any investment, ETFs have risks. These include the general risks associated with investing in theunderlying assets, potential tracking error, and the possibility that particular indices may lag other market segments or active managers. In addition, ETFs investing in international markets may include currency and geopolitical risks, while fixed income ETF risks also include credit and interest rate risk. Leveraged, Inverse, and Leveraged Inverse ETFs have unique risks, which are reviewed on slide 9.

US ETF Weekly Update- Weekly Flows: $8.5 Billion Net Outflows- ETF Assets Stand at $1.4 Trillion, up 7% YTD - 12 ETF Launches- Van Eck to Change Benchmark on Two ETFs- Vanguard Transitions Indices on Eight ETFs

We define exchange-traded funds as encompassing passively and actively managed exchange-traded funds. This report is focused on U.S.-listed exchange-traded funds. These funds are registered with the SEC and trade as a single stock under SEC exemptions. U.S. listed, open-end fund ETFs must be offered under and sold only pursuant to a Prospectus. U.S.-listed ETFs may not be marketed or sold in a number of jurisdictions and may not be suitable for all investors. Morgan Stanley Wealth Management Sales Personnel should check with the Legal Department to clarify whether they may market the ETFs in a particular jurisdiction.

MICHAEL [email protected]+1 212 783 3317

STEPHEN [email protected]+1 212 783 3329

DAVID [email protected]+1 212 783 3328

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Please refer to important information, disclosures and qualifications at the end of this material

US-Listed ETFs: Estimated Flows by Market Segment For the first time in eight weeks, ETFs posted net outflows ($8.5 bln in net outflows)

- Last week’s net outflows were led by US Large-Cap ETFs ($3.2 bln); conversely, Fixed Income ETFs generated net inflows of $829 mln, the most of any category we measured

- ETF assets stand at $1.4 tln, up 7% YTD; $54.6 bln net inflows YTD 13-week flows were mostly positive among asset classes; combined $33.6 bln in net inflows

- International – Developed Equity ETFs have posted material net inflows over the last 13 weeks ($10.5 bln); the category’s ETF market share has risen by 2 percentage points as assets are up 42% over the past 52 weeks

- Commodity ETFs have posted net outflows of $12.4 bln over the last 13 weeks; in particular, one ETF, the SPDR Gold Trust (GLD), has exhibited net outflows of $10.4 bln over this period (GLD accounts for 60% of Commodity market cap)

Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Data estimated as of 4/19/13 based on daily change in share counts and daily NAVs.

Mkt Cap MarketInvestment Objective Funds 1-Week 4-Week 13-Week ($ Mil) Share (%)US Broad-Market 22 163 630 2,484 42,172 3US Large-Cap 60 (3,148) 331 1,297 320,928 22US Mid-Cap 32 (508) 410 1,178 60,007 4US Small- & Micro-Cap 39 (1,515) (1,735) 2,465 56,951 4US Sector & Industry 147 (1,754) (199) 7,673 144,941 10US Custom 73 455 1,757 4,899 20,573 1US Dividend Income 17 436 1,815 4,533 50,894 4Leveraged/Inverse 179 192 1,373 3,185 28,916 2International - Developed 152 294 1,992 10,540 149,817 11International - Emerging 139 (1,628) (3,296) (8,031) 154,866 11Global 111 (295) 500 3,174 40,072 3Fixed Income 171 829 4,111 10,393 255,281 18Commodity 38 (2,323) (6,050) (12,359) 84,410 6Currency 17 (84) (108) (134) 3,602 0Active 54 351 800 2,282 13,119 1Total 1,251 (8,535) 2,332 33,579 1,426,551 100

Net Cash Flow ($ Mil)

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US-Listed ETFs: Estimated Largest Flows by Individual ETF For the second consecutive week, the iShares MSCI Japan Index Fund (EWJ) posted the most net inflows

- EWJ generated net inflows of $448 mln last week and, for the last 13 weeks, posted net inflows of $3.1 bln; expected policy actions have resulted in a weaker yen and higher Japanese equity prices

- Despite continued net outflows in the physical gold ETFs (GLD, IAU), the Market Vectors Gold Miners ETF (GDX) posted netinflows of $238 mln last week; since gold’s peak in 10/12, gold miners have significantly underperformed the spot price of gold

- Notably, the two largest EM equity ETFs, the iShares MSCI Emerging Markets Index Fund (EEM) and the Vanguard FTSE Emerging Markets ETF (VWO) posted combined net outflows of $1.2 bln last week; over the last 13 weeks EEM and VWO have exhibited net outflows of $8.0 bln (equivalent to the total International - Emerging net outflows)


Mkt CapETF Name Symbol 1-Week 4-Week 13-Week ($ Mil)iShares MSCI Japan Index Fund EWJ 448 2,310 3,062 9,845iShares Barclays TIPS Bond Fund TIP 362 (350) (1,133) 20,926Health Care Select Sector SPDR XLV 317 524 1,392 7,902Market Vectors Gold Miners ETF GDX 238 142 287 5,880iShares MSCI USA Minimum Volatility Index Fund USMV 219 870 2,134 3,242PowerShares S&P 500 Low Volatility Portfolio SPLV 214 511 1,200 4,865WisdomTree Japan Hedged Equity Fund DXJ 191 989 4,076 7,059Vanguard Dividend Appreciation ETF VIG 183 284 1,428 14,870Utilities Select Sector SPDR XLU 178 96 419 6,457SPDR Dow Jones Industrial Average ETF DIA 174 852 420 12,038SPDR S&P 500 ETF SPY (1,647) 893 (2,004) 129,605iShares Russell 2000 Index Fund IWM (1,602) (2,044) 182 18,448SPDR Gold Trust GLD (1,590) (4,720) (10,383) 50,557iShares MSCI Emerging Markets Index Fund EEM (745) (1,089) (5,612) 43,753SPDR S&P MidCap 400 ETF MDY (696) (314) (205) 11,713Guggenheim S&P Equal Weight ETF RSP (589) (583) (302) 3,652iShares Core S&P 500 ETF IVV (538) (53) 1,602 40,097Financials Select Sector SPDR XLF (497) (560) (41) 10,902iShares Gold Trust IAU (478) (680) (1,108) 8,834Vanguard FTSE Emerging Markets ETF VWO (439) (1,555) (2,416) 55,873

Net Cash Flow ($ Mil)

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US-Listed ETFs: Short InterestData Unchanged: Based on data as of 3/28/13

SPDR S&P 500 ETF (SPY) had the largest increases in USD short interest at $1.9 bln- SPY’s shares short are at their highest level since 5/31/12- SPY is up more than 23% on a total return basis since 5/31/12- Aggregate ETF USD short interest decreased by $4.1 bln over the period ended 3/28/13, coming off four consecutive periods during

which ETF short interest increased The average shares short/shares outstanding for ETFs is currently 4.2%

- The SPDR Oil & Gas Exploration & Production ETF (XOP) had the most shares short as a % of shares outstanding at 219% for the period ended 3/28/13

- Retail, currency, and financial ETFs seem to consistently make the list as the most heavily shorted ETFs- Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can

exceed 100% (only six ETFs exhibited shares short as a % of shares outstanding greater than 100%)

Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Short Interest data are only reported bi-monthly with a lag. Data compares short interest from 3/28/13 vs. 3/15/13.

