# EDGAR Filing Document

**Accession Number:** 0000741375
**File Stem:** 0001133228-23-000277
**Filing Date:** 2023-1
**Character Count:** 2468759
**Document Hash:** d35b8e923a7d8a3e3aba648264c9b491
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001133228-23-000277.hdr.sgml**: 20230127

**ACCESSION NUMBER**: 0001133228-23-000277

**CONFORMED SUBMISSION TYPE**: 485BPOS

**PUBLIC DOCUMENT COUNT**: 54

**FILED AS OF DATE**: 20230127

**DATE AS OF CHANGE**: 20230127

**EFFECTIVENESS DATE**: 20230127

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** MORGAN STANLEY INSTITUTIONAL FUND TRUST
- **CENTRAL INDEX KEY:** 0000741375
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** PA
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 485BPOS
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-03980
- **FILM NUMBER:** 23562376

**BUSINESS ADDRESS:**
- **STREET 1:** 522 FIFTH AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10036
- **BUSINESS PHONE:** 800-548-7786

**MAIL ADDRESS:**
- **STREET 1:** 522 FIFTH AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10036

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MAS FUNDS /MA/
- **DATE OF NAME CHANGE:** 19960724

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MAS FUNDS INC
- **DATE OF NAME CHANGE:** 19931227

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MAS FUNDS
- **DATE OF NAME CHANGE:** 19930927
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** MORGAN STANLEY INSTITUTIONAL FUND TRUST
- **CENTRAL INDEX KEY:** 0000741375
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** PA
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 485BPOS
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 002-89729
- **FILM NUMBER:** 23562375

**BUSINESS ADDRESS:**
- **STREET 1:** 522 FIFTH AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10036
- **BUSINESS PHONE:** 800-548-7786

**MAIL ADDRESS:**
- **STREET 1:** 522 FIFTH AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10036

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MAS FUNDS /MA/
- **DATE OF NAME CHANGE:** 19960724

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MAS FUNDS INC
- **DATE OF NAME CHANGE:** 19931227

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MAS FUNDS
- **DATE OF NAME CHANGE:** 19930927

## Series and Classes Contracts Data

### Core Plus Fixed Income Portfolio (Series ID: S000004114)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000011537 | Class A Shares | MFXAX           |
| C000011538 | Class I Shares | MPFIX           |
| C000113789 | Class L        | MSIOX           |
| C000155930 | Class C        | MSCKX           |
| C000198828 | Class R6       | MPLRX           |

### Corporate Bond Portfolio (Series ID: S000004118)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000011548 | Class A Shares | MIGAX           |
| C000011549 | Class I Shares | MPFDX           |
| C000065127 | Class L Shares | MGILX           |
| C000155931 | Class C        | MSBOX           |

### Short Duration Income Portfolio (Series ID: S000004119)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000011550 | Class I Shares | MPLDX           |
| C000052876 | Class A Shares | MLDAX           |
| C000113791 | Class L        | MSJLX           |
| C000155932 | Class C        | MSLDX           |
| C000161558 | Class R6       | MSDSX           |

### Global Strategist Portfolio (Series ID: S000004124)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000011555 | Class A Shares | MBAAX           |
| C000011556 | Class I Shares | MPBAX           |
| C000113792 | Class L        | MSDLX           |
| C000155933 | Class C        | MSSOX           |
| C000156275 | Class R6       | MGPOX           |

### Discovery Portfolio (Series ID: S000004127)

| Class ID   | Class Name     | Ticker Symbol   |
|:---|:---|:---|
| C000011562 | Class A Shares | MACGX           |
| C000011563 | Class I Shares | MPEGX           |
| C000113795 | Class L        | MSKLX           |
| C000129401 | Class R6       | MMCGX           |
| C000155934 | Class C        | MSMFX           |

### High Yield Portfolio (Series ID: S000035938)

| Class ID   | Class Name   | Ticker Symbol   |
|:---|:---|:---|
| C000110149 | Class I      | MSYIX           |
| C000110150 | Class A      | MSYPX           |
| C000110152 | Class L      | MSYLX           |
| C000138838 | Class R6     | MSHYX           |
| C000155936 | Class C      | MSHDX           |
| C000198829 | Class IR     | MRHYX           |
| C000222238 | Class W      | MSYWX           |

### Ultra Short Income Portfolio (Series ID: S000052013)

| Class ID   | Class Name          | Ticker Symbol   |
|:---|:---|:---|
| C000163598 | Institutional Class | MUIIX           |
| C000163599 | Class IR            | MULSX           |
| C000163600 | Class A             | MUAIX           |

### Ultra-Short Municipal Income Portfolio (Series ID: S000063885)

| Class ID   | Class Name          | Ticker Symbol   |
|:---|:---|:---|
| C000206865 | Institutional Class | MUIMX           |
| C000206866 | Class A             | MUAMX           |
| C000206867 | Class IR            | MULMX           |

### Dynamic Value Portfolio (Series ID: S000071262)

| Class ID   | Class Name   | Ticker Symbol   |
|:---|:---|:---|
| C000226177 | Class R6     | MAADX           |
| C000226178 | Class A      | MAAUX           |
| C000226179 | Class C      | MAAOX           |
| C000226180 | Class I      | MAAQX           |

?xml version='1.0' encoding='ASCII'? 2022-06-14MSIFTDiscoveryPortfolio_485B_PSP_January2023

**As filed with the Securities and Exchange Commission on January 27, 2023**

**Registration Nos.: 2-89729**

**811-03980**

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM N-1A**

---

| | |
|:---|:---|
| **REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933** | ☒ |
| **Pre-Effective Amendment No.** | ☐ |
| **Post-Effective Amendment No. 218** | ☒ |

---

**and/or**

---

| | |
|:---|:---|
| **REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940** | ☒ |
| **Amendment No. 221** | ☒ |

---

**Morgan Stanley Institutional Fund Trust**

**(Exact Name of Registrant as Specified in Charter)**

**522 Fifth Avenue**

**New York, New York 10019**

**(Address of Principal Executive Office)**

**Registrant's Telephone Number, Including Area Code: (800) 548-7786**

**Mary E. Mullin, Esq.**

**1633 Broadway**

**New York, New York 10019**

**(Name and Address of Agent for Service)**

**Copy to:**

---

| | |
|:---|:---|
| **Mark Parise, Esq.** | **Allison Fumai, Esq.** |
| **Perkins Coie LLP** | **Dechert LLP** |
| **1155 Avenue of the Americas** | **1095 Avenue of the Americas** |
| **22nd Floor** | **New York, New York 10036** |
| **New York, New York 10036** |  |

---

**Approximate Date of Proposed Public Offering:**

As soon as practicable after this Post-Effective Amendment becomes effective.

**It is proposed that this filing will become effective (check appropriate box):**

☒ Immediately
 upon filing pursuant to paragraph (b)

☐ On (date) pursuant to paragraph (b)

☐ 60 days after filing pursuant to paragraph (a)(1) <br> ☐ On (date) pursuant to paragraph (a)(1)

☐ 75 days after filing pursuant to paragraph (a)(2) <br> ☐ On (date) pursuant to paragraph (a)(2) of Rule 485.

**Amending the Prospectus and Updating Financial Statements**

If appropriate, check the following box:

☐ This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

![image](pr15541img002.jpg)

![image](pr15541img003.jpg)

Morgan Stanley Institutional Fund Trust

**Discovery Portfolio**

------

**Prospectus** \| January 27, 2023

---

| | |
|:---|:---|
| **Share Class** | **Ticker Symbol** |
| Class I | MPEGX |
| Class A | MACGX |
| Class L | MSKLX |
| Class C | MSMFX |
| Class R6 | MMCGX |

---

![image](pr15541img001.jpg)

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

An investment in the Fund is not a bank deposit and is not insured by the Federal Deposit Insurance Corporation or any

other government agency. An investment in the Fund involves investment risks, and you may lose money in the fund.

IFTMCGPRO 01/23

------

**Table of Contents**

---

| | |
|:---|:---|
|  | **Page** |
| [**Fund Summary**](#ref_chapter_2_15541)  | 1 |
| [**Details of the Fund**](#ref_chapter_3_15541)  | 8 |
| [**Additional Information about the Fund's Investment Strategies and Related Risks**](#ref_chapter_4_15541)  | 9 |
| [**Fund Management**](#ref_chapter_5_15541)  | 16 |
| [**Shareholder Information**](#ref_chapter_6_15541)  | 17 |
| [**Consolidated Financial Highlights**](#ref_chapter_7_15541)  | 30 |
| [**Appendix A**](#ref_chapter_8_15541)  | 36 |

---

------

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Discovery Portfolio

**Investment Objective**

The Discovery Portfolio (the "Fund") seeks long-term capital growth.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay fees** **other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below.**

For purchases of Class A shares, you may qualify for a sales charge discount if the cumulative net asset value per share ("NAV") of Class A shares of the Fund being purchased in a single transaction, together with the NAV of any Class A, Class L and Class C shares of the Fund already held in Related Accounts (as defined in the section of the Prospectus entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares") as of the date of the transaction as well as Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") and including shares of Morgan Stanley Money Market Funds (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") that you acquired in an exchange of Class A, Class L or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios already held in Related Accounts as of the date of the transaction, amounts to $50,000 or more. More information about this combined purchase discount and other discounts is available from your financial intermediary, on page 20 of the Prospectus in the section entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares" and in Appendix A attached to the Prospectus.

Class I shares may be available on brokerage platforms of firms that have agreements with the Fund's principal underwriter permitting such firms to (i) offer Class I shares solely when acting as an agent for the investor and (ii) impose on an investor transacting in Class I shares through such platforms a commission and/or other forms of compensation to the broker. Shares of the Fund are available in other share classes that have different fees and expenses.

**Shareholder Fees** (fees paid directly from your investment)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Maximum sales charge (load) imposed on purchases (as a percentage of offering price) |  | 5.25% |  |  |  |
| Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or NAV at redemption) |  | None<sup>1</sup> |  | 1.00%<sup>2</sup> |  |

---

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Advisory Fee<sup>3</sup>  | 0.50% | 0.50% | 0.50% | 0.50% | 0.50% |
| Distribution and/or Shareholder Service (12b-1) Fee |  | 0.25% | 0.75% | 1.00% |  |
| Other Expenses<sup>4</sup>  | 0.27% | 0.28% | 0.26% | 0.27% | 0.14% |
| Total Annual Fund Operating Expenses | 0.77% | 1.03% | 1.51% | 1.77% | 0.64% |

---

**1**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Discovery Portfolio (Con't)

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same. After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund. The example for Class C shares reflects the conversion to Class A shares after eight years. Please refer to the section of the Prospectus entitled "Shareholder Information—Conversion Features" for more information. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $79 | $246 | $428 | $954 |
| Class A | $625 | $836 | $1064  | $1718 |
| Class L | $154 | $477 | $824 | $1802  |
| Class C | $280  | $557 | $959 | $1889 |
| Class R6 | $65 | $205  | $357 | $798 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $79 | $246 | $428 | $954 |
| Class A | $625 | $836 | $1064  | $1718 |
| Class L | $154 | $477 | $824 | $1802  |
| Class C | $180  | $557 | $959 | $1889 |
| Class R6 | $65 | $205  | $357 | $798 |

---

---

| | |
|:---|:---|
| 1 | Investments in Class A shares that are not subject to any sales charges at the time of purchase are subject to a contingent deferred sales charge ("CDSC") of 1.00% that will be imposed if you sell your shares within 12 months after purchase, except for certain specific circumstances. See "Shareholder Information—How To Redeem Fund Shares" for further information about the CDSC waiver categories. |

---

2 The Class C CDSC is only applicable if you sell your shares within one year after the last day of the month of purchase. See "Shareholder Information—How To Redeem Fund Shares" for a complete discussion of the CDSC.

---

| | |
|:---|:---|
| 3 | "Advisory Fee" includes the management fee of a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands (the "Subsidiary"). The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to waive or credit a portion of the advisory fee in an amount equal to the management fee paid to the Adviser by the Subsidiary. |

---

4 "Other Expenses" include expenses of the Fund's and Subsidiary's most recent fiscal year.

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 67% of the average value of its portfolio.

**Principal Investment Strategies**

Under normal circumstances, the Fund's "Adviser," Morgan Stanley Investment Management Inc., seeks long-term capital growth by investing primarily in established and emerging companies with capitalizations within the range of companies included in the Russell Midcap® Growth Index, which as of December 31, 2022 was between $306.2 million and $52.2 billion. The Adviser emphasizes a bottom-up stock selection process, seeking attractive investments on an individual company basis. The Adviser typically invests in unique companies it believes have sustainable competitive advantages with above average business visibility, the ability to deploy capital at high rates of return, strong balance sheets and an attractive risk/reward.

The Adviser actively integrates sustainability into the investment process by using environmental, social and governance ("ESG") factors as a lens for additional fundamental research, which can contribute to investment decision-making. The Adviser conducts research to examine how environmental and social initiatives within companies can drive enterprise value by creating growth opportunities, reducing risk, driving profitability, strengthening durable competitive advantages and/or aligning with secular growth trends. Other aspects of the investment process include a proprietary, systematic evaluation of governance policies, specifically focusing on compensation alignment on long-term value creation. The Adviser does not treat ESG as a deterministic, reductive screen, nor as a portfolio construction tool layered on top of a passive vehicle.

The Fund may invest in equity securities. The Fund may also invest in privately placed and restricted securities.

**2**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Discovery Portfolio (Con't)

The Fund may invest up to 25% of its total assets in securities of foreign issuers, including issuers located in emerging market or developing countries. The securities in which the Fund may invest may be denominated in U.S. dollars or in currencies other than U.S. dollars.

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Equity Securities.** In general, prices of equity securities are more volatile than those of fixed-income securities. The prices of equity securities fluctuate, and sometimes widely fluctuate, in response to activities specific to the issuer of the security as well as factors unrelated to the fundamental condition of the issuer, including general market, economic , political conditions and public health conditions. During periods when equity securities experience heightened volatility, such as during periods of market, economic or financial uncertainty or distress, the Fund's investments in equity securities may be subject to heightened risks.

• **Mid Cap Companies.** Investments in mid cap companies may involve greater risks than investments in larger, more established companies. The securities issued by mid cap companies may be less liquid and such companies may have more limited markets, financial resources and product lines and may lack the depth of management of larger companies.

• **Foreign and Emerging Market Securities.** Investments in foreign markets entail special risks such as currency, political (including geopolitical) , economic and market risks. There also may be greater market volatility, less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and custody costs, decreased market liquidity and less government and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The risks of investing in emerging market countries are greater than the risks associated with investments in foreign developed countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging market countries. In addition, the Fund's investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged, the value of those investments will fluctuate with U.S. dollar exchange rates. To the extent hedged by the use of foreign currency forward exchange contracts, the precise matching of the foreign currency forward exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. There is additional risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken and that foreign currency forward exchange contracts create exposure to currencies in which the Fund's securities are not denominated. The use of foreign currency forward exchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. Economic sanctions and other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities , negatively impact the value or liquidity of the Fund's investments , significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices , or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies .

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little

**3**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Discovery Portfolio (Con't)

trading in the secondary market available for particular securities. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **Focused Investing.** To the extent that the Fund invests in a limited number of issuers, the Fund will be more susceptible to negative events affecting those issuers and a decline in the value of a particular instrument may cause the Fund's overall value to decline to a greater degree than if the Fund were invested more widely.

• **Private Placements and Restricted Securities.** The Fund's investments may include privately placed securities, which are subject to resale restrictions. These securities could have the effect of increasing the level of Fund illiquidity to the extent the Fund may be unable to sell or transfer these securities due to restrictions on transfers or on the ability to find buyers interested in purchasing the securities. Additionally, the market for certain investments deemed liquid at the time of purchase may become illiquid under adverse market or economic conditions.

• **Information Technology Sector Risk.** The value of Fund shares may be particularly impacted by events that adversely affect the information technology sector, such as rapid changes in technology product cycles, product obsolescence, government regulation, and competition, and may fluctuate more than that of a fund that does not invest significantly in companies in the technology sector.

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Class I shares' performance from year-to-year and by showing how the Fund's average annual returns for the past one, five and 10 year periods and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The performance of the other classes, which is shown in the table below, will differ because the classes have different ongoing fees. The Fund's returns in the table include the maximum applicable sales charge for Class A and Class C and assume you sold your shares at the end of each period (unless otherwise noted). The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15541img004.jpg)

**4**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Discovery Portfolio (Con't)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 06/30/20 | 69.78% |
| **Low Quarter** | 06/30/22 | -41.72% |

---

**5**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Discovery Portfolio (Con't)

**Average Annual Total Returns**

(for the calendar periods ended December 31, 2022)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Past**<br>**One Year** | **Past**<br>**Five Years** | **Past**<br>**Ten Years** | **Since Inception** |
| **Class I** (commenced operations on 3/30/90) | **Class I** (commenced operations on 3/30/90) | **Class I** (commenced operations on 3/30/90) | **Class I** (commenced operations on 3/30/90) | **Class I** (commenced operations on 3/30/90) |
| Return Before Taxes | -63.39% | 4.16% | 6.92% | 10.73% |
| Return After Taxes on Distributions<sup>1</sup>  | -63.39% | 0.57% | 2.46% | 8.02% |
| Return After Taxes on Distributions and Sale of Fund Shares | -37.53% | 4.87% | 5.68% | 8.81% |
| **Class A** (commenced operations on 1/31/97) | **Class A** (commenced operations on 1/31/97) | **Class A** (commenced operations on 1/31/97) | **Class A** (commenced operations on 1/31/97) | **Class A** (commenced operations on 1/31/97) |
| Return Before Taxes | -65.44% | 2.75% | 6.05% | 8.06% |
| **Class L** (commenced operations on 6/14/12) | **Class L** (commenced operations on 6/14/12) | **Class L** (commenced operations on 6/14/12) | **Class L** (commenced operations on 6/14/12) | **Class L** (commenced operations on 6/14/12) |
| Return Before Taxes | -63.72% | 3.36% | 6.05% | 6.24% |
| **Class C** (commenced operations on 5/31/17) | **Class C** (commenced operations on 5/31/17) | **Class C** (commenced operations on 5/31/17) | **Class C** (commenced operations on 5/31/17) | **Class C** (commenced operations on 5/31/17) |
| Return Before Taxes | -64.17% | 3.05% | N/A | 4.37% |
| **Class R6** (commenced operations on 9/13/13) | **Class R6** (commenced operations on 9/13/13) | **Class R6** (commenced operations on 9/13/13) | **Class R6** (commenced operations on 9/13/13) | **Class R6** (commenced operations on 9/13/13) |
| Return Before Taxes | -63.35% | 4.26% | N/A | 4.94% |
| Russell Midcap<sup>®</sup> Growth Index (reflects no deduction for fees, expenses or taxes)<sup>2</sup>  | -26.72% | 7.64% | 11.41% | 10.14%<sup>3</sup> |
| Lipper Mid-Cap Growth Funds Index (reflects no deductions for taxes)<sup>4</sup>  | -29.79% | 6.70% | 10.44% | 9.51%<sup>3</sup> |

---

1 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

---

| | |
|:---|:---|
| 2 | The Russell Midcap® Growth Index measures the performance of the mid-cap growth segment of the U.S. equity universe. It includes those Russell Midcap® Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell Midcap® Index is a subset of the Russell 1000® Index and includes approximately 800 of the smallest securities in the Russell 1000® Index, which in turn consists of approximately 1,000 of the largest U.S. securities based on a combination of market capitalization and current index membership. It is not possible to invest directly in an index. |

---

3 Since Inception reflects the inception date of Class I.

4 The Lipper Mid-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Mid-Cap Growth Funds classification. There are currently 30 funds represented in this Index.

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Fund's other classes will vary from Class I shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of Counterpoint Global. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began**<br>**Managing Fund** |
| Dennis P. Lynch | Managing Director | January 2002 |
| Sam G. Chainani | Managing Director | June 2004 |
| Jason C. Yeung | Managing Director | September 2007 |
| Armistead B. Nash | Managing Director | September 2008 |
| David S. Cohen | Managing Director | January 2002 |
| Alexander T. Norton | Executive Director | July 2005 |

---

**Purchase and Sale of Fund Shares**

*Morgan Stanley Institutional Fund Trust (the "Trust") has suspended offering Class L shares of the Fund for sale to all investors. The Class L shareholders of the Fund do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders may invest in additional Class L shares through reinvestment of dividends and distributions.*

**6**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Discovery Portfolio (Con't)

The minimum initial investment generally is $1 million for Class I shares and $1,000 for each of Class A and Class C shares of the Fund. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and in each case subject to the discretion of the Adviser. The minimum initial investment may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business directly from the Fund by mail (c/o SS&C Global Investor and Distribution Solutions, Inc., P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-800-869-6397) or by contacting an authorized third-party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's "Distributor," Morgan Stanley Distribution, Inc. (each, a "Financial Intermediary"). In addition, you can sell Fund shares at any time by enrolling in a systematic withdrawal plan. If you sell Class A or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Fund shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

**7**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Details of the Fund**

Discovery Portfolio

**Investment Objective**

The Discovery Portfolio seeks long-term capital growth.

**Approach**

The Adviser seeks long-term capital growth by investing primarily in established and emerging companies with capitalizations within the range of companies included in the Russell MidCap® Growth Index.

**Process**

The Adviser emphasizes a bottom-up stock selection process, seeking attractive investments on an individual company basis. The Adviser typically invests in unique companies it believes have sustainable competitive advantages with above average business visibility, the ability to deploy capital at high rates of return, strong balance sheets and an attractive risk/reward. The Adviser generally considers selling a portfolio holding when it determines that the holding no longer satisfies its investment criteria.

In accordance with the Fund's investment strategy of investing in mid cap companies, the capitalization range of securities in which the Fund may invest is consistent with the capitalization range of the Russell Midcap® Growth Index, which as of December 31, 2022 was between $306.2 million and $52.2 billion. The market capitalization limit is subject to adjustment annually based upon the Adviser's assessment as to the capitalization range of companies which possess the fundamental characteristics of mid cap companies.

The Adviser actively integrates sustainability into the investment process by using ESG factors as a lens for additional fundamental research, which can contribute to investment decision-making. The Adviser conducts research to examine how environmental and social initiatives within companies can drive enterprise value by creating growth opportunities, reducing risk, driving profitability, strengthening durable competitive advantages and/or aligning with secular growth trends. Other aspects of the investment process include a proprietary, systematic evaluation of governance policies, specifically focusing on compensation alignment on long-term value creation. The Adviser does not treat ESG as a deterministic, reductive screen, nor as a portfolio construction tool layered on top of a passive vehicle.

The Fund may invest in equity securities. The Fund may also invest in privately placed and restricted securities.

The Fund may invest up to 25% of its total assets in securities of foreign issuers, including issuers located in emerging market or developing countries. The securities in which the Fund may invest may be denominated in U.S. dollars or in currencies other than U.S. dollars.

**8**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks

&nbsp;&nbsp;&nbsp; *This section discusses additional information relating to the Fund's investment strategies, other types of investments that the Fund may make and related risk factors. The Fund's investment practices and limitations are also described in more detail in the Statement of Additional Information ("SAI"), which is incorporated by reference and legally is a part of this Prospectus. For details on how to obtain a copy of the SAI and other reports and information, see the back cover of this Prospectus.*<br>

Economies and financial markets worldwide have recently experienced periods of increased volatility, uncertainty, distress, government spending, inflation and disruption to consumer demand, economic output and supply chains. To the extent these conditions continue, the risks associated with an investment in the Fund, including those described below, could be heightened and the Fund's investments (and thus a shareholder's investment in the Fund) may be particularly susceptible to sudden and substantial losses, reduced yield or income or other adverse developments. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time.

**Equity Securities**

Equity securities may include common and preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase common stocks, depositary receipts, shares of investment companies, limited partnership interests and other specialty securities having equity features. Many factors affect the value of equity securities, including earnings, earnings forecasts, corporate events and factors impacting the issuer's industry and the market generally. The Fund may invest in equity securities that are publicly traded on securities exchanges or over-the-counter ("OTC") or in equity securities that are not publicly traded. Securities that are not publicly traded may be more difficult to value or sell and their value may fluctuate more dramatically than other securities. The prices of convertible securities are affected by changes similar to those of equity and fixed-income securities.

A depositary receipt is generally issued by a bank or financial institution and represents the common stock or other equity securities of a foreign company. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts, or to pass through to them any voting rights with respect to the deposited securities.

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

**Market and Geopolitical Risk**

The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. Price movements, sometimes called volatility, may be greater or less depending on the types of securities the Fund owns and the markets in which the securities trade. Volatility and disruption in financial markets and economies may be sudden and unexpected, expose the Fund to greater risk, including risks associated with reduced market liquidity and fair valuation, and adversely affect the Fund's operations. For example, the Adviser potentially will be prevented from executing investment decisions at an advantageous time or price as a result of any domestic or global market disruptions and reduced market liquidity may impact the Fund's ability to sell securities to meet redemptions.

The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. Inflation rates may change frequently and significantly because of various factors, including unexpected shifts in the domestic or global economy and changes in monetary

**9**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

or economic policies (or expectations that these policies may change). Changes in expected inflation rates may adversely affect market and economic conditions, the Fund's investments and an investment in the Fund. Other financial, economic and other global market and social developments or disruptions may result in similar adverse circumstances, and it is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). In general, the securities or other instruments that the Adviser believes represent an attractive investment opportunity or in which the Fund seeks to invest may be unavailable entirely or in the specific quantities sought by the Fund. As a result, the Fund may need to obtain the desired exposure through a less advantageous investment, forgo the investment at the time or seek to replicate the desired exposure through a derivative transaction or investment in another investment vehicle. Any such event(s) could have a significant adverse impact on the value and risk profile of the Fund's portfolio. There is a risk that you may lose money by investing in the Fund.

Social, political, economic and other conditions and events, such as war, natural disasters, health emergencies (e.g., the novel coronavirus outbreak, epidemics and other pandemics), terrorism, conflicts, social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and the Adviser's investment advisory activities and services of other service providers, which in turn could adversely affect the Fund's investments and other operations.

Global events may negatively impact broad segments of businesses and populations, cause a significant negative impact on the performance of the Fund's investments and exacerbate pre-existing political, social and economic risks to the Fund. The Fund's operations may be interrupted as a result, which may contribute to the negative impact on investment performance. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions that affect the instruments in which the Fund invests, or the issuers of such instruments, in ways that could have a significant negative impact on the Fund's investment performance.

**IPOs**

The Fund may purchase shares issued as part of, or a short period after, a company's initial public offering ("IPO"), and may at times dispose of those shares shortly after their acquisition. The Fund's purchase of shares issued in IPOs exposes it to the risks associated with companies that have little operating history as public companies, including unseasoned trading, small number of shares available for trading and limited information about the issuer, as well as to the risks inherent in those sectors of the market where these new issuers operate. The market for IPO issuers may be volatile, and share prices of newly-public companies have fluctuated significantly over short periods of time. IPOs may produce high, double-digit returns. Such returns are highly unusual and may not be sustainable.

**Fixed-Income Securities**

Fixed-income securities are securities that pay a fixed or a variable rate of interest until a stated maturity date. Fixed-income securities include U.S. government securities, securities issued by federal or federally sponsored agencies and instrumentalities, corporate bonds and notes, asset-backed securities, mortgage securities, securities rated below investment grade (commonly referred to as "junk bonds" or "high yield/high risk securities"), municipal bonds, loan participations and assignments, zero coupon bonds, convertible securities, Eurobonds, Brady Bonds, Yankee Bonds, repurchase agreements, commercial paper and cash equivalents.

Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. The Fund may be subject to liquidity risk, which may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. Fixed-income securities may be called (i.e., redeemed by the issuer) prior to final maturity. If a callable security is called, the Fund may have to reinvest the proceeds at a lower rate of interest.

**Foreign Securities**

Foreign issuers generally are subject to different accounting, auditing and financial reporting standards than U.S. issuers. There may be less information available to the public about foreign issuers. Securities of foreign issuers can be less liquid and experience greater price movements. In addition, the prices of such securities may be susceptible to influence by large traders, due to the limited size of many foreign securities markets. Moreover, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Also, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and

**10**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. In some foreign countries, there is also the risk of government expropriation, excessive taxation, political or social instability, the imposition of currency controls or diplomatic developments that could affect the Fund's investment. There also can be difficulty obtaining and enforcing judgments against issuers in foreign countries. Foreign stock exchanges, broker-dealers and listed issuers may be subject to less government regulation and oversight. The cost of investing in foreign securities, including brokerage commissions and custodial expenses, can be higher than the cost of investing in domestic securities.

Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. International trade barriers or economic sanctions against foreign countries, organizations, companies, entities and/or individuals may adversely affect the Fund's foreign holdings or exposures. Investments in foreign markets may also be adversely affected by less stringent investor protections and disclosure standards, and governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. Governmental actions can have a significant effect on the economic conditions in foreign countries, which also may adversely affect the value and liquidity of the Fund's investments. Foreign investment in the securities markets of certain foreign countries is restricted or controlled to varying degrees. For example, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Moreover, if a deterioration occurs in a country's balance of payments, the country could impose temporary restrictions on foreign capital remittances. The Fund could also be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investment. Any of these actions could severely affect security prices, which could result in losses to the Fund and increased transaction costs, impair the Fund's ability to purchase or sell foreign securities or transfer the Fund's assets back into the United States, or otherwise adversely affect the Fund's operations. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. Certain foreign investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When the Fund holds illiquid investments, its portfolio may be harder to value.

Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. The Fund's investments in foreign securities are subject to economic sanctions and trade laws in the United States and other jurisdictions. These laws and related governmental actions, including counter-sanctions and other retaliatory measures, can, from time to time, prevent or prohibit the Fund from investing in certain foreign securities. In addition, economic sanctions could prohibit the Fund from transacting with particular countries, organizations, companies, entities and/or individuals by banning them from global payment systems that facilitate cross-border payments, restricting their ability to settle securities transactions, and freezing their assets. The imposition of sanctions and other similar measures could, among other things, cause a decline in the value of securities issued by the sanctioned country or companies located in, or economically linked to, the sanctioned country, downgrades in the credit ratings of the sanctioned country or companies located in, or economically linked to, the sanctioned country, devaluation of the sanctioned country's currency, and increased market volatility and disruption in the sanctioned country and throughout the world. Economic sanctions or other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities, negatively impact the value or liquidity of the Fund's investments, significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices, increase the Fund's transaction costs, make the Fund's investments more difficult to value or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies. These conditions may be in place for a substantial period of time and enacted with limited advance notice to the Fund.

**Foreign Currency**

Investments in foreign securities may be denominated in foreign currencies. The value of foreign currencies may fluctuate relative to the value of the U.S. dollar or other applicable foreign currency. Since the Fund may invest in such non-U.S. dollar-denominated securities, and therefore may convert the value of such securities into U.S. dollars, changes in currency exchange rates can increase or decrease the U.S. dollar value of the Fund's assets. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and the overall economic health of the issuer. Devaluation of a currency by a country's government or banking authority also will have a significant impact on the value of any investments denominated in that currency. The Adviser may use derivatives to reduce this risk. The Adviser may in its discretion choose not to hedge against currency risk. In addition, certain market conditions may make it impossible or uneconomical to hedge against currency risk.

**Emerging Market Securities**

The Fund may invest in emerging market or developing countries, which are countries that major international financial institutions generally consider to be less economically mature than developed nations (such as the United States or most nations in Western Europe). Emerging market or developing countries may be more likely to experience political turmoil or rapid changes in economic

**11**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

conditions than more developed countries, and the financial condition of issuers in emerging market or developing countries may be more precarious than in other countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging markets countries. In addition, due to jurisdictional limitations, U.S. authorities (e.g., SEC and the U.S. Department of Justice) may be limited in their ability to enforce regulatory or legal obligations in emerging market countries. In addition, emerging market securities generally are less liquid and subject to wider price and currency fluctuations than securities issued in more developed countries. These characteristics result in greater risk of price volatility in emerging market or developing countries, which may be heightened by currency fluctuations relative to the U.S. dollar.

**REITs and Foreign Real Estate Companies**

Investing in REITs and foreign real estate companies exposes investors to the risks of owning real estate directly, as well as to risks that relate specifically to the way in which REITs and foreign real estate companies are organized and operated. REITs and foreign real estate companies generally invest directly in real estate, in mortgages or in some combination of the two. Operating REITs and foreign real estate companies requires specialized management skills and the Fund indirectly bears management expenses along with the direct expenses of the Fund. Individual REITs and foreign real estate companies may own a limited number of properties and may concentrate in a particular region or property type. REITs may also be subject to heavy cash flow dependency, default by borrowers and self-liquidation.

REITs also must satisfy specific requirements of the Code in order to qualify for tax-free pass-through income. The failure of a company to qualify as a REIT could have adverse consequences for the Fund, including significantly reducing the return to the Fund on its investment in such company. Foreign real estate companies may be subject to laws, rules and regulations governing those entities and their failure to comply with those laws, rules and regulations could negatively impact the performance of those entities. In addition, REITs and foreign real estate companies, like mutual funds, have expenses, including management and administration fees, that are paid by their shareholders. As a result, shareholders will directly bear the expenses of their investment in the Fund and indirectly bear the expenses of the Fund's investments when the Fund invests in REITs and foreign real estate companies.

**Foreign Currency Forward Exchange Contracts**

In connection with its investments in foreign securities, the Fund also may enter into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Foreign currency forward exchange contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, the Fund may use cross currency hedging or proxy hedging with respect to currencies in which the Fund has or expects to have portfolio or currency exposure. Cross currency and proxy hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies.

Investments in foreign currency forward exchange contracts may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. The Adviser's success in these transactions will depend principally on its ability to predict accurately the future exchange rates between foreign currencies and the U.S. dollar. Foreign currency forward exchange contracts may be used for non-hedging purposes in seeking to meet the Fund's investment objective, such as when the Adviser anticipates that particular non-U.S. currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Fund's investment portfolio. Investing in foreign currency forward exchange contracts for purposes of gaining from projected changes in exchange rates, as opposed to hedging currency risks applicable to the Fund's holdings, further increases the Fund's exposure to foreign securities losses. There is no assurance that the Adviser's use of currency derivatives will benefit the Fund or that they will be, or can be, used at appropriate times.

**Derivatives**

The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivative instruments used by the Fund will be counted toward the Fund's exposure in the types of securities listed herein to the extent they have economic characteristics similar to such securities. A derivative is a financial instrument whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid 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

**12**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable SEC rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objective, there is no assurance that the use of derivatives will achieve this result.

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

*Futures.* A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. While the value of a futures contract tends to increase or decrease in tandem with the value of the underlying instrument, differences between the futures market and the market for the underlying asset may result in an imperfect correlation. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures contract.

*Options.* If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument, foreign currency or contract, such as a swap agreement or futures contract, on the underlying instrument or foreign currency at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument, swap, foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

Investments in foreign currency options may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. There is a risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. The value of a foreign currency option is dependent upon the value of the underlying foreign currency relative to the U.S. dollar or other applicable foreign currency. The price of the option may vary with changes in the value of either or both currencies and has no relationship to the investment merits of a foreign security. Options on foreign currencies are affected by all of those factors that influence foreign exchange rates and foreign investment generally. Unanticipated changes in currency prices may result in losses to the Fund and poorer overall performance for the Fund than if it had not entered into such contracts. Options on foreign currencies are traded primarily in the OTC market, but may also be traded on U.S. and foreign exchanges.

Foreign currency options contracts may be used for hedging purposes or non-hedging purposes in pursuing the Fund's investment objective, such as when the Adviser anticipates that particular non-U.S. currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Fund's investment portfolio. Investing in foreign currencies for purposes of gaining from projected changes in exchange rates, as opposed to only hedging currency risks applicable to the Fund's holdings, further increases the Fund's exposure to foreign securities losses. There is no assurance that the Adviser's use of currency derivatives will benefit the Fund or that they will be, or can be, used at appropriate times.

*Swaps.* The Fund may enter into OTC swap contracts or cleared swap transactions. An OTC swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Typically swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each party. Cleared swap transactions may help reduce counterparty credit risk. In a cleared swap, the Fund's ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial institution. OTC swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty.

**13**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

Certain swaps have begun trading on exchanges called swap execution facilities. Exchange trading is expected to increase liquidity of swaps trading. Both OTC and cleared swaps could result in losses if interest rates, foreign currency exchange rates or other factors are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments require the clearing and exchange trading of certain standardized swap transactions. Mandatory exchange-trading and clearing is occurring on a phased-in basis. The Fund may pay fees or incur costs each time it enters into, amends or terminates a swap agreement.

*Structured Investments.* The Fund also may invest a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Fund will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Fund is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Fund's illiquidity to the extent that the Fund, at a particular point in time, may be unable to find qualified buyers for these securities.

**Mid Cap Companies Risk**

Investments in mid cap companies may involve greater risks than investments in larger, more established companies. The securities issued by mid cap companies may be less liquid and such companies may have more limited markets, financial resources and product lines and may lack the depth of management of larger companies.

**Liquidity**

The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. Illiquidity can be caused by, among other things, a drop in overall market trading volume, an inability to find a willing buyer, or legal restrictions on the securities' resale. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

**Private Placements and Restricted Securities**

The Fund's investments may include privately placed securities, which are subject to resale restrictions. These securities could have the effect of increasing the level of Fund illiquidity to the extent the Fund may be unable to sell or transfer these securities due to restrictions on transfers or on the ability to find buyers interested in purchasing the securities. Additionally, the market for certain investments deemed liquid at the time of purchase may become illiquid under adverse market or economic conditions. The illiquidity of the market, as well as the lack of publicly available information regarding these securities, may also adversely affect the ability to arrive at a fair value for certain securities at certain times and could make it difficult for the Fund to sell certain securities. If the Fund is forced to sell an illiquid security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

**Special Purpose Acquisition Companies**

A special purpose acquisition company ("SPAC") is a publicly traded company that raises investment capital for the purpose of acquiring or merging with an existing company. Typically, the acquisition target is an existing privately held company that wants to trade publicly, which it accomplishes through a combination with a SPAC rather than by conducting a traditional initial public offering ("IPO"). SPACs and similar entities are blank check companies and do not have any operating history or ongoing business other than seeking acquisitions. The long term value of a SPAC's securities is particularly dependent on the ability of the SPAC's management to identify a merger target and complete an acquisition.

An investment in a SPAC is subject to the risks that any proposed acquisition or merger may not obtain the requisite approval of SPAC shareholders, may require governmental or other approvals that it fails to obtain or that an acquisition or merger, once effected, may prove unsuccessful and lose value. In addition, among other conflicts of interest, the economic interests of the management, directors, officers and related parties of a SPAC can differ from the economic interests of public shareholders, which may lead to conflicts as they evaluate, negotiate and recommend business combination transactions to shareholders. This risk may become more acute as the deadline for the completion of a business combination nears or in the event that attractive acquisition or merger targets become scarce.

An investment in a SPAC is also subject to the risk that a significant portion of the funds raised by the SPAC may be expended during the search for a target acquisition or merger. The value of investments in SPACs may be highly volatile and may depreciate

**14**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

over time. In addition, investments in SPACs may be subject to the same risks as investing in any initial public offering, including the risks associated with companies that have little operating history as public companies, including unseasoned trading, small number of shares available for trading and limited information about the issuer. In addition, the market for IPO issuers may be volatile, and share prices of newly-public companies have fluctuated significantly over short periods of time. Although some IPOs may produce high returns, such returns are not typical and may not be sustainable. Certain investments in SPACs are privately placed securities and are also subject to the risks of such securities.

**Information Technology Sector Risk**

To the extent the Fund invests significantly in the information technology sector, the value of Fund shares may be particularly impacted by events that adversely affect the information technology sector, such as rapid changes in technology product cycles, competition for the services of qualified personnel and government regulation. The products of information technology companies may face product obsolescence due to rapid technological developments and frequent new product introduction and unpredictable changes in growth rates. Companies in the information technology sector also can be heavily dependent on patent protection and the expiration of patents may adversely affect the profitability of these companies. As a result, the value of shares may fluctuate more than that of a fund that does not invest significantly in companies in the technology sector.