Change in Short Interest Shares Short as % of Shares Outstanding

ETF Name Symbol

SPDR S&P 500 ETF SPY 1,926,459,284iShares MSCI Emerging Markets Index Fund EEM 999,679,078iShares MSCI Mexico Capped Investable Market Index Fund EWW 138,227,354Direxion Daily Financial Bull 3x Shares FAS 131,290,349iShares MSCI France Index Fund EWQ 131,227,924SPDR Gold Trust GLD (1,531,216,005)PowerShares QQQ QQQ (854,228,418)iShares Russell 2000 Index Fund IWM (743,444,085)iShares Dow Jones US Real Estate Index Fund IYR (569,784,428)SPDR Retail ETF XRT (496,099,288)

Last Changein USD Amount

Held Short ETF Name Symbol

Shares Short/ Shrs Out

(%)

SPDR Oil & Gas Exploration & Production ETF XOP 219.1CurrencyShares Euro Trust FXE 190.7SPDR Retail ETF XRT 182.9Market Vectors Retail ETF RTH 160.0CurrencyShares Japanese Yen Trust FXY 124.4Market Vectors Semiconductor ETF SMH 115.4PowerShares KBW Regional Banking Portfolio KBWR 73.5Direxion Daily Real Estate Bear 3x Shares DRV 70.6iShares MSCI France Index Fund EWQ 70.1WisdomTree Europe Hedged Equity Fund HEDJ 65.3

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US-Listed ETFs: Most Successful Recent Launches by Assets


$6.4 bln in total market cap of ETFs less than 1-year old- Newly launched Fixed Income ETFs accounted for 24% of the market cap of ETFs launched over the past year, the most of any

category, including $806 mln in net inflows over the last 13 weeks- Issuance picked up last week with 12 launches; 39 new ETF listings and 27 closures/delistings YTD

The top 10 most successful launches make up 57% of the market cap of ETFs launched over the past year - Six different ETF sponsors and two asset classes represented in top 10 most successful launches- Seven out of the 10 most successful launches over the past year have an income orientation - Despite not cracking the top 10 most successful launches over the past year, the SPDR BlackStone/GSO Senior Loan ETF

(SRLN) generated net inflows of $60 mln last week, the most of any recently launched fund; SRLN is an actively managed floating rate senior loan ETF that was launched on 4/4/13 and currently has a market cap of $140 mln

Estimated Flows for ETF Launches Over Past Year Top 10 Successful Launches Over Past YearMkt Cap Market

Investment Objective Funds 1-Week 4-Week 13-Week ($ Mil) Share (%)US Broad-Market 0 0 0 0 0 0US Large-Cap 1 0 0 0 11 0US Mid-Cap 0 0 0 0 0 0US Small- & Micro-Cap 0 0 0 0 0 0US Sector & Industry 1 0 4 5 7 0US Custom 17 0 32 139 666 10US Dividend Income 6 15 79 217 405 6Leveraged/Inverse 7 0 0 1 25 0International - Developed 6 32 63 289 792 12International - Emerging 12 59 165 735 1,244 19Global 15 35 124 299 542 8Fixed Income 21 33 348 806 1,562 24Commodity 1 0 1 2 21 0Currency 1 0 (4) (0) 8 0Active 22 98 195 476 1,152 18Total 110 272 1,007 2,969 6,434 100

Net Cash Flow ($ Mil)Symbol Fund Name

Mkt Cap($ Mil)

1-WeekFlows($ Mil)

4-WeekFlows($ Mil)

IEMG iShares Core MSCI Emerging Markets ETF 984 59 135IEFA iShares Core MSCI EAFE ETF 599 32 58VTIP Vanguard Short-Term Inflation-Protected Securities ETF 533 18 115EMLP First Trust North American Energy Infrastructure Fund 312 16 46MDIV First Trust Multi-Asset Diversified Income Index Fund 306 30 88HYEM Market Vectors Emerging Markets High Yield Bond ETF 241 5 193SDOG ALPS Sector Dividend Dogs ETF 194 6 28MOAT Market Vectors Morningstar Wide Moat Research ETF 179 0 6PFXF Market Vectors Preferred Securities ex Financials ETF 155 3 7INKM SPDR SSGA Income Allocation ETF 150 5 17Total 3,654 174 694

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US-Listed ETFs: New Listings For the Week

Source: Company Data, Morgan Stanley Wealth Management ETF Research.

Symbol Fund NameLaunchDate

Expense Ratio (%)

IBCB iShares 2016 Investment Grade Corporate Bond ETF 4/19/2013 0.10Tracks an index of USD-denominated, investment grade, corporate bonds issued by non-financial companies that mature between 3/31/15 and 4/1/16; IBCB will terminate on or about 3/31/16.

IBCC iShares 2018 Investment Grade Corporate Bond ETF 4/19/2013 0.10Tracks an index of USD-denominated, investment grade, corporate bonds issued by non-financial companies that mature between 3/31/17 and 4/1/18; IBCC will terminate on or about 3/31/18.

IBCD iShares 2020 Investment Grade Corporate Bond ETF 4/19/2013 0.10Tracks an index of USD-denominated, investment grade, corporate bonds issued by non-financial companies that mature between 3/31/19 and 4/1/20; IBCD will terminate on or about 3/31/20.

IBCE iShares 2023 Investment Grade Corporate Bond ETF 4/19/2013 0.10Tracks an index of USD-denominated, investment grade, corporate bonds issued by non-financial companies that mature between 3/31/22 and 4/1/23; IBCE will terminate on or about 3/31/23.

MTUM iShares MSCI USA Momentum Factor ETF 4/18/2013 0.15Tracks an index of US large- and mid-cap stocks that exhibit higher momentum characteristics than the parent market-cap weighted index.

SIZE iShares MSCI USA Size Factor ETF 4/18/2013 0.15Tracks an index of US large- and mid-cap stocks that exhibit smaller average market caps and lower risk weightings than the parent market-cap weighted index.

VLUE iShares MSCI USA Value Factor ETF 4/18/2013 0.15Tracks an index of US large- and mid-cap stocks that exhibit favorable value scores based on: book value and 3-year moving average of sales, earnings, and cash earnings.

IELG iShares Enhanced US Large-Cap ETF 4/18/2013 0.18Actively managed ETF of US large-cap stocks that are selected based on, but not limited to, cash earnings, earnings variability, leverage, P/B ratio, and market cap.

IESM iShares Enhanced US Small-Cap ETF 4/18/2013 0.35Actively managed ETF of US small-cap stocks that are selected based on, but not l imited to, cash earnings, earnings variabili ty, leverage, P/B ratio, and market cap.

IQDF FlexShares International Quality Dividend Index Fund 4/16/2013 0.47Tracks an index of international companies selected based on a proprietary scoring model that seeks to enhance dividend yield while providing similar beta relative to its market-cap weighted parent index.

IQDE FlexShares International Quality Dividend Defensive Index Fund 4/16/2013 0.47Tracks an index of international companies selected based on a proprietary scoring model that seeks to enhance dividend yield while providing a lower beta relative to its market-cap weighted parent index.

IQDY FlexShares International Quality Dividend Dynamic Index Fund 4/16/2013 0.47Tracks an index of international companies selected based on a proprietary scoring model that seeks to enhance dividend yield while providing a higher beta relative to its market-cap weighted parent index.

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US-Listed ETFs: News Highlights

Source: Company Data, Morgan Stanley Wealth Management ETF Research.

Van Eck to Change Benchmark on Two ETFs- In a 4/18/13 press release, Van Eck announced the Market Vectors Africa Index ETF (AFK) and Market Vectors Gulf States

Index ETF (MES) will begin to track new benchmarks effective on or about 6/21/13.- AFK will track the Market Vectors GDP Africa Index and MES will track the Market Vectors GDP GCC Index.- Both new indices employ a gross domestic product (GDP) weighting methodology to determine the country weighting within

the index. Prior indices utilized a float adjusted, modified market-cap weighting methodology.- The new indices track the performance of the largest and most liquid companies that generate at least 50% of their revenues

from their respective regions.

Vanguard Transitions Indices on Eight ETFs- On 4/17/13, Vanguard announced new benchmarks were in effect for eight of its ETFs. - As previously announced, Vanguard is transitioning many of its domestic ETFs to University of Chicago CRSP Indices from

MSCI Indices (see table below).