**Large Shareholder Transactions Risk**

The Fund may experience adverse effects when certain shareholders purchase or redeem large amounts of shares of the Fund. Such larger than normal redemptions may cause the Fund to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. Similarly, large Fund share purchases may adversely affect the Fund's performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would. These transactions may also accelerate the realization of taxable income to shareholders if such sales of investments resulted in gains, and may also increase transaction costs. In addition, a large redemption could result in the Fund's current expenses being allocated over a smaller asset base, leading to an increase in the Fund's expense ratio. Although large shareholder transactions may be more frequent under certain circumstances, the Fund is generally subject to the risk that shareholders can purchase or redeem a significant percentage of Fund shares at any time.

**Investment Discretion**

In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments it buys, holds or sells on a day-to-day basis, and which trading strategies it uses. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

**Temporary Defensive Investments**

When the Adviser believes that changes in market, economic, political or other conditions warrant, the Fund may invest without limit in cash, cash equivalents or other fixed-income securities for temporary defensive purposes that may be inconsistent with the Fund's principal investment strategies. If the Adviser incorrectly predicts the effects of these changes, such defensive investments may adversely affect the Fund's performance and the Fund may not achieve its investment objective.

**15**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management

Adviser

Morgan Stanley Investment Management Inc., with principal offices at 522 Fifth Avenue, New York, NY 10036, conducts a worldwide portfolio management business and provides a broad range of portfolio management services to customers in the United States and abroad. Morgan Stanley (NYSE: "MS") is the parent of the Adviser, which is the parent of the Distributor. Morgan Stanley is a preeminent global financial services firm engaged in securities trading and brokerage activities, as well as providing investment banking, research and analysis, financing and financial advisory services. As of December 31, 2022, the Adviser, together with its affiliated asset management companies, had approximately $1.3 trillion in assets under management or supervision.

A discussion regarding the basis for the Board of Trustees' approval of the investment advisory agreement is available in the Fund's Annual Report to Shareholders for the fiscal year ended September 30, 2022.

Advisory Fees

For the fiscal year ended September 30, 2022, the Adviser received a fee for advisory services (net of fee waivers, if applicable) equal to 0.50% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund, if necessary, if such fees would cause the total annual operating expenses of the Fund to exceed 0.80% for Class I, 1.15% for Class A, 1.65% for Class L, 1.90% for Class C and 0.73% for Class R6. In determining the actual amount of fee waiver and/or expense reimbursement for the Fund, if any, the Adviser excludes from total annual operating expenses, acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation). The fee waivers and/or expense reimbursements for the Fund will continue for at least one year from the date of this Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. The Adviser may make additional voluntary fee waivers and/or expense reimbursements. The Adviser may discontinue these voluntary fee waivers and/or expense reimbursements at any time in the future.

The Fund's annual operating expenses may vary throughout the period and from year to year. The Fund's actual expenses may be different than the expenses listed in the Fund's fee and expense table based upon the extent and amount of a fee waiver and/or expense reimbursement.

Portfolio Management

The Fund is managed by members of Counterpoint Global. Counterpoint Global consists of portfolio managers and analysts. Current members of Counterpoint Global who are jointly and primarily responsible for the day-to-day management of the Fund are Dennis P. Lynch, Sam G. Chainani, Jason C. Yeung, Armistead B. Nash, David S. Cohen and Alexander T. Norton.

Mr. Lynch has been associated with the Adviser in an investment management capacity since 1998. Mr. Chainani has been associated with the Adviser in an investment management capacity since 1996. Mr. Yeung has been associated with the Adviser in an investment management capacity since 2002. Mr. Nash has been associated with the Adviser in an investment management capacity since 2002. Mr. Cohen has been associated with the Adviser in an investment management capacity since 1993. Mr. Norton has been associated with the Adviser in an investment management capacity since 2000.

Mr. Lynch is the lead portfolio manager of the Fund. Messrs. Chainani, Yeung, Nash, Cohen and Norton are co-portfolio managers. Counterpoint Global members collaborate to manage the assets of the Fund.

**Additional Information**

The Fund's SAI provides additional information about the portfolio managers' compensation structure, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Fund.

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

**16**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information

**Share Class Arrangements**

*The Trust has suspended offering Class L shares of the Fund for sale to all investors. The Class L shareholders of the Fund do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders of the Fund may invest in additional Class L shares through reinvestment of dividends and distributions.*

The Trust currently offers investors Class I, Class A, Class C and Class R6 shares of the Fund. Class I and Class R6 shares are not subject to a sales charge and are not subject to a distribution and/or shareholder service (12b-1) fee. In addition, no sub-accounting or other similar fees, or any finder's fee payments are charged or paid on Class R6 shares. The Class L shares of the Fund are currently closed to all investors except in the limited circumstances set forth in this Prospectus. Class C shares are sold at NAV with no initial sales charge, but are subject to a CDSC of 1.00% on sales made within one year after the last day of the month of purchase. Class I and Class R6 shares generally require investments in minimum amounts that are substantially higher than Class A and Class C shares.

**Minimum Investment Amounts**

The minimum initial investment generally is $1 million for Class I shares and $1,000 for Class A and Class C shares of the Fund. The minimum initial investment amount may be waived by the Adviser for the following categories: (1) 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 advisory programs, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or (iv) certain other investment programs that do not charge an asset-based fee, as outlined in an agreement between the Distributor and such financial institution; (2) sales through a Financial Intermediary that has entered into an agreement with the Distributor to offer Fund shares to self-directed investment brokerage accounts, which may or may not charge a transaction fee; (3) qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions); (4) defined contribution, defined benefit and other employer-sponsored employee benefit plans, whether or not qualified under the Code, where such plans purchase Class A, Class C and/or Class I shares through a plan-level or omnibus account sponsored or serviced by a Financial Intermediary that has entered into an agreement with the Fund, the Distributor and/or the Adviser pursuant to which such Class A, Class C and/or Class I shares are available to such plans; (5) certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or its affiliates for their employees or the Trust's Trustees; (6) 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; (7) current or retired Directors or Trustees of the Morgan Stanley Funds (as defined herein), such persons' spouses, and children under the age of 21, and trust accounts for which any of such persons is a beneficiary; (8) certain other registered open-end investment companies whose shares are distributed by the Distributor; (9) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser; (10) the reinvestment of dividends from Class A, Class C or Class I shares of the Fund in additional shares of the same class of such Fund; or (11) certain other institutional investors based on assets under management or other considerations at the discretion of the Adviser. The Fund no longer accepts direct purchases of Class C shares by accounts for which no broker-dealer or other Financial Intermediary is specified. Any direct purchase received by the Fund's transfer agent for Class C shares for such accounts will automatically be invested in Class A shares of the Fund.

Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Each Financial Intermediary may also have its own rules about minimum initial investment amounts, minimum account balances, share transactions and limits on the number of share transactions you are permitted to make in a given time period. When purchasing shares through a Financial Intermediary, you may not benefit from certain policies and procedures of the Fund as your eligibility may be dependent upon the policies and procedures of your Financial Intermediary, including those regarding reductions of sales charges. Please consult your Financial Intermediary for more information.

Class R6 shares are offered only to eligible investors meeting certain minimum investment requirements. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Code and in each case subject to the discretion of the Adviser. Initial omnibus trades of $5 million or more shall be accepted from certain platforms, including (i) banks and trust companies; (ii) insurance companies; and (iii) registered investment advisory firms. The $5 million minimum initial investment amount may be waived for Fund shares purchased by or through: (1) certain registered open-end investment companies whose shares are distributed by the Distributor; or (2) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.

If the value of your account falls below the applicable minimum initial investment amount for a class of shares of the Fund as a result of share redemptions or you no longer meet one of the waiver criteria set forth above, your account may be subject to involuntary

**17**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

conversion or involuntary redemption, as applicable. You will be notified prior to any such conversions or redemptions. No CDSC will be imposed on any involuntary conversion or involuntary redemption.

The Adviser, in its sole discretion, may waive a minimum initial investment amount in certain cases.

**Distribution of Fund Shares**

Morgan Stanley Distribution, Inc. is the exclusive distributor of shares of the Fund. The Distributor receives no compensation from the Fund for distributing Class I and Class R6 shares of the Fund. The Trust has adopted a Shareholder Services Plan with respect to the Class A shares of the Fund and a Distribution and Shareholder Services Plan with respect to the Class L and Class C shares of the Fund (the "Plans") pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act"). Under the Plans, the Fund pays the Distributor (i) a shareholder services fee of up to 0.25% of the average daily net assets of each of the Class A shares, Class L shares and Class C shares on an annualized basis and (ii) a distribution fee of up to 0.50% of the average daily net assets of Class L shares on an annualized basis and up to 0.75% of the average daily net assets of Class C shares on an annualized basis.

The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares. Such fees relate solely to the Class A, Class L and Class C shares and will reduce the net investment income and total return of the Class A, Class L and Class C shares, respectively. Because the fees are paid out of the Fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

The Adviser and/or Distributor may pay compensation to Financial Intermediaries in connection with the sale, distribution, marketing and retention of the Fund's shares and/or shareholder servicing. Such compensation may be significant in amount and the prospect of receiving any such additional compensation may provide affiliated or unaffiliated Financial Intermediaries with an incentive to favor sales of shares of the Fund over other investment options. Any such payments will not change the NAV or the price of the Fund's shares. For more information, please see the Fund's SAI.

**About Net Asset Value**

The NAV of a class of shares of the Fund is determined by dividing the total of the value of the Fund's investments and other assets attributable to the class, less any liabilities attributable to the class, by the total number of outstanding shares of that class of the Fund. In making this calculation, the Fund generally values its portfolio securities and other assets at market price. When no market quotations are readily available for a security or other asset, including circumstances under which the Adviser determines that a market quotation is not accurate, fair value for the security or other asset will be determined in good faith using methods approved by the Trust's Board of Trustees.

In addition, with respect to securities that primarily are listed on foreign exchanges, when an event occurs after the close of such exchanges that is likely to have changed the value of the securities (e.g., a percentage change in value of one or more U.S. securities indices in excess of specified thresholds), such securities will be valued at their fair value, as determined under procedures approved by the Trust's Board of Trustees. Securities also may be fair valued in the event of a significant development affecting a country or region or an issuer-specific development that is likely to have changed the value of the security. In these cases, the Fund's NAV will reflect certain portfolio securities' fair value rather than their market price. To the extent the Fund invests in open-end management companies (other than ETFs) that are registered under the 1940 Act, the Fund's NAV is calculated based in relevant part upon the NAV of such funds. The prospectuses for such funds explain the circumstances under which they will use fair value pricing and its effects.

Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security or other asset is materially different than the value that could be realized upon the sale of that security or other asset. With respect to securities that are primarily listed on foreign exchanges, the values of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. The NAV of the Fund (excluding any applicable sales charges) is based on the value of the Fund's portfolio securities or other assets. Although the assets of each class are invested in the same portfolio of securities or other assets, the NAV of each class will differ because the classes have different class specific expenses.

The Fund relies on various sources to calculate its NAV. The ability of the Fund's provider of administrative services to calculate the NAV per share of the Fund is subject to operational risks associated with processing or human errors, systems or technology failures, cyber attacks and errors caused by third party service providers, data sources, or trading counterparties. Such failures may result in delays in calculating the Fund's NAV and/or the inability to calculate NAV over extended periods. The Fund may be unable to recover any losses associated with such failures. In addition, if the third party service providers and/or data sources upon which the Fund directly or indirectly relies to calculate its NAV or price individual securities are unavailable or otherwise unable to calculate the NAV correctly, it may be necessary for alternative procedures to be utilized to price the securities at the time of determining the Fund's NAV.

**18**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

The Fund's NAV per share is subject to various investment and other risks. Please refer to the "Additional Information About the Fund's Investment Strategies and Related Risks" and "The Fund's Investments and Strategies" sections of the Prospectus and SAI, respectively, for more information regarding risks associated with an investment in the Fund.

**Pricing of Fund Shares**

You may buy or sell (redeem) shares of the Fund at the NAV next determined for the class after receipt of your order in good order, plus any applicable sales charge. The Trust determines the NAV for the Fund as of the close of the NYSE (normally 4:00 p.m. Eastern time) on each day that the NYSE is open for business (the "Pricing Time"). Shares generally will not be priced on days that the NYSE is closed. If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the Fund reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate its NAV as of, the normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. The Fund may elect to remain open and price its shares on days when the NYSE is closed but the primary securities markets on which the Fund's securities trade remain open. Trading of securities that are primarily listed on foreign exchanges may take place on weekends and other days when the Fund does not price its shares. Therefore, to the extent, if any, that the Fund invests in securities primarily listed on foreign exchanges, the value of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares.

**Portfolio Holdings**

A description of the Trust's policies and procedures with respect to the disclosure of the Fund's portfolio securities is available in the Trust's SAI.

**How To Purchase Fund Shares**

You may purchase shares of the Fund on each day that the Fund is open for business by contacting your Financial Intermediary or directly from the Fund.

*Purchasing Shares Through a Financial Intermediary*

You may open a new account and purchase shares of the Fund through a Financial Intermediary. The Financial Intermediary will assist you with the procedures to invest in shares of the Fund. Investors purchasing or selling shares of the Fund through a Financial Intermediary, including Morgan Stanley Wealth Management, may be charged transaction-based or other fees by the Financial Intermediary for its services. If you are purchasing shares of the Fund through a Financial Intermediary, please consult your Financial Intermediary for more information regarding any such fees and for purchase instructions.

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

The availability of sales charge waivers and discounts may depend on whether you purchase Fund shares directly from the Fund (or the Distributor) or a Financial Intermediary. More information regarding sales charge discounts and waivers is summarized below. The Fund's sales charge waivers (and discounts) disclosed in this Prospectus are available for qualifying purchases made directly from the Fund (or the Distributor) and are generally available through Financial Intermediaries. The sales charge waivers (and discounts) available through certain other Financial Intermediaries are set forth in Appendix A to this Prospectus (Intermediary-Specific Sales Charge Waivers and Discounts), which may differ from those available for purchases made directly from the Fund (or the Distributor). Please contact your Financial Intermediary regarding applicable sales charge waivers (and discounts) and for information regarding the Financial Intermediary's related policies and procedures.

With respect to sales through Financial Intermediaries, no offers or sales of Fund shares may be made in any foreign jurisdiction, except with the consent of the Distributor.

*Purchasing Shares Directly From the Fund*

Initial Purchase

You may open a new account, subject to acceptance by the Fund, and purchase shares of the Fund by completing and signing a New Account Application provided by SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), the Fund's transfer agent, or Eaton Vance Management, the Fund's co-transfer agent, which you can obtain by calling Morgan Stanley Shareholder Services at 1-800-869-6397 and mailing it to Morgan Stanley Institutional Fund Trust, c/o SS&C Global Investor and Distribution Solutions, Inc., P.O. Box 219804, Kansas City, MO 64121-9804.

**19**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

After submitting a completed New Account Application to SS&C GIDS, you may wire Federal Funds (monies credited by a Federal Reserve Bank) to State Street Bank and Trust Company (the "Custodian"). You should instruct your bank to send a Federal Funds wire in a specified amount to the Custodian using the following wire instructions:

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111-2101

ABA #011000028

DDA #00575373

Attn: Morgan Stanley Institutional Fund Trust

Subscription Account

Ref: (Fund Name, Account Number, Account Name)

The Fund no longer accepts direct purchases of Class C shares by accounts for which no broker-dealer or other Financial Intermediary is specified (i.e., such purchasers are not eligible investors for Class C shares). Any direct purchase received by the Fund's transfer agent for Class C shares for such accounts will automatically be invested in Class A shares of the Fund. In addition, Class C shares held in an account for which no broker-dealer or other Financial Intermediary is specified and which are not subject to a CDSC will periodically be converted to Class A shares of the Fund.

Additional Investments

You may purchase additional shares of the Fund for your account at any time by contacting your Financial Intermediary or by contacting the Fund directly. For additional 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, signed by the account owner(s), to assure proper crediting to your account. After mailing a "letter of instruction," you may wire Federal Funds by following the instructions under "Initial Purchase."

**Sales Charges Applicable to Purchases of Class A Shares**

Class A shares are subject to a sales charge equal to a maximum of 5.25% calculated as a percentage of the offering price on a single transaction as shown in the table below. For Class A shares sold by the Distributor, the Distributor will receive the sales charge imposed on purchases of Class A shares (or any CDSC paid on redemption) and will retain the full amount of such sales charge. As shown below, the sales charge is reduced for purchases of $50,000 and over.

---

| | | | |
|:---|:---|:---|:---|
|  | **Front-End Sales Charge** | **Front-End Sales Charge** |  |
| **Amount of Single Transaction** | **Percentage of Public Offering Price** | **Approximate Percentage of Net** **Amount Invested** | **Dealer Commission as a** **Percentage of Public Offering** **Price** |
| Less than $50,000 | 5.25% | 5.54% | 4.75% |
| $50,000 but less than $100,000 | 4.50% | 4.71% | 4.00% |
| $100,000 but less than $250,000 | 3.50% | 3.63% | 3.00% |
| $250,000 but less than $500,000 | 2.50% | 2.56% | 2.00% |
| $500,000 but less than $1 million | 2.00% | 2.04% | 1.50% |
| $1 million and over\* | 0.00% | 0.00% | 0.00% |

---

\* The Distributor may pay a commission of up to 1.00% to a Financial Intermediary for purchase amount of $1 million or more.

You may benefit from a reduced sales charge schedule (i.e., breakpoint discount) for purchases of Class A shares of the Fund by combining, in a single transaction, your purchase with purchases of Class A shares of the Fund by the following related accounts ("Related Accounts"):

• A single account (including an individual, a joint account, a trust or fiduciary account).

• 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).

• An UGMA/UTMA (Uniform Gifts to Minors Act/Uniform Transfers to Minors Act) account.

• An individual retirement account ("IRA").

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

Investments of $1 million or more are not subject to an initial sales charge, but are generally subject to a CDSC of 1.00% on sales made within 12 months after purchase. See "—How to Redeem Fund Shares" below for more information about how the CDSC is assessed. The CDSC is assessed on an amount equal to the lesser of the then market value of the shares or the historical cost of the

**20**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

shares (which is the amount actually paid for the shares at the time of original purchase) being redeemed. Accordingly, no sales charge is imposed on increases in NAV above the initial purchase price. In determining whether a CDSC applies to a redemption, it is assumed that the shares being redeemed first are any shares in the shareholder's account that are not subject to a CDSC, followed by shares held the longest in the shareholder's account.

In addition to investments of $1 million or more, purchases of Class A shares are not subject to a front-end sales charge if your account qualifies under one of the following categories:

• 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 advisory programs, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or (iv) certain other investment programs that do not charge an asset- based fee, as outlined in an agreement between the Distributor and such financial institution.

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

• Qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions).

• 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 account sponsored or serviced by a Financial Intermediary that has an agreement with the Fund, the Distributor and/or the Adviser pursuant to which Class A shares are available to such plans without an initial sales charge.

• Certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or its affiliates for their employees or the Trust's Trustees.

• 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.

• 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.

• Certain other registered open-end investment companies, whose shares are distributed by the Distributor.

• Investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.

• The reinvestment of dividends in additional Fund shares.

• The reinvestment of dividends from Class A shares of the Fund in additional Class A shares of the same Fund.

• Current employees of financial intermediaries or their affiliates that have executed a selling agreement with the Distributor, such persons' spouses, children under the age of 21, and trust accounts for which any such person is a beneficiary, as permitted by internal policies of their employer.

• Investment and institutional clients of the Adviser and its affiliates.

• Direct purchases of shares by accounts where no Financial Intermediary is specified.

Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Please consult your Financial Intermediary for more information. For specific information with respect to sales charge waivers and discounts available through a specific Financial Intermediary, please refer to Appendix A attached to this Prospectus.

*Combined Purchase Privilege*

You will have the benefit of a reduced sales charge by combining your purchase of Class A shares of the Fund in a single transaction with your purchase of Class A shares of any other Morgan Stanley Multi-Class Fund (as defined herein) for any Related Account except for purchases of shares of Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income or Ultra-Short Municipal Income Portfolios.

*Right of Accumulation*

Your sales charge may be reduced if you invest $50,000 or more in a single transaction, as calculated below:

(a) the NAV of Class A shares of the Fund being purchased plus the total of the NAV of any Class A, Class L and Class C shares of the Fund held in Related Accounts as of the transaction date,

(b) plus the total of the NAV of Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (including shares of Morgan Stanley Money Market Funds (as defined herein) that you acquired in a prior exchange of Class A, Class

**21**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

L or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund, excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios) held in Related Accounts as of the transaction date.

*Notification*

You must notify your Financial Intermediary (or the Trust's transfer agent, if you purchase shares of the Fund directly through the Trust) at the time a purchase order is placed that the purchase qualifies for a reduced sales charge under any of the privileges discussed above. The reduced sales charge will not be granted if: (i) notification is not furnished at the time of the order; or (ii) a review of the records of your Financial Intermediary or the Trust's transfer agent, SS&C GIDS, or Eaton Vance Management, the Fund's co-transfer agent, does not confirm your represented holdings. Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Please consult your Financial Intermediary 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, it may be necessary at the time of purchase for you to inform your Financial Intermediary (or the Trust's transfer agent, if you purchase shares of the Fund directly through the Trust) of the existence of any Related Accounts in which there are holdings eligible to be aggregated to meet the sales load breakpoint and/or right of accumulation threshold. In order to verify your eligibility, you may be required to provide account statements and/or confirmations regarding your purchases and/or holdings of any Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund (including shares of Morgan Stanley Money Market Funds that you acquired in an exchange from Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund except Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios, if applicable) held in all Related Accounts at your Financial Intermediary, in order to determine whether you have met the 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 you enter into a written "Letter of Intent." A Letter of Intent provides for the purchase of Class A shares of the Fund and Class A shares of other Morgan Stanley Multi-Class Funds, except Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios, within a 13-month period. The initial purchase of Class A shares of the Fund under a Letter of Intent must be at least 5% of the stated investment goal. The Letter of Intent does not preclude the Fund (or any other Morgan Stanley Multi-Class Fund) from discontinuing sales of its shares. To determine the applicable sales charge reduction, you may also include (1) the cost of Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund that were previously purchased at a price including a front-end sales charge during the 90-day period prior to the Distributor receiving the Letter of Intent and (2) the historical cost of shares of any Morgan Stanley Money Market Fund that you acquired in an exchange from Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund purchased during that period at a price including a front-end sales charge. You may also combine purchases and exchanges by any Related Accounts during such 90-day period.

You should retain any records necessary to substantiate historical costs because the Fund, SS&C GIDS and your Financial Intermediary may not maintain this information. You can obtain a Letter of Intent by contacting your Financial Intermediary or by calling toll-free 1-800-869-6397. If you do not achieve the stated investment goal within the 13-month period, you are required to pay the difference between the sales charges otherwise applicable and sales charges actually paid, which may be deducted from your investment. Shares acquired through reinvestment of distributions are not aggregated to achieve the stated investment goal.

Class A shares also are offered at net asset value to investment and institutional clients of the Adviser and its affiliates and direct purchases of shares by accounts where no Financial Intermediary is specified.

**Conversion Features**

A shareholder currently holding Class A shares of the Fund in a fee-based advisory program ("Advisory Program") account, or currently holding Class A shares in a brokerage account but wishing to transfer into an Advisory Program account, may convert such shares to Class I shares of the Fund within the Advisory Program at any time. In addition, a shareholder holding Class C or Class L shares of the Fund through a brokerage account or an Advisory Program account may convert such shares to either Class A or Class I shares of the Fund within an Advisory Program at any time. Such conversions will be on the basis of the relative NAVs, without requiring any investment minimum to be met and without the imposition of any redemption fee or other charge. If a CDSC is applicable to such Class A or Class C shares, then the conversion may not occur until after the shareholder has held the shares for an 18-month or 12-month period, respectively, except that, a CDSC applicable to Class A and Class C shares converted to Class I shares through Traditional IRAs, Roth IRAs, Rollover IRAs, Inherited IRAs, SEP IRAs, SIMPLE IRAs, BASIC Plans, Educational Savings Accounts and Medical Savings Accounts on the Merrill Lynch platform will be waived. With respect to Class A shares, Merrill Lynch will remit to the Distributor the full amount of the CDSC otherwise payable upon sale of such shares. With respect to Class C shares, Merrill Lynch will remit the portion of the payment to be made to the Distributor in an amount equal to the CDSC multiplied by the number of months remaining on the CDSC period divided by the maximum number of months of the CDSC period.

**22**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

In addition, a shareholder currently holding a class of shares of the Fund in a Merrill Lynch Advisory Program account may have such shares converted by Merrill Lynch to an eligible class of shares of the Fund for a Merrill Lynch brokerage account upon the transfer of the shares of the Fund from a Merrill Lynch Advisory Program account to a brokerage account with Merrill Lynch. Such conversions will be on the basis of the relative NAVs and without the imposition of any redemption fee or other charge. The fees and expenses of the new class may be higher than those of the previously held class.

After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund with no initial sales charge, provided that the Fund or the Financial Intermediary through which a shareholder purchased or holds Class C shares has records verifying that the Class C shares have been held for at least eight years. The automatic conversion of Class C shares to Class A shares will not apply to shares held through group retirement plan recordkeeping platforms of certain Financial Intermediaries who hold such shares in an omnibus account and do not track participant level share lot aging to facilitate such a conversion. The eight-year period runs from the last day of the month in which the shares were purchased or, in the case of Class C shares acquired through an exchange, from the last day of the month in which the original Class C shares were purchased; the shares will convert to Class A shares based on their relative NAVs in the month following the eight-year period. At the same time, an equal proportion of Class C shares acquired through automatically reinvested distributions will convert to Class A shares on the same basis.

Furthermore, the Adviser may in its sole discretion permit a conversion of one share class to another share class of the same Fund in certain other circumstances, provided that the Fund's eligibility requirements are met, and subject to the shareholder's consent. Such conversions will be on the basis of the relative NAVs and without the imposition of any redemption fee or other charge.

A conversion of shares of one class directly for shares of another class of the same Fund normally should not be taxable for federal income tax purposes.

Please ask your financial advisor if you are eligible for converting a class of shares pursuant to these conversion features. A conversion feature's availability will be subject to the applicable classes being offered on a Financial Intermediary's platform. Shareholders should carefully review information in this Prospectus regarding share class features, including conversions and exchanges, or contact their financial advisor for more information. You should talk to your tax advisor before making a conversion.

In addition, Class C shares held in an account for which no broker-dealer or other Financial Intermediary is specified and which are not subject to a CDSC will periodically be converted to Class A shares of the same Fund.

**General**

Shares of the Fund may, in the Fund's discretion, be purchased with investment securities (in lieu of or, in conjunction with, cash) acceptable to the Fund. The securities would be accepted by the Fund at their market value in return for Fund shares of equal value, taking into account any applicable sales charge.

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

When you buy Fund shares, the shares (plus any applicable sales charge) will be purchased at the next share price calculated after we receive your purchase order in good order. Purchase orders not received in good order prior to Pricing Time will be executed at the NAV next determined after the purchase order is received in good order. Certain institutional investors and financial institutions have entered into arrangements with the Fund, the Adviser and/or the Distributor pursuant to which they may place orders prior to the Pricing Time, but make payment in Federal Funds for those shares up to three days after the purchase order is placed, depending on the arrangement. We reserve the right to reject any order for the purchase of Fund shares for any reason.

The Trust may suspend the offering of shares, or any class of shares, of the Fund or reject any purchase orders when we think it is in the best interest of the Fund.

Certain patterns of past exchanges and/or purchase or sale transactions involving the Fund may result in the Fund rejecting, limiting or prohibiting, at its sole discretion and without prior notice, additional purchases and/or exchanges and may result in a shareholder's account being closed. Determinations in this regard may be made based on the frequency or dollar amount of previous exchanges or purchase or sale transactions. For more information, please refer to the section of this Prospectus entitled "Frequent Purchases and Redemptions of Shares."

**23**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

**How To Redeem Fund Shares**

You may process a redemption request by contacting your Financial Intermediary. Otherwise, you may redeem shares of the Fund by mail or, if authorized, by telephone, at no charge other than as described below. The value of shares redeemed may be more or less than the purchase price, depending on the NAV at the time of redemption. Shares of the Fund will be redeemed at the NAV next determined after we receive your redemption request in good order and will be reduced by the amount of any applicable CDSC.

*Redemptions by Letter*

Requests should be addressed to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804.

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

(a) A letter of instruction, if required, or a stock assignment specifying the account name, the account number, the name of the Fund and the number of shares or dollar amount to be redeemed, signed by all registered owners of the shares in the exact names in which the shares are registered, and whether you wish to receive the redemption proceeds by check or by wire to the bank account we have on file for you;

(b) Any required signature guarantees if you are requesting payment to anyone other than the registered owner(s) or that payment be sent to any address other than the address of the registered owner(s) or pre-designated bank account; and

(c) Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianship, corporations, pension and profit sharing plans and other organizations.

*Redemptions by Telephone*

You automatically have telephone redemption and exchange privileges unless you indicate otherwise by checking the applicable box on the New Account Application or calling Morgan Stanley Shareholder Services to opt out of such privileges. You may request a redemption of shares of the Fund by calling the Morgan Stanley Shareholder Services at 1-800-869-6397 and requesting that the redemption proceeds be mailed or wired to you. You cannot redeem shares of the Fund by telephone if you hold share certificates for those shares. For your protection when calling the Fund, we will employ reasonable procedures to confirm that instructions communicated over the telephone are genuine. These procedures may include requiring various forms of personal identification (such as name, mailing address, social security number or other tax identification number), tape-recording telephone communications and providing written confirmation of instructions communicated by telephone. If reasonable procedures are employed, neither Morgan Stanley, SS&C GIDS nor the Fund will be liable for following telephone instructions that it reasonably believes to be genuine. Telephone redemptions and exchanges may not be available if you cannot reach Morgan Stanley Shareholder Services by telephone, whether because all telephone lines are busy or for any other reason; in such case, a shareholder would have to use the Fund's other redemption and exchange procedures described in this section. Telephone instructions will be accepted if received by Morgan Stanley Shareholder Services between 9:00 a.m. and 4:00 p.m. Eastern time on any day the NYSE is open for business. During periods of drastic economic or market changes, it is possible that the telephone privileges may be difficult to implement, although this has not been the case with the Fund in the past. To opt out of telephone privileges, please contact the Fund at 1-800-869-6397.

*Systematic Withdrawal Plan*

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's balance (provided the amount is at least $25), on a monthly, quarterly, semi-annual or annual basis, from any fund with a balance of at least $1,000. Each time you add a fund to the plan, you must meet the plan requirements.

Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under certain circumstances. See the Class A and Class C waiver categories listed below.

To sign up for the systematic withdrawal plan, contact your Morgan Stanley Financial Advisor or call toll-free 1-800-869-6397. You may terminate or suspend your plan at any time. Please remember that withdrawals from the plan are sales of shares, not Fund "distributions," and ultimately may exhaust your account balance. The Trust may terminate or revise the plan at any time.

*CDSC Waivers on Class A and Class C Shares*

The CDSC on Class A and Class C shares will be waived in connection with sales of Class A and Class C shares for which no commission or transaction fee was paid by the Distributor or Financial Intermediary at the time of purchase of such shares. In addition, a CDSC, if otherwise applicable, will be waived in the case of:

• 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 the shares are: (i) registered either in your individual name or in the names of you and your spouse as joint tenants with right of survivorship; (ii) registered in the name of a trust of which (a) you are the settlor and that is revocable by you (i.e., a "living trust") or (b) you and your spouse are the settlors and that is revocable by you or your

**24**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

spouse (i.e., a "joint living trust"); or (iii) held in a qualified corporate or self-employed retirement plan, IRA or 403(b) Custodial Account; provided in each case that the sale is requested within one year after your death or initial determination of disability.

• Sales in connection with the following retirement plan "distributions": (i) lump-sum or other distributions from a qualified 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 59½); (ii) required minimum distributions and certain other distributions (such as those following attainment of age 59½) from an IRA or 403(b) Custodial Account; or (iii) a tax-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).

• Sales of shares in connection with the systematic withdrawal plan of up to 12% annually of the value of the Fund from which plan sales are made. The percentage is determined on the date you establish the systematic withdrawal plan and based on the next calculated share price. You may have this CDSC waiver applied in amounts up to 1% per month, 3% per quarter, 6% semi- annually or 12% annually. Shares with no CDSC will be sold first, followed by those with the lowest CDSC. As such, the waiver benefit will be reduced by the amount of your shares that are not subject to a CDSC. If you suspend your participation in the plan, you may later resume plan payments without requiring 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 are eligible for a CDSC waiver, please contact your Financial Intermediary or call toll-free 1-800-869-6397.

*Redemption Proceeds*

The Fund typically expects to pay redemption proceeds to you within two business days following receipt of your redemption request for those payments made to your brokerage account held with a Financial Intermediary. For redemption proceeds that are paid directly to you by the Fund, the Fund typically expects to pay redemption proceeds by check or by wire to you within one business day, following receipt of your redemption request; however, in all cases, it may take up to seven calendar days to pay redemption proceeds.

The Fund typically expects to meet redemption requests by using a combination of sales of securities held by the Fund and/or holdings of cash and cash equivalents. On a less regular basis, the Fund also reserves the right to use borrowings or interfund lending to meet redemption requests, and the Fund may use these methods during both normal and stressed market conditions.

If we determine that it is in the best interest of the Trust or the Fund not to pay redemption proceeds in cash, we may distribute to you securities held by the Fund. If requested, we will pay a portion of your redemption(s) in cash (during any 90 day period) up to the lesser of $250,000 or 1% of the net assets of the Fund at the beginning of such period. If the Fund redeems your shares in-kind, you will bear any market risks associated with the securities paid as redemption proceeds. Such in-kind securities may be illiquid and difficult or impossible for a shareholder to sell at a time and at a price that a shareholder would like. Redemptions paid in such securities generally will give rise to income, gain or loss for income tax purposes in the same manner as redemptions paid in cash. In addition, you may incur brokerage costs and a further gain or loss for income tax purposes when you ultimately sell the securities.

*Reinstatement Privilege*

If you redeem shares, you may reinvest at net asset value all or any portion of the redemption proceeds in the same account and in the same class of shares of the Fund you redeemed from or another Morgan Stanley Multi-Class Fund, provided that the reinvestment occurs within 90 days of the redemption, the privilege has not been used more than once in the prior 12 months, the redeemed shares were subject to a front-end sales charge or CDSC and that you are otherwise eligible to invest in that class. Under these circumstances your account will be credited with any CDSC paid in connection with the redemption. Any CDSC period applicable to the shares you acquire upon reinvestment will run from the date of your original share purchase. For requests for reinvestment sent to the Fund's transfer agent, the request must be in writing. At the time of a reinvestment, you or your Financial Intermediary must notify the Fund or the transfer agent that you are reinvesting redemption proceeds in accordance with this privilege. If you reinvest, your purchase will be at the next determined net asset value following receipt of your request.

**Exchange Privilege**

You may exchange shares of any class of the Fund for the same class of shares of any mutual fund (excluding money market funds) sponsored and advised by the Adviser (each, a "Morgan Stanley Multi-Class Fund"), if available, without the imposition of an exchange fee. Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund even though Class L shares are closed to investors. In addition, you may exchange shares of any class of the Fund for shares of Morgan Stanley California Tax-Free Daily Income Trust, Morgan Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. Government Money Market Trust (each, a "Morgan Stanley Money Market Fund" and, together with the Morgan Stanley Multi-Class Funds, the "Morgan Stanley Funds"), if available, without the imposition of an exchange fee. Because purchases of Class A shares of Morgan Stanley Institutional Fund Trust Ultra-Short Income and Ultra-Short Municipal Income Portfolios are not subject to a sales charge, and purchases of Class A shares of Morgan Stanley Institutional Fund Trust Short Duration Income Portfolio are subject to a reduced sales charge, you may be subject to the payment of a sales charge by your Financial Intermediary, at time of exchange into

**25**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

Class A shares of a Morgan Stanley Fund, based on the amount that you would have owed if you directly purchased Class A shares of that Morgan Stanley Fund (less any sales charge previously paid in connection with shares exchanged for such shares of Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income or Ultra-Short Municipal Income Portfolios, as applicable). Class L shares of the Fund that are exchanged for shares of a Morgan Stanley Money Market Fund 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). Exchanges are effected based on the respective NAVs of the applicable Morgan Stanley Fund (subject to any applicable redemption fee) and in accordance with the eligibility requirements of such Fund. To obtain a prospectus for another Morgan Stanley Fund, contact your Financial Intermediary or call Morgan Stanley Shareholder Services at 1-800-869-6397. Prospectuses are also available on our Internet site at www.morganstanley.com/im. If you purchased Fund shares through a Financial Intermediary, certain Morgan Stanley Funds may be unavailable for exchange. Contact your Financial Intermediary for more information regarding the exchange privilege and to determine which Morgan Stanley Funds are available for exchange.

The current prospectus for each Morgan Stanley Fund describes its investment objective(s), policies, investment minimums and applicable sales charges, and should be read before investing. Since exchanges are available only into continuously offered Morgan Stanley Funds, exchanges are generally not available into Morgan Stanley Funds or classes of Morgan Stanley Funds that are not currently being offered for purchase.

You can process your exchange by contacting your Financial Intermediary. You may also send exchange requests to the Trust's transfer agent, SS&C GIDS, or Eaton Vance Management, the Fund's co-transfer agent, by mail to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804 or by calling 1-800-869-6397.

There are special considerations when you exchange Class A and Class C shares of the Fund that are subject to a CDSC. When determining the length of time you held the Class A or Class C shares, any period (starting at the end of the month) during which you held such shares will be counted. In addition, any period (starting at the end of the month) during which you held (i) Class A or Class C shares of other funds of the Trust; (ii) Class A or Class C shares of a Morgan Stanley Multi-Class Fund; or (iii) shares of a Morgan Stanley Money Market Fund, any of which you acquired in an exchange from such Class A or Class C shares of the Fund, will also be counted; however, if you sell shares of (a) such other fund of the Trust; (b) the Morgan Stanley Multi-Class Fund; or (c) the Morgan Stanley Money Market Fund, before the expiration of the CDSC "holding period," you will be charged the CDSC applicable to such shares.

You will be subject to the same minimum initial investment and account size as an initial purchase. Your exchange price will be the price calculated at the next Pricing Time after the Morgan Stanley Fund receives your exchange order. The Morgan Stanley Fund, in its sole discretion, may waive the minimum initial investment amount in certain cases. For direct accounts, the check writing privilege is not available for Morgan Stanley Money Market Fund shares you acquire in an exchange from a non-money market fund. If you are investing through a financial advisor, check with your advisor regarding the availability of check writing privileges. The Fund may terminate or revise the exchange privilege upon required notice or in certain cases without notice. The Fund reserves the right to reject an exchange order for any reason.

If you exchange shares of 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 Fund shares and the exchange into the other fund is considered a purchase. As a result, you may realize a capital gain or loss. You should review the "Taxes" section and consult your own tax professional about the tax consequences of an exchange.

**Frequent Purchases and Redemptions of Shares**

Frequent purchases and redemptions of shares by Fund shareholders are referred to as "market-timing" or "short-term trading" and may present risks for other shareholders of the Fund, which may include, among other things, diluting the value of the Fund's shares held by long-term shareholders, interfering with the efficient management of the Fund, increasing brokerage and administrative costs, incurring unwanted taxable gains and forcing the Fund to hold excess levels of cash.

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

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

**26**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

The Trust discourages and does not accommodate frequent purchases and redemptions of Fund shares by Fund shareholders and the Trust's Board of Trustees has adopted policies and procedures with respect to such frequent purchases and redemptions.