Ticker Name New Index*MGK Vanguard Mega Cap Growth ETF CRSP US Mega Cap Growth Index*MGV Vanguard Mega Cap Value ETF CRSP US Mega Cap Value IndexVUG Vanguard Growth ETF CRSP US Large Cap Growth IndexVTV Vanguard Value ETF CRSP US Large Cap Value IndexVOT Vanguard Mid-Cap Growth ETF CRSP US Mid Cap Growth IndexVOE Vanguard Mid-Cap Value ETF CRSP US Mid Cap Value IndexVBK Vanguard Small-Cap Growth ETF CRSP US Small Cap Growth IndexVBR Vanguard Small-Cap Value ETF CRSP US Small Cap Value Index*Also underwent name changes.

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Recent Reports Fixed Income ETF Asset Allocation Model Update

- April 10, 2013

1Q13 Preliminary ETF Fund Flows-$54.5 Billion Net Inflows- April 3, 2013

ETF US Sector Allocation Model Update- March 18, 2013

2012 Tracking Error Report: A Modest Rise Amid Expansion- March 14, 2013

ETF Quarterly Report: $1.4 Trillion in 1,235 ETFs- March 5, 2013

US Dividend ETFs: More Than Just Yield- December 7, 2012

2012 Year-End ETF & CEF Tax Strategies- October 19, 2012

Morgan Stanley & Co., Citi Research and Morgan Stanley Wealth Management do not provide fundamental research ratings on exchange-traded funds (ETFs).

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Leveraged, Inverse & Leveraged Inverse Conclusions and Risks1) Leveraged, Inverse, and Leveraged Inverse (L&LI) ETFs generally capture a high percentage of their expected daily returns, particularly on a net asset value basis. 2) L&LI ETFs are not appropriate for all investors. However, we believe they can be appropriate tools for some investors looking to make short-term tactical trades if they perceive a high likelihood of a strong market move occurring in a relatively short time period. In strong trending markets, being on the right side of the “trade” with L or LI ETFs can lead to very strong returns. 3) Investors should not expect these ETFs to deliver total returns linked to their benchmarks over any period other than daily. The effects of compounding and the daily re-leveraging or de-leveraging that occurs with L&LI ETFs can lead to unexpected results over the long term. As a result, we believe longer-term investors should consider regularly rebalancing positions. 4) Trendless markets, particularly those with a high level of volatility, can lead to substantial relative underperformance of L&LI ETFs.

2) Leveraged and Leveraged Inverse (L&LI) ETFs typically utilize futures and equity swap agreements. The use of these derivative instruments increases risk and enhances the possibility of tracking error. Relative to traditional ETFs, leveraged, inverse and leveraged inverse ETFs typically have higher costs and lower tax efficiency.

3) The effects of compounding can lead to significant deviations from traditional benchmarks over longer time periods. For example, if $100,000 is invested in an index that increases in value by 10% on day one and then decreases in value by 10% on day two, the investment will be worth $110,000 at the end of day one and $99,000 after day two. However, the value of a security that doubles the daily performance of the index would be worth $120,000 on day one and $96,000 after day two. Thus, the index is down 1% after two days, a doubling of which would be down 2%. However, the security attempting to double the return of the index is down 4%. Investors should consider carefully the potential impact over longer periods.

MLP and MLP ETF RisksIndividual MLPs are publicly traded partnerships that have unique risks related to their structure. These include, but are not limited to, their reliance on the capital markets to fund growth, adverse ruling on the current tax treatment of distributions (typically mostly tax deferred), and commodity volume risk.

For tax purposes, MLP ETFs are taxed as C corporations and will be obligated to pay federal and state corporate income taxes on their taxable income, unlike traditional ETFs, which are structured as registered investment companies. These ETFs are likely to exhibit tracking error relative to their index as a result of accounting for deferred tax assets or liabilities (see funds’prospectuses).

The potential tax benefits from investing in MLPs depend on their being treated as partnerships for federal income tax purposes and, if the MLP is deemed to be a corporation, then its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the fund which could result in a reduction of the fund’s value.

MLP funds accrue deferred income taxes for future tax liabilities associated with the portion of MLP distributions considered to be a tax-deferred return of capital and for any net operating gains as well as capital appreciation of its investments; this deferred tax liability is reflected in the daily NAV; and, as a result, the MLP fund’s after-tax performance could differ significantly from the underlying assets even if the pre-tax performance is closely tracked.

Commodity ETF RisksCommodity ETFs may be subject to greater volatility than traditional ETFs and can be affected by increased volatility of commodities prices or indexes as well as changes in supply-and-demand relationships, interest rates, monetary and other governmental policies, or factors affecting a particular sector or commodity.

Currency ETF RisksInvesting in foreign markets entails greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. Investing in currency involves additional special risks such as credit, interest rate fluctuations, derivative investment risk, and domestic and foreign inflation rates, which can be volatile and may be less liquid than other securities and more sensitive to the effect of varied economic conditions. In addition, international investing entails greater risk, as well as greater potential rewards compared to U.S. investing. These risks include political and economic uncertainties of foreign countries as well as the risk of currency fluctuations. These risks are magnified in countries with emerging markets, since these countries may have relatively unstable governments and less established markets and economies.

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The information and opinions in Morgan Stanley Wealth Management Research were prepared by Morgan Stanley Smith Barney LLC, under its trade name Morgan Stanley Wealth Management and/or its affiliate Morgan Stanley Private Wealth Management Ltd, and Morgan Stanley Wealth Management Australia Pty Ltd (collectively, "Morgan Stanley Wealth Management").For important disclosures (including copies of historical disclosures) regarding the securities and/or companies that are the subject of this Morgan Stanley Wealth Management Research product,please contact Morgan Stanley Wealth Management Research, 522 Fifth Ave., New York, N.Y. 10036, Attention: Research Management. In addition, the same important disclosures, with the exception of the historical disclosures, are contained on the Firm's disclosure website at https://www.morganstanley.com/online/researchdisclosures. Historical disclosures will be provided upon request back to June 1, 2009.Morgan Stanley Wealth Management Analyst CertificationThe Morgan Stanley Wealth Management research analysts principally responsible for the preparation and content of all or any identified portion of this research report, hereby certify that their views about the securities and/or companies discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report. Unless otherwise stated, the individuals listed on the cover page of this report are Morgan Stanley Wealth Management research analysts.Global Research Conflict Management PolicyMorgan Stanley Wealth Management has a Conflict Management policy available at: https://www.morganstanley.com/online/researchconflictpolicies