The Trust's policies with respect to purchases, redemptions and exchanges of Fund shares are described in the "Shareholder Information—How To Purchase Fund Shares," "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares," "Shareholder Information—General," "Shareholder Information—How To Redeem Fund Shares" and "Shareholder Information—Exchange Privilege" sections of this Prospectus. Except as described in each of these sections, and with respect to trades that occur through omnibus accounts at Financial Intermediaries, as described below, the Trust's policies regarding frequent trading of Fund shares are applied uniformly to all shareholders. With respect to trades that occur through omnibus accounts at Financial Intermediaries, such as investment advisers, broker-dealers, transfer agents and third-party administrators, the Trust (i) has requested assurance that such Financial Intermediaries currently selling Fund shares have in place internal policies and procedures reasonably designed to address market-timing concerns and has instructed such Financial Intermediaries to notify the Fund immediately if they are unable to comply with such policies and procedures and (ii) requires all prospective Financial Intermediaries to agree to cooperate in enforcing the Trust's policies (or, upon prior written approval only, a Financial Intermediary's own policies) with respect to frequent purchases, redemptions and exchanges of Fund shares.

With respect to trades that occur through omnibus accounts at Financial Intermediaries, to some extent, the Trust relies on the Financial Intermediary to monitor frequent short-term trading within the Fund by the Financial Intermediary's customers. However, the Fund has entered into agreements with Financial Intermediaries whereby Financial Intermediaries are required to provide certain customer identification and transaction information upon the Fund's request. The Fund may use this information to help identify and prevent market-timing activity in the Fund. There can be no assurance that the Fund will be able to identify or prevent all market-timing activities.

**Taxes**

As with any investment, you should consider how your Fund investment will be taxed. The tax information in this Prospectus is provided as general information. You should consult your own tax professional about the tax consequences of 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, you need to be aware of the possible tax consequences when the Fund makes distributions and when you sell shares, including an exchange to another Morgan Stanley Fund.

*Taxation of Distributions.* Your distributions normally are subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares. A distribution also may be subject to local income tax. Any income dividend distributions and any short-term capital gain distributions are taxable to you as ordinary income. Any long-term capital gain distributions are taxable as long-term capital gains, no matter how long you have owned shares in the Fund.

If certain holding period requirements are met with respect to your shares, a portion of the income dividends you receive may be taxed at the same rates 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, such income will not be considered long-term capital gains for other federal income tax purposes. For example, you will not be permitted to offset income dividends with capital losses. Short term capital gain distributions will continue to be taxed as ordinary income taxes.

If certain holding period requirements are met, corporate shareholders may be entitled to a dividends-received deduction for the portion of dividends they receive which are attributable to dividends received by such portfolios from U.S. corporations.

If you buy shares of the Fund before a distribution, you may be subject to tax on the entire amount of the taxable distribution you receive. Distributions are taxable to you even if they are paid from income or gain earned by the Fund before your investment (and thus were included in the price you paid for your Fund shares).

Investment income received by the Fund from sources within foreign countries may be subject to foreign income taxes.

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

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

The Fund (or its administrative agent) is required to report to the IRS and furnish to Fund shareholders the cost basis information for sale transactions of shares purchased on or after January 1, 2012. Shareholders may elect to have one of several cost basis methods applied to their account when calculating the cost basis of shares sold, including average cost, FIFO ("first-in, first-out") or some

**27**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

other specific identification method. Unless you instruct otherwise, the Fund will use average cost as its default cost basis method, and will treat sales as first coming from shares purchased prior to January 1, 2012. If average cost is used for the first sale of Fund shares covered by these new rules, the shareholder may only use an alternative cost basis method for shares purchased prospectively. Fund shareholders should consult with their tax advisors to determine the best cost basis method for their tax situation.

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

When you open your account, you should provide your social security or tax identification number on your investment application. By providing this information, you will avoid being subject to federal backup withholding at the applicable rate on taxable distributions and redemption proceeds. Any withheld amount would be sent to the IRS as an advance payment of your taxes due on your income for such year.

Shareholders who are not citizens or residents of the United States and certain foreign entities will generally be subject to withholding of U.S. tax of 30% on distributions made by 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 made to certain non-U.S. entities that fail to comply (or be 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 provide additional information to the Fund to enable the Fund to determine whether withholding is required.

Because each investor's tax circumstances are unique and the tax laws may change, you should consult your tax advisor about your investment.

**Dividends and Distributions**

The Fund's policy is to distribute to shareholders substantially all of its net investment income, if any, in the form of an annual dividend and to distribute net realized capital gains, if any, at least annually.

The Fund automatically reinvests all dividends and distributions in additional shares. However, you may elect to receive distributions in cash by giving written notice to the Fund or your Financial Intermediary or by checking the appropriate box in the Distribution Option section on the New Account Application.

For accounts held directly with the Fund's transfer agent for which the shareholder has elected to receive distributions via check, any distribution (dividend or capital gain) under $10.00 is automatically reinvested in additional shares regardless of your elected distribution option.

**Potential Conflicts of Interest**

As a diversified global financial services firm, Morgan Stanley, the parent company of the Adviser, engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley's interests or the interests of its clients may conflict with the interests of the Fund. Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with any new or successor funds, programs, accounts or businesses, the ''Affiliated Investment Accounts'') with a wide variety of investment objectives that in some instances may overlap or conflict with the Fund's investment objectives and present conflicts of interest. In addition, Morgan Stanley may also from time to time create new or successor Affiliated Investment Accounts that may compete with the Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and, in fact, they may not be. Conflicts of interest not described below may also exist.

For more information about conflicts of interest, see the section entitled "Potential Conflicts of Interest" in the SAI.

*Material Nonpublic Information.* It is expected that confidential or material nonpublic information regarding an investment or potential investment opportunity may become available to the Adviser. If such information becomes available, the Adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. Morgan Stanley has established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley. In limited circumstances, however, including for purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, personnel, including personnel of the investment adviser, on one side of an information barrier may have

**28**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

access to information and personnel on the other side of the information barrier through "wall crossings." The Adviser faces conflicts of interest in determining whether to engage in such wall crossings. Information obtained in connection with such wall crossings may limit or restrict the ability of the Adviser to engage in or otherwise effect transactions on behalf of the Fund (including purchasing or selling securities that the Adviser may otherwise have purchased or sold for the Fund in the absence of a wall crossing).

*Investments by Morgan Stanley and its Affiliated Investment Accounts.* In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the Adviser and the Investment team, may have obligations to other clients or investors in Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of the Fund or its shareholders. The Fund's investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a result, the members of an Investment team may face conflicts in the allocation of investment opportunities among the Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the Adviser. Certain Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts. To seek to reduce potential conflicts of interest and to attempt to allocate such investment opportunities in a fair and equitable manner, the Adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the Adviser, including the Fund, fair access to investment opportunities consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the Adviser.

*Payments to Broker-Dealers and Other Financial Intermediaries.* The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of the Fund, to certain Financial Intermediaries (which may include affiliates of the Adviser and Distributor), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Fund and/or shareholder servicing. The prospect of receiving, or the receipt of, additional compensation, as described above, by Financial Intermediaries may provide such Financial Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Fund over other investment options with respect to which these Financial Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Fund or the amount that the Fund receives to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any disclosures provided by Financial Intermediaries as to their compensation. In addition, in certain circumstances, the Adviser restricts, limits or reduces the amount of the Fund's investment, or restricts the type of governance or voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.

*Morgan Stanley Trading and Principal Investing Activities.* Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for the Fund's holdings, although these activities could have an adverse impact on the value of one or more of the Fund's investments, or could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and potentially adverse to, that of the Fund.

*Morgan Stanley's Investment Banking and Other Commercial Activities.* Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment funds that may compete with the Fund and with respect to investments that the Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve an action of a different timing or nature than the action taken, by the Fund. Morgan Stanley may give advice and provide recommendations to persons competing with the Fund and/or any of the Fund's investments that are contrary to the Fund's best interests and/or the best interests of any of its investments. Morgan Stanley's activities on behalf of its clients (such as engagements as an underwriter or placement agent) may restrict or otherwise limit investment opportunities that may otherwise be available to the Fund.

Morgan Stanley may be engaged to act as a financial advisor to a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in connection with such transactions. Morgan Stanley's compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, the Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to a merger or an acquisition.

**29**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

Consolidated Financial Highlights

The consolidated financial highlights tables that follow are intended to help you understand the financial performance of the Class I, Class A, Class L, Class C and Class R6 shares of the Fund for the past five years. Certain information reflects financial results for a single Fund share. The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).

The ratio of expenses to average net assets listed in the tables below for each class of shares of the Fund are based on the average net assets of the Fund for each of the periods listed in the tables. To the extent that the Fund's average net assets decrease over the Fund's next fiscal year, such expense ratios can be expected to increase, potentially significantly, because certain fixed costs will be spread over a smaller amount of assets.

The information below has been derived from the consolidated financial statements audited by Ernst & Young LLP, the Fund's independent registered public accounting firm. Ernst & Young LLP's report, along with the Fund's consolidated financial statements, are incorporated by reference into the Fund's SAI. The Annual Report to Shareholders (which includes the Fund's consolidated financial statements) and SAI are available at no cost from the Trust at the toll-free number noted on the back cover to this Prospectus.

**30**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Discovery Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class I** | **Class I** | **Class I** | **Class I** | **Class I** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020<sup>(1)</sup>**  | **2019<sup>(1)</sup>**  | **2018<sup>(1)</sup>**  |
| **Net Asset Value, Beginning of Period** | $42.00<br>| $38.19<br>| $19.92<br>| $23.30<br>| $22.30<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Loss<sup>(2)</sup>  | (0.14)<br>| (0.24)<br>| (0.15)<br>| (0.05)<br>| (0.07)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (19.69)<br>| 7.35<br>| 20.73<br>| 0.35<br>| 7.99<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (19.83)<br>| 7.11<br>| 20.58<br>| 0.30<br>| 7.92<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (10.11)<br>| (3.30)<br>| (2.31)<br>| (3.68)<br>| (6.92)<br>|
| **Net Asset Value, End of Period** | $12.06<br>| $42.00<br>| $38.19<br>| $19.92<br>| $23.30<br>|
| **Total Return<sup>(3)</sup>**  | (61.26)%<br>| 18.36<br> %<br>| 115.34<br> %<br>| 4.71<br> %<br>| 47.85<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $416283<br>| $1719520<br>| $1282828<br>| $374736<br>| $304179<br>|
| Ratio of Expenses Before Expense Limitation | 0.77<br> %<br>| N/A<br>| 0.74<br> %<br>| 0.74<br> %<br>| 0.72<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.77<br> %<br> <sup>(4)</sup> <br>| 0.72<br> %<br> <sup>(4)</sup> <br>| 0.73<br> %<br> <sup>(4)</sup> <br>| 0.73<br> %<br> <sup>(4)</sup> <br>| 0.71<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 0.72<br> %<br> <sup>(4)</sup> <br>| 0.73<br> %<br> <sup>(4)</sup> <br>| 0.73<br> %<br> <sup>(4)</sup> <br>| 0.71<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Net Investment Loss | (0.58)%<br> <sup>(4)</sup> <br>| (0.54)%<br> <sup>(4)</sup> <br>| (0.57)%<br> <sup>(4)</sup> <br>| (0.27)%<br> <sup>(4)</sup> <br>| (0.35)%<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.01<br> %<br>| 0.01<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 67<br> %<br>| 115<br> %<br>| 65<br> %<br>| 116<br> %<br>| 86<br> %<br>|

---

(1) Not consolidated.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

**31**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Discovery Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class A** | **Class A** | **Class A** | **Class A** | **Class A** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020<sup>(1)</sup>**  | **2019<sup>(1)</sup>**  | **2018<sup>(1)</sup>**  |
| **Net Asset Value, Beginning of Period** | $32.12<br>| $29.92<br>| $16.12<br>| $19.71<br>| $19.92<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Loss<sup>(2)</sup>  | (0.14)<br>| (0.27)<br>| (0.17)<br>| (0.09)<br>| (0.11)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (13.66)<br>| 5.77<br>| 16.28<br>| 0.18<br>| 6.82<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (13.80)<br>| 5.50<br>| 16.11<br>| 0.09<br>| 6.71<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (10.11)<br>| (3.30)<br>| (2.31)<br>| (3.68)<br>| (6.92)<br>|
| **Net Asset Value, End of Period** | $8.21<br>| $32.12<br>| $29.92<br>| $16.12<br>| $19.71<br>|
| **Total Return<sup>(3)</sup>**  | (61.35)%<br>| 18.02<br> %<br>| 114.87<br> %<br>| 4.40<br> %<br>| 47.36<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $527685<br>| $1944335<br>| $1403660<br>| $403285<br>| $304921<br>|
| Ratio of Expenses Before Expense Limitation | 1.03<br> %<br>| N/A<br>| 1.01<br> %<br>| 1.00<br> %<br>| 1.02<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.03<br> %<br> <sup>(4)</sup> <br>| 1.00<br> %<br> <sup>(4)</sup> <br>| 1.00<br> %<br> <sup>(4)</sup> <br>| 0.99<br> %<br> <sup>(4)</sup> <br>| 1.01<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 1.00<br> %<br> <sup>(4)</sup> <br>| 1.00<br> %<br> <sup>(4)</sup> <br>| 0.99<br> %<br> <sup>(4)</sup> <br>| 1.01<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Net Investment Loss | (0.85)%<br> <sup>(4)</sup> <br>| (0.81)%<br> <sup>(4)</sup> <br>| (0.82)%<br> <sup>(4)</sup> <br>| (0.52)%<br> <sup>(4)</sup> <br>| (0.65)%<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.01<br> %<br>| 0.01<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 67<br> %<br>| 115<br> %<br>| 65<br> %<br>| 116<br> %<br>| 86<br> %<br>|

---

(1) Not consolidated.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

**32**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Discovery Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class L** | **Class L** | **Class L** | **Class L** | **Class L** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020<sup>(1)</sup>**  | **2019<sup>(1)</sup>**  | **2018<sup>(1)</sup>**  |
| **Net Asset Value, Beginning of Period** | $27.00<br>| $25.69<br>| $14.21<br>| $17.96<br>| $18.79<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Loss<sup>(2)</sup>  | (0.16)<br>| (0.36)<br>| (0.21)<br>| (0.15)<br>| (0.18)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (10.53)<br>| 4.97<br>| 14.00<br>| 0.08<br>| 6.27<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (10.69)<br>| 4.61<br>| 13.79<br>| (0.07)<br>| 6.09<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (10.11)<br>| (3.30)<br>| (2.31)<br>| (3.68)<br>| (6.92)<br>|
| **Net Asset Value, End of Period** | $6.20<br>| $27.00<br>| $25.69<br>| $14.21<br>| $17.96<br>|
| **Total Return<sup>(3)</sup>**  | (61.52)%<br>| 17.48<br> %<br>| 113.70<br> %<br>| 3.90<br> %<br>| 46.73<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $4704<br>| $13762<br>| $14173<br>| $8124<br>| $9572<br>|
| Ratio of Expenses Before Expense Limitation | 1.51<br> %<br>| N/A<br>| 1.50<br> %<br>| 1.51<br> %<br>| 1.51<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.51<br> %<br> <sup>(4)</sup> <br>| 1.44<br> %<br> <sup>(4)</sup> <br>| 1.49<br> %<br> <sup>(4)</sup> <br>| 1.50<br> %<br> <sup>(4)</sup> <br>| 1.50<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 1.44<br> %<br> <sup>(4)</sup> <br>| 1.49<br> %<br> <sup>(4)</sup> <br>| 1.50<br> %<br> <sup>(4)</sup> <br>| 1.50<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Net Investment Loss | (1.33)%<br> <sup>(4)</sup> <br>| (1.26)%<br> <sup>(4)</sup> <br>| (1.27)%<br> <sup>(4)</sup> <br>| (1.06)%<br> <sup>(4)</sup> <br>| (1.15)%<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.01<br> %<br>| 0.01<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 67<br> %<br>| 115<br> %<br>| 65<br> %<br>| 116<br> %<br>| 86<br> %<br>|

---

(1) Not consolidated.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

**33**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Discovery Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class C** | **Class C** | **Class C** | **Class C** | **Class C** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020<sup>(1)</sup>**  | **2019<sup>(1)</sup>**  | **2018<sup>(1)</sup>**  |
| **Net Asset Value, Beginning of Period** | $30.51<br>| $28.74<br>| $15.67<br>| $19.42<br>| $19.85<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Loss<sup>(2)</sup>  | (0.24)<br>| (0.49)<br>| (0.32)<br>| (0.22)<br>| (0.29)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (12.64)<br>| 5.56<br>| 15.70<br>| 0.15<br>| 6.78<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (12.88)<br>| 5.07<br>| 15.38<br>| (0.07)<br>| 6.49<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (10.11)<br>| (3.30)<br>| (2.31)<br>| (3.68)<br>| (6.92)<br>|
| **Net Asset Value, End of Period** | $7.52<br>| $30.51<br>| $28.74<br>| $15.67<br>| $19.42<br>|
| **Total Return<sup>(3)</sup>**  | (61.66)%<br>| 17.21<br> %<br>| 113.21<br> %<br>| 3.55<br> %<br>| 46.08<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $15363<br>| $59936<br>| $33781<br>| $6518<br>| $536<br>|
| Ratio of Expenses Before Expense Limitation | 1.77<br> %<br>| N/A<br>| 1.75<br> %<br>| 1.84<br> %<br>| 3.69<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.77<br> %<br> <sup>(4)</sup> <br>| 1.71<br> %<br> <sup>(4)</sup> <br>| 1.74<br> %<br> <sup>(4)</sup> <br>| 1.83<br> %<br> <sup>(4)</sup> <br>| 1.89<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 1.71<br> %<br> <sup>(4)</sup> <br>| 1.74<br> %<br> <sup>(4)</sup> <br>| 1.83<br> %<br> <sup>(4)</sup> <br>| 1.89<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Net Investment Loss | (1.59)%<br> <sup>(4)</sup> <br>| (1.52)%<br> <sup>(4)</sup> <br>| (1.59)%<br> <sup>(4)</sup> <br>| (1.32)%<br> <sup>(4)</sup> <br>| (1.58)%<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.01<br> %<br>| 0.01<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 67<br> %<br>| 115<br> %<br>| 65<br> %<br>| 116<br> %<br>| 86<br> %<br>|

---

(1) Not consolidated.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

**34**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Discovery Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020<sup>(2)</sup>**  | **2019<sup>(2)</sup>**  | **2018<sup>(2)</sup>**  |
| **Net Asset Value, Beginning of Period** | $42.67<br>| $38.72<br>| $20.15<br>| $23.50<br>| $22.43<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Loss<sup>(3)</sup>  | (0.10)<br>| (0.19)<br>| (0.12)<br>| (0.04)<br>| (0.06)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (20.12)<br>| 7.44<br>| 21.00<br>| 0.37<br>| 8.05<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (20.22)<br>| 7.25<br>| 20.88<br>| 0.33<br>| 7.99<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (10.11)<br>| (3.30)<br>| (2.31)<br>| (3.68)<br>| (6.92)<br>|
| **Net Asset Value, End of Period** | $12.34<br>| $42.67<br>| $38.72<br>| $20.15<br>| $23.50<br>|
| **Total Return<sup>(4)</sup>**  | (61.20)%<br>| 18.47<br> %<br>| 115.65<br> %<br>| 4.77<br> %<br>| 47.89<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $194806<br>| $547683<br>| $354067<br>| $130653<br>| $93005<br>|
| Ratio of Expenses Before Expense Limitation | 0.64<br> %<br>| N/A<br>| 0.64<br> %<br>| 0.64<br> %<br>| 0.66<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.64<br> %<br> <sup>(5)</sup> <br>| 0.61<br> %<br> <sup>(5)</sup> <br>| 0.63<br> %<br> <sup>(5)</sup> <br>| 0.63<br> %<br> <sup>(5)</sup> <br>| 0.65<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 0.61<br> %<br> <sup>(5)</sup> <br>| 0.63<br> %<br> <sup>(5)</sup> <br>| 0.63<br> %<br> <sup>(5)</sup> <br>| 0.65<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Net Investment Loss | (0.45)%<br> <sup>(5)</sup> <br>| (0.42)%<br> <sup>(5)</sup> <br>| (0.44)%<br> <sup>(5)</sup> <br>| (0.18)%<br> <sup>(5)</sup> <br>| (0.30)%<br> <sup>(5)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(6)</sup> <br>| 0.00<br> %<br> <sup>(6)</sup> <br>| 0.01<br> %<br>| 0.01<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 67<br> %<br>| 115<br> %<br>| 65<br> %<br>| 116<br> %<br>| 86<br> %<br>|

---

(1) Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2) Not consolidated.

(3) Per share amount is based on average shares outstanding.

(4) Calculated based on the net asset value as of the last business day of the period.

(5) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6) Amount is less than 0.005%.

**35**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Prospectus \| **Appendix**

Appendix A

**Intermediary-Specific Sales Charge Waivers and Discounts**

The availability of certain sales charge waivers and discounts will depend on whether you purchase your shares directly from the Fund or through a Financial Intermediary. Financial Intermediaries may have different policies and procedures regarding the availability of front-end sales charge waivers or CDSC waivers, which are discussed below. In all instances, it is the purchaser's responsibility to notify the Fund or the purchaser's Financial Intermediary at the time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts. For waivers and discounts not available through a particular Financial Intermediary, shareholders will have to purchase Fund shares directly from the Fund (or the Distributor) or through another Financial Intermediary to receive these waivers or discounts. A Financial Intermediary's administration and implementation of its particular policies with respect to any variations, waivers and/or discounts is neither supervised nor verified by the Fund, the Adviser or the Distributor. The Fund and the Distributor do not provide investment advice or recommendations or any form of tax or legal advice to existing or potential shareholders with respect to investment transactions involving the Fund.

\*\*\*\*\*

**Merrill Lynch**

Shareholders purchasing Fund shares through a Merrill Lynch platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at Merrill Lynch**

• Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan

• Shares purchased by a 529 Plan (does not include 529 Plan units or 529-specific share classes or equivalents)

• Shares purchased through a Merrill Lynch affiliated investment advisory program

• Shares exchanged due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

• Shares purchased by third party investment advisors on behalf of their advisory clients through Merrill Lynch's platform

• Shares of funds purchased through the Merrill Edge Self-Directed platform (if applicable)

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family)

• Shares exchanged from Class C (i.e. level-load) shares of the same fund pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

• Employees and registered representatives of Merrill Lynch or its affiliates and their family members

• Directors or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus

• Eligible shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). Automated transactions (i.e. systematic purchases and withdrawals) and purchases made after shares are automatically sold to pay Merrill Lynch's account maintenance fees are not eligible for reinstatement

**CDSC Waivers on A and C Shares available at Merrill Lynch**

• Death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code

• Shares sold to pay Merrill Lynch fees but only if the transaction is initiated by Merrill Lynch

• Shares acquired through a right of reinstatement

• Shares held in retirement brokerage accounts, that are exchanged for a lower cost share class due to transfer to certain fee based accounts or platforms (applicable to A and C shares only)

**36**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Shares received through an exchange due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

**Front-end Load Discounts Available at Merrill Lynch: Breakpoints, Rights of Accumulation and Letters of Intent** 

• Breakpoints as described in this Prospectus

• Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts as described in the Fund's prospectus will be automatically calculated based on the aggregated holding of fund family assets held by accounts (including 529 program holdings, where applicable) within the purchaser's household at Merrill Lynch. Eligible fund family assets not held at Merrill Lynch may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent (LOI) which allow for breakpoint discounts based on anticipated purchases within a fund family, through Merrill Lynch, over a 13-month period of time (if applicable)

**Morgan Stanley Wealth Management**

Shareholders purchasing Fund shares through a Morgan Stanley Wealth Management transactional brokerage account will be eligible only for the following front-end sales charge waivers with respect to Class A shares, which may differ from and may be more limited than those disclosed elsewhere in this Prospectus or SAI, except that such shareholders will continue to be eligible for front-end sales charge breakpoint discounts as described in the Prospectus.

**Front-end Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management**

• Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or Keogh plans

• Morgan Stanley employee and employee-related accounts according to Morgan Stanley's account linking rules

• Shares purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund

• Shares purchased through a Morgan Stanley self-directed brokerage account

• Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management's share class conversion program

• Shares purchased from the proceeds of redemptions within the same fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge

**Raymond James & Associates, Inc., Raymond James Financial Services, Inc. and each entity's affiliates ("Raymond James")**

Shareholders purchasing fund shares through a Raymond James platform or account, or through an introducing broker-dealer or independent registered investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at Raymond James**

• Shares purchased in an investment advisory program

• Shares purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions

• Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement)

• A shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James

**CDSC Waivers on Classes A and C shares available at Raymond James**

• Death or disability of the shareholder

**37**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the Fund's Prospectus

• Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James

• Shares acquired through a right of reinstatement

**Front-end load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent**

• Breakpoints as described in this Prospectus

• Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor about such assets

• Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets

**Oppenheimer & Co. Inc. ("OPCO")**

Shareholders purchasing Fund shares through an OPCO platform or account are eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at OPCO**

• Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan

• Shares purchased by or through a 529 Plan

• Shares purchased through an OPCO affiliated investment advisory program

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Restatement).

• A shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO

• Employees and registered representatives of OPCO or its affiliates and their family members

• Directors or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus

**CDSC Waivers on A and C Shares available at OPCO**

• Death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the prospectus

• Shares sold to pay OPCO fees but only if the transaction is initiated by OPCO

• Shares acquired through a right of reinstatement

**38**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Front-end load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent**

• Breakpoints as described in this prospectus

• Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

**Janney**

If you purchase Fund shares through a Janney Montgomery Scott LLC ("Janney") brokerage account, you are eligible for the following load waivers (front-end sales charge waivers and CDSC, or back-end sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Prospectus or SAI.

**Front-end Sales Charge Waivers on Class A shares available at Janney**

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family)

• Shares purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e., right of reinstatement)

• Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or Keogh plans

• Shares acquired through a right of reinstatement

• Class C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Janney's policies and procedures

**CDSC Waivers on Class A and C shares available at Janney**

• Shares sold upon the death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Shares purchased in connection with a return of excess contributions from an IRA account

• Shares sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching age 70½ as described in the Fund's Prospectus

• Shares sold to pay Janney fees but only if the transaction is initiated by Janney

• Shares acquired through a right of reinstatement

• Shares exchanged into the same share class of a different fund

**Front-end Sales Charge\* Discounts available at Janney: Breakpoints, Rights of Accumulation and/or Letters of Intent**

• Breakpoints as described in this Prospectus

• Rights of Accumulation (ROA), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Janney. Eligible fund family assets not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets

\*Also referred to as an "initial sales charge."

**39**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Stifel, Nicolaus & Company, Incorporated ("Stifel")**

Effective July 1, 2020, shareholders purchasing Fund shares through a Stifel platform or account or who own shares for which Stifel or an affiliate is the broker-dealer of record are eligible for the following additional sales charge waiver.

**Front-end Sales Load Waiver on Class A Shares at Stifel**

• Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Stifel's policies and procedures. All other sales charge waivers and reductions described elsewhere in the Fund's Prospectus or SAI still apply.

**Robert W. Baird & Co. ("Baird")**

Shareholders purchasing fund shares through a Baird platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.

**Front-End Sales Charge Waivers on A-shares Available at Baird**

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund

• Shares purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird

• Shares purchased using the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same accounts, and (3) redeemed shares were subject to a front-end or deferred sales charge (known as rights of reinstatement)

• A shareholder in the Funds C Shares will have their share converted at net asset value to A shares of the same fund if the shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird

• Employer-sponsored retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs or SAR-SEPs

**CDSC Waivers on A and C shares Available at Baird**

• Shares sold due to death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Shares bought due to returns of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable Internal Revenue Service regulations as described in the Fund's prospectus

• Shares sold to pay Baird fees but only if the transaction is initiated by Baird

• Shares acquired through a right of reinstatement

**Front-End Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of Accumulations**

• Breakpoints as described in this prospectus

• Rights of accumulations which entitles shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Baird. Eligible fund family assets not held at Baird may be included in the rights of accumulations calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent (LOI) allow for breakpoint discounts based on anticipated purchases within a fund family, through Baird, over a 13-month period of time

**Ameriprise Financial**

The following information applies to Class A share purchases if you have an account with or otherwise purchase Fund shares through Ameriprise Financial:

**40**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Effective January 15, 2021, shareholders purchasing Fund shares through an Ameriprise Financial retail brokerage account are eligible for the following front-end sales charge waivers, which may differ from those disclosed elsewhere in this Prospectus or in the SAI.

• Employer-sponsored retirement plans (e.g., 401(k) plans 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not any other fund within the same fund family).

• Shares exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent that this Prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following a shorter holding period, that waiver will apply.

• Employees and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.

• Shares purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor's spouse, advisor's lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor's lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse of a covered family member who is a lineal descendant.

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e. Rights of Reinstatement).

**Edward D. Jones & Co., L.P. ("Edward Jones")**

Effective on or after April 29, 2022, the following information supersedes prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones (also referred to as "shareholders") purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible only for the following sales charge discounts (also referred to as "breakpoints") and waivers, which can differ from discounts and waivers described elsewhere in the mutual fund prospectus or statement of additional information or through another broker-dealer. In all instances, it is the shareholder's responsibility to inform Edward Jones at the time of purchase of any relationship, holdings of Fund shares, or other facts qualifying the purchaser for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they have questions regarding their eligibility for these discounts and waivers.

**Breakpoints**

• Breakpoint pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.

**Rights of Accumulation ("ROA")**

• The applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market funds and any assets held in group retirement plans) of Fund shares held by the shareholder or in an account grouped by Edward Jones with other accounts for the purpose of providing certain pricing considerations ("pricing groups"). If grouping assets as a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for shares purchased with a sales charge.

• The employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.

• ROA is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).

**Letter of Intent ("LOI")**

• Through a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period from the date Edward Jones receives the LOI. The LOI is determined by calculating the higher of cost or market value of qualifying holdings at LOI initiation in combination with the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint discounts. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies to the total amount. The inclusion of eligible fund family assets in the LOI calculation is dependent on the shareholder notifying Edward Jones of such assets at the

**41**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

time of calculation. Purchases made before the LOI is received by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if LOI is not met.

• If the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.

**Sales Charge Waivers**

Sales charges are waived for the following shareholders and in the following situations:

• Associates of Edward Jones and its affiliates and their family members who are in the same pricing group (as determined by Edward Jones under its policies and procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.

• Shares purchased in an Edward Jones fee-based program.

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment.

• Shares purchased from the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are from the sale of shares within 60 days of the purchase, and 2) the sale and purchase are made in the same share class and the same account or the purchase is made in an individual retirement account with proceeds from liquidations in a nonretirement account.

• Shares exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable sales charge as disclosed in the prospectus.

• Exchanges from Class C shares to Class A shares of the same fund, generally, in the 84th month following the anniversary of the purchase date or earlier at the discretion of Edward Jones.

**Contingent Deferred Sales Charge ("CDSC") Waivers**

If the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder is responsible to pay the CDSC except in the following conditions:

• The death or disability of the shareholder.

• Systematic withdrawals with up to 10% per year of the account value.

• Return of excess contributions from an Individual Retirement Account (IRA).

• Shares sold as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the shareholder reaches qualified age based on applicable IRS regulations.

• Shares sold to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.

• Shares exchanged in an Edward Jones fee-based program.

• Shares acquired through NAV reinstatement.

• Shares redeemed at the discretion of Edward Jones for Minimums Balances, as described below.

**Other Important Information Regarding Transactions Through Edward Jones**

**Minimum Purchase Amounts**

• Initial purchase minimum: $250

• Subsequent purchase minimum: none

**Minimum Balances**

• Edward Jones has the right to redeem at its discretion fund holdings with a balance of $250 or less. The following are examples of accounts that are not included in this policy:

○ A fee-based account held on an Edward Jones platform

○ A 529 account held on an Edward Jones platform

○ An account with an active systematic investment plan or LOI

**42**

------

[Back To **Table of Contents**](#TOC_15541)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Exchanging Share Classes**

• At any time it deems necessary, Edward Jones has the authority to exchange at NAV a shareholder's holdings in a fund to Class A shares of the same fund.

**43**

------

[Back To **Table of Contents**](#TOC_15541)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15541)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15541)

Where to Find Additional Information

In addition to this Prospectus, the Fund has an SAI, dated January 27, 2023 (as may be supplemented from time to time), which contains additional, more detailed information about the Trust and the Fund. The SAI is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus.

The Trust publishes Annual and Semi-Annual Reports ("Shareholder Reports") that contain additional information about the Fund's investments. In the Fund's Annual Report to Shareholders, you will find a discussion of the market conditions and the investment strategies that significantly affected the Fund's performance during the last fiscal year. For additional Trust information, including information regarding the investments comprising the Fund, please call the toll-free number below.

You may obtain the SAI and Shareholder Reports without charge by contacting the Trust at the toll-free number below or on our Internet site at: www.morganstanley.com/im. If you purchased shares through a Financial Intermediary, you may also obtain these documents, without charge, by contacting your Financial Intermediary.

Shareholder Reports and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.

Morgan Stanley Institutional Fund Trust

c/o SS&C GIDS.

P.O. Box 219804

Kansas City, MO 64121-9804

For Shareholder Inquiries,

call toll-free 1-800-869-6397.

Prices and Investment Results are available at www.morganstanley.com/im.

The Trust's 1940 Act registration number is 811-03980.© 2023 Morgan Stanley

IFTMCGPRO 01/23

------

![image](pr15647img002.jpg)

Morgan Stanley Institutional Fund Trust

**Dynamic Value Portfolio**

------

**Prospectus** \| January 27, 2023

---

| | |
|:---|:---|
| **Share Class** | **Ticker Symbol** |
| Class I | MAAQX |
| Class A | MAAUX |
| Class C | MAAOX |
| Class R6 | MAADX |

---

![image](pr15647img001.jpg)

The Securities and Exchange Commission ("SEC") and the Commodities Futures Trading Commission have not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

An investment in the Fund is not a bank deposit and is not insured by the Federal Deposit Insurance Corporation or any other government agency. An investment in the Fund involves investment risks, and you may lose money in the Fund.

IFTDYVPRO 01/23

------

**Table of Contents**

---

| | |
|:---|:---|
|  | **Page** |
| [**Fund Summary**](#ref_chapter_2_15647)  | 1 |
| [**Details of the Fund**](#ref_chapter_3_15647)  | 6 |
| [**Additional Information about the Fund's Investment Strategies and Related Risks**](#ref_chapter_4_15647)  | 7 |
| [**Fund Management**](#ref_chapter_5_15647)  | 11 |
| [**Shareholder Information**](#ref_chapter_6_15647)  | 12 |
| [**Financial Highlights**](#ref_chapter_7_15647)  | 25 |
| [**Appendix A**](#ref_chapter_8_15647)  | 30 |

---

------

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Dynamic Value Portfolio

**Investment Objective**

The Dynamic Value Portfolio (the "Fund") seeks capital appreciation.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay fees** **other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below.**

For purchases of Class A shares, you may qualify for a sales charge discount if the cumulative net asset value per share ("NAV") of Class A shares of the Fund being purchased in a single transaction, together with the NAV of any Class A and Class C shares of the Fund already held in Related Accounts (as defined in the section of the Prospectus entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares") as of the date of the transaction as well as Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") and including shares of Morgan Stanley Money Market Funds (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") that you acquired in an exchange of Class A or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios already held in Related Accounts as of the date of the transaction, amounts to $50,000 or more. More information about this combined purchase discount and other discounts is available from your financial intermediary, on page 16 of the Prospectus in the section entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares" and in Appendix A attached to the Prospectus.

Class I shares may be available on brokerage platforms of firms that have agreements with the Fund's principal underwriter permitting such firms to (i) offer Class I shares solely when acting as an agent for the investor and (ii) impose on an investor transacting in Class I shares through such platforms a commission and/or other forms of compensation to the broker. Shares of the Fund are available in other share classes that have different fees and expenses.

**Shareholder Fees** (fees paid directly from your investment)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class C** | **Class R6** |
| Maximum sales charge (load) imposed on purchases (as a percentage of offering price) |  | 5.25% |  |  |
| Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or NAV at redemption) |  | None<sup>1</sup> | 1.00%<sup>2</sup> |  |

---

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class C** | **Class R6** |
| Advisory Fee | 0.35% | 0.35% | 0.35% | 0.35% |
| Distribution and/or Shareholder Service (12b-1) Fee |  | 0.25% | 1.00% |  |
| Other Expenses | 1.16% | 1.58% | 1.42% | 1.14% |
| Total Annual Fund Operating Expenses<sup>3</sup>  | 1.51% | 2.18% | 2.77% | 1.49% |
| Fee Waiver and/or Expense Reimbursement<sup>3</sup>  | 0.96% | 1.28% | 1.12% | 0.99% |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>3</sup>  | 0.55% | 0.90% | 1.65% | 0.50% |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year). After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund. The example for Class C shares reflects the conversion to Class A shares after eight years. Please refer to the section of the Prospectus entitled "Shareholder Information—Conversion Features" for more information. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

**1**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Dynamic Value Portfolio (Con't)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $56 | $383 | $732 | $1719 |
| Class A | $612 | $1054  | $1522 | $2811 |
| Class C | $268  | $753 | $1365  | $2876  |
| Class R6 | $51 | $374 | $719 | $1695 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $56 | $383 | $732 | $1719 |
| Class A | $612 | $1054  | $1522 | $2811 |
| Class C | $168  | $753 | $1365  | $2876  |
| Class R6 | $51 | $374 | $719 | $1695 |

---

---

| | |
|:---|:---|
| 1 | Investments in Class A shares that are not subject to any sales charges at the time of purchase are subject to a contingent deferred sales charge ("CDSC") of 1.00% that will be imposed if you sell your shares within 12 months after purchase, except for certain specific circumstances. See "Shareholder Information—How To Redeem Fund Shares" for further information about the CDSC waiver categories. |

---

2 The Class C CDSC is only applicable if you sell your shares within one year after the last day of the month of purchase. See "Shareholder Information—How To Redeem Fund Shares" for a complete discussion of the CDSC.

---

| | |
|:---|:---|
| 3 | The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.55% for Class I, 0.90% for Class A, 1.65% for Class C and 0.50% for Class R6. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust") acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect Fund performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 125% of the average value of its portfolio.

**Principal Investment Strategies**

The Adviser seeks to achieve the Fund's investment objective by investing primarily in equity securities within the Russell 1000 Index universe. The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. Utilizing the Adviser's assessment of the macroeconomic environment to determine the attractiveness of "Value" stocks overall, the Adviser will construct a portfolio incorporating the most attractively valued Value stocks and the least attractively valued Value stocks ("Anti-Value" stocks) within the Russell 1000 Index universe. Value stocks are those believed by the Adviser to be undervalued in comparison to their peers due to economic, market, company-specific or other factors. Depending on the Adviser's conviction level related to the attractiveness of Value stocks at any point in time, the Fund's exposures may range from long exposures to both Value and Anti-Value stocks (when conviction to Value stocks is low) to a fully invested long position in Value stocks with an additional relative position creating long exposure to Value and short exposure to Anti-Value (when conviction to Value stocks is at its highest). The Fund's exposure to Value and Anti-Value stocks may be obtained through investments in equity securities (such as common stock), total return swaps and other derivative instruments. The Adviser's assessment of the attractiveness of Value is based primarily on the team's analysis of historic valuations, analysis of the macroeconomic backdrop that typically favors value historically, and a determination of investor sentiment and positioning as it relates to Value stocks. Underlying Value and Anti-Value stocks are screened using a multi-factor framework, are weighted to seek to neutralize industry exposures relative to the Russell 1000 Value Index, the Fund's benchmark, and are periodically rebalanced and refreshed based on screening outputs. The Fund's strategy is designed to comprehensively identify the most attractive Value stocks within the Russell 1000 Index universe, neutralized for industry exposures, as well as the periods in time when the Adviser believes these securities have the highest probability of outperforming (or underperforming) their benchmark index.

From time to time, certain amounts of the Fund's investments will be total return swap transactions, the underlying assets of which may be long positions in Value stocks and long or short positions in Anti-Value stocks. The Fund may also invest in futures for cash management purposes. Derivative instruments used by the Fund will be counted towards the Fund's exposure to equity securities within the Russell 1000 Index universe to the extent that they have economic characteristics similar to such securities.

**2**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Dynamic Value Portfolio (Con't)

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Equity Securities.** In general, prices of equity securities are more volatile than those of fixed-income securities. The prices of equity securities fluctuate, and sometimes widely fluctuate, in response to activities specific to the issuer of the security as well as factors unrelated to the fundamental condition of the issuer, including general market, economic , political conditions and public health conditions. During periods when equity securities experience heightened volatility, such as during periods of market, economic or financial uncertainty or distress, the Fund's investments in equity securities may be subject to heightened risks.

• **Value Investing.** Value investing is an investment style. Value stocks are those believed to be undervalued in comparison to their peers due to market, company-specific or other factors. Value stocks can perform differently from the market as a whole and other types of stocks and may fail to increase in price as anticipated or may decrease in price. The Fund may outperform or underperform other funds that invest in similar asset classes but employ different investment styles.

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **Derivatives.** Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument, including market risk, and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, including total return swaps, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin requirements and risks arising from mispricing or valuation complexity and operational and legal risks . Certain derivative transactions, including total return swaps, may give rise to a form of leverage. Total return swaps may effectively add leverage to the Fund's portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap. Leverage magnifies the potential for gain and the risk of loss. As a result of the structure of certain derivatives, adverse changes in, among other things, interest rates, volatility or the value of the underlying instrument can result in losses substantially greater than the amount invested in the derivative itself. Certain derivatives (such as total return swaps or other derivative instruments providing short exposure) have the potential for unlimited loss, regardless of the size of the initial investment. If the Fund has insufficient cash to meet daily variation margin or payment requirements, it may have to sell securities from its portfolio at a time when it may be disadvantageous to do so. Changes in regulation relating to the Fund's use of derivatives and related instruments could potentially limit or impact the Fund's ability to invest in derivatives, limit the fund's ability to employ certain strategies that use derivatives and/or adversely affect the value of derivatives and the Fund's performance.

• **LIBOR Discontinuance or Unavailability Risk.** The London InterBank Offered Rate ("LIBOR") is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. The Financial Conduct Authority (the "FCA"), which is the regulatory authority that oversees financial services firms , financial markets in the U.K. and the administrator of LIBOR, announced that, after the end of 2021, one-week and two-month U.S. Dollar LIBOR and all non-U.S. Dollar LIBOR settings have either ended or are no longer representative of the underlying market they seek to measure. The FCA also announced that the most commonly used U.S. dollar LIBOR settings may continue to be provided on a representative basis until mid-2023 . However, in connection with supervisory guidance from regulators, some regulated entities may no longer enter into most new LIBOR-based contracts . As a result of the foregoing , LIBOR may no longer be available or no longer deemed an appropriate reference rate upon which to determine the interest rate on or impacting certain loans, notes, derivatives and other instruments or investments held by the Fund .

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its

**3**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Dynamic Value Portfolio (Con't)

discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Class I shares' performance for one year and by showing how the Fund's average annual returns for the past one year period and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The performance of the other classes, which is shown in the table below, will differ because the classes have different ongoing fees. The Fund's returns in the table include the maximum applicable sales charge for Class A and Class C and assume you sold your shares at the end of each period (unless otherwise noted). The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15647img003.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 12/31/22 | 15.30% |
| **Low Quarter** | 09/30/22 | -9.13% |

---

**Average Annual Total Returns**

(for the calendar periods ended December 31, 2022)

---

| | | |
|:---|:---|:---|
|  | **Past**<br>**One Year** | **Since Inception** |
| **Class I** (commenced operations on 3/19/2021) | **Class I** (commenced operations on 3/19/2021) | **Class I** (commenced operations on 3/19/2021) |
| Return Before Taxes | 0.82% | 6.36% |
| Return After Taxes on Distributions<sup>1</sup>  | -0.18% | 4.78% |
| Return After Taxes on Distributions and Sale of Fund Shares | 0.68% | 4.30% |
| **Class A** (commenced operations on 3/19/2021) | **Class A** (commenced operations on 3/19/2021) | **Class A** (commenced operations on 3/19/2021) |
| Return Before Taxes | -4.93% | 2.77% |
| **Class C** (commenced operations on 3/19/2021) | **Class C** (commenced operations on 3/19/2021) | **Class C** (commenced operations on 3/19/2021) |
| Return Before Taxes | -1.06% | 5.29% |
| **Class R6** (commenced operations on 3/19/2021) | **Class R6** (commenced operations on 3/19/2021) | **Class R6** (commenced operations on 3/19/2021) |
| Return Before Taxes | 0.73% | 6.31% |
| Russell 1000<sup>®</sup> Value Index (reflects no deduction for fees, expenses or taxes)<sup>2</sup>  | -7.54% | 2.62%<sup>3</sup> |
| Lipper Mid-Cap Value Funds Index (reflects no deduction for taxes)<sup>4</sup>  | -7.59% | 1.80%<sup>3</sup> |

---

1 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

---

| | |
|:---|:---|
| 2 | The Russell 1000<sup>®</sup> Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected and historical growth rates. The Russell 1000<sup>®</sup> Index measures the performance of the largest 1000 U.S. companies representing approximately 98% of the investable U.S. equity market. It is not possible to invest directly in an index. |

---

3 Since Inception reflects the inception date of the Fund.

4 The Lipper Mid-Cap Value Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Mid-Cap Value Funds classification. There are currently 30 funds represented in this Index.

**4**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Dynamic Value Portfolio (Con't)

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Fund's other classes will vary from Class I shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of the Global Multi-Asset team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser or Affiliate** | **Date Began**<br>**Managing Fund** |
| Cyril Moullé-Berteaux | Managing Director | Since Inception |
| Mark A. Bavoso | Managing Director | Since Inception |
| Sergei Parmenov | Managing Director of Morgan Stanley Investment Management (Australia) Pty Limited ("MSIM Australia") | Since Inception |
| Douglas Rentz | Executive Director | Since Inception |

---

In rendering investment advisory services to the Fund, the Adviser uses the portfolio management, research and other resources of MSIM Australia, a foreign (non-U.S.) affiliate of Morgan Stanley Investment Management Inc. that is not registered under the Investment Advisers Act of 1940, as amended, and may provide services to the Fund through this "participating affiliate" arrangement, as that term is used in relief granted by the staff of the SEC allowing U.S. registered investment advisers to use portfolio management or research resources of advisory affiliates subject to the regulatory supervision of the registered investment adviser.

**Purchase and Sale of Fund Shares**

The minimum initial investment generally is $1 million for Class I shares and $1,000 for each of Class A and Class C shares of the Fund. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and in each case subject to the discretion of the Adviser. The minimum initial investment may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business directly from the Fund by mail (c/o SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-800-869-6397) or by contacting an authorized third-party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's "Distributor," Morgan Stanley Distribution, Inc. (each, a "Financial Intermediary"). In addition, you can sell Fund shares at any time by enrolling in a systematic withdrawal plan. If you sell Class A or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Fund shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

**5**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Details of the Fund**

Dynamic Value Portfolio

**Investment Objective**

The Dynamic Value Portfolio seeks capital appreciation.

The Fund's investment objective may be changed by the Trust's Board of Trustees without shareholder approval. If the Fund's investment objective changes, the Fund will notify shareholders and shareholders should consider whether the Fund remains an appropriate investment in light of the change.

**Approach**

The Adviser seeks to achieve the Fund's investment objective by investing primarily in equity securities within the Russell 1000 Index universe. The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. From time to time, certain amounts of the Fund's investments will be total return swap transactions, the underlying assets of which may be long positions in Value stocks and long or short positions in Anti-Value stocks, as described below. The Fund may also invest in futures for cash management purposes. Derivative instruments used by the Fund will be counted towards the Fund's exposure to equity securities within the Russell 1000 Index universe to the extent that they have economic characteristics similar to such securities.

**Process**

Utilizing the Adviser's assessment of the macroeconomic environment to determine the attractiveness of "Value" stocks overall, the Adviser will construct a portfolio incorporating the most attractively valued Value stocks and the least attractively valued Value stocks ("Anti-Value" stocks) within the Russell 1000 Index universe. Value stocks are those believed by the Adviser to be undervalued in comparison to their peers due to economic, market, company-specific or other factors. Depending on the Adviser's conviction level related to the attractiveness of Value stocks at any point in time, the Fund's exposures may range from long exposures to both Value and Anti-Value stocks (when conviction to Value stocks is low) to a fully invested long position in Value stocks with an additional relative position creating long exposure to Value and short exposure to Anti-Value (when conviction to Value stocks is at its highest). The Fund's exposure to Value and Anti-Value stocks may be obtained through investments in equity securities (such as common stock), total return swaps and other derivative instruments. The Adviser's assessment of the attractiveness of Value is based primarily on the team's analysis of historic valuations, analysis of the macroeconomic backdrop that typically favors value historically, and a determination of investor sentiment and positioning as it relates to Value stocks. Underlying Value and Anti-Value stocks are screened using a multi-factor framework, are weighted to seek to neutralize industry exposures relative to the Russell 1000 Value Index, the Fund's benchmark, and are periodically rebalanced and refreshed based on screening outputs. The Fund's strategy is designed to comprehensively identify the most attractive Value stocks within the Russell 1000 Index universe, neutralized for industry exposures, as well as the periods in time when the Adviser believes these securities have the highest probability of outperforming (or underperforming) their benchmark index.

**6**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks

&nbsp;&nbsp;&nbsp; *This section discusses additional information relating to the Fund's investment strategies, other types of investments that the Fund may make and related risk factors. The Fund's investment practices and limitations are also described in more detail in the Statement of Additional Information ("SAI"), which is incorporated by reference and legally is a part of this Prospectus. For details on how to obtain a copy of the SAI and other reports and information, see the back cover of this Prospectus.*<br>

Economies and financial markets worldwide have recently experienced periods of increased volatility, uncertainty, distress, government spending, inflation and disruption to consumer demand, economic output and supply chains. To the extent these conditions continue, the risks associated with an investment in the Fund, including those described below, could be heightened and the Fund's investments (and thus a shareholder's investment in the Fund) may be particularly susceptible to sudden and substantial losses, reduced yield or income or other adverse developments. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time.

**Equity Securities**

Equity securities may include common and preferred stocks, convertible securities and equity-linked securities, real estate investment trusts ("REITs"), rights and warrants to purchase common stocks, depositary receipts, shares of investment companies, limited partnership interests and other specialty securities having equity features. Many factors affect the value of equity securities, including earnings, earnings forecasts, corporate events and factors impacting the issuer's industry and the market generally. The Fund may invest in equity securities that are publicly traded on securities exchanges or over-the-counter ("OTC") or in equity securities that are not publicly traded. Securities that are not publicly traded may be more difficult to value or sell and their value may fluctuate more dramatically than other securities.

A depositary receipt is generally issued by a bank or financial institution and represents the common stock or other equity securities of a foreign company. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts, or to pass through to them any voting rights with respect to the deposited securities.

**Value Investing**

Value investing is an investment style. Value stocks are those believed to be undervalued in comparison to their peers due to market, company-specific or other factors. Value stocks can perform differently from the market as a whole and other types of stocks. Additionally, if an assessment of a company's prospects is wrong, or if the market does not recognize the value of the company, the price of that company's stock may fail to increase as anticipated or may decrease. Different types of stocks tend to shift in and out of favor depending on market and economic conditions, and value-oriented funds may underperform in market cycles when another investment style, such as growth investing, is in favor. The Fund may outperform or underperform other funds that invest in similar asset classes but employ different investment styles.

**Market and Geopolitical Risk**

The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. Price movements, sometimes called volatility, may be greater or less depending on the types of securities the Fund owns and the markets in which the securities trade. Volatility and disruption in financial markets and economies may be sudden and unexpected, expose the Fund to greater risk, including risks associated with reduced market liquidity and fair valuation, and adversely affect the Fund's operations. For example, the Adviser potentially will be prevented from executing investment decisions at an advantageous time or price as a result of any domestic or global market disruptions and reduced market liquidity may impact the Fund's ability to sell securities to meet redemptions.

The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. Inflation rates may change frequently and significantly because of various factors, including unexpected shifts in the domestic or global economy and changes in monetary or economic policies (or expectations that these policies may change). Changes in expected inflation rates may adversely affect market and economic conditions, the Fund's investments and an investment in the Fund. Other financial, economic and other global market and social developments or disruptions may result in similar adverse circumstances, and it is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects

**7**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

(which may last for extended periods). In general, the securities or other instruments that the Adviser believes represent an attractive investment opportunity or in which the Fund seeks to invest may be unavailable entirely or in the specific quantities sought by the Fund. As a result, the Fund may need to obtain the desired exposure through a less advantageous investment, forgo the investment at the time or seek to replicate the desired exposure through a derivative transaction or investment in another investment vehicle. Any such event(s) could have a significant adverse impact on the value and risk profile of the Fund's portfolio. There is a risk that you may lose money by investing in the Fund.

Social, political, economic and other conditions and events, such as war, natural disasters, health emergencies (e.g., the novel coronavirus outbreak, epidemics and other pandemics), terrorism, conflicts, social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and the Adviser's investment advisory activities and services of other service providers, which in turn could adversely affect the Fund's investments and other operations.

Global events may negatively impact broad segments of businesses and populations, cause a significant negative impact on the performance of the Fund's investments and exacerbate pre-existing political, social and economic risks to the Fund. The Fund's operations may be interrupted as a result, which may contribute to the negative impact on investment performance. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions that affect the instruments in which the Fund invests, or the issuers of such instruments, in ways that could have a significant negative impact on the Fund's investment performance.

**LIBOR Discontinuance or Unavailability Risk.**

LIBOR is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. The Financial Conduct Authority (the "FCA"), which is the regulatory authority that oversees financial services firms, financial markets in the U.K. and the administrator of LIBOR, announced that, after the end of 2021, one-week and two-month U.S. Dollar LIBOR and all non-U.S. Dollar LIBOR settings have either ended or are no longer representative of the underlying market they seek to measure. The FCA also announced that the most commonly used U.S. Dollar LIBOR settings may continue to be provided on a representative basis until mid-2023. However, in connection with supervisory guidance from regulators, some regulated entities may no longer enter into most new LIBOR-based contracts. As a result of the foregoing, LIBOR may no longer be available or no longer deemed an appropriate reference rate upon which to determine the interest rate on or impacting certain derivatives and other instruments or investments held by the Fund. In light of this eventuality, public and private sector industry initiatives are currently underway to establish new or alternative reference rates to be used in place of LIBOR. There is no assurance that the composition or characteristics of any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that it will have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability, which may affect the value or liquidity or return on certain of the Fund's investments and result in costs incurred in connection with closing out positions and entering into new trades.

Neither the effect of the LIBOR transition process nor its ultimate success can yet be known. The transition process might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. While some existing LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, there may be significant uncertainty regarding the effectiveness of any such alternative methodologies to replicate LIBOR. Not all existing LIBOR-based instruments may have alternative rate-setting provisions and there remains uncertainty regarding the willingness and ability of issuers to add alternative rate-setting provisions in certain existing instruments. Although state and federal statutes have been enacted to address difficult LIBOR transition issues, the application and effect of these statutes are uncertain. In addition, a liquid market for newly-issued instruments that use a reference rate other than LIBOR is still developing. There may also be challenges for the Fund to enter into hedging transactions against such newly-issued instruments until a market for such hedging transactions develops. All of the aforementioned may adversely affect the Fund's investments (including their volatility, value and liquidity) and, as a result, the performance or NAV.

**Derivatives**

The Fund may, but is not required to, use derivatives and other similar instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income.

A derivative is a financial instrument whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, including total return swaps, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other

**8**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments.

Certain derivative transactions, including total return swaps, may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so or may cause the Fund to be more volatile than if the Fund had not been leveraged. As a result of the structure of certain derivatives, adverse changes in, among other things, interest rates, volatility or the value of the underlying instrument can result in losses substantially greater than the amount invested in the derivative itself. Certain derivatives (such as total return swaps or other derivative instruments providing short exposure) have the potential for unlimited loss, regardless of the size of the initial investment. If the Fund has insufficient cash to meet daily variation margin or payment requirements, it may have to sell securities from its portfolio at a time when it may be disadvantageous to do so. Changes in regulation relating to the Fund's use of derivatives and related instruments could potentially limit or impact the Fund's ability to invest in derivatives, limit the Fund's ability to employ certain strategies that use derivatives and/or adversely affect the value of derivatives and the Fund's performance. Although the Adviser seeks to use derivatives to further the Fund's investment objective, there is no assurance that the use of derivatives will achieve this result.

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

*Total Return Swaps.* Total return swaps are contracts in which one party agrees to make periodic payments to another party based on the change in market value of the assets underlying the contract, which may include, but not be limited to, a specified security, basket of securities or securities indices during the specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets. Total return swaps may be used to obtain long or short exposure to a security or market without owning or taking physical custody of such security or investing directly in such market. The Fund may incur a theoretically unlimited loss on short exposures. In comparison, the Fund may incur losses on long exposures, but such losses are limited by the fact that the underlying security's price cannot fall below zero. Based on the Fund's strategies and depending on the Fund's then-current positioning, the Fund could experience losses as a result of both its long and short exposures to Value and Anti-Value stocks at the same time. Total return swaps may effectively add leverage to the Fund's portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap.

Total return swaps are subject to the risk that a counterparty will default on its payment obligations to the Fund thereunder, and conversely, that the Fund will not be able to meet its obligation to the counterparty. Generally, the Fund will enter into total return swaps on a net basis (i.e., the two payment streams are netted against one another with the Fund receiving or paying, as the case may be, only the net amount of the two payments).

*Futures.* A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. While the value of a futures contract tends to increase or decrease in tandem with the value of the underlying instrument, differences between the futures market and the market for the underlying asset may result in an imperfect correlation. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures contract.

*Options.* If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument, foreign currency or contract, such as a swap agreement or futures contract, on the underlying instrument or foreign currency at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument, swap, or futures contract on the underlying instrument at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

*Swaps.* The Fund may enter into OTC swap contracts or cleared swap transactions. An OTC swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Typically swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the

**9**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

two payment streams are netted out, with only the net amount paid by one party to the other). The Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each party. Cleared swap transactions may help reduce counterparty credit risk. In a cleared swap, the Fund's ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial institution. OTC swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty. Certain swaps have begun trading on exchanges called swap execution facilities. Exchange trading is expected to increase liquidity of swaps trading. Both OTC and cleared swaps could result in losses if interest rates, foreign currency exchange rates or other factors are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments require the clearing and exchange trading of certain standardized swap transactions. Mandatory exchange-trading and clearing is occurring on a phased-in basis. The Fund may pay fees or incur costs each time it enters into, amends or terminates a swap agreement.

**Liquidity**

The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. Illiquidity can be caused by, among other things, a drop in overall market trading volume, an inability to find a willing buyer, or legal restrictions on the securities' resale. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

**Large Shareholder Transactions Risk**

The Fund may experience adverse effects when certain shareholders purchase or redeem large amounts of shares of the Fund. Such larger than normal redemptions may cause the Fund to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. Similarly, large Fund share purchases may adversely affect the Fund's performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would. These transactions may also accelerate the realization of taxable income to shareholders if such sales of investments resulted in gains, and may also increase transaction costs. In addition, a large redemption could result in the Fund's current expenses being allocated over a smaller asset base, leading to an increase in the Fund's expense ratio. Although large shareholder transactions may be more frequent under certain circumstances, the Fund is generally subject to the risk that shareholders can purchase or redeem a significant percentage of Fund shares at any time.

**Temporary Defensive Investments**

When the Adviser believes that changes in market, economic, political or other conditions warrant, the Fund may invest without limit in cash, cash equivalents or other fixed-income securities for temporary defensive purposes that may be inconsistent with the Fund's principal investment strategies. If the Adviser incorrectly predicts the effects of these changes, such defensive investments may adversely affect the Fund's performance and the Fund may not achieve its investment objective.

**Investment Discretion**

In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments it buys, holds or sells on a day-to-day basis, and which trading strategies it uses. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

**10**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management

Adviser

Morgan Stanley Investment Management Inc., with principal offices at 522 Fifth Avenue, New York, NY 10036, conducts a worldwide portfolio management business and provides a broad range of portfolio management services to customers in the United States and abroad. Morgan Stanley (NYSE: "MS") is the parent of the Adviser, which is the parent of the Distributor. Morgan Stanley is a preeminent global financial services firm engaged in securities trading and brokerage activities, as well as providing investment banking, research and analysis, financing and financial advisory services. As of December 31, 2022, the Adviser, together with its affiliated asset management companies, had approximately $1.3 trillion in assets under management or supervision.

A discussion regarding the basis for the Board of Trustees' approval of the investment advisory agreement is available in the Fund's Annual Report to Shareholders for the fiscal year ended September 30, 2022.

Advisory Fees

For the fiscal year ended September 30, 2022, the Adviser received a fee for advisory services (net of fee waivers, if applicable) equal to 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund, if necessary, if such fees would cause the total annual operating expenses of the Fund to exceed 0.55% for Class I, 0.90% for Class A, 1.65% for Class C and 0.50% for Class R6. In determining the actual amount of fee waiver and/or expense reimbursement for the Fund, if any, the Adviser excludes from total annual operating expenses, acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation). The fee waivers and/or expense reimbursements for the Fund will continue for at least one year from the date of this Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. The Adviser may make additional voluntary fee waivers and/or expense reimbursements. The Adviser may discontinue these voluntary fee waivers and/or expense reimbursements at any time in the future.

The Fund's annual operating expenses may vary throughout the period and from year to year. The Fund's actual expenses may be different than the expenses listed in the Fund's fee and expense table based upon the extent and amount of a fee waiver and/or expense reimbursement.

Portfolio Management

The Fund is managed by members of the Global Multi-Asset team. The team consists of portfolio managers and analysts.

Current members of the team jointly and primarily responsible for the day-to-day management of the Fund are Mark A. Bavoso, Cyril Moullé-Berteaux, Sergei Parmenov and Douglas Rentz. Mr. Bavoso has been associated with the Adviser in an investment management capacity since 1986. Mr. Moullé-Berteaux has been associated with the Adviser in an investment management capacity since August 2011. Mr. Parmenov has been associated with Morgan Stanley Investment Management (Australia) Pty Limited ("MSIM Australia") in an investment management capacity since 2021. Prior to joining MSIM Australia, Mr. Parmenov was associated with the Adviser in an investment management capacity from 2011 through 2021. Mr. Rentz has been associated with the Adviser in an investment management capacity since July 2011. Team members collaborate to manage the assets of the Fund.

In rendering investment advisory services to the Fund, the Adviser uses the portfolio management, research and other resources of MSIM Australia, a foreign (non-U.S.) affiliate of Morgan Stanley Investment Management Inc. that is not registered under the Investment Advisers Act of 1940, as amended, and may provide services to the Fund through this "participating affiliate" arrangement, as that term is used in relief granted by the staff of the SEC allowing U.S. registered investment advisers to use portfolio management or research resources of advisory affiliates subject to the regulatory supervision of the registered investment adviser.

**Additional Information**

The Fund's SAI provides additional information about the portfolio managers' compensation structure, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Fund.

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

**11**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information

**Share Class Arrangements**

The Trust currently offers investors Class I, Class A, Class C and Class R6 shares of the Fund. Class I and Class R6 shares are not subject to a sales charge and are not subject to a distribution and/or shareholder service (12b-1) fee. In addition, no sub-accounting or other similar fees, or any finder's fee payments are charged or paid on Class R6 shares. Class C shares are sold at NAV with no initial sales charge, but are subject to a CDSC of 1.00% on sales made within one year after the last day of the month of purchase. Class I and Class R6 shares generally require investments in minimum amounts that are substantially higher than Class A and Class C shares.

**Minimum Investment Amounts**

The minimum initial investment generally is $1 million for Class I shares and $1,000 for Class A and Class C shares of the Fund. The minimum initial investment amount may be waived by the Adviser for the following categories: (1) 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 advisory programs, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or (iv) certain other investment programs that do not charge an asset-based fee, as outlined in an agreement between the Distributor and such financial institution; (2) sales through a Financial Intermediary that has entered into an agreement with the Distributor to offer Fund shares to self-directed investment brokerage accounts, which may or may not charge a transaction fee; (3) qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions); (4) defined contribution, defined benefit and other employer-sponsored employee benefit plans, whether or not qualified under the Code, where such plans purchase Class A, Class C and/or Class I shares through a plan-level or omnibus account sponsored or serviced by a Financial Intermediary that has entered into an agreement with the Fund, the Distributor and/or the Adviser pursuant to which such Class A, Class C and/or Class I shares are available to such plans; (5) certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or its affiliates for their employees or the Trust's Trustees; (6) 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; (7) current or retired Directors or Trustees of the Morgan Stanley Funds (as defined herein), such persons' spouses, and children under the age of 21, and trust accounts for which any of such persons is a beneficiary; (8) certain other registered open-end investment companies whose shares are distributed by the Distributor; (9) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser; (10) the reinvestment of dividends from Class A, Class C or Class I shares of the Fund in additional shares of the same class of such Fund; or (11) certain other institutional investors based on assets under management or other considerations at the discretion of the Adviser. The Fund no longer accepts direct purchases of Class C shares by accounts for which no broker-dealer or other Financial Intermediary is specified. Any direct purchase received by the Fund's transfer agent for Class C shares for such accounts will automatically be invested in Class A shares of the Fund.

Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Each Financial Intermediary may also have its own rules about minimum initial investment amounts, minimum account balances, share transactions and limits on the number of share transactions you are permitted to make in a given time period. When purchasing shares through a Financial Intermediary, you may not benefit from certain policies and procedures of the Fund as your eligibility may be dependent upon the policies and procedures of your Financial Intermediary, including those regarding reductions of sales charges. Please consult your Financial Intermediary for more information.

Class R6 shares are offered only to eligible investors meeting certain minimum investment requirements. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Code and in each case subject to the discretion of the Adviser. Initial omnibus trades of $5 million or more shall be accepted from certain platforms, including (i) banks and trust companies; (ii) insurance companies; and (iii) registered investment advisory firms. The $5 million minimum initial investment amount may be waived for Fund shares purchased by or through: (1) certain registered open-end investment companies whose shares are distributed by the Distributor; or (2) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.

If the value of your account falls below the applicable minimum initial investment amount for a class of shares of the Fund as a result of share redemptions or you no longer meet one of the waiver criteria set forth above, your account may be subject to involuntary conversion or involuntary redemption, as applicable. You will be notified prior to any such conversions or redemptions. No CDSC will be imposed on any involuntary conversion or involuntary redemption.

The Adviser, in its sole discretion, may waive a minimum initial investment amount in certain cases.

**Distribution of Fund Shares**

Morgan Stanley Distribution, Inc. is the exclusive distributor of shares of the Fund. The Distributor receives no compensation from the Fund for distributing Class I and Class R6 shares of the Fund. The Trust has adopted a Shareholder Services Plan with respect to

**12**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

the Class A shares of the Fund and a Distribution and Shareholder Services Plan with respect to Class C shares of the Fund (the "Plans") pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act"). Under the Plans, the Fund pays the Distributor (i) a shareholder services fee of up to 0.25% of the average daily net assets of each of the Class A shares and Class C shares on an annualized basis and (ii) a distribution fee of up to 0.75% of the average daily net assets of Class C shares on an annualized basis. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A and Class C shares. Such fees relate solely to the Class A and Class C shares and will reduce the net investment income and total return of the Class A and Class C shares, respectively. Because the fees are paid out of the Fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

The Adviser and/or Distributor may pay compensation to Financial Intermediaries in connection with the sale, distribution, marketing and retention of the Fund's shares and/or shareholder servicing. Such compensation may be significant in amount and the prospect of receiving any such additional compensation may provide affiliated or unaffiliated Financial Intermediaries with an incentive to favor sales of shares of the Fund over other investment options. Any such payments will not change the NAV or the price of the Fund's shares. For more information, please see the Fund's SAI.

**About Net Asset Value**

The NAV of a class of shares of the Fund is determined by dividing the total of the value of the Fund's investments and other assets attributable to the class, less any liabilities attributable to the class, by the total number of outstanding shares of that class of the Fund. In making this calculation, the Fund generally values its portfolio securities and other assets at market price. When no market quotations are readily available for a security or other asset, including circumstances under which the Adviser determines that a market quotation is not accurate, fair value for the security or other asset will be determined in good faith using methods approved by the Trust's Board of Trustees.

In addition, with respect to securities that primarily are listed on foreign exchanges, when an event occurs after the close of such exchanges that is likely to have changed the value of the securities (e.g., a percentage change in value of one or more U.S. securities indices in excess of specified thresholds), such securities will be valued at their fair value, as determined under procedures approved by the Trust's Board of Trustees. Securities also may be fair valued in the event of a significant development affecting a country or region or an issuer-specific development that is likely to have changed the value of the security. In these cases, the Fund's NAV will reflect certain portfolio securities' fair value rather than their market price. To the extent the Fund invests in open-end management companies (other than exchange-traded funds) that are registered under the 1940 Act, the Fund's NAV is calculated based in relevant part upon the NAV of such funds. The prospectuses for such funds explain the circumstances under which they will use fair value pricing and its effects.

Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security or other asset is materially different than the value that could be realized upon the sale of that security or other asset. With respect to securities that are primarily listed on foreign exchanges, the values of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. The NAV of the Fund (excluding any applicable sales charges) is based on the value of the Fund's portfolio securities or other assets. Although the assets of each class are invested in the same portfolio of securities or other assets, the NAV of each class will differ because the classes have different class specific expenses.

The Fund relies on various sources to calculate its NAV. The ability of the Fund's provider of administrative services to calculate the NAV per share of the Fund is subject to operational risks associated with processing or human errors, systems or technology failures, cyber attacks and errors caused by third party service providers, data sources, or trading counterparties. Such failures may result in delays in calculating the Fund's NAV and/or the inability to calculate NAV over extended periods. The Fund may be unable to recover any losses associated with such failures. In addition, if the third party service providers and/or data sources upon which the Fund directly or indirectly relies to calculate its NAV or price individual securities are unavailable or otherwise unable to calculate the NAV correctly, it may be necessary for alternative procedures to be utilized to price the securities at the time of determining the Fund's NAV.

The Fund's NAV per share is subject to various investment and other risks. Please refer to the "Additional Information About the Fund's Investment Strategies and Related Risks" and "The Fund's Investments and Strategies" sections of the Prospectus and SAI, respectively, for more information regarding risks associated with an investment in the Fund.

**Pricing of Fund Shares**

You may buy or sell (redeem) shares of the Fund at the NAV next determined for the class after receipt of your order in good order, plus any applicable sales charge. The Trust determines the NAV for the Fund as of the close of the NYSE (normally 4:00 p.m. Eastern time) on each day that the NYSE is open for business (the "Pricing Time"). Shares generally will not be priced on days that the NYSE is closed. If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the Fund reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate its NAV as of, the

**13**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. The Fund may elect to remain open and price its shares on days when the NYSE is closed but the primary securities markets on which the Fund's securities trade remain open. Trading of securities that are primarily listed on foreign exchanges may take place on weekends and other days when the Fund does not price its shares. Therefore, to the extent, if any, that the Fund invests in securities primarily listed on foreign exchanges, the value of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares.

**Portfolio Holdings**

A description of the Trust's policies and procedures with respect to the disclosure of the Fund's portfolio securities is available in the Trust's SAI.

**How To Purchase Fund Shares**

You may purchase shares of the Fund on each day that the Fund is open for business by contacting your Financial Intermediary or directly from the Fund.

*Purchasing Shares Through a Financial Intermediary*

You may open a new account and purchase shares of the Fund through a Financial Intermediary. The Financial Intermediary will assist you with the procedures to invest in shares of the Fund. Investors purchasing or selling shares of the Fund through a Financial Intermediary, including Morgan Stanley Wealth Management, may be charged transaction-based or other fees by the Financial Intermediary for its services. If you are purchasing shares of the Fund through a Financial Intermediary, please consult your Financial Intermediary for more information regarding any such fees and for purchase instructions.

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

The availability of sales charge waivers and discounts may depend on whether you purchase Fund shares directly from the Fund (or the Distributor) or a Financial Intermediary. More information regarding sales charge discounts and waivers is summarized below. The Fund's sales charge waivers (and discounts) disclosed in this Prospectus are available for qualifying purchases made directly from the Fund (or the Distributor) and are generally available through Financial Intermediaries. The sales charge waivers (and discounts) available through certain other Financial Intermediaries are set forth in Appendix A to this Prospectus (Intermediary-Specific Sales Charge Waivers and Discounts), which may differ from those available for purchases made directly from the Fund (or the Distributor). Please contact your Financial Intermediary regarding applicable sales charge waivers (and discounts) and for information regarding the Financial Intermediary's related policies and procedures.

With respect to sales through Financial Intermediaries, no offers or sales of Fund shares may be made in any foreign jurisdiction, except with the consent of the Distributor.

*Purchasing Shares Directly From the Fund*

Initial Purchase

You may open a new account, subject to acceptance by the Fund, and purchase shares of the Fund by completing and signing a New Account Application provided by SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), the Fund's transfer agent, or Eaton Vance Management, the Fund's co-transfer agent, which you can obtain by calling Morgan Stanley Shareholder Services at 1-800-869-6397 and mailing it to Morgan Stanley Institutional Fund Trust, c/o SS&C Global Investor and Distribution Solutions, Inc., P.O. Box 219804, Kansas City, MO 64121-9804.

After submitting a completed New Account Application to SS&C GIDS, you may wire Federal Funds (monies credited by a Federal Reserve Bank) to State Street Bank and Trust Company (the "Custodian"). You should instruct your bank to send a Federal Funds wire in a specified amount to the Custodian using the following wire instructions:

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111-2101

ABA #011000028

DDA #00575373

Attn: Morgan Stanley Institutional Fund Trust

Subscription Account

Ref: (Fund Name, Account Number, Account Name)

**14**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

The Fund no longer accepts direct purchases of Class C shares by accounts for which no broker-dealer or other Financial Intermediary is specified (i.e., such purchasers are not eligible investors for Class C shares). Any direct purchase received by the Fund's transfer agent for Class C shares for such accounts will automatically be invested in Class A shares of the Fund. In addition, Class C shares held in an account for which no broker-dealer or other Financial Intermediary is specified and which are not subject to a CDSC will periodically be converted to Class A shares of the Fund.

Additional Investments

You may purchase additional shares of the Fund for your account at any time by contacting your Financial Intermediary or by contacting the Fund directly. For additional 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, signed by the account owner(s), to assure proper crediting to your account. After mailing a "letter of instruction," you may wire Federal Funds by following the instructions under "Initial Purchase."

**Sales Charges Applicable to Purchases of Class A Shares**

Class A shares are subject to a sales charge equal to a maximum of 5.25% calculated as a percentage of the offering price on a single transaction as shown in the table below. For Class A shares sold by the Distributor, the Distributor will receive the sales charge imposed on purchases of Class A shares (or any CDSC paid on redemption) and will retain the full amount of such sales charge. As shown below, the sales charge is reduced for purchases of $50,000 and over.

---

| | | | |
|:---|:---|:---|:---|
|  | **Front-End Sales Charge** | **Front-End Sales Charge** |  |
| **Amount of Single Transaction** | **Percentage of Public Offering Price** | **Approximate Percentage of Net** **Amount Invested** | **Dealer Commission as a** **Percentage of Offering Price** |
| Less than $50,000 | 5.25% | 5.54% | 4.75% |
| $50,000 but less than $100,000 | 4.50% | 4.71% | 4.00% |
| $100,000 but less than $250,000 | 3.50% | 3.63% | 3.00% |
| $250,000 but less than $500,000 | 2.50% | 2.56% | 2.00% |
| $500,000 but less than $1 million | 2.00% | 2.04% | 1.50% |
| $1 million and over\* | 0.00% | 0.00% | 0.00% |

---

\* The Distributor may pay a commission of up to 1.00% to a Financial Intermediary for purchase amount of $1 million or more.

You may benefit from a reduced sales charge schedule (i.e., breakpoint discount) for purchases of Class A shares of the Fund by combining, in a single transaction, your purchase with purchases of Class A shares of the Fund by the following related accounts ("Related Accounts"):

• A single account (including an individual, a joint account, a trust or fiduciary account).

• 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).

• An UGMA/UTMA (Uniform Gifts to Minors Act/Uniform Transfers to Minors Act) account.

• An individual retirement account ("IRA").

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

Investments of $1 million or more are not subject to an initial sales charge, but are generally subject to a CDSC of 1.00% on sales made within 12 months after purchase. See "—How to Redeem Fund Shares" below for more information about how the CDSC is assessed. The CDSC is assessed on an amount equal to the lesser of the then market value of the shares or the historical cost of the shares (which is the amount actually paid for the shares at the time of original purchase) being redeemed. Accordingly, no sales charge is imposed on increases in NAV above the initial purchase price. In determining whether a CDSC applies to a redemption, it is assumed that the shares being redeemed first are any shares in the shareholder's account that are not subject to a CDSC, followed by shares held the longest in the shareholder's account.

In addition to investments of $1 million or more, purchases of Class A shares are not subject to a front-end sales charge if your account qualifies under one of the following categories:

• 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 advisory programs, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or (iv) certain other investment programs that do not charge an asset- based fee, as outlined in an agreement between the Distributor and such financial institution.

**15**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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

• Qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions).

• 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 account sponsored or serviced by a Financial Intermediary that has an agreement with the Fund, the Distributor and/or the Adviser pursuant to which Class A shares are available to such plans without an initial sales charge.

• Certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or its affiliates for their employees or the Trust's Trustees.

• 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.

• 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.

• Certain other registered open-end investment companies, whose shares are distributed by the Distributor.

• Investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.

• The reinvestment of dividends in additional Fund shares.

• The reinvestment of dividends from Class A shares of the Fund in additional Class A shares of the Fund.

• Current employees of financial intermediaries or their affiliates that have executed a selling agreement with the Distributor, such persons' spouses, children under the age of 21, and trust accounts for which any such person is a beneficiary, as permitted by internal policies of their employer.

• Investment and institutional clients of the Adviser and its affiliates.

• Direct purchases of shares by accounts where no Financial Intermediary is specified.

Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Please consult your Financial Intermediary for more information. For specific information with respect to sales charge waivers and discounts available through a specific Financial Intermediary, please refer to Appendix A attached to this Prospectus.

*Combined Purchase Privilege*

You will have the benefit of a reduced sales charge by combining your purchase of Class A shares of the Fund in a single transaction with your purchase of Class A shares of any other Morgan Stanley Multi-Class Fund (as defined herein) for any Related Account except for purchases of shares of Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income or Ultra-Short Municipal Income Portfolios.

*Right of Accumulation*

Your sales charge may be reduced if you invest $50,000 or more in a single transaction, as calculated below:

(a) the NAV of Class A shares of the Fund being purchased plus the total of the NAV of any Class A and Class C shares of the Fund held in Related Accounts as of the transaction date,

(b) plus the total of the NAV of Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (including shares of Morgan Stanley Money Market Funds (as defined herein) that you acquired in a prior exchange of Class A or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund, excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios) held in Related Accounts as of the transaction date.

*Notification*

You must notify your Financial Intermediary (or the Trust's transfer agent, if you purchase shares of the Fund directly through the Trust) at the time a purchase order is placed that the purchase qualifies for a reduced sales charge under any of the privileges discussed above. The reduced sales charge will not be granted if: (i) notification is not furnished at the time of the order; or (ii) a review of the records of your Financial Intermediary or the Trust's transfer agent, SS&C GIDS, or Eaton Vance Management, the Fund's co-transfer agent, does not confirm your represented holdings. Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Please consult your Financial Intermediary for more information.