Important US Regulatory Disclosures on Subject IssuersThe following analyst or strategist (or a household member) owns securities (or related derivatives), ETFs, or Closed-End funds that he or she covers or recommends in Morgan Stanley Wealth Management Research: David Perlman - Vanguard Total Stock Market ETF, Vanguard Total World Stock Index Fund, WisdomTree Emerging Markets Equity Income Fund.Morgan Stanley Wealth Management or an affiliate, including, but not limited to, Morgan Stanley & Co. LLC, but excluding Citigroup Global Markets, Inc. and its affiliates other than Morgan Stanley Wealth Management, beneficially owned 1% or more of a class of common equity securities of: PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat.Fund, PIMCO Intermediate Muni. Bond Strat.Fund, PIMCO ST Municipal Bond Strat. Fund, PIMCO Total Return ETF.Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, but not limited to, Morgan Stanley & Co. LLC, and/or Citigroup Global Markets, Inc. or an affiliate, received compensation for investment banking services from the following issuers (if the security is an ETF or Closed-End Fund, the compensation is from the fund's investment manager or advisor): CurrencyShares Australian Dollar Trust, CurrencyShares Canadian Dollar Trust, CurrencyShares Swiss Franc Trust, First Trust Dow Jones Internet Index, First Trust ISE-Revere Natural Gas Index, First Trust Large Cap Core AlphaDEX Fund, First Trust Morningstar Dividend Leaders Index Fund, PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat.Fund, PIMCO Intermediate Muni. Bond Strat.Fund, PIMCO ST Municipal Bond Strat. Fund, PIMCO Total Return ETF.In the next 3 months, Morgan Stanley Wealth Management or an affiliate, including, but not limited to, Morgan Stanley & Co. LLC, and/or Citigroup Global Markets, Inc. or an affiliate, will seek compensation for investment banking services from the following issuers (if the security is an ETF or Closed-End Fund, the compensation is from the fund's investment manager or advisor): PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat.Fund, PIMCO Intermediate Muni. Bond Strat.Fund, PIMCO ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard ETF Emerging Markets, Vanguard ETF European, Vanguard ETF REIT, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All-World ex-US ETF, Vanguard FTSE ex-US SmallCap ETF, Vanguard Growth ETF, Vanguard Health Care ETF, Vanguard High Dividend Yield ETF, Vanguard Industrials ETF, Vanguard Information Technology ETF, Vanguard Intermediate-Term Bond ETF, Vanguard Intermediate-Term Corporate Bond ETF, Vanguard Large-Cap ETF, Vanguard Materials ETF, Vanguard Mid-Cap ETF, Vanguard Mid-Cap Growth ETF, Vanguard Mid-Cap Value ETF, Vanguard MSCI EAFE ETF, Vanguard Pacific ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond, Vanguard Small-Cap ETF, Vanguard Small-Cap Growth ETF, Vanguard Small-Cap Value ETF, Vanguard Telecom Services ETF, Vanguard Total Bond Market ETF, Vanguard Total Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF.Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, but not limited to, Morgan Stanley & Co. LLC, and/or Citigroup Global Markets, Inc. or an affiliate, hasprovided or is providing investment banking services to, or has an investment banking client relationship with, the following issuers (if the security is an ETF or Closed-End Fund, the services were or are being provided to, or the relationship is with, the fund's investment manager or advisor): CurrencyShares Australian Dollar Trust, CurrencyShares Canadian Dollar Trust, CurrencyShares Swiss Franc Trust, First Trust Dow Jones Internet Index, First Trust ISE-Revere Natural Gas Index, First Trust Large Cap Core AlphaDEX Fund, First Trust Morningstar Dividend Leaders Index Fund, PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat.Fund, PIMCO Intermediate Muni. Bond Strat.Fund, PIMCO ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard ETF Emerging Markets, Vanguard ETF European, Vanguard ETF REIT, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All-World ex-US ETF, Vanguard FTSE ex-US SmallCap ETF, Vanguard Growth ETF, Vanguard Health Care ETF, Vanguard High Dividend Yield ETF, Vanguard Industrials ETF, Vanguard Information Technology ETF, Vanguard Intermediate-Term Bond ETF, Vanguard Intermediate-Term Corporate Bond ETF, Vanguard Large-Cap ETF, Vanguard Materials ETF, Vanguard Mid-Cap ETF, Vanguard Mid-Cap Growth ETF, Vanguard Mid-Cap Value ETF, Vanguard MSCI EAFE ETF, Vanguard Pacific ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond, Vanguard Small-Cap ETF, Vanguard Small-Cap Growth ETF, Vanguard Small-Cap Value ETF, Vanguard Telecom Services ETF, Vanguard Total Bond Market ETF, Vanguard Total Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF.Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, Citigroup Global Markets, Inc. or an affiliate, has received compensation for products or services other than investment banking services from the following issuers (if the security is an ETF or Closed-End Fund, the compensation is from the fund's investment manager or advisor): Alerian MLP ETF, Consumer Discretionary Select Sector, Consumer Staples Select Sector SPDR, CurrencyShares Australian Dollar Trust, CurrencyShares Canadian Dollar Trust, CurrencyShares Swiss Franc Trust,

Important Disclosures

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Direxion Financial Bear 3X, Direxion Financial Bull 3X, Energy Select Sector SPDR, Financials Select Sector SPDR, Guggenheim BRIC ETF, Guggenheim China Small Cap ETF, Guggenheim Multi-Asset Income ETF, Guggenheim S&P Global Water Index ETF, Guggenheim Solar ETF, Health Care Select Sector SPDR, Industrials Select Sector SPDR, IQ Global Resources ETF, IQ Hedge Multi-Strategy Tracker ETF, iShares Barclays 1-3 Year Credit Bond, iShares Barclays 20+ Year Treasury Bond, iShares Barclays 3-7 Year Treasury, iShares Barclays 7-10 Year Treasury Bond, iSharesBarclays Agency Bond Fund, iShares Barclays Aggregate Bond Fund, iShares Barclays Intermediate Credit, iShares Barclays Lehman 1-3 Yr Treasury, iShares Barclays MBS Bond Fund, iSharesBarclays Short Treasury, iShares Barclays TIPS Bond Fund, iShares Cohen & Steers Realty Majors, iShares Core MSCI Emerging Markets ETF, iShares Core S&P 500 ETF, iShares Core S&P Mid-Cap ETF, iShares Core S&P Small-Cap ETF, iShares DJ US Basic Materials Sector Index Fund, iShares DJ US Cons. Services Sector Index Fund, iShares DJ US Consumer Goods Sector, iShares DJ US Technology Sector Index, iShares Dow Jones Broker-Dealers Index, iShares Dow Jones International Select D, iShares Dow Jones Select Dividend Index, iShares Dow Jones Transportation Index, iShares Dow Jones U.S. Index Fund, iShares Dow Jones U.S. Medical Devices, iShares Dow Jones U.S. Oil & Gas Exp., iShares Dow Jones U.S. Oil Equip. & Svcs, iShares Dow Jones US Aerospace & Defense, iShares Dow Jones US Energy Sector Index Fund, iShares Dow Jones US Financial Sector, iShares Dow Jones US Financial Services, iShares Dow Jones US Healthcare Sector, iShares Dow Jones US Home Construction, iShares Dow Jones US Industrial Sector, iShares Dow Jones US Real Estate Index, iShares Dow Jones US Telecom Sector, iShares Dow Jones US Utilities Sector, iShares FTSE China 25 Index Fund, iShares Gold Trust, iShares GSCI Commodity Indexed Trust, iShares High Dividend Equity Fund, iShares iBoxx $ High Yield Corp Bond, iShares iBoxx $ InvesTopInv Grade Bond, iShares JPMorgan USD Emerging Mkt Bond, iShares Morningstar Large Growth Index, iShares Morningstar Large Value Index, iShares Morningstar Mid Growth Index, iSharesMorningstar Mid Value Index Fund, iShares MSCI ACWI ex US Index Fund, iShares MSCI ACWI Index Fund, iShares MSCI All Country Asia ex-Japan Index Fund, iShares MSCI All Peru Capped Index Fund, iShares MSCI Australia Index Fund, iShares MSCI Brazil Index Fund, iShares MSCI BRIC Index Fund, iShares MSCI Canada Index Fund, iShares MSCI Chile Index Fund, iShares MSCI China Index Fund, iShares MSCI EAFE Growth Index Fund, iShares MSCI EAFE Index Fund, iShares MSCI EAFE Small Cap Index Fund, iShares MSCI EAFE Value Index Fund, iShares MSCI Emerging Markets Index Fund, iShares MSCI Emerging Mkts Min Volatilit, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Israel Capped Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Index Fund, iShares MSCI Pacific ex-Japan Index Fund, iShares MSCI Russia Capped Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Index Fund, iShares MSCI Turkey Index Fund, iShares MSCI United Kingdom Index Fund, iShares MSCI USA Minimum Volatility Index Fund, iShares Nasdaq Biotech, iShares PHLX SOX Semiconductors Sector Index Fund, iShares Russell 1000 Growth Index Fund, iShares Russell 1000 Index Fund, iShares Russell 1000 Value Index Fund, iShares Russell 2000 Growth Index Fund, iShares Russell 2000 Index Fund, iShares Russell 2000 Value Index Fund, iShares Russell 3000 Growth Index Fund, iShares Russell 3000 Index Fund, iShares Russell 3000 Value Index Fund, iShares Russell Microcap Index Fund, iShares Russell Mid Cap Growth Index, iShares Russell Midcap Index Fund, iShares Russell Midcap Value Index Fund, iShares S&P 100 Index Fund, iShares S&P 500 Growth Index Fund, iShares S&P 500 Value Index Fund, iShares S&P Europe 350 Index Fund, iShares S&P Global 100 Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples, iShares S&P Global Energy Sector Index, iShares S&P Global Financial Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares S&P Global Ind. Sector Index, iShares S&P Global Infrastructure Index, iShares S&P Global Materials Sector, iShares S&P Global Tech. Sector Index, iShares S&P Global Tele. Sector Index, iShares S&P Global Utilities Sector, iShares S&P Latin America 40 Index Fund, iShares S&P MidCap 400 Growth Index Fund, iShares S&P MidCap 400 Value Index Fund, iShares S&P N. Amer. Natural Res. Sector, iShares S&P N. Amer. Software Index Fund, iShares S&P Nat'l AMT-Free Municipal, iShares S&P North American Technology, iShares S&P Short Term Nat.Municipal, iShares S&P SmallCap 600 Growth, iShares S&P SmallCap 600 Value, iShares S&P U.S. Preferred Stock Index, iShares S&P/Citigroup International Treasury Bond Fund, iShares Silver Trust, Market Vectors Agribusiness ETF, Market Vectors Brazil Small-Cap ETF, Market Vectors Coal ETF, Market Vectors Emerg. Markets Local, Market Vectors ETF Gold Miners, Market Vectors Global Alt.Energy ETF, Market Vectors Hard Assets Producers ETF, Market Vectors High Yield Municipal Inde, Market Vectors Indonesia Index ETF, Market Vectors Intermediate Municipal In, Market Vectors Junior Gold Miners ETF, Market Vectors Nuclear Energy ETF, Market Vectors Russia ETF, Market Vectors Steel Index ETF, Market Vectors Vietnam ETF, Materials Select Sector SPDR, Oil Services HOLDRS, Pharmaceutical HOLDRS, PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat.Fund, PIMCO Intermediate Muni. Bond Strat.Fund, PIMCO ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, PowerShares Build America Bond Portfolio, PowerShares DB Agriculture Fund, PowerShares DB Base Metals Fund, PowerShares DB Energy Fund, PowerShares DB G10 Currency Harvest Fund, PowerShares DB Oil Fund, PowerShares DB USD Index Bearish Fund, PowerShares DB USD Index Bullish Fund, PowerShares Dynam. LargeCap Value, PowerShares Dynam.LargeCap Growth, PowerShares Dynamic Market Portfolio, PowerShares Emerging Markets Sovereign Debt Portfolio, PowerShares Financial Preferred Portf., PowerShares FTSE RAFI US 1000 Portfolio, PowerShares Global Clean Ergy. Portfol., PowerShares Global Water Portfolio, PowerShares Int.Div. Achievers Portfol., PowerShares Preferred Portfolio, PowerShares QQQ, PowerShares S&P 500 BuyWrite Portfolio, PowerShares S&P 500 Low Volatility Portfolio, PowerShares Senior Loan Portfolio, PowerShares VRDO Tax-Free Wkly Portfol., PowerShares Water Resources Portfolio, PowerShares WilderHill Clean Ergy., Rydex Russell Top 50 ETF, Rydex S&P 500 Pure Growth ETF, Rydex S&P Equal Weight ETF, Semiconductor HOLDRS, SPDR Barclays 1-3 Month T-Bill ETF, SPDR Barclays Capital Int. Treasury, SPDR Barclays Capital ST Muni. Bond ET, SPDR Barclays Convertible Bond ETF, SPDR Barclays High Yield Bond ETF, SPDR Barclays Municipal Bond ETF, SPDR Barclays Short Term High Yield Bond ETF, SPDR Biotech ETF, SPDR DB Int. Govt. Inflation-Protect, SPDR Dow Jones Int. Real Estate ETF, SPDR Dow Jones REIT ETF, SPDR KBW Bank ETF, SPDR KBW Regional Banking ETF, SPDR Oil & Gas Equipment & Services ETF, SPDR Oil & Gas Exploration & Prod. ETF, SPDR Retail ETF, SPDR S&P China ETF, SPDR S&P Dividend ETF, SPDR S&P Emerging Asia Pacific ETF, SPDR S&P Emerging Markets Small Cap ETF, SPDR S&P Homebuilders ETF, SPDR S&P International Dividend ETF, SPDR S&P International Small Cap ETF, SPDR S&P Metals & Mining ETF, Technology Select Sector SPDR, Utilities Select Sector SPDR, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard ETF Emerging Markets, Vanguard ETF European, Vanguard ETF REIT, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All-World ex-US ETF, Vanguard FTSE ex-US SmallCap ETF, Vanguard Growth ETF, Vanguard Health Care ETF, Vanguard High Dividend Yield ETF, Vanguard Industrials ETF, Vanguard Information Technology ETF, Vanguard Intermediate-Term Bond ETF, Vanguard Intermediate-Term Corporate Bond ETF, Vanguard Large-Cap ETF, Vanguard Materials ETF, Vanguard Mid-Cap ETF, Vanguard Mid-Cap Growth ETF, Vanguard Mid-Cap Value ETF, Vanguard MSCI EAFE ETF, Vanguard Pacific ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond, Vanguard Small-Cap ETF, Vanguard Small-Cap Growth ETF, Vanguard Small-Cap Value ETF, Vanguard Telecom Services ETF, Vanguard Total Bond Market ETF, Vanguard Total Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF, WisdomTree Emerging Markets Equity Income Fund.