**16**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

In order to obtain a reduced sales charge for Class A shares of the Fund under any of the privileges discussed above, it may be necessary at the time of purchase for you to inform your Financial Intermediary (or the Trust's transfer agent, if you purchase shares of the Fund directly through the Trust) of the existence of any Related Accounts in which there are holdings eligible to be aggregated to meet the sales load breakpoint and/or right of accumulation threshold. In order to verify your eligibility, you may be required to provide account statements and/or confirmations regarding your purchases and/or holdings of any Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund (including shares of Morgan Stanley Money Market Funds that you acquired in an exchange from Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund except Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios, if applicable) held in all Related Accounts at your Financial Intermediary, in order to determine whether you have met the 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 you enter into a written "Letter of Intent." A Letter of Intent provides for the purchase of Class A shares of the Fund and Class A shares of other Morgan Stanley Multi-Class Funds, except Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios, within a 13-month period. The initial purchase of Class A shares of the Fund under a Letter of Intent must be at least 5% of the stated investment goal. The Letter of Intent does not preclude the Fund (or any other Morgan Stanley Multi-Class Fund) from discontinuing sales of its shares. To determine the applicable sales charge reduction, you may also include (1) the cost of Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund that were previously purchased at a price including a front-end sales charge during the 90-day period prior to the Distributor receiving the Letter of Intent and (2) the historical cost of shares of any Morgan Stanley Money Market Fund that you acquired in an exchange from Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund purchased during that period at a price including a front-end sales charge. You may also combine purchases and exchanges by any Related Accounts during such 90-day period.

You should retain any records necessary to substantiate historical costs because the Fund, SS&C GIDS and your Financial Intermediary may not maintain this information. You can obtain a Letter of Intent by contacting your Financial Intermediary or by calling toll-free 1-800-869-6397. If you do not achieve the stated investment goal within the 13-month period, you are required to pay the difference between the sales charges otherwise applicable and sales charges actually paid, which may be deducted from your investment. Shares acquired through reinvestment of distributions are not aggregated to achieve the stated investment goal.

Class A shares also are offered at net asset value to investment and institutional clients of the Adviser and its affiliates and direct purchases of shares by accounts where no Financial Intermediary is specified.

**Conversion Features**

A shareholder currently holding Class A shares of the Fund in a fee-based advisory program ("Advisory Program") account, or currently holding Class A shares in a brokerage account but wishing to transfer into an Advisory Program account, may convert such shares to Class I shares of the Fund within the Advisory Program at any time. In addition, a shareholder holding Class C shares of the Fund through a brokerage account or an Advisory Program account may convert such shares to either Class A or Class I shares of the Fund within an Advisory Program at any time. Such conversions will be on the basis of the relative NAVs, without requiring any investment minimum to be met and without the imposition of any redemption fee or other charge. If a CDSC is applicable to such Class A or Class C shares, then the conversion may not occur until after the shareholder has held the shares for an 18-month or 12-month period, respectively, except that a CDSC applicable to Class A and Class C shares converted to Class I shares through Traditional IRAs, Roth IRAs, Rollover IRAs, Inherited IRAs, SEP IRAs, SIMPLE IRAs, BASIC Plans, Educational Savings Accounts and Medical Savings Accounts on the Merrill Lynch platform will be waived. With respect to Class A shares, Merrill Lynch will remit to the Distributor the full amount of the CDSC otherwise payable upon sale of such shares. With respect to Class C shares, Merrill Lynch will remit the portion of the payment to be made to the Distributor in an amount equal to the CDSC multiplied by the number of months remaining on the CDSC period divided by the maximum number of months of the CDSC period.

In addition, a shareholder holding a class of shares of the Fund in a Merrill Lynch Advisory Program account may have such shares converted by Merrill Lynch to an eligible class of shares of the Fund for a Merrill Lynch brokerage account upon the transfer of the shares of the Fund from a Merrill Lynch Advisory Program account to a brokerage account with Merrill Lynch. Such conversions will be on the basis of the relative NAVs and without the imposition of any redemption fee or other charge. The fees and expenses of the new class may be higher than those of the previously held class.

After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund with no initial sales charge, provided that the Fund or the Financial Intermediary through which a shareholder purchased or holds Class C shares has records verifying that the Class C shares have been held for at least eight years. The automatic conversion of Class C shares to Class A shares will not apply to shares held through group retirement plan recordkeeping platforms of certain Financial Intermediaries who hold such shares in an omnibus account and do not track participant level share lot aging to facilitate such a conversion. The eight-year period runs from the last day of the month in which the shares were purchased or, in the case of Class C shares acquired through an exchange, from the last day of the month in which the original Class C shares were purchased; the shares will convert to Class A

**17**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

shares based on their relative NAVs in the month following the eight-year period. At the same time, an equal proportion of Class C shares acquired through automatically reinvested distributions will convert to Class A shares on the same basis.

Furthermore, the Adviser may in its sole discretion permit a conversion of one share class to another share class of the same Fund in certain other circumstances, provided that the Fund's eligibility requirements are met, and subject to the shareholder's consent. Such conversions will be on the basis of the relative NAVs and without the imposition of any redemption fee or other charge.

A conversion of shares of one class directly for shares of another class of the same Fund normally should not be taxable for federal income tax purposes.

Please ask your financial advisor if you are eligible for converting a class of shares pursuant to these conversion features. A conversion feature's availability will be subject to the applicable classes being offered on a Financial Intermediary's platform. Shareholders should carefully review information in this Prospectus regarding share class features, including conversions and exchanges, or contact their financial advisor for more information. You should talk to your tax advisor before making a conversion.

In addition, Class C shares held in an account for which no broker-dealer or other Financial Intermediary is specified and which are not subject to a CDSC will periodically be converted to Class A shares of the same Fund.

**General**

Shares of the Fund may, in the Fund's discretion, be purchased with investment securities (in lieu of or, in conjunction with, cash) acceptable to the Fund. The securities would be accepted by the Fund at their market value in return for Fund shares of equal value, taking into account any applicable sales charge.

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

When you buy Fund shares, the shares (plus any applicable sales charge) will be purchased at the next share price calculated after we receive your purchase order in good order. Purchase orders not received in good order prior to Pricing Time will be executed at the NAV next determined after the purchase order is received in good order. Certain institutional investors and financial institutions have entered into arrangements with the Fund, the Adviser and/or the Distributor pursuant to which they may place orders prior to the Pricing Time, but make payment in Federal Funds for those shares up to three days after the purchase order is placed, depending on the arrangement. We reserve the right to reject any order for the purchase of Fund shares for any reason.

The Trust may suspend the offering of shares, or any class of shares, of the Fund or reject any purchase orders when we think it is in the best interest of the Fund.

Certain patterns of past exchanges and/or purchase or sale transactions involving the Fund may result in the Fund rejecting, limiting or prohibiting, at its sole discretion and without prior notice, additional purchases and/or exchanges and may result in a shareholder's account being closed. Determinations in this regard may be made based on the frequency or dollar amount of previous exchanges or purchase or sale transactions. For more information, please refer to the section of this Prospectus entitled "Frequent Purchases and Redemptions of Shares."

**How To Redeem Fund Shares**

You may process a redemption request by contacting your Financial Intermediary. Otherwise, you may redeem shares of the Fund by mail or, if authorized, by telephone, at no charge other than as described below. The value of shares redeemed may be more or less than the purchase price, depending on the NAV at the time of redemption. Shares of the Fund will be redeemed at the NAV next determined after we receive your redemption request in good order and will be reduced by the amount of any applicable CDSC.

*Redemptions by Letter*

Requests should be addressed to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804.

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

(a) A letter of instruction, if required, or a stock assignment specifying the account name, the account number, the name of the Fund and the number of shares or dollar amount to be redeemed, signed by all registered owners of the shares in the exact names in which

**18**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

the shares are registered, and whether you wish to receive the redemption proceeds by check or by wire to the bank account we have on file for you;

(b) Any required signature guarantees if you are requesting payment to anyone other than the registered owner(s) or that payment be sent to any address other than the address of the registered owner(s) or pre-designated bank account; and

(c) Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianship, corporations, pension and profit sharing plans and other organizations.

*Redemptions by Telephone*

You automatically have telephone redemption and exchange privileges unless you indicate otherwise by checking the applicable box on the New Account Application or calling Morgan Stanley Shareholder Services to opt out of such privileges. You may request a redemption of shares of the Fund by calling the Morgan Stanley Shareholder Services at 1-800-869-6397 and requesting that the redemption proceeds be mailed or wired to you. You cannot redeem shares of the Fund by telephone if you hold share certificates for those shares. For your protection when calling the Fund, we will employ reasonable procedures to confirm that instructions communicated over the telephone are genuine. These procedures may include requiring various forms of personal identification (such as name, mailing address, social security number or other tax identification number), tape-recording telephone communications and providing written confirmation of instructions communicated by telephone. If reasonable procedures are employed, neither Morgan Stanley, SS&C GIDS nor the Fund will be liable for following telephone instructions that it reasonably believes to be genuine. Telephone redemptions and exchanges may not be available if you cannot reach Morgan Stanley Shareholder Services by telephone, whether because all telephone lines are busy or for any other reason; in such case, a shareholder would have to use the Fund's other redemption and exchange procedures described in this section. Telephone instructions will be accepted if received by Morgan Stanley Shareholder Services between 9:00 a.m. and 4:00 p.m. Eastern time on any day the NYSE is open for business. During periods of drastic economic or market changes, it is possible that the telephone privileges may be difficult to implement, although this has not been the case with the Fund in the past. To opt out of telephone privileges, please contact the Fund at 1-800-869-6397.

*Systematic Withdrawal Plan*

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's balance (provided the amount is at least $25), on a monthly, quarterly, semi-annual or annual basis, from any fund with a balance of at least $1,000. Each time you add a fund to the plan, you must meet the plan requirements.

Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under certain circumstances. See the Class A and Class C waiver categories listed below.

To sign up for the systematic withdrawal plan, contact your Morgan Stanley Financial Advisor or call toll-free 1-800-869-6397. You may terminate or suspend your plan at any time. Please remember that withdrawals from the plan are sales of shares, not Fund "distributions," and ultimately may exhaust your account balance. The Trust may terminate or revise the plan at any time.

*CDSC Waivers on Class A and Class C Shares*

The CDSC on Class A and Class C shares will be waived in connection with sales of Class A and Class C shares for which no commission or transaction fee was paid by the Distributor or Financial Intermediary at the time of purchase of such shares. In addition, a CDSC, if otherwise applicable, will be waived in the case of:

• 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 the shares are: (i) registered either in your individual name or in the names of you and your spouse as joint tenants with right of survivorship; (ii) registered in the name of a trust of which (a) you are the settlor and that is revocable by you (i.e., a "living trust") or (b) you and your spouse are the settlors and that is revocable by you or your spouse (i.e., a "joint living trust"); or (iii) held in a qualified corporate or self-employed retirement plan, IRA or 403(b) Custodial Account; provided in each case that the sale is requested within one year after your death or initial determination of disability.

• Sales in connection with the following retirement plan "distributions": (i) lump-sum or other distributions from a qualified 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 59½); (ii) required minimum distributions and certain other distributions (such as those following attainment of age 59½) from an IRA or 403(b) Custodial Account; or (iii) a tax-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).

• Sales of shares in connection with the systematic withdrawal plan of up to 12% annually of the value of the Fund from which plan sales are made. The percentage is determined on the date you establish the systematic withdrawal plan and based on the next calculated share price. You may have this CDSC waiver applied in amounts up to 1% per month, 3% per quarter, 6% semi- annually or 12% annually. Shares with no CDSC will be sold first, followed by those with the lowest CDSC. As such, the waiver

**19**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

benefit will be reduced by the amount of your shares that are not subject to a CDSC. If you suspend your participation in the plan, you may later resume plan payments without requiring a new determination of the account value for the 12% CDSC waiver.<br>

The Distributor may require confirmation of your entitlement before granting a CDSC waiver. If you believe you are eligible for a CDSC waiver, please contact your Financial Intermediary or call toll-free 1-800-869-6397.

*Redemption Proceeds*

The Fund typically expects to pay redemption proceeds to you within two business days following receipt of your redemption request for those payments made to your brokerage account held with a Financial Intermediary. For redemption proceeds that are paid directly to you by the Fund, the Fund typically expects to pay redemption proceeds by check or by wire to you within one business day, following receipt of your redemption request; however, in all cases, it may take up to seven calendar days to pay redemption proceeds.

The Fund typically expects to meet redemption requests by using a combination of sales of securities held by the Fund and/or holdings of cash and cash equivalents. On a less regular basis, the Fund also reserves the right to use borrowings or interfund lending to meet redemption requests, and the Fund may use these methods during both normal and stressed market conditions.

If we determine that it is in the best interest of the Trust or the Fund not to pay redemption proceeds in cash, we may distribute to you securities held by the Fund. If requested, we will pay a portion of your redemption(s) in cash (during any 90 day period) up to the lesser of $250,000 or 1% of the net assets of the Fund at the beginning of such period. If the Fund redeems your shares in-kind, you will bear any market risks associated with the securities paid as redemption proceeds. Such in-kind securities may be illiquid and difficult or impossible for a shareholder to sell at a time and at a price that a shareholder would like. Redemptions paid in such securities generally will give rise to income, gain or loss for income tax purposes in the same manner as redemptions paid in cash. In addition, you may incur brokerage costs and a further gain or loss for income tax purposes when you ultimately sell the securities.

*Reinstatement Privilege*

If you redeem shares, you may reinvest at net asset value all or any portion of the redemption proceeds in the same account and in the same class of shares of the Fund you redeemed from or another Morgan Stanley Multi-Class Fund, provided that the reinvestment occurs within 90 days of the redemption, the privilege has not been used more than once in the prior 12 months, the redeemed shares were subject to a front-end sales charge or CDSC and that you are otherwise eligible to invest in that class. Under these circumstances your account will be credited with any CDSC paid in connection with the redemption. Any CDSC period applicable to the shares you acquire upon reinvestment will run from the date of your original share purchase. For requests for reinvestment sent to the Fund's transfer agent, the request must be in writing. At the time of a reinvestment, you or your Financial Intermediary must notify the Fund or the transfer agent that you are reinvesting redemption proceeds in accordance with this privilege. If you reinvest, your purchase will be at the next determined net asset value following receipt of your request.

**Exchange Privilege**

You may exchange shares of any class of the Fund for the same class of shares of any mutual fund (excluding money market funds) sponsored and advised by the Adviser (each, a "Morgan Stanley Multi-Class Fund"), if available, without the imposition of an exchange fee. Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund even though Class L shares are closed to investors. In addition, you may exchange shares of any class of the Fund for shares of Morgan Stanley California Tax-Free Daily Income Trust, Morgan Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. Government Money Market Trust (each, a "Morgan Stanley Money Market Fund" and, together with the Morgan Stanley Multi-Class Funds, the "Morgan Stanley Funds"), if available, without the imposition of an exchange fee. Because purchases of Class A shares of Morgan Stanley Institutional Fund Trust Ultra-Short Income and Ultra-Short Municipal Income Portfolios are not subject to a sales charge, and purchases of Class A shares of Morgan Stanley Institutional Fund Trust Short Duration Income Portfolio are subject to a reduced sales charge, you may be subject to the payment of a sales charge by your Financial Intermediary, at time of exchange into Class A shares of a Morgan Stanley Fund, based on the amount that you would have owed if you directly purchased Class A shares of that Morgan Stanley Fund (less any sales charge previously paid in connection with shares exchanged for such shares of Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income or Ultra-Short Municipal Income Portfolios, as applicable). Class L shares of the Fund that are exchanged for shares of a Morgan Stanley Money Market Fund 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). Exchanges are effected based on the respective NAVs of the applicable Morgan Stanley Fund (subject to any applicable redemption fee) and in accordance with the eligibility requirements of such Fund. To obtain a prospectus for another Morgan Stanley Fund, contact your Financial Intermediary or call Morgan Stanley Shareholder Services at 1-800-869-6397. Prospectuses are also available on our Internet site at www.morganstanley.com/im. If you purchased Fund shares through a Financial Intermediary, certain Morgan Stanley Funds may be unavailable for exchange. Contact your Financial Intermediary for more information regarding the exchange privilege and to determine which Morgan Stanley Funds are available for exchange.

**20**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

The current prospectus for each Morgan Stanley Fund describes its investment objective(s), policies, investment minimums and applicable sales charges, and should be read before investing. Since exchanges are available only into continuously offered Morgan Stanley Funds, exchanges are generally not available into Morgan Stanley Funds or classes of Morgan Stanley Funds that are not currently being offered for purchase.

You can process your exchange by contacting your Financial Intermediary. You may also send exchange requests to the Trust's transfer agent, SS&C GIDS, or Eaton Vance Management, the Fund's co-transfer agent, by mail to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804 or by calling 1-800-869-6397.

There are special considerations when you exchange Class A and Class C shares of the Fund that are subject to a CDSC. When determining the length of time you held the Class A or Class C shares, any period (starting at the end of the month) during which you held such shares will be counted. In addition, any period (starting at the end of the month) during which you held (i) Class A or Class C shares of other funds of the Trust; (ii) Class A or Class C shares of a Morgan Stanley Multi-Class Fund; or (iii) shares of a Morgan Stanley Money Market Fund, any of which you acquired in an exchange from such Class A or Class C shares of the Fund, will also be counted; however, if you sell shares of (a) such other fund of the Trust; (b) the Morgan Stanley Multi-Class Fund; or (c) the Morgan Stanley Money Market Fund, before the expiration of the CDSC "holding period," you will be charged the CDSC applicable to such shares.

You will be subject to the same minimum initial investment and account size as an initial purchase. Your exchange price will be the price calculated at the next Pricing Time after the Morgan Stanley Fund receives your exchange order. The Morgan Stanley Fund, in its sole discretion, may waive the minimum initial investment amount in certain cases. For direct accounts, the check writing privilege is not available for Morgan Stanley Money Market Fund shares you acquire in an exchange from a non-money market fund. If you are investing through a financial advisor, check with your advisor regarding the availability of check writing privileges. The Fund may terminate or revise the exchange privilege upon required notice or in certain cases without notice. The Fund reserves the right to reject an exchange order for any reason.

If you exchange shares of 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 Fund shares and the exchange into the other fund is considered a purchase. As a result, you may realize a capital gain or loss. You should review the "Taxes" section and consult your own tax professional about the tax consequences of an exchange.

**Frequent Purchases and Redemptions of Shares**

Frequent purchases and redemptions of shares by Fund shareholders are referred to as "market-timing" or "short-term trading" and may present risks for other shareholders of the Fund, which may include, among other things, diluting the value of the Fund's shares held by long-term shareholders, interfering with the efficient management of the Fund, increasing brokerage and administrative costs, incurring unwanted taxable gains and forcing the Fund to hold excess levels of cash.

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

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

The Trust discourages and does not accommodate frequent purchases and redemptions of Fund shares by Fund shareholders and the Trust's Board of Trustees has adopted policies and procedures with respect to such frequent purchases and redemptions.

The Trust's policies with respect to purchases, redemptions and exchanges of Fund shares are described in the "Shareholder Information—How To Purchase Fund Shares," "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares," "Shareholder Information—General," "Shareholder Information—How To Redeem Fund Shares" and "Shareholder Information—Exchange Privilege" sections of this Prospectus. Except as described in each of these sections, and with respect to trades that occur through omnibus accounts at Financial Intermediaries, as described below, the Trust's policies regarding frequent trading of Fund shares are applied uniformly to all shareholders. With respect to trades that occur through omnibus accounts at Financial Intermediaries, such as investment advisers, broker-dealers, transfer agents and third-party administrators, the Trust (i) has requested assurance that such Financial Intermediaries currently selling Fund shares have in place internal policies and procedures

**21**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

reasonably designed to address market-timing concerns and has instructed such Financial Intermediaries to notify the Fund immediately if they are unable to comply with such policies and procedures and (ii) requires all prospective Financial Intermediaries to agree to cooperate in enforcing the Trust's policies (or, upon prior written approval only, a Financial Intermediary's own policies) with respect to frequent purchases, redemptions and exchanges of Fund shares.

With respect to trades that occur through omnibus accounts at Financial Intermediaries, to some extent, the Trust relies on the Financial Intermediary to monitor frequent short-term trading within the Fund by the Financial Intermediary's customers. However, the Fund has entered into agreements with Financial Intermediaries whereby Financial Intermediaries are required to provide certain customer identification and transaction information upon the Fund's request. The Fund may use this information to help identify and prevent market-timing activity in the Fund. There can be no assurance that the Fund will be able to identify or prevent all market-timing activities.

**Taxes**

As with any investment, you should consider how your Fund investment will be taxed. The tax information in this Prospectus is provided as general information. You should consult your own tax professional about the tax consequences of 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, you need to be aware of the possible tax consequences when the Fund makes distributions and when you sell shares, including an exchange to another Morgan Stanley Fund.

*Taxation of Distributions.* Your distributions normally are subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares. A distribution also may be subject to local income tax. Any income dividend distributions and any short-term capital gain distributions are taxable to you as ordinary income. Any long-term capital gain distributions are taxable as long-term capital gains, no matter how long you have owned shares in the Fund.

If certain holding period requirements are met with respect to your shares, a portion of the income dividends you receive may be taxed at the same rates 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, such income will not be considered long-term capital gains for other federal income tax purposes. For example, you will not be permitted to offset income dividends with capital losses. Short term capital gain distributions will continue to be taxed as ordinary income taxes.

If certain holding period requirements are met, corporate shareholders may be entitled to a dividends-received deduction for the portion of dividends they receive which are attributable to dividends received by such portfolios from U.S. corporations.

If you buy shares of the Fund before a distribution, you may be subject to tax on the entire amount of the taxable distribution you receive. Distributions are taxable to you even if they are paid from income or gain earned by the Fund before your investment (and thus were included in the price you paid for your Fund shares).

Investment income received by the Fund from sources within foreign countries may be subject to foreign income taxes.

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

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

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

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

**22**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

When you open your account, you should provide your social security or tax identification number on your investment application. By providing this information, you will avoid being subject to federal backup withholding at the applicable rate on taxable distributions and redemption proceeds. Any withheld amount would be sent to the IRS as an advance payment of your taxes due on your income for such year.

One of the requirements for favorable tax treatment as a regulated investment company under the Code is that the Fund derive at least 90% of its gross income from certain qualifying sources of income.

Shareholders who are not citizens or residents of the United States and certain foreign entities will generally be subject to withholding of U.S. tax of 30% on distributions made by 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 made to certain non-U.S. entities that fail to comply (or be 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 provide additional information to the Fund to enable the Fund to determine whether withholding is required.

Because each investor's tax circumstances are unique and the tax laws may change, you should consult your tax advisor about your investment.

**Dividends and Distributions**

The Fund's policy is to distribute to shareholders substantially all of its net investment income, if any, in the form of an annual dividend and to distribute net realized capital gains, if any, at least annually.

The Fund automatically reinvests all dividends and distributions in additional shares. However, you may elect to receive distributions in cash by giving written notice to the Fund or your Financial Intermediary or by checking the appropriate box in the Distribution Option section on the New Account Application.

For accounts held directly with the Fund's transfer agent for which the shareholder has elected to receive distributions via check, any distribution (dividend or capital gain) under $10.00 is automatically reinvested in additional shares regardless of your elected distribution option.

**Potential Conflicts of Interest**

As a diversified global financial services firm, Morgan Stanley, the parent company of the Adviser, engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley's interests or the interests of its clients may conflict with the interests of the Fund. Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with any new or successor funds, programs, accounts or businesses, the ''Affiliated Investment Accounts'') with a wide variety of investment objectives that in some instances may overlap or conflict with the Fund's investment objectives and present conflicts of interest. In addition, Morgan Stanley may also from time to time create new or successor Affiliated Investment Accounts that may compete with the Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and, in fact, they may not be. Conflicts of interest not described below may also exist.

For more information about conflicts of interest, see the section entitled "Potential Conflicts of Interest" in the SAI.

*Material Nonpublic Information.* It is expected that confidential or material nonpublic information regarding an investment or potential investment opportunity may become available to the Adviser. If such information becomes available, the Adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. Morgan Stanley has established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley. In limited circumstances, however, including for purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, personnel, including personnel of the investment adviser, on one side of an information barrier may have access to information and personnel on the other side of the information barrier through "wall crossings." The Adviser faces conflicts of interest in determining whether to engage in such wall crossings. Information obtained in connection with such wall crossings may limit or restrict the ability of the Adviser to engage in or otherwise effect transactions on behalf of the Fund (including purchasing or selling securities that the Adviser may otherwise have purchased or sold for the Fund in the absence of a wall crossing).

*Investments by Morgan Stanley and its Affiliated Investment Accounts.* In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the Adviser and the Investment team, may have obligations to other clients or investors in

**23**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of the Fund or its shareholders. The Fund's investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a result, the members of an Investment team may face conflicts in the allocation of investment opportunities among the Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the Adviser. Certain Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts. To seek to reduce potential conflicts of interest and to attempt to allocate such investment opportunities in a fair and equitable manner, the Adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the Adviser, including the Fund, fair access to investment opportunities consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the Adviser.

*Payments to Broker-Dealers and Other Financial Intermediaries.* The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of the Fund, to certain Financial Intermediaries (which may include affiliates of the Adviser and Distributor), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Fund and/or shareholder servicing. The prospect of receiving, or the receipt of, additional compensation, as described above, by Financial Intermediaries may provide such Financial Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Fund over other investment options with respect to which these Financial Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Fund or the amount that the Fund receives to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any disclosures provided by Financial Intermediaries as to their compensation. In addition, in certain circumstances, the Adviser restricts, limits or reduces the amount of the Fund's investment, or restricts the type of governance or voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.

*Morgan Stanley Trading and Principal Investing Activities.* Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for the Fund's holdings, although these activities could have an adverse impact on the value of one or more of the Fund's investments, or could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and potentially adverse to, that of the Fund.

*Morgan Stanley's Investment Banking and Other Commercial Activities.* Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment funds that may compete with the Fund and with respect to investments that the Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve an action of a different timing or nature than the action taken, by the Fund. Morgan Stanley may give advice and provide recommendations to persons competing with the Fund and/or any of the Fund's investments that are contrary to the Fund's best interests and/or the best interests of any of its investments. Morgan Stanley's activities on behalf of its clients (such as engagements as an underwriter or placement agent) may restrict or otherwise limit investment opportunities that may otherwise be available to the Fund.

Morgan Stanley may be engaged to act as a financial advisor to a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in connection with such transactions. Morgan Stanley's compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, the Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to a merger or an acquisition.

**24**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

Financial Highlights

The financial highlights tables that follow are intended to help you understand the financial performance of the Class I, Class A, Class C and Class R6 shares of the Fund since inception. Certain information reflects financial results for a single Fund share. The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).

The ratio of expenses to average net assets listed in the tables below for each class of shares of the Fund are based on the average net assets of the Fund for each of the periods listed in the tables. To the extent that the Fund's average net assets decrease over the Fund's next fiscal year, such expense ratios can be expected to increase, potentially significantly, because certain fixed costs will be spread over a smaller amount of assets.

The information below has been derived from the financial statements audited by Ernst & Young LLP, the Fund's independent registered public accounting firm. Ernst & Young LLP's report, along with the Fund's financial statements, are incorporated by reference into the Fund's SAI. The Annual Report to Shareholders (which includes the Fund's financial statements) and SAI are available at no cost from the Trust at the toll-free number noted on the back cover to this Prospectus.

**25**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Dynamic Value Portfolio**

---

| | | |
|:---|:---|:---|
| | **Class I** | **Class I** |
| <br>**Selected Per Share Data and Ratios** | **Year Ended**<br>**September 30, 2022** | **Period from March 19, 2021<sup>(1)</sup>** **to** **September 30, 2021** |
| **Net Asset Value, Beginning of Period** | $10.44<br>| $10.00<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.22<br>| 0.11<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.94)<br>| 0.33<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (0.72)<br>| 0.44<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.17)<br>| —<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.29)<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.46)<br>| —<br>|
| **Net Asset Value, End of Period** | $9.26<br>| $10.44<br>|
| **Total Return<sup>(3)</sup>**  | (7.26)%<br>| 4.40<br> %<br> <sup>(6)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $9763<br>| $10295<br>|
| Ratio of Expenses Before Expense Limitation | 1.51<br> %<br>| 6.44<br> %<br> <sup>(7)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 0.51<br> %<br> <sup>(4)</sup> <br>| 0.53<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Net Investment Income | 2.00<br> %<br> <sup>(4)</sup> <br>| 1.95<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.01<br> %<br>| 0.00<br> %<br> <sup>(5)(7)</sup> <br>|
| Portfolio Turnover Rate | 125<br> %<br>| 82<br> %<br> <sup>(6)</sup> <br>|

---

(1) Commencement of Operations.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

(6) Not annualized.

(7) Annualized.

**26**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Dynamic Value Portfolio**

---

| | | |
|:---|:---|:---|
| | **Class A** | **Class A** |
| <br>**Selected Per Share Data and Ratios** | **Year Ended**<br>**September 30, 2022** | **Period from March 19, 2021<sup>(1)</sup>** **to** **September 30, 2021** |
| **Net Asset Value, Beginning of Period** | $10.42<br>| $10.00<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.19<br>| 0.10<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.95)<br>| 0.32<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (0.76)<br>| 0.42<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.15)<br>| —<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.29)<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.44)<br>| —<br>|
| **Net Asset Value, End of Period** | $9.22<br>| $10.42<br>|
| **Total Return<sup>(3)</sup>**  | (7.70)%<br>| 4.20<br> %<br> <sup>(6)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $1379<br>| $27<br>|
| Ratio of Expenses Before Expense Limitation | 2.18<br> %<br>| 13.65<br> %<br> <sup>(7)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 0.89<br> %<br> <sup>(4)</sup> <br>| 0.90<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Net Investment Income | 1.81<br> %<br> <sup>(4)</sup> <br>| 1.84<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.01<br> %<br>| 0.00<br> %<br> <sup>(5)(7)</sup> <br>|
| Portfolio Turnover Rate | 125<br> %<br>| 82<br> %<br> <sup>(6)</sup> <br>|

---

(1) Commencement of Operations.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

(6) Not annualized.

(7) Annualized.

**27**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Dynamic Value Portfolio**

---

| | | |
|:---|:---|:---|
| | **Class C** | **Class C** |
| <br>**Selected Per Share Data and Ratios** | **Year Ended**<br>**September 30, 2022** | **Period from March 19, 2021<sup>(1)</sup>** **to** **September 30, 2021** |
| **Net Asset Value, Beginning of Period** | $10.38<br>| $10.00<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.11<br>| 0.06<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.93)<br>| 0.32<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (0.82)<br>| 0.38<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.13)<br>| —<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.29)<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.42)<br>| —<br>|
| **Net Asset Value, End of Period** | $9.14<br>| $10.38<br>|
| **Total Return<sup>(3)</sup>**  | (8.32)%<br>| 3.80<br> %<br> <sup>(6)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $1736<br>| $34<br>|
| Ratio of Expenses Before Expense Limitation | 2.77<br> %<br>| 15.35<br> %<br> <sup>(7)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 1.64<br> %<br> <sup>(4)</sup> <br>| 1.65<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Net Investment Income | 1.06<br> %<br> <sup>(4)</sup> <br>| 1.04<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.01<br> %<br>| 0.00<br> %<br> <sup>(5)(7)</sup> <br>|
| Portfolio Turnover Rate | 125<br> %<br>| 82<br> %<br> <sup>(6)</sup> <br>|

---

(1) Commencement of Operations.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

(6) Not annualized.

(7) Annualized.

**28**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Dynamic Value Portfolio**

---

| | | |
|:---|:---|:---|
| | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  |
| <br>**Selected Per Share Data and Ratios** | **Year Ended**<br>**September 30, 2022** | **Period from March 19, 2021<sup>(2)</sup>** **to** **September 30, 2021** |
| **Net Asset Value, Beginning of Period** | $10.44<br>| $10.00<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(3)</sup>  | 0.29<br>| 0.11<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (1.02)<br>| 0.33<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (0.73)<br>| 0.44<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.17)<br>| —<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.29)<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.46)<br>| —<br>|
| **Net Asset Value, End of Period** | $9.25<br>| $10.44<br>|
| **Total Return<sup>(4)</sup>**  | (7.35)%<br>| 4.40<br> %<br> <sup>(7)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $88921<br>| $10<br>|
| Ratio of Expenses Before Expense Limitation | 1.49<br> %<br>| 25.05<br> %<br> <sup>(8)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 0.49<br> %<br> <sup>(5)</sup> <br>| 0.50<br> %<br> <sup>(5)(8)</sup> <br>|
| Ratio of Net Investment Income | 2.85<br> %<br> <sup>(5)</sup> <br>| 1.98<br> %<br> <sup>(5)(8)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.01<br> %<br>| 0.00<br> %<br> <sup>(6)(8)</sup> <br>|
| Portfolio Turnover Rate | 125<br> %<br>| 82<br> %<br> <sup>(7)</sup> <br>|

---

(1) Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2) Commencement of Operations.

(3) Per share amount is based on average shares outstanding.

(4) Calculated based on the net asset value as of the last business day of the period.

(5) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6) Amount is less than 0.005%.

(7) Not annualized.

(8) Annualized.

**29**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Prospectus \| **Appendix**

Appendix A

**Intermediary-Specific Sales Charge Waivers and Discounts**

The availability of certain sales charge waivers and discounts will depend on whether you purchase your shares directly from the Fund or through a Financial Intermediary. Financial Intermediaries may have different policies and procedures regarding the availability of front-end sales charge waivers or CDSC waivers, which are discussed below. In all instances, it is the purchaser's responsibility to notify the Fund or the purchaser's Financial Intermediary at the time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts. For waivers and discounts not available through a particular Financial Intermediary, shareholders will have to purchase Fund shares directly from the Fund (or the Distributor) or through another Financial Intermediary to receive these waivers or discounts. A Financial Intermediary's administration and implementation of its particular policies with respect to any variations, waivers and/or discounts is neither supervised nor verified by the Fund, the Adviser or the Distributor. The Fund and the Distributor do not provide investment advice or recommendations or any form of tax or legal advice to existing or potential shareholders with respect to investment transactions involving the Fund.

\*\*\*\*\*

**Merrill Lynch**

Shareholders purchasing Fund shares through a Merrill Lynch platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at Merrill Lynch**

• Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan

• Shares purchased by a 529 Plan (does not include 529 Plan units or 529-specific share classes or equivalents)

• Shares purchased through a Merrill Lynch affiliated investment advisory program

• Shares exchanged due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

• Shares purchased by third party investment advisors on behalf of their advisory clients through Merrill Lynch's platform

• Shares of funds purchased through the Merrill Edge Self-Directed platform (if applicable)

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family)

• Shares exchanged from Class C (i.e. level-load) shares of the same fund pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

• Employees and registered representatives of Merrill Lynch or its affiliates and their family members

• Directors or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus

• Eligible shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). Automated transactions (i.e. systematic purchases and withdrawals) and purchases made after shares are automatically sold to pay Merrill Lynch's account maintenance fees are not eligible for reinstatement

**CDSC Waivers on A and C Shares available at Merrill Lynch**

• Death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code

• Shares sold to pay Merrill Lynch fees but only if the transaction is initiated by Merrill Lynch

• Shares acquired through a right of reinstatement

• Shares held in retirement brokerage accounts, that are exchanged for a lower cost share class due to transfer to certain fee based accounts or platforms (applicable to A and C shares only)

**30**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Shares received through an exchange due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

**Front-end Load Discounts Available at Merrill Lynch: Breakpoints, Rights of Accumulation and Letters of Intent** 

• Breakpoints as described in this Prospectus

• Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts as described in the Fund's prospectus will be automatically calculated based on the aggregated holding of fund family assets held by accounts (including 529 program holdings, where applicable) within the purchaser's household at Merrill Lynch. Eligible fund family assets not held at Merrill Lynch may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent (LOI) which allow for breakpoint discounts based on anticipated purchases within a fund family, through Merrill Lynch, over a 13-month period of time (if applicable)

**Morgan Stanley Wealth Management**

Shareholders purchasing Fund shares through a Morgan Stanley Wealth Management transactional brokerage account will be eligible only for the following front-end sales charge waivers with respect to Class A shares, which may differ from and may be more limited than those disclosed elsewhere in this Prospectus or SAI, except that such shareholders will continue to be eligible for front-end sales charge breakpoint discounts as described in the Prospectus.

**Front-end Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management**

• Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or Keogh plans

• Morgan Stanley employee and employee-related accounts according to Morgan Stanley's account linking rules

• Shares purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund

• Shares purchased through a Morgan Stanley self-directed brokerage account

• Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management's share class conversion program

• Shares purchased from the proceeds of redemptions within the same fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge

**Raymond James & Associates, Inc., Raymond James Financial Services, Inc. and each entity's affiliates ("Raymond James")**

Shareholders purchasing fund shares through a Raymond James platform or account, or through an introducing broker-dealer or independent registered investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at Raymond James**

• Shares purchased in an investment advisory program

• Shares purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions

• Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement)

• A shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James

**CDSC Waivers on Classes A and C shares available at Raymond James**

• Death or disability of the shareholder

**31**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the Fund's Prospectus

• Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James

• Shares acquired through a right of reinstatement

**Front-end load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent**

• Breakpoints as described in this Prospectus

• Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor about such assets

• Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets

**Oppenheimer & Co. Inc. ("OPCO")**

Shareholders purchasing Fund shares through an OPCO platform or account are eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at OPCO**

• Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan

• Shares purchased by or through a 529 Plan

• Shares purchased through an OPCO affiliated investment advisory program

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Restatement).

• A shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO

• Employees and registered representatives of OPCO or its affiliates and their family members

• Directors or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus

**CDSC Waivers on A and C Shares available at OPCO**

• Death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the prospectus

• Shares sold to pay OPCO fees but only if the transaction is initiated by OPCO

• Shares acquired through a right of reinstatement

**32**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Front-end load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent**

• Breakpoints as described in this prospectus

• Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

**Janney**

If you purchase Fund shares through a Janney Montgomery Scott LLC ("Janney") brokerage account, you are eligible for the following load waivers (front-end sales charge waivers and CDSC, or back-end sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Prospectus or SAI.

**Front-end Sales Charge Waivers on Class A shares available at Janney**

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family)

• Shares purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e., right of reinstatement)

• Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or Keogh plans

• Shares acquired through a right of reinstatement

• Class C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Janney's policies and procedures

**CDSC Waivers on Class A and C shares available at Janney**

• Shares sold upon the death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Shares purchased in connection with a return of excess contributions from an IRA account

• Shares sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching age 70½ as described in the Fund's Prospectus

• Shares sold to pay Janney fees but only if the transaction is initiated by Janney

• Shares acquired through a right of reinstatement

• Shares exchanged into the same share class of a different fund

**Front-end Sales Charge\* Discounts available at Janney: Breakpoints, Rights of Accumulation and/or Letters of Intent**

• Breakpoints as described in this Prospectus

• Rights of Accumulation (ROA), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Janney. Eligible fund family assets not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets

\*Also referred to as an "initial sales charge."

**33**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Stifel, Nicolaus & Company, Incorporated ("Stifel")**

Effective July 1, 2020, shareholders purchasing Fund shares through a Stifel platform or account or who own shares for which Stifel or an affiliate is the broker-dealer of record are eligible for the following additional sales charge waiver.

**Front-end Sales Load Waiver on Class A Shares at Stifel**

• Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Stifel's policies and procedures. All other sales charge waivers and reductions described elsewhere in the Fund's Prospectus or SAI still apply.

**Robert W. Baird & Co. ("Baird")**

Shareholders purchasing fund shares through a Baird platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.

**Front-End Sales Charge Waivers on A-shares Available at Baird**

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund

• Shares purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird

• Shares purchased using the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same accounts, and (3) redeemed shares were subject to a front-end or deferred sales charge (known as rights of reinstatement)

• A shareholder in the Funds C Shares will have their share converted at net asset value to A shares of the same fund if the shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird

• Employer-sponsored retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs or SAR-SEPs

**CDSC Waivers on A and C shares Available at Baird**

• Shares sold due to death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Shares bought due to returns of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable Internal Revenue Service regulations as described in the Fund's prospectus

• Shares sold to pay Baird fees but only if the transaction is initiated by Baird

• Shares acquired through a right of reinstatement

**Front-End Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of Accumulations**

• Breakpoints as described in this prospectus

• Rights of accumulations which entitles shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Baird. Eligible fund family assets not held at Baird may be included in the rights of accumulations calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent (LOI) allow for breakpoint discounts based on anticipated purchases within a fund family, through Baird, over a 13-month period of time

**34**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Ameriprise Financial**

The following information applies to Class A share purchases if you have an account with or otherwise purchase Fund shares through Ameriprise Financial:

• Effective January 15, 2021, shareholders purchasing Fund shares through an Ameriprise Financial retail brokerage account are eligible for the following front-end sales charge waivers, which may differ from those disclosed elsewhere in this Prospectus or in the SAI.

• Employer-sponsored retirement plans (e.g., 401(k) plans 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not any other fund within the same fund family).

• Shares exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent that this Prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following a shorter holding period, that waiver will apply.

• Employees and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.

• Shares purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor's spouse, advisor's lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor's lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse of a covered family member who is a lineal descendant.

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e. Rights of Reinstatement).

**Edward D. Jones & Co., L.P. ("Edward Jones")**

Effective on or after April 29, 2022, the following information supersedes prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones (also referred to as "shareholders") purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible only for the following sales charge discounts (also referred to as "breakpoints") and waivers, which can differ from discounts and waivers described elsewhere in the mutual fund prospectus or statement of additional information or through another broker-dealer. In all instances, it is the shareholder's responsibility to inform Edward Jones at the time of purchase of any relationship, holdings of Fund shares, or other facts qualifying the purchaser for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they have questions regarding their eligibility for these discounts and waivers.

**Breakpoints**

• Breakpoint pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.

**Rights of Accumulation ("ROA")**

• The applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market funds and any assets held in group retirement plans) of Fund shares held by the shareholder or in an account grouped by Edward Jones with other accounts for the purpose of providing certain pricing considerations ("pricing groups"). If grouping assets as a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for shares purchased with a sales charge.

• The employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.

• ROA is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).

**Letter of Intent ("LOI")**

• Through a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period from the date Edward Jones receives the LOI. The LOI is determined by calculating the higher of cost or

**35**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

market value of qualifying holdings at LOI initiation in combination with the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint discounts. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies to the total amount. The inclusion of eligible fund family assets in the LOI calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if LOI is not met.<br>

• If the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.

**Sales Charge Waivers**

Sales charges are waived for the following shareholders and in the following situations:

• Associates of Edward Jones and its affiliates and their family members who are in the same pricing group (as determined by Edward Jones under its policies and procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.

• Shares purchased in an Edward Jones fee-based program.

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment.

• Shares purchased from the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are from the sale of shares within 60 days of the purchase, and 2) the sale and purchase are made in the same share class and the same account or the purchase is made in an individual retirement account with proceeds from liquidations in a nonretirement account.

• Shares exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable sales charge as disclosed in the prospectus.

• Exchanges from Class C shares to Class A shares of the same fund, generally, in the 84th month following the anniversary of the purchase date or earlier at the discretion of Edward Jones.

**Contingent Deferred Sales Charge ("CDSC") Waivers**

If the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder is responsible to pay the CDSC except in the following conditions:

• The death or disability of the shareholder.

• Systematic withdrawals with up to 10% per year of the account value.

• Return of excess contributions from an Individual Retirement Account (IRA).

• Shares sold as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the shareholder reaches qualified age based on applicable IRS regulations.

• Shares sold to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.

• Shares exchanged in an Edward Jones fee-based program.

• Shares acquired through NAV reinstatement.

• Shares redeemed at the discretion of Edward Jones for Minimums Balances, as described below.

**Other Important Information Regarding Transactions Through Edward Jones**

**Minimum Purchase Amounts**

• Initial purchase minimum: $250

• Subsequent purchase minimum: none

**Minimum Balances**

• Edward Jones has the right to redeem at its discretion fund holdings with a balance of $250 or less. The following are examples of accounts that are not included in this policy:

**36**

------

[Back To **Table of Contents**](#TOC_15647)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

○ A fee-based account held on an Edward Jones platform

○ A 529 account held on an Edward Jones platform

○ An account with an active systematic investment plan or LOI

**Exchanging Share Classes**

• At any time it deems necessary, Edward Jones has the authority to exchange at NAV a shareholder's holdings in a fund to Class A shares of the same fund.

**37**

------

[Back To **Table of Contents**](#TOC_15647)

Where to Find Additional Information

In addition to this Prospectus, the Fund has an SAI, dated January 27, 2023 (as may be supplemented from time to time), which contains additional, more detailed information about the Trust and the Fund. The SAI is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus.

The Trust publishes Annual and Semi-Annual Reports ("Shareholder Reports") that contain additional information about the Fund's investments. In the Fund's Annual Report to Shareholders, you will find a discussion of the market conditions and the investment strategies that significantly affected the Fund's performance during the last fiscal year. For additional Trust information, including information regarding the investments comprising the Fund, please call the toll-free number below.

You may obtain the SAI and Shareholder Reports without charge by contacting the Trust at the toll-free number below or on our Internet site at: www.morganstanley.com/im. If you purchased shares through a Financial Intermediary, you may also obtain these documents, without charge, by contacting your Financial Intermediary.

Shareholder Reports and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.

Morgan Stanley Institutional Fund Trust

c/o SS&C GIDS

P.O. Box 219804

Kansas City, MO 64121-9804

For Shareholder Inquiries,

call toll-free 1-800-869-6397

Prices and Investment Results are available at www.morganstanley.com/im.

The Trust's 1940 Act registration number is 811-03980.© 2023 Morgan Stanley

IFTDYVPRO 01/23

------

![image](pr15574img002.jpg)

Morgan Stanley Institutional Fund Trust

**Fixed Income Portfolios**

Core Plus Fixed Income Portfolio

Corporate Bond Portfolio

High Yield Portfolio

Short Duration Income Portfolio

------

**Prospectus** \| January 27, 2023

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** |
| **Fund** | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Core Plus Fixed Income Portfolio | MPFIX | MFXAX | MSIOX | MSCKX | MPLRX |
| Corporate Bond Portfolio | MPFDX | MIGAX | MGILX | MSBOX |  |
| High Yield Portfolio | MSYIX | MSYPX | MSYLX | MSHDX | MSHYX |
| Short Duration Income Portfolio | MPLDX | MLDAX | MSJLX | MSLDX | MSDSX |

---

![image](pr15574img001.jpg)

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

An investment in a Fund is not a bank deposit and is not insured by the Federal Deposit Insurance Corporation or any other

government agency. An investment in a Fund involves investment risks, and you may lose money in the fund.

IFTFIPRO 01/23

------

**Table of Contents**

---

| | |
|:---|:---|
|  | **Page** |
| [**Fund Summary**](#ref_chapter_2_15574)  | 1 |
| [Core Plus Fixed Income Portfolio](#ref_chapter_2-sect1_1_15574)  | 1 |
| [Corporate Bond Portfolio](#ref_chapter_2-sect1_12_15574)  | 10 |
| [High Yield Portfolio](#ref_chapter_2-sect1_23_15574)  | 17 |
| [Short Duration Income Portfolio](#ref_chapter_2-sect1_33_15574)  | 24 |
| [**Details of the Funds**](#ref_chapter_3_15574)  | 31 |
| [Core Plus Fixed Income Portfolio](#ref_chapter_3-sect1_1_15574)  | 31 |
| [Corporate Bond Portfolio](#ref_chapter_3-sect1_2_15574)  | 32 |
| [High Yield Portfolio](#ref_chapter_3-sect1_3_15574)  | 33 |
| [Short Duration Income Portfolio](#ref_chapter_3-sect1_4_15574)  | 34 |
| [**Additional Information about the Funds' Investment Strategies and Related Risks**](#ref_chapter_4_15574)  | 35 |
| [**Fund Management**](#ref_chapter_5_15574)  | 51 |
| [**Shareholder Information**](#ref_chapter_6_15574)  | 53 |
| [**Financial Highlights**](#ref_chapter_7_15574)  | 67 |
| [Core Plus Fixed Income Portfolio](#ref_chapter_7-sect1_2_15574)  | 68 |
| [Corporate Bond Portfolio](#ref_chapter_7-sect1_3_15574)  | 73 |
| [High Yield Portfolio](#ref_chapter_7-sect1_4_15574)  | 77 |
| [Short Duration Income Portfolio](#ref_chapter_7-sect1_5_15574)  | 82 |
| [**Appendix A**](#ref_chapter_8_15574)  | 87 |

---

------

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Core Plus Fixed Income Portfolio

**Investment Objective**

The Core Plus Fixed Income Portfolio (the "Fund") seeks above-average total return over a market cycle of three to five years.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay fees** **other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below.**

For purchases of Class A shares, you may qualify for a sales charge discount if the cumulative net asset value per share ("NAV") of Class A shares of the Fund being purchased in a single transaction, together with the NAV of any Class A, Class L and Class C shares of the Fund already held in Related Accounts (as defined in the section of the Prospectus entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares") as of the date of the transaction as well as Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") and including shares of Morgan Stanley Money Market Funds (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") that you acquired in an exchange of Class A, Class L or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios already held in Related Accounts as of the date of the transaction, amounts to $100,000 or more. More information about this combined purchase discount and other discounts is available from your financial intermediary, on page 56 of the Prospectus in the section entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares" and in Appendix A attached to the Prospectus.

Class I shares may be available on brokerage platforms of firms that have agreements with the Fund's principal underwriter permitting such firms to (i) offer Class I shares solely when acting as an agent for the investor and (ii) impose on an investor transacting in Class I shares through such platforms a commission and/or other forms of compensation to the broker. Shares of the Fund are available in other share classes that have different fees and expenses.

**Shareholder Fees** (fees paid directly from your investment)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Maximum sales charge (load) imposed on purchases (as a percentage of offering price) |  | 3.25% |  |  |  |
| Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or NAV at redemption) |  | None<sup>1</sup> |  | 1.00%<sup>2</sup> |  |

---

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Advisory Fee | 0.38% | 0.38% | 0.38% | 0.38% | 0.38% |
| Distribution and/or Shareholder Service (12b-1) Fee |  | 0.25% | 0.50% | 1.00% |  |
| Other Expenses | 0.25% | 0.26% | 0.43% | 0.24% | 0.15% |
| Total Annual Fund Operating Expenses<sup>3</sup>  | 0.63% | 0.89% | 1.31% | 1.62% | 0.53% |
| Fee Waiver and/or Expense Reimbursement<sup>3</sup>  | 0.21% | 0.12% | 0.29% | 0.10% | 0.16% |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>3</sup>  | 0.42% | 0.77% | 1.02% | 1.52% | 0.37% |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year). After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund. The example for Class C shares reflects the conversion to Class A shares after eight years. Please refer to the section of the Prospectus entitled "Shareholder Information—Conversion Features" for more information. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

**1**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Core Plus Fixed Income Portfolio (Con't)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $43 | $181 | $330 | $766 |
| Class A | $401  | $588  | $791 | $1375 |
| Class L | $104  | $387 | $690  | $1554  |
| Class C | $255 | $501 | $872 | $1718 |
| Class R6 | $38 | $154 | $280 | $650 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $43 | $181 | $330 | $766 |
| Class A | $401  | $588  | $791 | $1375 |
| Class L | $104  | $387 | $690  | $1554  |
| Class C | $155 | $501 | $872 | $1718 |
| Class R6 | $38 | $154 | $280 | $650 |

---

---

| | |
|:---|:---|
| 1 | Investments in Class A shares that are not subject to any sales charges at the time of purchase are subject to a contingent deferred sales charge ("CDSC") of 0.75% that will be imposed if you sell your shares within 12 months except for certain specific circumstances. See "Shareholder Information—How To Redeem Fund Shares" for further information about the CDSC waiver categories. |

---

2 The Class C CDSC is only applicable if you sell your shares within one year after the last day of the month of purchase. See "Shareholder Information—How To Redeem Fund Shares" for a complete discussion of the CDSC.

---

| | |
|:---|:---|
| 3 | The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.42% for Class I, 0.77% for Class A, 1.02% for Class L, 1.52% for Class C and 0.37% for Class R6. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust") acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 266% of the average value of its portfolio.

**Principal Investment Strategies**

Under normal circumstances, at least 80% of the Fund's assets will be invested in fixed-income securities. This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. The Fund invests primarily in a diversified mix of U.S. dollar-denominated investment grade fixed-income securities, including U.S. government, corporate, municipal, mortgage- and asset-backed securities. The Fund will ordinarily seek to maintain an average weighted maturity between five and ten years.

The Adviser employs a value approach toward fixed-income investing and evaluates the relative attractiveness among corporate, mortgage and U.S. government securities, and also may invest in non-dollar-denominated issues. The Adviser relies upon value measures to guide its decisions regarding sector, security and country selection, such as the relative attractiveness of the extra yield offered by securities other than those issued by the U.S. Treasury. The Adviser also measures various types of risk by monitoring interest rates, inflation, the shape of the yield curve, credit risk, prepayment risk, country risk and currency valuations. The Fund may engage in frequent trading to achieve its investment objective.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

The Fund may invest opportunistically in fixed-income securities that are rated below "investment grade" or are not rated, but are of equivalent quality. These fixed-income securities are often referred to as "high yield securities" or "junk bonds." High yield securities are fixed-income securities rated by one or more rating agencies below Baa3 by Moody's Investors Service, Inc. ("Moody's"), below BBB- by S&P Global Ratings Group, a division of S&P Global Inc. ("S&P"), below BBB- by Fitch Ratings, Inc. ("Fitch") or, if unrated, considered by the Adviser to be of equivalent quality. The Fund may also invest in loan-related investments, such as public

**2**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Core Plus Fixed Income Portfolio (Con't)

bank loans made by banks or other financial institutions and loan participations and assignments, which may be rated investment grade or below investment grade. In addition, the Fund may invest in convertible securities.

The Fund's mortgage securities may include collateralized mortgage obligations ("CMOs"), commercial mortgage-backed securities ("CMBS"), stripped mortgage-backed securities ("SMBS") and inverse floating rate obligations ("inverse floaters"). In addition, the Fund may invest in to-be-announced pass-through mortgage securities, which settle on a delayed delivery basis ("TBAs"). The Fund may also invest in securities of foreign issuers, including issuers located in emerging market or developing countries. The securities in which the Fund may invest may be denominated in U.S. dollars or in currencies other than U.S. dollars. The Fund may also invest in restricted and illiquid securities.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. 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. The Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities. Derivative instruments used by the Fund will be counted toward the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Asset-Backed Securities.** Asset-backed securities are subject to credit (such as a borrower's default on its mortgage obligation and the default or failure of a guarantee underlying the asset-backed security), interest rate and certain additional risks, including the risk that various federal and state consumer laws and other legal and economic factors may result in the collateral backing the securities being insufficient to support payment on the securities. Some asset-backed securities also entail prepayment risk and extension risk, which may vary depending on the type of asset. Due to these risks, asset-backed securities may become more volatile in certain interest rate environments.

• **Credit and Interest Rate Risk.** Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. In such instances, the value of the Fund could decline and the Fund could lose money. Interest rate risk refers to the decline in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. The Fund may invest in variable and floating rate loans and other variable and floating rate securities. Although these instruments are generally less sensitive to interest rate changes than fixed rate instruments, the value of variable and floating rate loans and other securities may decline if their interest rates do not rise as quickly, or as much, as general interest rates. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.

• **Fixed-Income Securities.** Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). For example, a type of fixed-income securities in which the Fund may invest are corporate debt obligations. In addition to interest rate, credit and other risks, corporate debt obligations are also subject to factors directly related to the issuer, such as the credit rating of the corporation, the corporation's performance and perceptions of the corporation in the marketplace, and by factors not directly related to the issuer, such as general market liquidity, economic conditions and inflation. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). The Fund is not limited as to the maturities (when a debt security provides its final payment) or durations (measure of interest rate sensitivity) of the securities in which it may invest. Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. A portion of the Fund's fixed-income securities may be rated below investment grade. The Fund may be subject to

**3**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Core Plus Fixed Income Portfolio (Con't)

certain liquidity risks that may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. To the extent that the Fund invests in convertible securities, and the convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying security.<br>

• **Municipals.** Because the Fund may invest in municipal securities (also referred to as municipal obligations), the Fund may be susceptible to political, legislative, economic, regulatory, tax or other factors affecting issuers of these municipal securities, such as state and local governments and their agencies. To the extent that the Fund invests in municipal securities of issuers in the same economic sector, it could be more sensitive to economic, business or political developments that affect such sector. Municipal securities and their issuers may be more susceptible to downgrade, loss of revenue, default and bankruptcy because of recent periods of economic stress. Municipal securities also involve the risk that an issuer may call the securities for redemption, which could force the Fund to reinvest the proceeds at a lower rate of interest.

• **High Yield Securities ("Junk Bonds").** The Fund's investments in high yield securities expose it to a substantial degree of credit risk. Investing in emerging markets intensifies risk, because high yield securities may be more volatile in price in certain environments. High yield securities may be issued by companies that are restructuring, are smaller and less creditworthy or are more highly indebted than other companies, and therefore they may have more difficulty making scheduled payments of principal and interest. High yield securities are subject to greater risk of loss of income and principal than higher rated securities and may be considered speculative. High yield securities may experience reduced liquidity, and sudden and substantial decreases in price. An economic downturn affecting an issuer of high yield securities may result in an increased incidence of default. In the event of a default, the Fund may incur additional expenses to seek recovery.

• **Loan-Related Investments.** In addition to risks generally associated with debt investments, loan-related investments, such as public bank loans and loan participations and assignments, are subject to other risks. Such investments may be subject to additional risks including subordination to other creditors, no collateral or limited rights in collateral, lack of a regular trading market, extended settlement periods, liquidity risks, prepayment risks, potentially less protection under the federal securities laws and lack of publicly available information. Bank loans are subject to the risk of default in the payment of interest or principal on a loan, which will result in a reduction of income to the Fund, and a potential decrease in the Fund's NAV. The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates. Because public bank loans usually rank lower in priority of payment to senior loans, they present a greater degree of investment risk. These bank loans may exhibit greater price volatility as well.

• **Mortgage-Backed Securities.** Mortgage-backed securities entail prepayment risk, which generally increases during a period of falling interest rates. Rising interest rates tend to discourage refinancings, with the result that the average life and volatility of mortgage-backed securities will increase and market price will decrease. Rates of prepayment, faster or slower than expected by the Adviser, could reduce the Fund's yield, increase the volatility of the Fund and/or cause a decline in NAV. Mortgage-backed securities are also subject to extension risk, which is the risk that rising interest rates could cause mortgages or other obligations underlying the securities to be prepaid more slowly than expected, thereby lengthening the duration of such securities, increasing their sensitivity to interest rate changes and causing their prices to decline. Certain mortgage-backed securities may be more volatile and less liquid than other traditional types of debt securities. In addition, mortgage-backed securities are subject to credit risk. The Fund may invest in non-agency mortgage-backed securities offered by non-governmental issuers, such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers. Non-agency mortgage-backed securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-backed securities that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying non-agency mortgage-backed securities may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored mortgage-backed securities and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of a mortgage-backed security and could result in losses to the Fund. The risk of such defaults is generally higher in the case of mortgage pools that include subprime mortgages. Furthermore, mortgage-backed securities may be subject to risks associated with the assets underlying those securities, such as a decline in value. Investments in mortgage-backed securities may give rise to a form of leverage (indebtedness) and may cause the Fund's portfolio turnover rate to appear higher. Leverage may cause the Fund to be more volatile than if the Fund had not been leveraged. The risks associated with mortgage-backed securities typically become elevated during periods of distressed economic, market, health and labor conditions. In particular, increased levels of unemployment, delays and delinquencies in payments of mortgage and rent obligations, and uncertainty regarding the effects and extent of government intervention with respect to mortgage payments and other economic matters may adversely affect the Fund's investments in mortgage-backed securities.

• **U.S. Government Securities.** Different types of U.S. government securities are subject to different levels of credit risk, including the risk of default, depending on the nature of the particular government support for that security. For example, a U.S. government- sponsored entity, such as Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, although chartered or sponsored by an Act of Congress, may issue securities that are neither insured nor guaranteed by the U.S. Treasury

**4**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Core Plus Fixed Income Portfolio (Con't)

and, therefore, are not backed by the full faith and credit of the United States. With respect to U.S. government securities that are not backed by the full faith and credit of the United States, there is the risk that the U.S. Government will not provide financial support to such U.S. government agencies, instrumentalities or sponsored enterprises if it is not obligated to do so by law.<br>

• **Foreign and Emerging Market Securities.** Investments in foreign markets entail special risks such as currency, political (including geopolitical) , economic and market risks. There also may be greater market volatility, less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and custody costs, decreased market liquidity and less government and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The risks of investing in emerging market countries are greater than the risks associated with investments in foreign developed countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. Certain emerging market or developing countries are among the largest debtors to commercial banks and foreign governments. The issuer or governmental authority that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or pay interest when due in accordance with the terms of such obligations. In addition, foreign governments may default on their debt securities, which may require holders of such securities to participate in debt rescheduling or additional lending to defaulting governments. Moreover, there is no bankruptcy proceeding by which defaulted sovereign debt may be collected in whole or in part. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging market countries. In addition, the Fund's investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged, the value of those investments will fluctuate with U.S. dollar exchange rates. To the extent hedged by the use of foreign currency forward exchange contracts, the precise matching of the foreign currency forward exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. There is additional risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken and that foreign currency forward exchange contracts create exposure to currencies in which the Fund's securities are not denominated. The use of foreign currency forward exchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. Economic sanctions and other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities , negatively impact the value or liquidity of the Fund's investments , significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices , or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies .

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **Derivatives.** Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument, including market risk, and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates , risks that the transactions may not be liquid , risks arising from margin and payment requirements, risks arising from mispricing or valuation

**5**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Core Plus Fixed Income Portfolio (Con't)

complexity and operational and legal risks. Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Investments in currency derivatives may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. Foreign currency forward exchange contracts and currency futures and options contracts create exposure to currencies in which the Fund's securities are not denominated.<br>

• **When-Issued Securities, Delayed Delivery Securities and Forward Commitments.** The Fund may purchase or sell securities that it is entitled to receive on a when-issued, delayed delivery or through a forward commitment basis. There can be no assurance that a security purchased on a when-issued basis will be issued or that a security purchased or sold on a delayed delivery basis or through a forward commitment will be delivered. Also, the value of securities in these transactions on the delivery date may be more or less than the price paid by the Fund to purchase the securities. The Fund will lose money if the value of the security in such a transaction declines below the purchase price and will not benefit if the value of the security appreciates above the sale price during the commitment period.

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Portfolio Turnover.** Consistent with its investment policies, the Fund will purchase and sell securities without regard to the effect on portfolio turnover. Higher portfolio turnover will cause the Fund to incur additional transaction costs.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Class I shares' performance from year-to-year and by showing how the Fund's average annual returns for the past one, five and 10 year periods and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The performance of the other classes, which is shown in the table below, will differ because the classes have different ongoing fees. The Fund's returns in the table include the maximum applicable sales charge for Class A and Class C and assume you sold your shares at the end of each period (unless otherwise noted). The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15574img003.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 03/31/16 | 6.65% |

---

**6**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Core Plus Fixed Income Portfolio (Con't)

---

| | | |
|:---|:---|:---|
| **Low Quarter** | 03/31/22 | -5.95% |

---

**7**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Core Plus Fixed Income Portfolio (Con't)

**Average Annual Total Returns<sup>1</sup>**

(for the calendar periods ended December 31, 2022)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Past**<br>**One Year** | **Past**<br>**Five Years** | **Past**<br>**Ten Years** | **Since Inception** |
| **Class I** (commenced operations on 11/14/84) | **Class I** (commenced operations on 11/14/84) | **Class I** (commenced operations on 11/14/84) | **Class I** (commenced operations on 11/14/84) | **Class I** (commenced operations on 11/14/84) |
| Return Before Taxes | -14.13% | 0.32% | 2.65% | 6.35% |
| Return After Taxes on Distributions<sup>2</sup>  | -15.47% | -1.11% | 1.17% | 3.90% |
| Return After Taxes on Distributions and Sale of Fund Shares | -8.34% | -0.28% | 1.41% | 3.99% |
| **Class A** (commenced operations on 11/7/96) | **Class A** (commenced operations on 11/7/96) | **Class A** (commenced operations on 11/7/96) | **Class A** (commenced operations on 11/7/96) | **Class A** (commenced operations on 11/7/96) |
| Return Before Taxes | -17.14% | -0.67% | 1.97% | 3.81% |
| **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) |
| Return Before Taxes | -14.68% | -0.30% | 2.05% | 2.42% |
| **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) |
| Return Before Taxes | -15.86% | -0.72% | N/A | 1.19% |
| **Class R6** (commenced operations on 6/15/18) | **Class R6** (commenced operations on 6/15/18) | **Class R6** (commenced operations on 6/15/18) | **Class R6** (commenced operations on 6/15/18) | **Class R6** (commenced operations on 6/15/18) |
| Return Before Taxes | -14.10% | N/A | N/A | 0.74% |
| Bloomberg U.S. Aggregate Index (reflects no deduction for fees, expenses or taxes)<sup>3</sup>  | -13.01% | 0.02% | 1.06% | 6.07%<sup>4</sup> |
| Lipper Core Plus Bond Funds Index (reflects no deduction for taxes)<sup>5</sup>  | -13.55% | 0.35% | 1.47% | N/A |

---

1 During 2016, 2017 and 2019, the Fund received proceeds related to certain non-recurring litigation settlements. Had these settlements not occurred, the five and 10 year and since inception (where applicable) returns before and after taxes for such periods would have been lower.

2 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

---

| | |
|:---|:---|
| 3 | The Bloomberg U.S. Aggregate Index tracks the performance of U.S. government agency and Treasury securities, investment-grade corporate debt securities, agency mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities. It is not possible to invest directly in an index. |

---

4 Since Inception reflects the inception date of Class I.

5 The Lipper Core Plus Bond Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Core Plus Bond Fund classification. There are currently 30 funds represented in this Index.

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Fund's other classes will vary from Class I shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**8**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Core Plus Fixed Income Portfolio (Con't)

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of the Fixed Income team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began Managing Fund** |
| Neil Stone | Managing Director | January 2011 |
| Matthew Dunning | Executive Director | October 2014 |
| Joseph Mehlman | Managing Director | April 2013 |
| Gregory Finck | Managing Director | May 2015 |

---

**Purchase and Sale of Fund Shares**

*The Trust has suspended offering Class L shares of the Fund to all investors. The Class L shareholders of the Fund do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders may invest through reinvestment of dividends and distributions.*

The minimum initial investment generally is $1 million for Class I shares and $1,000 for each of Class A and Class C shares of the Fund. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and in each case subject to the discretion of the Adviser. The minimum initial investment may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business directly from the Fund by mail (c/o SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-800-869-6397) or by contacting an authorized third-party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's "Distributor," Morgan Stanley Distribution, Inc. (each, a "Financial Intermediary"). In addition, you can sell Fund shares at any time by enrolling in a systematic withdrawal plan. If you sell Class A or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Fund shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

**9**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Corporate Bond Portfolio

**Investment Objective**

The Corporate Bond Portfolio (the "Fund") seeks above-average total return over a market cycle of three to five years.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay fees** **other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below.**

For purchases of Class A shares, you may qualify for a sales charge discount if the cumulative net asset value per share ("NAV") of Class A shares of the Fund being purchased in a single transaction, together with the NAV of any Class A, Class L and Class C shares of the Fund already held in Related Accounts (as defined in the section of the Prospectus entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares") as of the date of the transaction as well as Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") and including shares of Morgan Stanley Money Market Funds (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") that you acquired in an exchange of Class A, Class L or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios already held in Related Accounts as of the date of the transaction, amounts to $100,000 or more. More information about this combined purchase discount and other discounts is available from your financial intermediary, on page 56 of the Prospectus in the section entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares" and in Appendix A attached to the Prospectus.

Class I shares may be available on brokerage platforms of firms that have agreements with the Fund's principal underwriter permitting such firms to (i) offer Class I shares solely when acting as an agent for the investor and (ii) impose on an investor transacting in Class I shares through such platforms a commission and/or other forms of compensation to the broker. Shares of the Fund are available in other share classes that have different fees and expenses.

**Shareholder Fees** (fees paid directly from your investment)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** |
| Maximum sales charge (load) imposed on purchases (as a percentage of offering price) |  | 3.25% |  |  |
| Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or NAV at redemption) |  | None<sup>1</sup> |  | 1.00%<sup>2</sup> |

---

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** |
| Advisory Fee | 0.38% | 0.38% | 0.38% | 0.38% |
| Distribution and/or Shareholder Service (12b-1) Fee |  | 0.25%<sup>3</sup> | 0.50% | 1.00% |
| Other Expenses | 0.48% | 0.46% | 0.55% | 0.54% |
| Total Annual Fund Operating Expenses<sup>4</sup>  | 0.86% | 1.09%<sup>3</sup> | 1.43% | 1.92% |
| Fee Waiver and/or Expense Reimbursement<sup>4</sup>  | 0.16% | 0.10%<sup>3</sup> | 0.00% | 0.12% |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>4</sup>  | 0.70% | 0.99%<sup>3</sup> | 1.43% | 1.80% |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year). After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund. The example for Class C shares reflects the conversion to Class A shares after eight years. Please refer to the section of the Prospectus entitled "Shareholder Information—Conversion Features" for more information. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

**10**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Corporate Bond Portfolio (Con't)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $72 | $258 | $461 | $1046 |
| Class A | $423 | $651 | $897 | $1602 |
| Class L | $146 | $452 | $782 | $1713 |
| Class C | $283 | $591 | $1026 | $2017 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $72 | $258 | $461 | $1046 |
| Class A | $423 | $651 | $897 | $1602 |
| Class L | $146 | $452 | $782 | $1713 |
| Class C | $183 | $591 | $1026 | $2017 |

---

---

| | |
|:---|:---|
| 1 | Investments in Class A shares that are not subject to any sales charges at the time of purchase are subject to a contingent deferred sales charge ("CDSC") of 0.75% that will be imposed if you sell your shares within 12 months except for certain specific circumstances. See "Shareholder Information—How To Redeem Fund Shares" for further information about the CDSC waiver categories. |

---

2 The Class C CDSC is only applicable if you sell your shares within one year after the last day of the month of purchase. See "Shareholder Information—How To Redeem Fund Shares" for a complete discussion of the CDSC.

---

| | |
|:---|:---|
| 3 | The Fund's "Distributor," Morgan Stanley Distribution, Inc., has agreed to waive the 12b-1 fee on Class A shares of the Fund to the extent it exceeds 0.15% of the average daily net assets of such shares on an annualized basis. This waiver will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust") acts to discontinue all or a portion of such waiver when it deems such action is appropriate. |

---

---

| | |
|:---|:---|
| 4 | The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.70% for Class I, 1.05% for Class A, 1.52% for Class L and 1.80% for Class C. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 110% of the average value of its portfolio.

**Principal Investment Strategies**

Under normal circumstances, at least 80% of the Fund's assets will be invested in corporate bonds. This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. The Fund invests primarily in a diversified mix of U.S. dollar-denominated corporate bonds. The Fund invests primarily in U.S. corporate bonds that carry an investment grade rating (i.e., generally rated Baa3 or higher by Moody's Investors Service, Inc. ("Moody's"), BBB- or higher by S&P Global Ratings Group, a division of S&P Global Inc. ("S&P"), BBB- or higher by Fitch Ratings, Inc. ("Fitch")) or, if unrated, considered by the Adviser to be of equivalent quality. The Fund may also invest in securities denominated in currencies other than U.S. dollars.

The Adviser employs a value approach toward fixed-income investing and evaluates the relative attractiveness of corporate bonds. The Adviser relies upon value measures to guide its decisions regarding sector and security selection, such as the relative attractiveness of the extra yield offered by securities other than those issued by the U.S. Treasury. The Adviser also measures various types of risk by monitoring interest rates, inflation, the shape of the yield curve, credit risk and prepayment risk.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

The Fund may also invest in restricted and illiquid securities.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. 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. Derivative instruments used by the Fund will be

**11**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Corporate Bond Portfolio (Con't)

counted towards the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Credit and Interest Rate Risk.** Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. In such instances, the value of the Fund could decline and the Fund could lose money. Interest rate risk refers to the decline in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. The Fund may invest in variable and floating rate loans and other variable and floating rate securities. Although these instruments are generally less sensitive to interest rate changes than fixed rate instruments, the value of variable and floating rate loans and other securities may decline if their interest rates do not rise as quickly, or as much, as general interest rates. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.

• **Fixed-Income Securities.** Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). The Fund is not limited as to the maturities (when a debt security provides its final payment) or durations (measure of interest rate sensitivity) of the securities in which it may invest. Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. A portion of the Fund's fixed-income securities may be rated below investment grade. The Fund may be subject to certain liquidity risks that may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities.

• **Foreign and Emerging Market Securities.** Investments in foreign markets entail special risks such as currency, political (including geopolitical), economic and market risks. There also may be greater market volatility, less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and custody costs, decreased market liquidity and less government and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The risks of investing in emerging market countries are greater than the risks associated with investments in foreign developed countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. Certain emerging market or developing countries are among the largest debtors to commercial banks and foreign governments. The issuer or governmental authority that

**12**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Corporate Bond Portfolio (Con't)

controls the repayment of sovereign debt may not be willing or able to repay the principal and/or pay interest when due in accordance with the terms of such obligations. In addition, foreign governments may default on their debt securities, which may require holders of such securities to participate in debt rescheduling or additional lending to defaulting governments. Moreover, there is no bankruptcy proceeding by which defaulted sovereign debt may be collected in whole or in part. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging market countries. In addition, the Fund's investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged, the value of those investments will fluctuate with U.S. dollar exchange rates. To the extent hedged by the use of foreign currency forward exchange contracts, the precise matching of the foreign currency forward exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. There is additional risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken and that foreign currency forward exchange contracts create exposure to currencies in which the Fund's securities are not denominated. The use of foreign currency forward exchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. Economic sanctions and other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities, negatively impact the value or liquidity of the Fund's investments, significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices, or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies.<br>

• **Foreign Currency.** The Fund's investments in foreign securities may be denominated in foreign currencies. The value of foreign currencies may fluctuate relative to the value of the U.S. dollar. Since the Fund may invest in such non-U.S. dollar-denominated securities, and therefore may convert the value of such securities into U.S. dollars, changes in currency exchange rates can increase or decrease the U.S. dollar value of the Fund's assets. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and the overall economic health of the issuer. Devaluation of a currency by a country's government or banking authority also will have a significant impact on the value of any investments denominated in that currency. The Adviser may use derivatives to reduce this risk. The Adviser may in its discretion choose not to hedge against currency risk. In addition, certain market conditions may make it impossible or uneconomical to hedge against currency risk.

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **Derivatives.** Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument, including market risk, and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates , risks that the transactions may not be liquid , risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks . Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss.

• **Financial Services.** The Fund is more susceptible to any economic, business, political, regulatory or other developments that adversely affect issuers in the financial services industry than a fund that does not invest significantly in the financial services industry. The profitability of many types of financial services companies may be adversely affected in certain market cycles, including periods of rising interest rates, which may restrict the availability and increase the cost of capital, and declining economic conditions, which may cause credit losses due to financial difficulties of borrowers. Financial services companies are also subject to extensive government regulation, including policy and legislative changes in the United States and other countries that are changing many aspects of financial regulation.

• **Industrials.** To the extent that the Fund invests significantly in the industrials sector, the Fund will be particularly susceptible to the risks associated with companies operating in this sector. For example, the value of securities issued by companies in the industrials sector may be adversely affected by changes in government regulations, domestic and world events and economic conditions. In addition, companies in the industrials sector may be adversely affected by, among other developments, environmental damages, product liability claims, commodity prices and exchange rates as well as changes in the supply of and demand for both their specific products or services and for industrials sector products in general.

**13**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Corporate Bond Portfolio (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• **When-Issued Securities, Delayed Delivery Securities and Forward Commitments.** The Fund may purchase or sell securities that it is entitled to receive on a when-issued, delayed delivery or through a forward commitment basis. There can be no assurance that a security purchased on a when-issued basis will be issued or that a security purchased or sold on a delayed delivery basis or through a forward commitment will be delivered. Also, the value of securities in these transactions on the delivery date may be more or less than the price paid by the Fund to purchase the securities. The Fund will lose money if the value of the security in such a transaction declines below the purchase price and will not benefit if the value of the security appreciates above the sale price during the commitment period.

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Portfolio Turnover.** Consistent with its investment policies, the Fund will purchase and sell securities without regard to the effect on portfolio turnover. Higher portfolio turnover will cause the Fund to incur additional transaction costs.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Class I shares' performance from year-to-year and by showing how the Fund's average annual returns for the past one, five and 10 year periods and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The performance of the other classes, which is shown in the table below, will differ because the classes have different ongoing fees. The Fund's returns in the table include the maximum applicable sales charge for Class A and Class C and assume you sold your shares at the end of each period (unless otherwise noted). The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15574img004.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 06/30/20 | 10.05% |
| **Low Quarter** | 06/30/22 | -8.09% |

---

**14**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Corporate Bond Portfolio (Con't)

**Average Annual Total Returns<sup>1</sup>**

(for the calendar periods ended December 31, 2022)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Past**<br>**One Year** | **Past**<br>**Five Years** | **Past**<br>**Ten Years** | **Since Inception** |
| **Class I** (commenced operations on 8/31/90) | **Class I** (commenced operations on 8/31/90) | **Class I** (commenced operations on 8/31/90) | **Class I** (commenced operations on 8/31/90) | **Class I** (commenced operations on 8/31/90) |
| Return Before Taxes | -16.28% | 0.15% | 2.72% | 5.50% |
| Return After Taxes on Distributions<sup>2</sup>  | -17.31% | -1.26% | 1.34% | 3.47% |
| Return After Taxes on Distributions and Sale of Fund Shares | -9.62% | -0.31% | 1.57% | 3.51% |
| **Class A** (commenced operations on 5/20/02) | **Class A** (commenced operations on 5/20/02) | **Class A** (commenced operations on 5/20/02) | **Class A** (commenced operations on 5/20/02) | **Class A** (commenced operations on 5/20/02) |
| Return Before Taxes | -19.23% | -0.79% | 2.10% | 3.30% |
| **Class L** (commenced operations on 6/16/08) | **Class L** (commenced operations on 6/16/08) | **Class L** (commenced operations on 6/16/08) | **Class L** (commenced operations on 6/16/08) | **Class L** (commenced operations on 6/16/08) |
| Return Before Taxes | -16.92% | -0.54% | 2.06% | 3.15% |
| **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) |
| Return Before Taxes | -18.03% | -0.95% | N/A | 1.25% |
| Bloomberg U.S. Corporate Index (reflects no deduction for fees, expenses or taxes)<sup>3</sup>  | -15.76% | 0.45% | 1.96% | 5.90%<sup>4</sup> |
| Lipper Corporate Debt Funds BBB-Rated Index (reflects no deduction for taxes)<sup>5</sup>  | -17.90% | -0.21% | 1.59% | 5.46%<sup>4</sup> |

---

1 During 2016 and 2017, the Fund received proceeds related to certain non-recurring litigation settlements. Had these settlements not occurred, the five and 10 year and since inception (where applicable) returns before and after taxes for such periods would have been lower.

2 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

---

| | |
|:---|:---|
| 3 | The Bloomberg U.S. Corporate Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed rate, taxable corporate bond market. It includes USD-denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers that meet specified maturity, liquidity and quality requirements. It is not possible to invest directly in an index. |

---

4 Since Inception reflects the inception date of Class I.

5 The Lipper Corporate Debt Funds BBB-Rated Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Corporate Debt Funds BBB-Rated Funds classification. There are currently 30 funds represented in this Index.