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Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, Citigroup Global Markets, Inc. or an affiliate, has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following issuers (if the security is an ETF or Closed-End Fund, the services were or are being provided to, or the agreement is with, the fund's investment manager or advisor): Alerian MLP ETF, Consumer Discretionary Select Sector, Consumer StaplesSelect Sector SPDR, CurrencyShares Australian Dollar Trust, CurrencyShares Canadian Dollar Trust, CurrencyShares Swiss Franc Trust, Direxion Financial Bear 3X, Direxion Financial Bull 3X, Energy Select Sector SPDR, Financials Select Sector SPDR, First Trust Dow Jones Internet Index, First Trust ISE-Revere Natural Gas Index, First Trust Large Cap Core AlphaDEX Fund, First Trust Morningstar Dividend Leaders Index Fund, Guggenheim BRIC ETF, Guggenheim China Small Cap ETF, Guggenheim Multi-Asset Income ETF, Guggenheim S&P Global Water Index ETF, Guggenheim Solar ETF, Health Care Select Sector SPDR, Industrials Select Sector SPDR, IQ Global Resources ETF, IQ Hedge Multi-Strategy Tracker ETF, iShares Barclays 1-3 Year Credit Bond, iShares Barclays 20+ Year Treasury Bond, iShares Barclays 3-7 Year Treasury, iShares Barclays 7-10 Year Treasury Bond, iShares Barclays Agency Bond Fund, iShares Barclays Aggregate Bond Fund, iSharesBarclays Intermediate Credit, iShares Barclays Lehman 1-3 Yr Treasury, iShares Barclays MBS Bond Fund, iShares Barclays Short Treasury, iShares Barclays TIPS Bond Fund, iShares Cohen & Steers Realty Majors, iShares Core MSCI Emerging Markets ETF, iShares Core S&P 500 ETF, iShares Core S&P Mid-Cap ETF, iShares Core S&P Small-Cap ETF, iShares DJ US Basic Materials Sector Index Fund, iShares DJ US Cons. Services Sector Index Fund, iShares DJ US Consumer Goods Sector, iShares DJ US Technology Sector Index, iShares Dow Jones Broker-Dealers Index, iShares Dow Jones International Select D, iShares Dow Jones Select Dividend Index, iShares Dow Jones Transportation Index, iShares Dow Jones U.S. Index Fund, iShares Dow Jones U.S. Medical Devices, iShares Dow Jones U.S. Oil & Gas Exp., iShares Dow Jones U.S. Oil Equip. & Svcs, iShares Dow Jones US Aerospace & Defense, iShares Dow Jones US Energy Sector Index Fund, iShares Dow Jones US Financial Sector, iShares Dow Jones US Financial Services, iShares Dow Jones US Healthcare Sector, iShares Dow Jones US Home Construction, iShares Dow Jones US Industrial Sector, iShares Dow Jones US Real Estate Index, iShares Dow Jones US Telecom Sector, iShares Dow Jones US Utilities Sector, iShares FTSE China 25 Index Fund, iShares Gold Trust, iShares GSCI Commodity Indexed Trust, iShares High Dividend Equity Fund, iShares iBoxx $ High Yield Corp Bond, iShares iBoxx $ InvesTop Inv Grade Bond, iShares JPMorgan USD Emerging Mkt Bond, iShares Morningstar Large Growth Index, iShares Morningstar Large Value Index, iShares Morningstar Mid Growth Index, iShares Morningstar Mid Value Index Fund, iShares MSCI ACWI ex US Index Fund, iShares MSCI ACWI Index Fund, iShares MSCI All Country Asia ex-Japan Index Fund, iShares MSCI All Peru Capped Index Fund, iShares MSCI Australia Index Fund, iShares MSCI Brazil Index Fund, iShares MSCI BRIC Index Fund, iShares MSCI Canada Index Fund, iShares MSCI Chile Index Fund, iShares MSCI China Index Fund, iShares MSCI EAFE Growth Index Fund, iShares MSCI EAFE Index Fund, iShares MSCI EAFE Small Cap Index Fund, iShares MSCI EAFE Value Index Fund, iShares MSCI Emerging Markets Index Fund, iShares MSCI Emerging Mkts Min Volatilit, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Israel Capped Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan, iSharesMSCI Malaysia Index Fund, iShares MSCI Mexico Index Fund, iShares MSCI Pacific ex-Japan Index Fund, iShares MSCI Russia Capped Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Index Fund, iShares MSCI Turkey Index Fund, iShares MSCI United Kingdom Index Fund, iShares MSCI USA Minimum Volatility Index Fund, iShares Nasdaq Biotech, iShares PHLX SOX Semiconductors Sector Index Fund, iShares Russell 1000 Growth Index Fund, iShares Russell 1000 Index Fund, iShares Russell 1000 Value Index Fund, iShares Russell 2000 Growth Index Fund, iShares Russell 2000 Index Fund, iShares Russell 2000 Value Index Fund, iShares Russell 3000 Growth Index Fund, iShares Russell 3000 Index Fund, iShares Russell 3000 Value Index Fund, iShares Russell Microcap Index Fund, iShares Russell Mid Cap Growth Index, iShares Russell Midcap Index Fund, iShares Russell Midcap Value Index Fund, iShares S&P 100 Index Fund, iShares S&P 500 Growth Index Fund, iShares S&P 500 Value Index Fund, iShares S&P Europe 350 Index Fund, iShares S&P Global 100 Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples, iShares S&P Global Energy Sector Index, iShares S&P Global Financial Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares S&P Global Ind. Sector Index, iShares S&P Global Infrastructure Index, iShares S&P Global Materials Sector, iShares S&P Global Tech. Sector Index, iShares S&P Global Tele. Sector Index, iShares S&P Global Utilities Sector, iShares S&P Latin America 40 Index Fund, iShares S&P MidCap 400 Growth Index Fund, iShares S&P MidCap 400 Value Index Fund, iSharesS&P N. Amer. Natural Res. Sector, iShares S&P N. Amer. Software Index Fund, iShares S&P Nat'l AMT-Free Municipal, iShares S&P North American Technology, iShares S&P Short Term Nat.Municipal, iShares S&P SmallCap 600 Growth, iShares S&P SmallCap 600 Value, iShares S&P U.S. Preferred Stock Index, iShares S&P/Citigroup International Treasury Bond Fund, iSharesSilver Trust, Market Vectors Agribusiness ETF, Market Vectors Brazil Small-Cap ETF, Market Vectors Coal ETF, Market Vectors Emerg. Markets Local, Market Vectors ETF Gold Miners, Market Vectors Global Alt.Energy ETF, Market Vectors Hard Assets Producers ETF, Market Vectors High Yield Municipal Inde, Market Vectors Indonesia Index ETF, Market Vectors Intermediate Municipal In, Market Vectors Junior Gold Miners ETF, Market Vectors Nuclear Energy ETF, Market Vectors Russia ETF, Market Vectors Steel Index ETF, Market Vectors Vietnam ETF, Materials Select Sector SPDR, Oil Services HOLDRS, Pharmaceutical HOLDRS, PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat.Fund, PIMCO Intermediate Muni. Bond Strat.Fund, PIMCO ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, PowerShares Build America Bond Portfolio, PowerShares DB Agriculture Fund, PowerShares DB Base Metals Fund, PowerShares DB Energy Fund, PowerShares DB G10 Currency Harvest Fund, PowerShares DB Oil Fund, PowerShares DB USD Index Bearish Fund, PowerShares DB USD Index Bullish Fund, PowerShares Dynam. LargeCapValue, PowerShares Dynam.LargeCap Growth, PowerShares Dynamic Market Portfolio, PowerShares Emerging Markets Sovereign Debt Portfolio, PowerShares Financial Preferred Portf., PowerShares FTSE RAFI US 1000 Portfolio, PowerShares Global Clean Ergy. Portfol., PowerShares Global Water Portfolio, PowerShares Int.Div. Achievers Portfol., PowerShares Preferred Portfolio, PowerShares QQQ, PowerShares S&P 500 BuyWrite Portfolio, PowerShares S&P 500 Low Volatility Portfolio, PowerShares Senior Loan Portfolio, PowerShares VRDO Tax-Free Wkly Portfol., PowerShares Water Resources Portfolio, PowerShares WilderHill Clean Ergy., Rydex Russell Top 50 ETF, Rydex S&P 500 Pure Growth ETF, Rydex S&P Equal Weight ETF, Semiconductor HOLDRS, SPDR Barclays 1-3 Month T-Bill ETF, SPDR Barclays Capital Int. Treasury, SPDR Barclays Capital ST Muni. Bond ET, SPDR Barclays Convertible Bond ETF, SPDR Barclays High Yield Bond ETF, SPDR Barclays Municipal Bond ETF, SPDR Barclays Short Term High Yield Bond ETF, SPDR Biotech ETF, SPDR DB Int. Govt. Inflation-Protect, SPDR Dow Jones Int. Real Estate ETF, SPDR Dow Jones REIT ETF, SPDR KBW Bank ETF, SPDR KBW Regional Banking ETF, SPDR Oil & Gas Equipment & Services ETF, SPDR Oil & Gas Exploration & Prod. ETF, SPDR Retail ETF, SPDR S&P China ETF, SPDR S&P Dividend ETF, SPDR S&P Emerging Asia Pacific ETF, SPDR S&P Emerging Markets Small Cap ETF, SPDR S&P Homebuilders ETF, SPDR S&P International Dividend ETF, SPDR S&P International Small Cap ETF, SPDR S&P Metals & Mining ETF, SPDR S&P MidCap 400 ETF, Technology Select Sector SPDR, United States Natural Gas Fund LP, Utilities Select Sector SPDR, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard ETF Emerging Markets, Vanguard ETF European, Vanguard ETF REIT, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All-World ex-US ETF, Vanguard FTSE ex-US SmallCap ETF, Vanguard Growth ETF,