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Fund's other classes will vary from Class I shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of the Fixed Income team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began Managing Fund** |
| Joseph Mehlman | Managing Director | December 2011 |
| Angie Salam | Managing Director | July 2021 |
| Stella Ma | Vice President | July 2022 |

---

**Purchase and Sale of Fund Shares**

*The Trust has suspended offering Class L shares of the Fund for sale to all investors. The Class L shareholders of the Fund do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders may invest in additional Class L shares through reinvestment of dividends and distributions.*

The minimum initial investment generally is $1 million for Class I shares and $1,000 for each of Class A and Class C shares of the Fund. The minimum initial investment may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business directly from the Fund by mail (c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-800-869-6397) or by

**15**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Corporate Bond Portfolio (Con't)

contacting an authorized third party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's Distributor (each, a "Financial Intermediary"). In addition, you can sell Fund shares at any time by enrolling in a systematic withdrawal plan. If you sell Class A or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Fund shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

**16**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio

**Investment Objective**

The High Yield Portfolio (the "Fund") seeks total return.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay fees** **other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below.**

For purchases of Class A shares, you may qualify for a sales charge discount if the cumulative net asset value per share ("NAV") of Class A shares of the Fund being purchased in a single transaction, together with the NAV of any Class A, Class L and Class C shares of the Fund already held in Related Accounts (as defined in the section of the Prospectus entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares") as of the date of the transaction as well as Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") and including shares of Morgan Stanley Money Market Funds (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") that you acquired in an exchange of Class A, Class L or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios already held in Related Accounts as of the date of the transaction, amounts to $100,000 or more. More information about this combined purchase discount and other discounts is available from your financial intermediary, on page 56 of the Prospectus in the section entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares" and in Appendix A attached to the Prospectus.

Class I shares may be available on brokerage platforms of firms that have agreements with the Fund's principal underwriter permitting such firms to (i) offer Class I shares solely when acting as an agent for the investor and (ii) impose on an investor transacting in Class I shares through such platforms a commission and/or other forms of compensation to the broker. Shares of the Fund are available in other share classes that have different fees and expenses.

**Shareholder Fees** (fees paid directly from your investment)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Maximum sales charge (load) imposed on purchases (as a percentage of offering price) |  | 3.25% |  |  |  |
| Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or NAV at redemption) |  | None<sup>1</sup> |  | 1.00%<sup>2</sup> |  |

---

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Advisory Fee | 0.60% | 0.60% | 0.60% | 0.60% | 0.60% |
| Distribution and/or Shareholder Service (12b-1) Fee |  | 0.25% | 0.50% | 1.00% |  |
| Other Expenses | 0.44% | 0.44% | 1.06% | 0.45% | 0.34% |
| Total Annual Fund Operating Expenses<sup>3</sup>  | 1.04% | 1.29% | 2.16% | 2.05% | 0.94% |
| Fee Waiver and/or Expense Reimbursement<sup>3</sup>  | 0.39% | 0.29% | 0.91% | 0.30% | 0.32% |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>3</sup>  | 0.65% | 1.00% | 1.25% | 1.75% | 0.62% |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year). After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund. The example for Class C shares reflects the conversion to Class A shares after eight years. Please refer to the section of the Prospectus entitled "Shareholder Information—Conversion Features" for more information. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

**17**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $66 | $292 | $536 | $1236 |
| Class A | $424  | $693 | $983 | $1806  |
| Class L | $127 | $588  | $1076  | $2421 |
| Class C | $278 | $614 | $1076  | $2160 |
| Class R6 | $63 | $268  | $489 | $1125 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $66 | $292 | $536 | $1236 |
| Class A | $424  | $693 | $983 | $1806  |
| Class L | $127 | $588  | $1076  | $2421 |
| Class C | $178 | $614 | $1076  | $2160 |
| Class R6 | $63 | $268  | $489 | $1125 |

---

---

| | |
|:---|:---|
| 1 | Investments in Class A shares that are not subject to any sales charges at the time of purchase are subject to a contingent deferred sales charge ("CDSC") of 0.75% that will be imposed if you sell your shares within 12 months except for certain specific circumstances. See "Shareholder Information—How To Redeem Fund Shares" for further information about the CDSC waiver categories. |

---

2 The Class C CDSC is only applicable if you sell your shares within one year after the last day of the month of purchase. See "Shareholder Information—How To Redeem Fund Shares" for a complete discussion of the CDSC.

---

| | |
|:---|:---|
| 3 | The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation) will not exceed 0.65% for Class I, 1.00% for Class A, 1.25% for Class L, 1.75% for Class C and 0.62% for Class R6. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust") acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 28% of the average value of its portfolio.

**Principal Investment Strategies**

Under normal circumstances, at least 80% of the Fund's assets will be invested in high yield securities (commonly referred to as "junk bonds"). This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. The Fund seeks to achieve its investment objective by investing primarily in high yield securities which are fixed-income securities rated by one or more rating agencies below Baa3 by Moody's Investors Service, Inc. ("Moody's"), below BBB- by S&P Global Ratings Group, a division of S&P Global Inc. ("S&P"), below BBB- by Fitch Ratings, Inc. ("Fitch") or, if unrated, considered by the Adviser to be of equivalent quality. The average maturity of the Fund's investments varies, and there is no limit on the maturity or on the credit quality of any security held by the Fund. The Fund's securities may include distressed and defaulted securities and mezzanine investments. The Fund also may invest in investment grade fixed-income securities, including U.S. and foreign government securities, corporate bonds and collateralized bond obligations. The Fund may also invest in preferred securities, equity securities and convertible securities.

The Fund's investment process starts with top-down macroeconomic analysis to assess the optimal positioning of the Fund. The team then applies a combination of quantitative and qualitative filters to identify securities that meet the team's investment criteria in terms of competitive position, franchise value and management quality. The investment team's credit analysis focuses on financial risk, business risk, management ability and intentions. Valuation analysis is used to narrow the screened investment universe to a pool of investment candidates who are then assessed in order to determine relative valuation. Finally, the Fund is constructed with sector allocation driven primarily from bottom-up security selection. Integral to the Fund construction process is the measurement and monitoring of market risk, duration and volatility and credit risk through the use of proprietary risk measures and models.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

**18**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

The Fund may also invest in loan-related investments, such as public bank loans made by banks or other financial institutions and loan participations and assignments, which may be rated investment grade or below investment grade.

The Fund may also invest in restricted and illiquid securities.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. 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. The Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities. Derivative instruments used by the Fund will be counted toward the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Credit and Interest Rate Risk.** Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. In such instances, the value of the Fund could decline and the Fund could lose money. Interest rate risk refers to the decline in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. The Fund may invest in variable and floating rate loans and other variable and floating rate securities. Although these instruments are generally less sensitive to interest rate changes than fixed rate instruments, the value of variable and floating rate loans and other securities may decline if their interest rates do not rise as quickly, or as much, as general interest rates. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.

• **Fixed-Income Securities.** Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). For example, a type of fixed-income securities in which the Fund may invest are corporate debt obligations. In addition to interest rate, credit and other risks, corporate debt obligations are also subject to factors directly related to the issuer, such as the credit rating of the corporation, the corporation's performance and perceptions of the corporation in the marketplace, and by factors not directly related to the issuer, such as general market liquidity, economic conditions and inflation. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). The Fund is not limited as to the maturities (when a debt security provides its final payment) or durations (measure of interest rate sensitivity) of the securities in which it may invest. Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. A portion of the Fund's fixed-income securities may be rated below investment grade. The Fund may be subject to certain liquidity risks that may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. To the extent that the Fund invests in convertible securities, and the convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying security.

• **High Yield Securities ("Junk Bonds").** High yield securities offer a higher yield than other, higher rated securities, but they carry a greater degree of risk and are considered speculative by the major credit rating agencies. Changes in the value of high yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. Prices of fixed-income securities generally will move in correlation to changes in an issuer's credit rating and inversely to movements in interest rates. The Fund's investments in high

**19**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

yield securities expose it to a substantial degree of credit risk. Prices of high yield securities will rise and fall primarily in response to actual or perceived changes in the issuer's financial health, although changes in market interest rates also will affect prices. High yield securities may be issued by companies that are restructuring, are smaller and less creditworthy or are more highly indebted than other companies, and therefore they may have more difficulty making scheduled payments of principal and interest. High yield securities may experience reduced liquidity, and sudden and substantial decreases in price. An economic downturn affecting an issuer of high yield securities may result in an increased incidence of default. In the event of a default, the Fund may incur additional expenses to seek recovery.<br>

• **U.S. Government Securities.** Different types of U.S. government securities are subject to different levels of credit risk, including the risk of default, depending on the nature of the particular government support for that security. For example, a U.S. government- sponsored entity, such as Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, although chartered or sponsored by an Act of Congress, may issue securities that are neither insured nor guaranteed by the U.S. Treasury and, therefore, are not backed by the full faith and credit of the United States. With respect to U.S. government securities that are not backed by the full faith and credit of the United States, there is the risk that the U.S. Government will not provide financial support to such U.S. government agencies, instrumentalities or sponsored enterprises if it is not obligated to do so by law.

• **Foreign and Emerging Market Securities.** Investments in foreign markets entail special risks such as currency, political (including geopolitical) , economic and market risks. There also may be greater market volatility, less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and custody costs, decreased market liquidity and less government and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The risks of investing in emerging market countries are greater than the risks associated with investments in foreign developed countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging market countries. In addition, the Fund's investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged, the value of those investments will fluctuate with U.S. dollar exchange rates. To the extent hedged by the use of foreign currency forward exchange contracts, the precise matching of the foreign currency forward exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. There is additional risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken and that foreign currency forward exchange contracts create exposure to currencies in which the Fund's securities are not denominated. The use of foreign currency forward exchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. Economic sanctions and other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities , negatively impact the value or liquidity of the Fund's investments , significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices , or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies .

• **Loan-Related Investments.** In addition to risks generally associated with debt investments, loan-related investments, such as public bank loans and loan participations and assignments, are subject to other risks. Such investments may be subject to additional risks including subordination to other creditors, no collateral or limited rights in collateral, lack of a regular trading market, extended settlement periods, liquidity risks, prepayment risks, potentially less protection under the federal securities laws and lack of publicly available information. Bank loans are subject to the risk of default in the payment of interest or principal on a loan, which will result in a reduction of income to the Fund, and a potential decrease in the Fund's NAV. The risk of default will

**20**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

increase in the event of an economic downturn or a substantial increase in interest rates. Because public bank loans usually rank lower in priority of payment to senior loans, they present a greater degree of investment risk. These bank loans may exhibit greater price volatility as well.

• **Equity Securities.** In general, prices of equity securities are more volatile than those of fixed-income securities. The prices of equity securities fluctuate, and sometimes widely fluctuate, in response to activities specific to the issuer of the security as well as factors unrelated to the fundamental condition of the issuer, including general market, economic , political conditions and public health conditions. To the extent that the Fund invests in convertible securities, and the convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying security. During periods when equity securities experience heightened volatility, such as during periods of market, economic or financial uncertainty or distress, the Fund's investments in equity securities may be subject to heightened risks.

• **Preferred Securities.** Preferred stock is issued with a fixed par value and pays dividends based on a percentage of that par value at a fixed rate. As with fixed-income securities, which also make fixed payments, the market value of preferred stock is sensitive to changes in interest rates. Preferred stock generally decreases in value if interest rates rise and increases in value if interest rates fall.

• **Mezzanine Investments.** Mezzanine investments are subordinated debt securities that receive payments of interest and principal after other more senior security holders are paid. Mezzanine investments carry the risk that the issuer will not be able to meet its obligations and that the mezzanine investments may lose value.

• **Distressed and Defaulted Securities.** Distressed and defaulted securities are speculative and involve substantial risks in addition to the risks of investing in high yield securities. The Fund will generally not receive interest payments on the distressed securities and the repayment of principal may also be at risk. These securities may present a substantial risk of default or may be in default at the time of investment, requiring the Fund to incur additional costs. The repayment of defaulted securities is also subject to significant uncertainties. The Fund may incur substantial expenses in seeking recovery upon a default in the payment of principal of or interest on its portfolio holdings.

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **Derivatives.** Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument, including market risk, and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates , risks that the transactions may not be liquid , risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks . Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Investments in currency derivatives may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. Foreign currency forward exchange contracts and currency futures and options contracts create exposure to currencies in which the Fund's securities are not denominated.

• **Consumer Discretionary/Staples.** To the extent that the Fund invests significantly in the consumer discretionary or staples sectors, the Fund will be particularly susceptible to the risks associated with companies operating in such sector(s). Companies in the consumer discretionary and staples sectors are subject to risks, including fluctuations in the performance of the overall domestic and international economy, shipment and supply chain disruptions, interest rate changes, currency exchange rates, increased competition and consumer confidence. Performance of such companies may also be adversely affected by factors such as reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes.

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of

**21**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Class I shares' performance from year-to-year and by showing how the Fund's average annual returns for the past one, five and 10 year periods and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The performance of the other classes, which is shown in the table below, will differ because the classes have different ongoing fees. The Fund's returns in the table include the maximum applicable sales charge for Class A and Class C and assume you sold your shares at the end of each period (unless otherwise noted). The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15574img005.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 06/30/20 | 10.05% |
| **Low Quarter** | 03/31/20 | -16.02% |

---

**Average Annual Total Returns**

(for the calendar periods ended December 31, 2022)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Past**<br>**One Year** | **Past**<br>**Five Years** | **Past**<br>**Ten Years** | **Since Inception** |
| **Class I** (commenced operations on 2/7/12) | **Class I** (commenced operations on 2/7/12) | **Class I** (commenced operations on 2/7/12) | **Class I** (commenced operations on 2/7/12) | **Class I** (commenced operations on 2/7/12) |
| Return Before Taxes | -11.57% | 1.43% | 4.19% | 5.26% |
| Return After Taxes on Distributions<sup>1</sup>  | -13.69% | -1.05% | 1.18% | 2.18% |
| Return After Taxes on Distributions and Sale of Fund Shares | -6.82% | 0.09% | 1.88% | 2.73% |
| **Class A** (commenced operations on 2/7/12) | **Class A** (commenced operations on 2/7/12) | **Class A** (commenced operations on 2/7/12) | **Class A** (commenced operations on 2/7/12) | **Class A** (commenced operations on 2/7/12) |
| Return Before Taxes | -14.68% | 0.40% | 3.48% | 4.59% |
| **Class L** (commenced operations on 2/7/12) | **Class L** (commenced operations on 2/7/12) | **Class L** (commenced operations on 2/7/12) | **Class L** (commenced operations on 2/7/12) | **Class L** (commenced operations on 2/7/12) |
| Return Before Taxes | -12.07% | 0.83% | 3.57% | 4.65% |
| **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) |
| Return Before Taxes | -13.41% | 0.33% | N/A | 1.86% |
| **Class R6** (commenced operations on 3/28/14) | **Class R6** (commenced operations on 3/28/14) | **Class R6** (commenced operations on 3/28/14) | **Class R6** (commenced operations on 3/28/14) | **Class R6** (commenced operations on 3/28/14) |
| Return Before Taxes | -11.63% | 1.46% | N/A | 2.87% |
| Bloomberg U.S. Corporate High Yield Index (reflects no deduction for fees, expenses or taxes)<sup>2</sup>  | -11.19% | 2.31% | 4.03% | -1.79%<sup>3</sup> |

---

**22**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

---

| | | | |
|:---|:---|:---|:---|
|  | **Past**<br>**One Year** | **Past**<br>**Five Years** | **Past**<br>**Ten Years** |
| Lipper High Current Yield Bond Funds Index (reflects no deduction for taxes)<sup>4</sup>  | -10.28% | 1.99% | 3.59%<br>-1.02%<sup>3</sup> |

---

1 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

---

| | |
|:---|:---|
| 2 | The Bloomberg U.S. Corporate High Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging market debt. It is not possible to invest directly in an index. |

---

3 Since Inception reflects the inception date of Class I.

4 The Lipper High Current Yield Bond Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper High Current Yield Bond Funds classification. There are currently 30 funds represented in this index.

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Fund's other classes will vary from Class I shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of the High Yield team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began Managing Fund** |
| Jack Cimarosa | Managing Director | January 2017 |
| Joseph F. Hurley | Executive Director | September 2022 |

---

**Purchase and Sale of Fund Shares**

*The Trust has suspended offering Class L shares of the Fund for sale to all investors. The Class L shareholders of the Fund do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders may invest in additional Class L shares through reinvestment of dividends and distributions.*

The minimum initial investment generally is $1 million for Class I shares and $1,000 for each of Class A and Class C shares of the Fund. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and in each case subject to the discretion of the Adviser. The minimum initial investment may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business directly from the Fund by mail (c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-800-869-6397) or by contacting an authorized third-party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's "Distributor," Morgan Stanley Distribution, Inc. (each, a "Financial Intermediary"). In addition, you can sell Fund shares at any time by enrolling in a systematic withdrawal plan. If you sell Class A or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Fund shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

**23**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Short Duration Income Portfolio

**Investment Objective**

The Short Duration Income Portfolio (the "Fund") seeks above-average total return over a market cycle of three to five years.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay fees** **other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below.**

For purchases of Class A shares, you may qualify for a sales charge discount if the cumulative net asset value per share ("NAV") of Class A shares of the Fund being purchased in a single transaction, together with the NAV of any Class A and Class C shares of the Fund already held in Related Accounts (as defined in the section of the Prospectus entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares") as of the date of the transaction as well as Class A shares of Morgan Stanley Institutional Fund Trust Ultra-Short Income Portfolio and Ultra-Short Municipal Income Portfolio already held in Related Accounts as of the date of the transaction, amounts to $100,000 or more. More information about this combined purchase discount and other discounts is available from your financial intermediary, on page 56 of the Prospectus in the section entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares" and in Appendix A attached to the Prospectus.

**Shareholder Fees** (fees paid directly from your investment)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Maximum sales charge (load) imposed on purchases (as a percentage of offering price) |  | 2.25% |  |  |  |
| Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or NAV at redemption) |  | None<sup>1</sup> |  | 1.00%<sup>2</sup> |  |

---

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Advisory Fee | 0.20% | 0.20% | 0.20% | 0.20% | 0.20% |
| Distributions and/or Shareholder Service (12b-1) Fee |  | 0.25% | 0.50% | 1.00% |  |
| Other Expenses | 0.24% | 0.23% | 0.45% | 0.32% | 19.29% |
| Total Annual Fund Operating Expenses<sup>3</sup>  | 0.44% | 0.68% | 1.15% | 1.52% | 19.49% |
| Fee Waiver and/or Expense Reimbursement<sup>3</sup>  | 0.14% | 0.13% | 0.35% | 0.22% | 19.24% |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>3</sup>  | 0.30% | 0.55% | 0.80% | 1.30% | 0.25% |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year). After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund. The example for Class C shares reflects the conversion to Class A shares after eight years. Please refer to the section of the Prospectus entitled "Shareholder Information—Conversion Features" for more information. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $31 | $127 | $232 | $541 |
| Class A | $280  | $425 | $583 | $1040 |
| Class L | $82 | $331 | $599 | $1366 |
| Class C | $232 | $459 | $808 | $1566 |
| Class R6 | $26 | $3538  | $6107  | $9900  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $31 | $127 | $232 | $541 |
| Class A | $280  | $425  | $583  | $1040  |

---

**24**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Short Duration Income Portfolio (Con't)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares** | **If You HELD Your Shares** | **If You HELD Your Shares** | **If You HELD Your Shares** | **If You HELD Your Shares** |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class L | $82 | $331 | $599 | $1366 |
| Class C | $132  | $459 | $808 | $1566 |
| Class R6 | $26 | $3538  | $6107  | $9900  |

---

---

| | |
|:---|:---|
| 1 | Investments in Class A shares that are not subject to any sales charges at the time of purchase are subject to a contingent deferred sales charge ("CDSC") of 0.25% that will be imposed if you sell your shares within 12 months after purchase, except for certain specific circumstances. See "Shareholder Information—How To Redeem Fund Shares" for further information about the CDSC waiver categories. |

---

2 The Class C contingent deferred sales charge ("CDSC") is only applicable if you sell your shares within one year after the last day of the month of purchase. See "Shareholder Information—How To Redeem Fund Shares" for a complete discussion of the CDSC.

---

| | |
|:---|:---|
| 3 | The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.30% for Class I, 0.55% for Class A, 0.80% for Class L, 1.30% for Class C and 0.25% for Class R6. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust") acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 53% of the average value of its portfolio.

**Principal Investment Strategies**

Under normal market conditions, substantially all of the Fund's assets will be invested in investment grade fixed-income securities denominated in U.S. dollars. This policy may be changed without shareholder approval; however, you would be notified in writing of any changes. The Fund invests primarily in U.S. government securities, investment grade corporate bonds and mortgage- and asset-backed securities. The Fund will ordinarily seek to maintain an average duration of approximately three years or less. With respect to corporate issuers, the Fund will not purchase securities with remaining maturities of more than 5.25 years.

The Adviser employs a value approach toward fixed-income investing and makes securities and sector decisions based on the anticipated tradeoff between long-run expected return and risk. The Fund seeks value in the fixed-income market with only a limited sensitivity to changes in interest rates. The Adviser relies upon value measures such as the level of real interest rates, yield curve slopes and credit-adjusted spreads to guide its decisions regarding interest rate, country, sector and security exposure. A team of portfolio managers implements strategies based on these types of value measures. Certain team members focus on specific bonds within each sector. Others seek to ensure that the aggregate risk exposures to changes in the level of interest rates and yield spreads match the Fund's objective.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

The Fund's mortgage securities may include collateralized mortgage obligations ("CMOs") and commercial mortgage-backed securities ("CMBS"). The Fund may also invest in asset-backed securities.

The Fund may invest in securities of foreign issuers, including issuers located in emerging market or developing countries, although only U.S. dollar denominated investment grade securities may be held in the Fund. The Fund may also invest in restricted and illiquid securities.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. 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.

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Credit and Interest Rate Risk.** Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. In such

**25**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Short Duration Income Portfolio (Con't)

instances, the value of the Fund could decline and the Fund could lose money. Interest rate risk refers to the decline in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. The Fund may invest in variable and floating rate loans and other variable and floating rate securities. Although these instruments are generally less sensitive to interest rate changes than fixed rate instruments, the value of variable and floating rate loans and other securities may decline if their interest rates do not rise as quickly, or as much, as general interest rates. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.<br>

• **Fixed-Income Securities.** Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. The Fund may be subject to certain liquidity risks that may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities.

• **U.S. Government Securities.** Different types of U.S. government securities are subject to different levels of credit risk, including the risk of default, depending on the nature of the particular government support for that security. For example, a U.S. government- sponsored entity, such as Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, although chartered or sponsored by an Act of Congress, may issue securities that are neither insured nor guaranteed by the U.S. Treasury and, therefore, are not backed by the full faith and credit of the United States. With respect to U.S. government securities that are not backed by the full faith and credit of the United States, there is the risk that the U.S. Government will not provide financial support to such U.S. government agencies, instrumentalities or sponsored enterprises if it is not obligated to do so by law.

• **Mortgage-Backed Securities.** Mortgage-backed securities entail prepayment risk, which generally increases during a period of falling interest rates. Rising interest rates tend to discourage refinancings, with the result that the average life and volatility of mortgage-backed securities will increase and market price will decrease. Rates of prepayment, faster or slower than expected by the Adviser, could reduce the Fund's yield, increase the volatility of the Fund and/or cause a decline in NAV. Mortgage-backed securities are also subject to extension risk, which is the risk that rising interest rates could cause mortgages or other obligations underlying the securities to be prepaid more slowly than expected, thereby lengthening the duration of such securities, increasing their sensitivity to interest rate changes and causing their prices to decline. Certain mortgage-backed securities may be more volatile and less liquid than other traditional types of debt securities. In addition, mortgage-backed securities are subject to credit risk. The Fund may invest in non-agency mortgage-backed securities offered by non-governmental issuers, such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers. Non-agency mortgage-backed securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-backed securities that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying non-agency mortgage-backed securities may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored mortgage-backed securities and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of a mortgage-backed security and could result in losses to the Fund. The risk of such defaults is generally higher in the case of mortgage pools that include subprime mortgages. Furthermore, mortgage-backed securities may be subject to risks associated with the assets underlying those securities, such as a decline in value. Investments in mortgage-backed securities may give rise to a form of leverage (indebtedness) and may cause the Fund's portfolio turnover rate to appear higher. Leverage may cause the Fund to be more volatile than if the Fund had not been leveraged. The risks associated with mortgage-backed securities typically become elevated during periods of distressed economic, market, health and labor conditions. In particular, increased levels of unemployment, delays and delinquencies in payments of mortgage and rent obligations, and uncertainty regarding the effects and extent of government intervention with respect to mortgage payments and other economic matters may adversely affect the Fund's investments in mortgage-backed securities.

**26**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Short Duration Income Portfolio (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• **Asset-Backed Securities.** Asset-backed securities are subject to credit (such as a borrower's default on its mortgage obligation and the default or failure of a guarantee underlying the asset-backed security), interest rate and certain additional risks, including the risk that various federal and state consumer laws and other legal and economic factors may result in the collateral backing the securities being insufficient to support payment on the securities. Some asset-backed securities also entail prepayment risk and extension risk, which may vary depending on the type of asset. Due to these risks, asset-backed securities may become more volatile in certain interest rate environments.

• **Foreign and Emerging Market Securities.** Investments in foreign markets entail special risks such as currency, political (including geopolitical) , economic and market risks. There also may be greater market volatility, less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and custody costs, decreased market liquidity and less government and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The risks of investing in emerging market countries are greater than the risks associated with investments in foreign developed countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. Certain emerging market or developing countries are among the largest debtors to commercial banks and foreign governments. The issuer or governmental authority that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or pay interest when due in accordance with the terms of such obligations. In addition, foreign governments may default on their debt securities, which may require holders of such securities to participate in debt rescheduling or additional lending to defaulting governments. Moreover, there is no bankruptcy proceeding by which defaulted sovereign debt may be collected in whole or in part. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging market countries. In addition, the Fund's investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged, the value of those investments will fluctuate with U.S. dollar exchange rates. To the extent hedged by the use of foreign currency forward exchange contracts, the precise matching of the foreign currency forward exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. There is additional risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken and that foreign currency forward exchange contracts create exposure to currencies in which the Fund's securities are not denominated. The use of foreign currency forward exchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. Economic sanctions and other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities , negatively impact the value or liquidity of the Fund's investments , significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices , or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies .

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **Derivatives.** Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument, including market risk, and may have additional risks, including imperfect correlation between the value of the derivative and the

**27**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Short Duration Income Portfolio (Con't)

underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss.<br>

• **Financial Services.** The Fund is more susceptible to any economic, business, political, regulatory or other developments that adversely affect issuers in the financial services industry than a fund that does not invest significantly in the financial services industry. The profitability of many types of financial services companies may be adversely affected in certain market cycles, including periods of rising interest rates, which may restrict the availability and increase the cost of capital, and declining economic conditions, which may cause credit losses due to financial difficulties of borrowers. Financial services companies are also subject to extensive government regulation, including policy and legislative changes in the United States and other countries that are changing many aspects of financial regulation.

• **Industrials.** To the extent that the Fund invests significantly in the industrials sector, the Fund will be particularly susceptible to the risks associated with companies operating in this sector. For example, the value of securities issued by companies in the industrials sector may be adversely affected by changes in government regulations, domestic and world events and economic conditions. In addition, companies in the industrials sector may be adversely affected by, among other developments, environmental damages, product liability claims, commodity prices and exchange rates as well as changes in the supply of and demand for both their specific products or services and for industrials sector products in general.

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Class I shares' performance from year-to-year and by showing how the Fund's average annual returns for the past one, five and 10 year periods and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The performance of the other classes, which is shown in the table below, will differ because the classes have different ongoing fees. The Fund's returns in the table include the maximum applicable sales charge for Class A and Class C and assume you sold your shares at the end of each period (unless otherwise noted). The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**28**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Short Duration Income Portfolio (Con't)

**Annual Total Returns—Calendar Years**

![image](pr15574img006.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 06/30/20 | 5.14% |
| **Low Quarter** | 03/31/20 | -3.38% |

---

**Average Annual Total Returns<sup>1</sup>**

(for the calendar periods ended December 31, 2022)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Past**<br>**One Year** | **Past**<br>**Five Years** | **Past**<br>**Ten Years** | **Since Inception** |
| **Class I** (commenced operations on 3/31/92) | **Class I** (commenced operations on 3/31/92) | **Class I** (commenced operations on 3/31/92) | **Class I** (commenced operations on 3/31/92) | **Class I** (commenced operations on 3/31/92) |
| Return Before Taxes | -4.07% | 1.06% | 1.81% | 2.78% |
| Return After Taxes on Distributions<sup>2</sup>  | -4.82% | 0.26% | 1.03% | 1.39% |
| Return After Taxes on Distributions and Sale of Fund Shares | -2.39% | 0.48% | 1.05% | 1.59% |
| **Class A** (commenced operations on 9/28/07)<sup>†</sup>  | **Class A** (commenced operations on 9/28/07)<sup>†</sup>  | **Class A** (commenced operations on 9/28/07)<sup>†</sup>  | **Class A** (commenced operations on 9/28/07)<sup>†</sup>  | **Class A** (commenced operations on 9/28/07)<sup>†</sup>  |
| Return Before Taxes | -6.56% | 0.34% | 1.30% | 0.14% |
| **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) |
| Return Before Taxes | -4.55% | 0.55% | 1.24% | 1.28% |
| **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) |
| Return Before Taxes | -6.08% | 0.04% | N/A | 0.87% |
| **Class R6** (commenced operations on 1/11/16) | **Class R6** (commenced operations on 1/11/16) | **Class R6** (commenced operations on 1/11/16) | **Class R6** (commenced operations on 1/11/16) | **Class R6** (commenced operations on 1/11/16) |
| Return Before Taxes | -4.14% | 1.13% | N/A | 2.24% |
| Bloomberg 1-3 Year U.S. Government/Credit Index (reflects no deduction of fees, expenses or taxes)<sup>3</sup>  | -3.69% | 0.92% | 0.88% | 3.49%<sup>4</sup> |
| Short Duration Income Blend Index (reflects no deduction of fees, expenses or taxes)<sup>5</sup>  | -3.69% | 0.81% | 0.76% | 3.45%<sup>4</sup> |
| Lipper Short Investment Grade Debt Funds Index (reflects no deduction for taxes)<sup>6</sup>  | -3.90% | 1.21% | 1.20% | 3.39%<sup>4</sup> |

---

† Effective April 29, 2022, the historical total returns with sales charges deducted for Class A shares have been restated to reflect the current maximum sales charge of 2.25%.

1 During 2016, 2018 and 2019, the Fund received proceeds related to certain non-recurring litigation settlements. Had these settlements not occurred, the five and 10 year and since inception (where applicable) returns before and after taxes for such periods would have been lower.

2 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

---

| | |
|:---|:---|
| 3 | The Bloomberg 1-3 Year U.S. Government/Credit Index tracks the securities in the 1-3 year maturity range of the Bloomberg U.S. Government/Credit Index which tracks investment-grade (BBB-/Baa3) or higher publicly traded fixed rate U.S. government, U.S. agency, and corporate issues. It is not possible to invest directly in an index. |

---

4 Since Inception reflects the inception date of Class I.

---

| | |
|:---|:---|
| 5 | The Short Duration Income Blend Index is a performance linked benchmark of the old benchmarks represented by the Bloomberg 1-3 Year U.S. Government/Credit Index for periods from the Fund's inception to January 8, 2016 and the ICE BofA 1-Year U.S. Treasury Note Index (benchmark tracks one-year U.S. government securities) from January 9, 2016 to July 31, 2019 and the new benchmark represented by the Bloomberg 1-3 Year U.S. Government/Credit index for periods thereafter. It is not possible to invest directly in an index. |

---

6 The Lipper Short Investment Grade Debt Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Short Investment Grade Debt Funds classification. There are currently 30 funds represented in this Index.

**29**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Short Duration Income Portfolio (Con't)

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Fund's other classes will vary from Class I shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of the Fixed Income team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began Managing Fund** |
| Neil Stone | Managing Director | January 2011 |
| Matthew Dunning | Executive Director | October 2014 |
| Eric Jesionowski | Executive Director | May 2015 |

---

**Purchase and Sale of Fund Shares**

*The Trust has suspended offering Class L shares of the Fund for sale to all investors. The Class L shareholders of the Fund do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders may invest in additional Class L shares through reinvestment of dividends and distributions.*

The minimum initial investment generally is $1 million for Class I shares and $1,000 for each of Class A and Class C shares of the Fund. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and in each case subject to the discretion of the Adviser. The minimum initial investment may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business directly from the Fund by mail (c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-800-869-6397) or by contacting an authorized third-party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's "Distributor," Morgan Stanley Distribution, Inc. (each, a "Financial Intermediary"). In addition, you can sell Fund shares at any time by enrolling in a systematic withdrawal plan. If you sell Class A or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Fund shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

**30**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Details of the Funds

Core Plus Fixed Income Portfolio

**Investment Objective**

The Core Plus Fixed Income Portfolio seeks above-average total return over a market cycle of three to five years.

**Approach**

The Fund invests primarily in a diversified mix of U.S. dollar-denominated investment grade fixed-income securities, including U.S. government, corporate, municipal, mortgage- and asset-backed securities. The Fund ordinarily will seek to maintain an average weighted maturity between five and ten years. Although there is no minimum or maximum maturity for any individual security, the Adviser actively manages the interest rate risk of the Fund within a range relative to its benchmark. The Fund may engage in frequent trading to achieve its investment objective.

The Fund may invest opportunistically in fixed-income securities that are rated below "investment grade" or are not rated, but are of equivalent quality. These fixed-income securities are often referred to as "high yield securities" or "junk bonds." High yield securities are fixed-income securities rated by one or more rating agencies below Baa3 by Moody's, below BBB- by S&P, below BBB- by Fitch or, if unrated, considered by the Adviser to be of equivalent quality. The Fund may invest in securities of foreign issuers, including issuers located in emerging market or developing countries. The securities in which the Fund may also invest may be denominated in U.S. dollars or currencies other than U.S. dollars.

The Fund may also invest in loan-related investments, such as public bank loans made by banks or other financial institutions and loan participations and assignments, which may be rated investment grade or below investment grade. The Fund's mortgage securities may include CMOs, CMBS, SMBS, inverse floaters and those purchased on a "TBA" basis. In addition, the Fund may invest in convertible securities.

The Fund may purchase certain non-publicly traded "restricted" securities. These securities may include "144A" securities which are exempt from registration and that may only be resold to qualified institutional buyers. The Fund may invest in illiquid securities, including restricted securities that are illiquid. The Fund may invest an unlimited amount in restricted securities that are considered by the Adviser to be liquid and otherwise meet the Fund's investment policies.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based on the value of another underlying asset, interest rate, index or financial instrument. 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. The Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities.

**Process**

The Adviser employs a value approach toward fixed-income investing. The Adviser's research teams evaluate the relative attractiveness among corporate, mortgage and U.S. government securities, and also may invest in non-dollar-denominated issues. The Adviser relies upon value measures to guide its decisions regarding sector, security and country selection, such as the relative attractiveness of the extra yield offered by securities other than those issued by the U.S. Treasury. The Adviser also measures various types of risk by monitoring interest rates, inflation, the shape of the yield curve, credit risk, prepayment risk, country risk and currency valuations. The Adviser's management team builds an investment Fund designed to take advantage of its judgment on these factors, while seeking to balance the overall risk of the Fund. The Adviser may sell securities or exit positions when it believes that expected risk-adjusted return is low compared to other investment opportunities.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

Under normal circumstances, at least 80% of the Fund's assets will be invested in fixed-income securities. This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. Derivative instruments used by the Fund will be counted toward the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

For purposes of policies adopted in accordance with Rule 35d-1 under the 1940 Act, the term "assets," as defined in Rule 35d-1 under the 1940 Act, means net assets plus the amount of any borrowings for investment purposes.

**31**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Details of the Funds

Corporate Bond Portfolio

**Investment Objective**

The Corporate Bond Portfolio seeks above-average total return over a market cycle of three to five years.

**Approach**

The Fund invests primarily in a diversified mix of U.S. dollar-denominated corporate bonds. Although there is no minimum or maximum maturity for any individual security, the Adviser actively manages the interest rate risk of the Fund within a range relative to its benchmark. The Fund invests primarily in U.S. corporate bonds that carry an investment grade rating (i.e., generally rated Baa3 or higher by Moody's, BBB- or higher by S&P or BBB- or higher by Fitch) or, if unrated, considered by the Adviser to be of equivalent quality. The Fund may also invest in securities denominated in currencies other than U.S. dollars.

The Fund may purchase certain non-publicly traded "restricted" securities. These securities may include "144A" securities, which are exempt from registration and may only be resold to qualified institutional buyers. The Fund may invest in illiquid securities, including restricted securities that are illiquid. The Fund may invest an unlimited amount in restricted securities that are considered by the Adviser to be liquid and otherwise meet the Fund's investment policies.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, Fund management or to earn income. Derivatives are financial instruments whose value is based on the value of another underlying asset, interest rate, index or financial instrument. 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.

**Process**

The Adviser employs a value approach toward fixed-income investing. The Adviser's research teams evaluate the relative attractiveness of corporate bonds. The Adviser relies upon value measures to guide its decisions regarding sector and security selection, such as the relative attractiveness of the extra yield offered by securities other than those issued by the U.S. Treasury. The Adviser also measures various types of risk by monitoring interest rates, inflation, the shape of the yield curve, credit risk and prepayment risk. The Adviser's management team builds an investment portfolio designed to take advantage of its judgment on these factors, while seeking to balance the overall risk of the Fund. The Adviser may sell securities or exit positions when it believes that expected risk-adjusted return is low compared to other investment opportunities.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

Under normal circumstances, at least 80% of the Fund's assets will be invested in corporate bonds. This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. Derivative instruments used by the Fund will be counted toward the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

For purposes of policies adopted in accordance with Rule 35d-1 under the 1940 Act, the term "assets," as defined in Rule 35d-1 under the 1940 Act, means net assets plus the amount of any borrowings for investment purposes.

**32**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Details of the Funds

High Yield Portfolio

**Investment Objective**

The High Yield Portfolio seeks total return.

The Fund's investment objective may be changed by the Trust's Board of Trustees without shareholder approval, but no change is anticipated. If the Fund's investment objective changes, the Fund will notify shareholders and shareholders should consider whether the Fund remains an appropriate investment in light of the change.

**Approach**

The Fund seeks to achieve its investment objective by investing primarily in high yield securities (commonly referred to as "junk bonds"). High yield securities are fixed-income securities rated by one or more rating agencies below Baa3 by Moody's, below BBB- by S&P, below BBB- by Fitch or, if unrated, considered by the Adviser to be of equivalent quality. The average maturity of the Fund's investments varies, and there is no limit on the maturity or on the credit quality of any security held by the Fund. The Fund's securities may include distressed and defaulted securities and mezzanine investments. The Fund also may invest in investment grade fixed-income securities, including U.S. and foreign government securities, corporate bonds and collateralized bond obligations. The Fund may also invest in preferred securities, equity securities and convertible securities.

The Fund may also invest in loan-related investments, such as public bank loans made by banks or other financial institutions and loan participations and assignments, which may be rated investment grade or below investment grade.

The Fund may purchase certain non-publicly traded "restricted" securities. These securities may include "144A" securities, which are exempt from registration that may only be resold to qualified institutional buyers. The Fund may invest in illiquid securities, including restricted securities that are illiquid. The Fund may invest an unlimited amount in restricted securities that are considered by the Adviser to be liquid and otherwise meet the Fund's investment policies.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based on the value of another underlying asset, interest rate, index or financial instrument. 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. The Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities.

**Process**

The Fund's investment process starts with top-down macroeconomic analysis to assess the optimal positioning of the Fund. The team then applies a combination of quantitative and qualitative filters to identify securities that meet the team's investment criteria in terms of competitive position, franchise value and management quality. The investment team's credit analysis focuses on financial risk, business risk, management ability and intentions. Valuation analysis is used to narrow the screened investment universe to a pool of investment candidates who are then assessed in order to determine relative valuation. Finally, the Fund is constructed with sector allocation driven primarily from bottom-up security selection. Integral to the Fund construction process is the measurement and monitoring of market risk, duration and volatility and credit risk through the use of proprietary risk measures and models.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

Under normal circumstances, at least 80% of the Fund's assets will be invested in high yield securities. This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. Derivative instruments used by the Fund will be counted toward the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

For purposes of policies adopted in accordance with Rule 35d-1 under the 1940 Act, the term "assets," as defined in Rule 35d-1 under the 1940 Act, means net assets plus the amount of any borrowings for investment purposes.