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Vanguard Health Care ETF, Vanguard High Dividend Yield ETF, Vanguard Industrials ETF, Vanguard Information Technology ETF, Vanguard Intermediate-Term Bond ETF, Vanguard Intermediate-Term Corporate Bond ETF, Vanguard Large-Cap ETF, Vanguard Materials ETF, Vanguard Mid-Cap ETF, Vanguard Mid-Cap Growth ETF, Vanguard Mid-Cap Value ETF, Vanguard MSCI EAFE ETF, Vanguard Pacific ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond, Vanguard Small-Cap ETF, Vanguard Small-Cap Growth ETF, Vanguard Small-Cap Value ETF, Vanguard Telecom Services ETF, Vanguard Total Bond Market ETF, Vanguard Total Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF, WisdomTree Emerging Markets Equity Income Fund.Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, Citigroup Global Markets, Inc. or an affiliate, has either provided or is providing non-investment banking, non-securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following issuers (if the security is an ETF or Closed-End Fund, the services were or are being provided to, or the agreement is with, the fund's investment manager or advisor): WisdomTree Emerging Markets Equity Income Fund.An affiliate of Morgan Stanley Wealth Management, including but not limited to, Morgan Stanley & Co. LLC, and/or Citigroup Global Markets Inc., has a significant financial interest in relation to the following issuers (if the security is an ETF or Closed-End Fund, the significant financial is in relation to the fund's investment manager or advisor): iShares Barclays 1-3 Year Credit Bond, iSharesBarclays 20+ Year Treasury Bond, iShares Barclays 3-7 Year Treasury, iShares Barclays 7-10 Year Treasury Bond, iShares Barclays Agency Bond Fund, iShares Barclays Aggregate Bond Fund, iSharesBarclays Intermediate Credit, iShares Barclays Lehman 1-3 Yr Treasury, iShares Barclays MBS Bond Fund, iShares Barclays Short Treasury, iShares Barclays TIPS Bond Fund, iShares Cohen & Steers Realty Majors, iShares Core S&P 500 ETF, iShares Core S&P Mid-Cap ETF, iShares Core S&P Small-Cap ETF, iShares DJ US Basic Materials Sector Index Fund, iShares DJ US Cons. Services Sector Index Fund, iShares DJ US Consumer Goods Sector, iShares DJ US Technology Sector Index, iShares Dow Jones Broker-Dealers Index, iShares Dow Jones International Select D, iShares Dow Jones Select Dividend Index, iShares Dow Jones Transportation Index, iShares Dow Jones U.S. Index Fund, iShares Dow Jones U.S. Medical Devices, iShares Dow Jones U.S. Oil & Gas Exp., iShares Dow Jones U.S. Oil Equip. & Svcs, iShares Dow Jones US Aerospace & Defense, iShares Dow Jones US Energy Sector Index Fund, iShares Dow Jones US Financial Sector, iShares Dow Jones US Financial Services, iShares Dow Jones US Healthcare Sector, iShares Dow Jones US Home Construction, iShares Dow Jones US Industrial Sector, iShares Dow Jones US Real Estate Index, iShares Dow Jones US Telecom Sector, iShares Dow Jones US Utilities Sector, iShares FTSE China 25 Index Fund, iShares Gold Trust, iShares GSCI Commodity Indexed Trust, iShares High Dividend Equity Fund, iShares iBoxx $ High Yield Corp Bond, iShares iBoxx $ InvesTop Inv Grade Bond, iShares JPMorgan USD Emerging Mkt Bond, iShares Morningstar Large Growth Index, iShares Morningstar Large Value Index, iSharesMorningstar Mid Growth Index, iShares Morningstar Mid Value Index Fund, iShares MSCI ACWI ex US Index Fund, iShares MSCI ACWI Index Fund, iShares MSCI All Country Asia ex-Japan Index Fund, iShares MSCI All Peru Capped Index Fund, iShares MSCI China Index Fund, iShares MSCI EAFE Growth Index Fund, iShares MSCI EAFE Index Fund, iShares MSCI EAFE Small Cap Index Fund, iSharesMSCI EAFE Value Index Fund, iShares MSCI Emerging Mkts Min Volatilit, iShares MSCI Russia Capped Index Fund, iShares MSCI USA Minimum Volatility Index Fund, iShares Nasdaq Biotech, iSharesPHLX SOX Semiconductors Sector Index Fund, iShares Russell 1000 Growth Index Fund, iShares Russell 1000 Index Fund, iShares Russell 1000 Value Index Fund, iShares Russell 2000 Index Fund, iShares Russell 2000 Value Index Fund, iShares Russell 3000 Index Fund, iShares Russell 3000 Value Index Fund, iShares Russell Microcap Index Fund, iShares Russell Mid Cap Growth Index, iShares Russell Midcap Index Fund, iShares Russell Midcap Value Index Fund, iShares S&P 100 Index Fund, iShares S&P 500 Growth Index Fund, iShares S&P 500 Value Index Fund, iShares S&P Europe 350 Index Fund, iShares S&P Global 100 Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples, iShares S&P Global Energy Sector Index, iShares S&P Global Financial Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares S&P Global Ind. Sector Index, iShares S&P Global Infrastructure Index, iShares S&P Global Materials Sector, iShares S&P Global Tech. Sector Index, iShares S&P Global Tele. Sector Index, iShares S&P Global Utilities Sector, iShares S&P Latin America 40 Index Fund, iShares S&P N. Amer. Natural Res. Sector, iShares S&P N. Amer. Software Index Fund, iShares S&P Nat'l AMT-Free Municipal, iShares S&P North American Technology, iShares S&P Short Term Nat.Municipal, iShares S&P U.S. Preferred Stock Index, iShares S&P/Citigroup International Treasury Bond Fund, iShares Silver Trust, PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat.Fund, PIMCO Intermediate Muni. Bond Strat.Fund, PIMCO ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, SPDR S&P 500 ETF. For an explanation of the determination of significant financial interest, please refer to the applicable policies for managing conflicts of interest, which can be found at https://www.morganstanley.com/online/researchconflictpolicies.The research analysts or strategists principally responsible for the preparation of Morgan Stanley Wealth Management Research have received compensation based upon various factors, including quality of research, investor client feedback, competitive factors, and firm profitability or revenues (which include fixed income trading and capital markets profitability or revenues). Research analysts' or strategists' compensation is not linked to the profitability or revenues of particular capital markets transactions performed by Morgan Stanley Wealth Management or the profitability or revenues of particular fixed income trading desks.Morgan Stanley Wealth Management and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Wealth Management Research. Morgan Stanley Wealth Management and/or its affiliates sells to and buys from customers the securities/instruments of issuers covered in this Morgan Stanley Wealth Management Research report on a principal basis.Morgan Stanley Wealth Management and others associated with it may have positions in and effect transactions in securities of ETFs mentioned and may also perform or seek to perform brokerage and other services for those ETFs and may enter into transactions with them. Affiliates of Morgan Stanley Wealth Management may participate in the creation and redemption of the securities covered in this report and as an authorized participant or otherwise, and may acquire such securities from the issuers for the purpose of resale.Investors should consider the investment objectives, risks, charges and expenses of each investment company carefully before investing. The prospectuses and product descriptions contain this and other information about the investment company and should be read carefully before investing. Investors may obtain product descriptions and prospectuses for the ETFs mentioned in this report from the ETF distributor, their brokers or the exchange upon which the particular ETF is listed. Morgan Stanley & Co. LLC or its affiliates is an authorized participant for one or more ETFs of the following fund families: BlackRock Fund Advisors, 1-800-474-2737; DirexionShares, 1-866-476-7523; ETF Securities, 1-212-918-4954; Guggenheim Funds, 1-888-949-3837; Merrill Lynch & Co., 1-212-449-1000; PIMCO ETFs, 1-888-400-4383; PowerShares Capital, 1-800-983-0903; StateStreet Global Advisors, 1-866-787-2257; United States Commodity Funds, 1-800-920-0259; The Vanguard Group, 1-866-499-8473; VanEckAssociates, 1-212-687-5200; WisdomTree, 1-866-909-9473.


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ETFs are redeemable only in Creation Unit size through an Authorized Participant.Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions.

Closed-End Fund Rating SystemMorgan Stanley Wealth Management only rates Closed-End Funds ("CEF"). For CEFs, Morgan Stanley Wealth Management uses a relative rating system using the terms Overweight, Equal-weight, Underweight, and Not Covered (see definitions below). Morgan Stanley Wealth Management does not assign ratings of Buy, Hold or Sell to the CEFs we cover. Overweight, Equal-weight, and Underweight are not the equivalent of buy, hold and sell. Investors should carefully read the definitions of all ratings used in Morgan Stanley Wealth Management Research. In addition, since Morgan Stanley Wealth Management Research contains more complete information concerning the analyst's view, investors should carefully read Morgan Stanley Wealth Management Research, in its entirety, and not infer the contents from the ratings alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor's decision to buy or sell a security or fund should depend on individual circumstances (such as the investor's existing holdings) and other considerations.

Closed-End Fund Ratings DefinitionsOverweight (O): The closed-end fund's total return is expected to exceed the average total return of the analyst's industry coverage universe, on a risk-adjusted basis, over the next 12-18 months.Equal-weight (E): The closed-end fund's total return is expected to be in line with the average total return of the analyst's industry coverage universe, on a risk-adjusted basis, over the next 12-18 months.Underweight (U): The closed end fund's total return is expected to be below the average total return of the analyst's industry coverage universe, on a risk-adjusted basis, over the next 12-18 months.Not Covered (NC): Indicates that the analyst does not cover the fund.

Closed-End Fund Ratings Distribution(as of date March 31, 2013)Morgan Stanley Wealth Management only rates CEFs. Thus, this Ratings Distribution table only displays the distribution data for the rated CEFs. For disclosure purposes only (in accordance with FINRA requirements), we include the category of Buy, Hold, and Sell alongside our ratings of Overweight, Equal-weight, and Underweight. Morgan Stanley Wealth Management does not assign ratings of Buy, Hold or Sell to the CEFs we cover. Overweight, Equal-weight, and Underweight are not the equivalent of buy, hold, and sell but represent recommended relative weightings (see definition below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy recommendation; we correspond Equal-weight to hold and Underweight to sell recommendations, respectively.


CEF Coverage Universe Investment Banking Clients (IBC)

Closed-End Fund (CEF) Rating Category Count % of Total Count % of Total IBC % of Rating Category

Overweight/Buy 29 29.0% 2 22.2% 6.9%

Equal-weight/Hold 46 46.0% 5 55.6% 10.9%

Underweight/Sell 25 25.0% 2 22.2% 8.0%

Total 100 100.0% 9 100.0%

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Important DisclosuresData includes CEFs currently assigned ratings. An investor's decision to buy or sell a fund should depend on individual circumstances (such as an investor's existing holdings) and other considerations. The Investment Banking Clients data above applies only to Morgan Stanley Wealth Management's CEF coverage universe. The data indicates those CEF investment managers for whom Morgan Stanley Wealth Management, provided investment banking services within the previous 12 months.

Other Important DisclosuresThis Morgan Stanley Wealth Management Research does not provide individually tailored investment advice. Morgan Stanley Wealth Management Research has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley Wealth Management recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. The securities, instruments, or strategies discussed in Morgan Stanley Wealth Management Research may not be suitable for all investors, and certain investors may not be eligible to purchase or participate in some or all of them.Morgan Stanley Wealth Management and its affiliates do not render advice on tax and tax accounting matters to clients. This material was not intended or written to be used, and it cannot be used or relied upon by any recipient, for any purpose, including the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Each client should consult his/her personal tax and/or legal advisor to learn about any potential tax or other implications that may result from acting on a particular recommendation.Morgan Stanley Wealth Management Research is not an offer to buy or sell or the solicitation of an offer to buy or sell any security/instrument or to participate in any particular trading strategy. The "Important US Regulatory Disclosures on Subject Issuers" section in Morgan Stanley Wealth Management Research reports or the "Listing of Important U.S. Regulatory Disclosures by security" section of the firm's disclosure website at https://www.morganstanley.com/online/researchdisclosures lists all issuers mentioned where Morgan Stanley Wealth Management or Morgan Stanley & Co. LLC, or their affiliates (excluding Citigroup Global Markets, Inc.) owns 1% or more of a class of common equity securities of the issuers. For all other issuers mentioned in Morgan Stanley Wealth Management Research, Morgan Stanley Wealth Management or its affiliates may have an investment of less than 1% in securities/instruments or derivatives of securities/instruments of companies and may trade them in ways different from those discussed in Morgan Stanley Wealth Management Research. Employees of Morgan Stanley Wealth Management Research are not involved in the preparation of Morgan Stanley Wealth Management Research, may have investments in securities/instruments or derivatives of securities/instruments of issuers mentioned and may trade them in ways different from those discussed in Morgan Stanley Wealth Management Research.Morgan Stanley Wealth Management Research is based on public information. Morgan Stanley Wealth Management makes every effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. We have no obligation to tell you when opinions or information in Morgan Stanley Wealth Management Research change apart from when we intend to discontinue equity research coverage of a subject company. Facts and views presented in Morgan Stanley Wealth Management Research have not been reviewed by, and may not reflect information known to, professionals in other Morgan Stanley Wealth Management business areas, including investment banking personnel.Morgan Stanley Wealth Management Research personnel conduct site visits from time to time but are prohibited from accepting payment or reimbursement by the company of travel expenses for such visits.The value of and income from your investments may vary because of changes in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices, market indexes, operational or financial conditions of companies or other factors. There may be time limitations on the exercise of options or other rights in securities/instruments transactions. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. If provided, and unless otherwise stated, the closing price on the cover page is that of the primary exchange for the subject company's securities/instruments.Morgan Stanley Wealth Management may make investment decisions or take proprietary positions that are inconsistent with the recommendations or views in this report.Investing in closed-end funds involves risks. These include the general risks associated with investing in securities, possible changes in market prices relative to net asset values and manager performance.Besides the general risk of holding securities that may decline in value, closed-end funds have risks related to leverage and the potential for discounts to widen.Morgan Stanley Wealth Management's Global Research Department produces and distributes research products for clients of Morgan Stanley Wealth Management. This research is disseminated in Australia to "retail clients" within the meaning of the Australian Corporations Act by Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813).Morgan Stanley Wealth Management is not incorporated under the People's Republic of China ("PRC") law and the research in relation to this report is conducted outside the PRC. In the PRC, thisreport will be distributed only upon request of a specific recipient. This report does not constitute an offer to sell or the solicitation of an offer to buy any securities in the PRC. PRC investors must have the relevant qualifications to invest in such securities and must be responsible for obtaining all relevant approvals, licenses, verifications and or registrations from PRC's relevant governmental authorities.

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Morgan Stanley Private Wealth Management Ltd, which is authorized and regulated by the Financial Services Authority, approves for the purpose of section 21 of the Financial Services and Markets Act 2000, research for distribution in the United Kingdom.Morgan Stanley Wealth Management is not acting as a municipal advisor and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.This material is disseminated in the United States of America by Morgan Stanley Wealth Management.If an analyst named on the front of this report is based in the UK, then this report is produced by Morgan Stanley Private Wealth Management UK Ltd, authorized and regulated by the FSA, for Morgan Stanley Wealth Management. The trademarks and service marks contained in Morgan Stanley Wealth Management Research are the property of their respective owners. Third-party data providers make no warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages of any kind relating to such data.Morgan Stanley Wealth Management Research, or any portion thereof may not be reprinted, sold or redistributed without the written consent of Morgan Stanley Smith Barney LLC.Morgan Stanley Wealth Management Research is disseminated and available primarily electronically, and, in some cases, in printed form.Additional information on recommended securities/instruments is available on request.© 2013 Morgan Stanley Smith Barney LLC. Member SIPC.


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