**33**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Details of the Funds

Short Duration Income Portfolio

**Investment Objective**

The Short Duration Income Portfolio seeks above-average total return over a market cycle of three to five years.

**Approach**

The Fund invests primarily in U.S. government securities, investment grade corporate bonds and mortgage- and asset-backed securities. The Fund seeks value in the fixed-income market with only a limited sensitivity to changes in interest rates. The Fund will ordinarily seek to maintain an average duration of approximately three years or less although there is no minimum or maximum for any individual security. With respect to corporate issuers, the Fund will not purchase securities with remaining maturities of more than 5.25 years. The Fund may also invest in securities of foreign issuers, including issuers located in emerging market or developing countries, although only U.S. dollar denominated investment grade securities may be held in the Fund.

The Fund's mortgage securities may include CMOs and CMBS. The Fund may also invest in asset-backed securities.

The Fund may purchase certain non-publicly traded "restricted" securities. These securities may include "144A" securities, which are exempt from registration and may only be resold to qualified institutional buyers. The Fund may invest in illiquid securities, including restricted securities that are illiquid. The Fund may invest an unlimited amount in restricted securities that are considered by the Adviser to be liquid and otherwise meet the Fund's investment policies.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, Fund management or to earn income. Derivatives are financial instruments whose value is based on the value of another underlying asset, interest rate, index or financial instrument. 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.

**Process**

The Adviser employs a value approach toward fixed-income investing. The Adviser makes securities and sector decisions based on the anticipated tradeoff between long-run expected return and risk. The Adviser relies upon value measures such as the level of real interest rates, yield curve slopes and credit-adjusted spreads to guide its decisions regarding interest rate, country, sector and security exposure. A team of portfolio managers implements strategies based on these types of value measures. Certain team members focus on specific bonds within each sector. Others seek to ensure that the aggregate risk exposures to changes in the level of interest rates and yield spreads match the Fund's objective. The Adviser may sell securities when it believes that expected risk-adjusted return is low compared to other investment opportunities.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

Under normal circumstances, substantially all of the Fund's assets will be invested in investment grade fixed-income securities denominated in U.S. dollars. This policy may be changed without shareholder approval; however, you would be notified in writing of any changes.

**34**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks

&nbsp;&nbsp;&nbsp; *This section discusses additional information relating to the Funds' investment strategies, other types of investments that the Funds may make and related risk factors. The Funds' investment practices and limitations are also described in more detail in the Statement of Additional Information ("SAI"), which is incorporated by reference and legally is a part of this Prospectus. For details on how to obtain a copy of the SAI and other reports and information, see the back cover of this Prospectus.*<br>

Economies and financial markets worldwide have recently experienced periods of increased volatility, uncertainty, distress, government spending, inflation and disruption to consumer demand, economic output and supply chains. To the extent these conditions continue, the risks associated with an investment in a Fund, including those described below, could be heightened and a Fund's investments (and thus a shareholder's investment in a Fund) may be particularly susceptible to sudden and substantial losses, reduced yield or income or other adverse developments. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time.

**Fixed-Income Securities**

Fixed-income securities are securities that pay a fixed or a variable rate of interest until a stated maturity date. Fixed-income securities include U.S. government securities, securities issued by federal or federally sponsored agencies and instrumentalities, corporate bonds and notes, asset-backed securities, mortgage securities, securities rated below investment grade (commonly referred to as "junk bonds" or "high yield/high risk securities") municipal bonds, loan participations and assignments, zero coupon bonds, convertible securities, Eurobonds, Brady Bonds, Yankee Bonds, repurchase agreements, commercial paper and cash equivalents.

Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Funds may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. The Funds may be subject to liquidity risk, which may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. Fixed-income securities may be called (i.e., redeemed by the issuer) prior to final maturity. If a callable security is called, a Fund may have to reinvest the proceeds at a lower rate of interest.

**Credit and Interest Rate Risk**

Fixed-income securities, such as bonds, generally are subject to two types of risk: credit risk and interest rate risk. Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. The risk of defaults across issuers and/or counterparties increases in adverse market and economic conditions. Interest rate risk refers to fluctuations (such as a decline) in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. A low interest rate environment may prevent a Fund from providing a positive yield or paying Fund expenses out of current income. The Funds may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. During periods when interest rates are low or there are negative interest rates, a Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for a Fund to sell at an advantageous price or time.

In addition, under certain conditions, there may be an increasing amount of issuers that are unprofitable, have little cash on hand and/or are unable to pay the interest owed on their debt obligations and the number of such issuers may increase if demand for their goods and services falls, borrowing costs rise due to governmental action or inaction or other reasons.

**Convertible Securities**

A convertible security is a bond, debenture, note, preferred stock, right, warrant or other security that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities generally have characteristics similar to both debt and equity securities. The value of

**35**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Convertible securities ordinarily provide a stream of income with generally higher yields than those of common stock of the same or similar issuers. Convertible securities generally rank senior to common stock in a corporation's capital structure but are usually subordinated to other comparable nonconvertible fixed-income securities in such capital structure. Convertible securities generally do not participate directly in any dividend increases or decreases of the underlying securities although the market prices of convertible securities may be affected by any dividend changes or other changes in the underlying securities.

**Distressed and Defaulted Securities**

Distressed and defaulted securities are speculative and involve substantial risks in addition to the risks of investing in high yield securities. The Fund will generally not receive interest payments on the distressed securities and the repayment of principal may also be at risk. These securities may present a substantial risk of default or may be in default at the time of investment. The repayment of defaulted securities is also subject to significant uncertainties. The Fund may incur substantial expenses in seeking recovery upon a default in the payment of principal of or interest on its portfolio holdings. If the portfolio company is forced to reorganize or liquidate, the Fund may lose its entire investment or may be required to accept cash or securities with a value less than its original investment. Distressed securities and any securities received in an exchange for such securities may be subject to restrictions on resale.

**Preferred Securities**

Preferred securities are subject to risks applicable generally to equity securities. In addition, a company's preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt, so the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company's financial condition or prospects. Preferred securities may pay fixed or adjustable rates of return. Like fixed-income securities, preferred stock generally decreases in value if interest rates rise and increases in value if interest rates fall.

**Mezzanine Investments**

Mezzanine investments are subordinated debt securities that receive payments of interest and principal after other more senior security holders are paid. Mezzanine investments generally are rated below investment grade and frequently are unrated and present many of the same risks as senior loans and non-investment grade bonds. However, unlike senior loans, mezzanine investments are not a senior or secondary secured obligation of the related borrower. They typically are the most subordinated debt obligation in an issuer's capital structure. Mezzanine investments also may often be unsecured. Mezzanine investments therefore are subject to the additional risk that the cash flow of the related borrower and the property securing the loan may be insufficient to repay as scheduled after giving effect to any senior obligations of the related borrower. Mezzanine investments are also expected to be a highly illiquid investment. Mezzanine investments will be subject to certain additional risks to the extent that such loans may not be protected by financial covenants or limitations upon additional indebtedness. Investment in mezzanine investments is a highly specialized investment practice that depends more heavily on independent credit analysis than investments in other types of debt obligations.

**Corporate Debt Obligations**

Corporate debt obligations are fixed-income securities issued by private corporations. Debtholders, as creditors, have a prior legal claim over common and preferred stockholders of the corporation as to both income and assets for the principal and interest due to the bondholder.

**ESG Investment Risk**

A Fund's adherence to its ESG criteria and application of related analyses when selecting investments may affect the Fund's performance depending on whether such investments are in or out of favor and relative to similar funds that do not adhere to such criteria or apply such analyses. Socially responsible norms differ by country and region, and a company's ESG practices or the Adviser's assessment of such may change over time. A Fund may invest in companies that do not reflect the beliefs and values of any particular investor. Additionally, a Fund's adherence to its ESG criteria and application of related analyses in connection with identifying and selecting investments in non-U.S. issuers often require subjective analysis and may be relatively more difficult than applying the ESG criteria or related analyses to investments of other issuers because data availability may be more limited with respect to non-U.S. issuers. A Fund's investments in certain companies may be susceptible to various factors that may impact their businesses or operations, including costs associated with government budgetary constraints that impact publicly funded projects and clean energy initiatives, the effects of general economic conditions throughout the world, increased competition from other providers of services, unfavorable tax laws or accounting policies and high leverage.

**Market and Geopolitical Risk**

The value of your investment in a Fund is based on the values of a Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. Price movements, sometimes called volatility, may be greater or less depending on the types of securities a Fund owns and the markets in which the securities trade. Volatility and disruption in financial markets and economies may be sudden and unexpected, expose a Fund to greater risk, including risks associated with reduced market liquidity and fair valuation, and adversely affect a Fund's operations. For example, the Adviser potentially will be prevented from executing investment decisions at an

**36**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

advantageous time or price as a result of any domestic or global market disruptions and reduced market liquidity may impact a Fund's ability to sell securities to meet redemptions.

The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in a Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. Inflation rates may change frequently and significantly because of various factors, including unexpected shifts in the domestic or global economy and changes in monetary or economic policies (or expectations that these policies may change). Changes in expected inflation rates may adversely affect market and economic conditions, a Fund's investments and an investment in a Fund. The market price of debt securities generally falls as inflation increases because the purchasing power of the future income and repaid principal is expected to be worth less when received by a Fund. The risk of inflation is greater for debt instruments with longer maturities and especially those that pay a fixed rather than variable interest rate. Other financial, economic and other global market and social developments or disruptions may result in similar adverse circumstances, and it is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). In general, the securities or other instruments that the Adviser believes represent an attractive investment opportunity or in which a Fund seeks to invest may be unavailable entirely or in the specific quantities sought by a Fund. As a result, a Fund may need to obtain the desired exposure through a less advantageous investment, forgo the investment at the time or seek to replicate the desired exposure through a derivative transaction or investment in another investment vehicle. Any such event(s) could have a significant adverse impact on the value and risk profile of a Fund's portfolio. There is a risk that you may lose money by investing in a Fund.

Social, political, economic and other conditions and events, such as war, natural disasters, health emergencies (e.g., the novel coronavirus outbreak, epidemics and other pandemics), terrorism, conflicts, social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and the Adviser's investment advisory activities and services of other service providers, which in turn could adversely affect a Fund's investments and other operations.

Government and other public debt, including municipal obligations in which a Fund may invest, can be adversely affected by large and sudden changes in local and global economic conditions that result in increased debt levels. Although high levels of government and other public debt do not necessarily indicate or cause economic problems, high levels of debt may create certain systemic risks if sound debt management practices are not implemented. A high debt level may increase market pressures to meet an issuer's funding needs, which may increase borrowing costs and cause a government or public or municipal entity to issue additional debt, thereby increasing the risk of refinancing. A high debt level also raises concerns that the issuer may be unable or unwilling to repay the principal or interest on its debt, which may adversely impact instruments held by a Fund that rely on such payments. Governmental and quasi-governmental responses to certain economic or other conditions may lead to increasing government and other public debt, which heighten these risks. Unsustainable debt levels can lead to declines in the value of currency, and can prevent a government from implementing effective counter-cyclical fiscal policy during economic downturns, can generate or contribute to an economic downturn or cause other adverse economic or market developments, such as increases in inflation or volatility. Increasing government and other public debt may adversely affect issuers, obligors, guarantors or instruments across a variety of asset classes.

Global events may negatively impact broad segments of businesses and populations, cause a significant negative impact on the performance of a Fund's investments and exacerbate pre-existing political, social and economic risks to a Fund. A Fund's operations may be interrupted as a result, which may contribute to the negative impact on investment performance. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions that affect the instruments in which a Fund invests, or the issuers of such instruments, in ways that could have a significant negative impact on a Fund's investment performance.

**Duration**

The average duration of a portfolio of fixed-income securities represents its exposure to changing interest rates. For example, when the level of interest rates increases by 1%, a fixed-income security having a positive duration of four years generally will decrease in value by 4%; when the level of interest rates decreases by 1%, the value of that same security generally will increase by 4%. A portfolio with a lower average duration generally will experience less price volatility in response to changes in interest rates than a portfolio with a higher average duration.

**High Yield Securities**

Fixed-income securities that are not investment grade are commonly referred to as "junk bonds" or high yield, high risk securities. These securities offer a higher yield than other higher rated securities, but they carry a greater degree of risk. High yield securities are subject to greater risk of loss of income and principal than higher rated securities and may be considered speculative by the major

**37**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

credit rating agencies. High yield securities may be issued by companies that are restructuring, are smaller and less creditworthy or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal and interest. Changes in the value of high yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities.

In recent years, there has been a broad trend of weaker or less restrictive covenant protections in the high yield market. Among other things, under such weaker or less restrictive covenants, borrowers might be able to exercise more flexibility with respect to certain activities than borrowers who are subject to stronger or more protective covenants. For example, borrowers might be able to incur more debt, including secured debt, return more capital to shareholders, remove or reduce assets that are designated as collateral securing high yield securities, increase the claims against assets that are permitted against collateral securing high yield securities or otherwise manage their business in ways that could impact creditors negatively. In addition, certain privately held borrowers might be permitted to file less frequent, less detailed or less timely financial reporting or other information, which could negatively impact the value of the high yield securities issued by such borrowers. Each of these factors might negatively impact the high yield securities held by the Fund.

**Mortgage-Backed Securities**

Mortgage securities are fixed-income securities representing an interest in a pool of underlying mortgage loans. They are sensitive to changes in interest rates, but may respond to these changes differently from other fixed-income securities due to the possibility of prepayment of the underlying mortgage loans. As a result, it may not be possible to determine in advance the actual maturity date or average life of a mortgage security. Rising interest rates tend to discourage refinancings, with the result that the average life and volatility of the security will increase and its market price will decrease. When interest rates fall, however, mortgage securities may not gain as much in market value because additional mortgage prepayments must be reinvested at lower interest rates. Prepayment risk may make it difficult to calculate the average maturity of a portfolio of mortgage securities and, therefore, to assess the volatility risk of that portfolio.

Certain Funds may invest in mortgage securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities. These securities are either direct obligations of the U.S. Government or the issuing agency or instrumentality has the right to borrow from the U.S. Treasury to meet its obligations although it is not legally required to extend credit to the agency or instrumentality. Certain of these mortgage securities purchased by a Fund, such as those issued by the Government National Mortgage Association and the Federal Housing Administration, are backed by the full faith and credit of the United States. Other of these mortgage securities purchased by a Fund, such as those issued by the Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac"), are not backed by the full faith and credit of the United States and there is a risk that the U.S. Government will not provide financial support to these agencies if it is not obligated to do so by law. The maximum potential liability of the issuers of some of the mortgage securities held by the Funds may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.

Non-agency mortgage-backed securities are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, mortgage-related securities held in a Fund's portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans. Non-agency mortgage-backed securities include securities that reflect an interest in, and are

**38**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

secured by, mortgage loans on commercial real property. Many of the risks of investing in CMBS reflect the risks of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants.

The risks associated with mortgage-backed securities are elevated in distressed economic, market, health and labor conditions, notably, increased levels of unemployment, delays and delinquencies in payments of mortgage and rent obligations, and uncertainty regarding the effects and extent of government intervention with respect to mortgage payments and other economic matters.

Delinquencies, defaults and losses on residential mortgage loans may increase substantially over certain periods, which may affect the performance of the mortgage-backed securities in which a Fund may invest. Mortgage loans backing non-agency mortgage-backed securities are more sensitive to economic factors that could affect the ability of borrowers to pay their obligations under the mortgage loans backing these securities. In addition, housing prices and appraisal values in many states and localities over certain periods have declined or stopped appreciating. A sustained decline or an extended flattening of those values may result in additional increases in delinquencies and losses on mortgage-backed securities generally (including the mortgaged-backed securities that the Funds may invest in as described above). Adverse changes in market conditions and regulatory climate may reduce the cash flow which a Fund, to the extent it invests in mortgage-backed securities or other asset-backed securities, receives from such securities and increase the incidence and severity of credit events and losses in respect of such securities. In the event that interest rate spreads for mortgage-backed securities and other asset-backed securities widen following the purchase of such assets by a Fund, the market value of such securities is likely to decline and, in the case of a substantial spread widening, could decline by a substantial amount. Furthermore, adverse changes in market conditions may result in reduced liquidity in the market for mortgage-backed securities and other asset-backed securities (including the mortgage-backed securities and other asset-backed securities in which the Funds may invest) and an unwillingness by banks, financial institutions and investors to extend credit to servicers, originators and other participants in the market for mortgage-backed and other asset-backed securities. As a result, the liquidity and/or the market value of any mortgage-backed or asset-backed securities that are owned by a Fund may experience declines after they are purchased by a Fund.

Collateralized mortgage obligations ("CMOs") are debt obligations collateralized by mortgage loans or mortgage pass-through securities (collectively "Mortgage Assets"). Payments of principal and interest on the Mortgage Assets and any reinvestment income are used to make payments on the CMOs. CMOs are issued in multiple classes. Each class has a fixed or floating rate and a stated maturity or final distribution date. The principal and interest on the Mortgage Assets may be allocated among the classes in a number of different ways. Certain classes will, as a result of the allocation, have more predictable cash flows than others. As a general matter, the more predictable the cash flow, the lower the yield relative to other Mortgage Assets. The less predictable the cash flow, the higher the yield and the greater the risk. A Fund may invest in any class of CMO, including classes that vary inversely with interest rates and may be more volatile and sensitive to prepayment rates.

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

Stripped mortgage-backed securities ("SMBS") are derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S. Government, or by private originators. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class receives most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the interest only or "IO" class), while the other class will receive all of the principal (the principal-only or "PO" class). Investments in each class of SMBS are extremely sensitive to changes in interest rates. IOs tend to decrease in value substantially if interest rates decline and prepayment rates become more rapid. POs tend to decrease in value substantially if interest rates increase and the rate of prepayment decreases. If a Fund invests in SMBS and interest rates move in a manner not anticipated by management, it is possible that a Fund could lose all or substantially all of its investment.

CMBS are generally multi-class or pass-through securities backed by a mortgage loan or a pool of mortgage loans secured by commercial property, such as industrial and warehouse properties, office buildings, retail space and shopping malls, multifamily

**39**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

properties and cooperative apartments. The commercial mortgage loans that underlie CMBS are generally not amortizing or not fully amortizing. That is, at their maturity date, repayment of their remaining principal balance or "balloon" is due and is repaid through the attainment of an additional loan or sale of the property. An extension of a final payment on commercial mortgages will increase the average life of the CMBS, generally resulting in a lower yield for discount bonds and a higher yield for premium bonds.

CMBS are subject to credit risk and prepayment risk. Although prepayment risk is present, it is of a lesser degree in the CMBS market than in the residential mortgage market; commercial real estate property loans often contain provisions that substantially reduce the likelihood that such securities will be prepaid (e.g., significant prepayment penalties on loans and, in some cases, prohibition on principal payments for several years following origination).

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

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

**Asset-Backed Securities**

Asset-backed securities apply the securitization techniques used to develop mortgage-backed securities to a broad range of other assets. Various types of assets, primarily automobile and credit card receivables and home equity loans, are pooled and securitized in pass-through structures similar to pass-through structures developed with respect to mortgage securitizations. Asset-backed securities have risk characteristics similar to mortgage-backed securities. Like mortgage-backed securities, they generally decrease in value as a result of interest rate increases, but may benefit less than other fixed-income securities from declining interest rates, principally because of prepayments. Also, as in the case of mortgage-backed securities, prepayments generally increase during a period of declining interest rates, although other factors, such as changes in credit use and payment patterns, may also influence prepayment rates. Asset-backed securities also involve the risk that various federal and state consumer laws and other legal and economic factors may result in the collateral backing the securities being insufficient to support payment on the securities.

A Fund may invest in other asset-backed or similarly structured securities, such as collateralized debt obligations ("CDOs"), collateralized bond obligations ("CBOs"), and collateralized loan obligations ("CLOs") These investments are subject to many of the same risks as other forms of asset-backed securities, including interest rate risk, credit risk and default risk, and are also subject to additional risks, including but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the risk that the collateral may default or decline in value or be downgraded, if rated by a nationally recognized statistical rating organization; (iii) the Fund may invest in tranches of CDOs that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investors regarding the characterization of proceeds; (v) the investment return achieved by the Fund could be significantly different than those predicted by financial models; (vi) the lack of a readily available secondary market for CDOs; (vii) the risk of forced "fire sale" liquidation due to technical defaults such as coverage test failures; and (viii) the CDO's manager may perform poorly. Investments in CDOs, CBOs and CLOs are also subject to risks particular to their respective asset class and structure.

For example, because CLOs are backed primarily by commercial loans, CLOs also bear many of the same risks as investing in loans directly. However, in addition to the risks associated with investing in commercial loans, the complex structure and highly leveraged nature of a CLO poses additional risks. CLOs may experience substantial losses attributable to loan defaults or trading losses. Such losses on the underlying assets are borne first by the holders of subordinate tranches. In addition, a Fund's investments in CLOs may decrease in market value when the CLO's assets experience loan defaults or credit impairment, losses that exceed the most subordinate tranches, or market anticipation of loan defaults and investor aversion to CLO securities as a class. CDOs are structured similarly to CLOs and bear many of the same risks as CLOs as well as additional risks because they are backed by pools of assets other than commercial loans, including securities (such as other asset-backed securities), synthetic instruments or bonds, and may be highly leveraged. Like CLOs, losses incurred by a CDO are borne first by holders of the most subordinate tranches. Accordingly, the risks of CDOs depend largely on the type of underlying collateral and the tranche of CDOs in which the Fund invests. Moreover, CDOs that obtain their exposure through synthetic investments are exposed to risks associated with derivative instruments.

**Contingent Convertible Instruments and Additional Tier 1 Capital**

Contingent convertible securities ("CoCos") are a form of hybrid debt security, which are intended to either convert into equity or have their principal written down upon the occurrence of certain "triggers." CoCos can be issued at all levels of seniority in the capital structure, from senior unsecured debt to subordinated Tier 1 (referred to as Additional Tier 1 Capital or "AT1"). The triggers

**40**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

vary by security and are defined by the documents governing the instruments. For CoCos, the trigger is typically a decline in the issuer's capital below a specified threshold level. In the case of AT1s, the securities can be triggered either at a specified threshold level or, in some cases, at regulators' discretion should they deem the issuer to be insolvent. Like other securities, CoCos and AT1s may be subject to credit, interest rate, high yield security, foreign security and markets risks associated with bonds and equities and some additional risks associated specifically to CoCos and AT1s include, but are not limited to, loss absorption risk and risk as subordinated instruments. The riskiness of these securities is typically greater for CoCos and AT1s that are issued by banks with capital ratios close to the level specified in the trigger.

*Coupon Risk.* Depending on the specifics of the security, the coupons of a CoCo or AT1 can potentially be cancelled at the banking institution's discretion or at the request of the relevant regulatory authority in order to help the bank absorb losses. The discretionary cancellation of payments may not be a formal event of default and there may not be remedies to require re-instatement of coupon payments or payment of any past missed payments. Due to uncertainty surrounding coupon payments, CoCos and AT1s may be volatile and their price may decline rapidly in the event that coupon payments are suspended.

*Subordinated instruments.* CoCos and AT1s will, in the majority of circumstances, be issued in the form of subordinated debt instruments in order to provide the appropriate regulatory capital treatment prior to a conversion. Accordingly, in the event of liquidation, dissolution or winding-up of an issuer prior to a conversion having occurred, the rights and claims of the holders of the CoCos or AT1s, such as a Fund, against the issuer in respect of or arising under the terms of the CoCos or AT1s may rank junior to the claims of all holders of some unsubordinated obligations of the issuer. In addition, if the CoCos or AT1s are converted into the issuer's underlying equity securities following a conversion event (i.e., a "trigger"), each holder will be subordinated due to their conversion from being the holder of a debt instrument to being the holder of an equity instrument.

*Market value will fluctuate based on various factors.* The value of CoCos and AT1s may be influenced by many factors including, without limitation: (i) the creditworthiness of the issuer and/or fluctuations in such issuer's applicable capital ratios; (ii) supply and demand for the CoCos and AT1s; (iii) general market conditions and available liquidity; and (iv) economic, financial and political events that affect the issuer, its particular market or the financial markets in general.

**When-Issued Securities, Delayed Delivery Securities and Forward Commitments**

A Fund may purchase or sell securities that it is entitled to receive on a when-issued basis. A Fund may also purchase or sell securities on a delayed delivery basis or through a forward commitment (including on a TBA (to be announced) basis). These transactions involve the purchase or sale of securities by a Fund at an established price with payment and delivery taking place in the future. The Fund enters into these transactions to obtain what is considered an advantageous price to the Fund at the time of entering into the transaction. There can be no assurance that a security purchased on a when-issued basis will be issued or that a security purchased or sold on a delayed delivery basis or through a forward commitment will be delivered. Also, the value of securities in these transactions on the delivery date may be more or less than the price paid by the Fund to purchase the securities. The Fund will lose money if the value of the security in such a transaction declines below the purchase price and will not benefit if the value of the security appreciates above the sale price during the commitment period.

**Foreign Securities**

Foreign issuers generally are subject to different accounting, auditing and financial reporting standards than U.S. issuers. There may be less information available to the public about foreign issuers. Securities of foreign issuers can be less liquid and experience greater price movements. In addition, the prices of such securities may be susceptible to influence by large traders, due to the limited size of many foreign securities markets. Moreover, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Also, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. In some foreign countries, there is also the risk of government expropriation, excessive taxation, political or social instability, the imposition of currency controls or diplomatic developments that could affect a Fund's investment. There also can be difficulty obtaining and enforcing judgments against issuers in foreign countries. Foreign stock exchanges, broker-dealers and listed issuers may be subject to less government regulation and oversight. The cost of investing in foreign securities, including brokerage commissions and custodial expenses, can be higher than the cost of investing in domestic securities.

Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. International trade barriers or economic sanctions against foreign countries, organizations, companies, entities and/or individuals may adversely affect a Fund's foreign holdings or exposures. Investments in foreign markets may also be adversely affected by less stringent investor protections and disclosure standards, and governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. Governmental actions can have a significant effect on the economic conditions in foreign countries, which also may adversely affect the value and liquidity of a Fund's

**41**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

investments. Foreign investment in the securities markets of certain foreign countries is restricted or controlled to varying degrees. For example, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Moreover, if a deterioration occurs in a country's balance of payments, the country could impose temporary restrictions on foreign capital remittances. A Fund could also be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investment. Any of these actions could severely affect security prices, which could result in losses to the Fund and increased transaction costs, impair a Fund's ability to purchase or sell foreign securities or transfer a Fund's assets back into the United States, or otherwise adversely affect a Fund's operations. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by a Fund, particularly during periods of market turmoil. Certain foreign investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When a Fund holds illiquid investments, its portfolio may be harder to value.

Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. A Fund's investments in foreign securities are subject to economic sanctions and trade laws in the United States and other jurisdictions. These laws and related governmental actions, including counter-sanctions and other retaliatory measures, can, from time to time, prevent or prohibit a Fund from investing in certain foreign securities. In addition, economic sanctions could prohibit a Fund from transacting with particular countries, organizations, companies, entities and/or individuals by banning them from global payment systems that facilitate cross-border payments, restricting their ability to settle securities transactions, and freezing their assets. The imposition of sanctions and other similar measures could, among other things, cause a decline in the value of securities issued by the sanctioned country or companies located in, or economically linked to, the sanctioned country, downgrades in the credit ratings of the sanctioned country or companies located in, or economically linked to, the sanctioned country, devaluation of the sanctioned country's currency, and increased market volatility and disruption in the sanctioned country and throughout the world. Economic sanctions or other similar measures could, among other things, effectively restrict or eliminate a Fund's ability to purchase or sell securities, negatively impact the value or liquidity of a Fund's investments, significantly delay or prevent the settlement of a Fund's securities transactions, force a Fund to sell or otherwise dispose of investments at inopportune times or prices, increase a Fund's transaction costs, make a Fund's investments more difficult to value or impair a Fund's ability to meet its investment objective or invest in accordance with its investment strategies. These conditions may be in place for a substantial period of time and enacted with limited advance notice to a Fund.

Certain Funds may invest in debt obligations known as "sovereign debt," which are obligations of governmental issuers in emerging market or developing countries and industrialized countries. Certain emerging market or developing countries are among the largest debtors to commercial banks and foreign governments. The issuer or governmental authority that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or pay interest when due in accordance with the terms of such obligations. Uncertainty surrounding the level and sustainability of sovereign debt of certain countries has at times increased volatility in the financial markets. In addition, a number of Latin American countries are among the largest debtors of developing countries and have a long history of reliance on foreign debt. Additional factors that may influence the ability or willingness to service debt include, but are not limited to, a country's cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, the relative size of its debt service burden to the economy as a whole and its government's policy towards the International Monetary Fund, the World Bank and other multilateral agencies. A country whose exports are concentrated in a few commodities or whose economy depends on certain strategic imports could be vulnerable to fluctuations in international prices of these commodities or imports. If a foreign sovereign obligor cannot generate sufficient earnings from foreign trade to service its external debt, it may need to depend on continuing loans and aid from foreign governments, commercial banks and multilateral organizations, and inflows of foreign investment. The commitment on the part of these foreign governments, multilateral organizations and others to make such disbursements may be conditioned on the government's implementation of economic reforms and/or economic performance and the timely service of its obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third-parties' commitments to lend funds, which may further impair the foreign sovereign obligor's ability or willingness to timely service its debts. In addition, there is no legal process for collecting on a sovereign debt that a government does not pay or bankruptcy proceeding by which all or part of the sovereign debt that a government entity has not repaid may be collected.

In connection with their investments in foreign securities, certain Funds also may enter into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Foreign currency forward exchange contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, a Fund may use cross currency hedging or proxy hedging with respect to currencies in which a Fund has or expects to have portfolio or currency exposure. Cross currency and proxy hedges involve the sale of

**42**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies.

**Foreign Currency**

Investments in foreign securities may be denominated in foreign currencies. The value of foreign currencies may fluctuate relative to the value of the U.S. dollar or other applicable foreign currency. Since the Funds may invest in such non-U.S. dollar-denominated securities, and therefore may convert the value of such securities into U.S. dollars, changes in currency exchange rates can increase or decrease the U.S. dollar value of the Funds' assets. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and the overall economic health of the issuer. Devaluation of a currency by a country's government or banking authority also will have a significant impact on the value of any investments denominated in that currency. The Adviser may use derivatives to reduce this risk. The Adviser may in its discretion choose not to hedge against currency risk. In addition, certain market conditions may make it impossible or uneconomical to hedge against currency risk.

**Emerging Market Securities**

Certain Funds may invest in emerging market or developing countries, which are countries that major international financial institutions generally consider to be less economically mature than developed nations (such as the United States or most nations in Western Europe). Emerging market or developing countries may be more likely to experience political turmoil or rapid changes in economic conditions than more developed countries, and the financial condition of issuers in emerging market or developing countries may be more precarious than in other countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, a Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging markets countries. In addition, due to jurisdictional limitations, U.S. authorities (e.g., SEC and the U.S. Department of Justice) may be limited in their ability to enforce regulatory or legal obligations in emerging market countries. In addition, emerging market securities generally are less liquid and subject to wider price and currency fluctuations than securities issued in more developed countries. These characteristics result in greater risk of price volatility in emerging market or developing countries, which may be heightened by currency fluctuations relative to the U.S. dollar.

**Loan-Related Investments**

Loan-related investments may include, without limitation, public bank loans made by banks or other financial institutions and loan participations and assignments. Such investments may be rated investment grade or below investment grade. To the extent these investments are second lien loans, which are lower in priority to senior loans, but have seniority in a company's capital structure to other liabilities, the company would be required to pay down these second lien loans prior to other lower-ranked claims on their assets. With respect to loan participations, a Fund may not always have direct recourse against a borrower if the borrower fails to pay scheduled principal and/or interest; may be subject to greater delays, expenses and risks than if the Fund had purchased a direct obligation of the borrower; and may be regarded as the creditor of the agent lender (rather than the borrower), subjecting the Fund to the creditworthiness of that lender as well.

Certain loans may be illiquid, meaning the Funds may not be able to sell them quickly at a fair price. Illiquid securities are also difficult to value. To the extent a loan has been deemed illiquid, it will be subject to a Fund's restrictions on investment in illiquid securities. The secondary market for loans may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. Because some loans may have a more limited secondary market, liquidity and valuation risk is more pronounced for a Fund than for funds that invest primarily in other types of fixed-income instruments or equity securities. In the case of extended trade settlement periods, a Fund may not receive the proceeds from the sale of a loan for a period after the sale. As a result, sale proceeds related to the sale of loans may not be available to make additional investments or to meet a Fund's redemption obligations for a period after the sale of the loans and, as a result, the Fund may have to sell other investments or engage in borrowing transactions, such as borrowing from its credit facility, if necessary to raise cash to meet its obligations. Loans are subject to the risk of default in the payment of interest or principal, which would result in a reduction of income to a Fund and a potential decrease in the Fund's NAV. Although a loan may be fully collateralized at the time of acquisition, the collateral may decline in value, be relatively illiquid or lose all or substantially all of its value subsequent to investment. Certain loans may not be considered securities under the federal securities laws and, therefore, investments in such loans may not be subject to certain protections under those laws.

The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates. Loans that are rated below investment grade share the same risks of other below investment grade securities. Because loans in which a Fund may invest could rank lower in priority of payment to senior loans, they present a greater degree of investment risk due to the fact that the cash flow or other property of the borrower securing the loan may be insufficient to meet scheduled payments after meeting the senior secured payment obligations of the borrower. These loans may exhibit greater price volatility as well. There is less readily available, reliable information about most loan investments than is the case for many other types of securities.

**43**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

**Covenant Lite Investments**

Some of the loans or other obligations in which a Fund may invest or obtain exposure to may be "covenant lite" loans or other obligations. Certain financial institutions may define "covenant lite" loans or securities differently. Covenants contained in loan documentation are intended to protect lenders and investors by imposing certain restrictions and other limitations on a borrower's operations or assets and by providing certain information and consent rights to lenders. Covenant lite loans or securities, which have varied terms and conditions, may contain fewer or no restrictive covenants compared to other loans that might enable a Fund to, among other things, proactively enforce financial covenants or prevent undesired actions by the borrower. As a result, covenant lite loans generally carry greater risks because they allow borrowers to exercise more flexibility with respect to certain activities that may otherwise be limited or prohibited under similar loan obligations that are not covenant lite. In addition, a Fund may receive less or less frequent financial reporting from a borrower under a covenant-lite obligation, which may result in more limited access to financial information, difficulty evaluating the borrower's financial performance over time and delays in exercising rights and remedies in the event of a significant financial decline. A Fund may experience relatively greater difficulty or delays in enforcing its rights on its holdings of certain covenant lite loans and other similar obligations than its holdings of loans or securities with more traditional financial covenants, which may result in losses to a Fund. During certain market conditions, many new, restructured or reissued loans and similar debt obligations may not feature traditional financial maintenance covenants, which are intended to protect lenders and investors by imposing certain restrictions and other limitations on a borrower's operations or assets and by providing certain information and consent rights to lenders.

**Liquidity**

A Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities illiquidity can be caused by, among other things, a drop in overall market trading volume, an inability to find a willing buyer, or legal restrictions on the securities' resale. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If a Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

**Equity Securities**

Equity securities may include common and preferred stocks, convertible securities and equity-linked securities, real estate investment trusts ("REITs"), rights and warrants to purchase common stocks, depositary receipts, shares of investment companies, limited partnership interests and other specialty securities having equity features. Certain Funds may invest in equity securities that are publicly traded on securities exchanges or over-the-counter ("OTC") or in equity securities that are not publicly traded. Securities that are not publicly traded may be more difficult to value or sell and their value may fluctuate more dramatically than other securities. The prices of convertible securities are affected by changes similar to those of equity and fixed-income securities.

A depositary receipt is generally issued by a bank or financial institution and represents the common stock or other equity securities of a foreign company. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts, or to pass through to them any voting rights with respect to the deposited securities.

**Derivatives**

The Funds may, but are not required to, use derivatives and other similar instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivative instruments used by a Fund will be counted towards the Fund's exposure in the types of securities listed herein to the extent they have economic characteristics similar to such securities. A derivative is a financial instrument whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause a Fund to liquidate portfolio positions when it may not be advantageous

**44**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

to do so, or may cause a Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further a Fund's investment objective, there is no assurance that the use of derivatives will achieve this result.

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

*Futures.* A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. While the value of a futures contract tends to increase or decrease in tandem with the value of the underlying instrument, differences between the futures market and the market for the underlying asset may result in an imperfect correlation. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed a Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by a Fund of margin deposits in the event of bankruptcy of a broker with which a Fund has open positions in the futures contract.

*Options.* If a Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument, foreign currency or contract, such as a swap agreement or futures contract, on the underlying instrument or foreign currency at an agreed-upon price typically in exchange for a premium paid by a Fund. If a Fund sells an option, it sells to another person the right to buy from or sell to a Fund a specific amount of the underlying instrument, swap, foreign currency, or futures contract on the underlying instrument or foreign currency at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by a Fund. When options are purchased OTC, a Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and a Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

Investments in foreign currency options may substantially change a Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. There is a risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. The value of a foreign currency option is dependent upon the value of the underlying foreign currency relative to the U.S. dollar or other applicable foreign currency. The price of the option may vary with changes in the value of either or both currencies and has no relationship to the investment merits of a foreign security. Options on foreign currencies are affected by all of those factors that influence foreign exchange rates and foreign investment generally. Unanticipated changes in currency prices may result in losses to a Fund and poorer overall performance for the Fund than if it had not entered into such contracts. Options on foreign currencies are traded primarily in the OTC market, but may also be traded on U.S. and foreign exchanges.

Foreign currency options contracts may be used for hedging purposes or non-hedging purposes in pursuing a Fund's investment objective, such as when the Adviser anticipates that particular non-U.S. currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Fund's investment portfolio. Investing in foreign currencies for purposes of gaining from projected changes in exchange rates, as opposed to only hedging currency risks applicable to a Fund's holdings, further increases a Fund's exposure to foreign securities losses. There is no assurance that the Adviser's use of currency derivatives will benefit a Fund or that they will be, or can be, used at appropriate times.

*Swaps.* A Fund may enter into OTC swap contracts or cleared swap transactions. An OTC swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Typically swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). A Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each party. Cleared swap transactions may help reduce counterparty credit risk. In a cleared swap, a Fund's ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial institution. OTC swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty. Certain swaps have begun trading on exchanges called swap execution facilities. Exchange trading is expected to increase liquidity of swaps trading. Both OTC and cleared swaps could result in losses if interest rates, foreign currency exchange rates or other factors are not correctly anticipated by a Fund or if the reference index, security or investments do not perform as expected. The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments require the clearing and exchange trading of certain standardized swap transactions. Mandatory exchange-trading and clearing is occurring on a phased-in basis. A Fund may pay fees or incur costs each time it enters into, amends or terminates a swap agreement.

**45**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

The Funds' use of swaps may include those based on the credit of an underlying security, commonly referred to as "credit default swaps." Where a Fund is the buyer of a credit default swap contract, it would typically be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by a third-party on the debt obligation. If no default occurs, the Fund would have paid to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract. When a Fund is the seller of a credit default swap contract, it typically receives the stream of payments but is obligated to pay an amount equal to the par (or other agreed-upon) value of a referenced debt obligation upon the default or similar event of the issuer of the referenced debt obligation.

**Large Shareholder Transactions Risk**

A Fund may experience adverse effects when certain shareholders purchase or redeem large amounts of shares of a Fund. Such larger than normal redemptions may cause a Fund to sell portfolio securities at times when it would not otherwise do so, which may negatively impact a Fund's NAV and liquidity. Similarly, large Fund share purchases may adversely affect a Fund's performance to the extent that a Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would. These transactions may also accelerate the realization of taxable income to shareholders if such sales of investments resulted in gains, and may also increase transaction costs. In addition, a large redemption could result in a Fund's current expenses being allocated over a smaller asset base, leading to an increase in a Fund's expense ratio. Although large shareholder transactions may be more frequent under certain circumstances, a Fund is generally subject to the risk that shareholders can purchase or redeem a significant percentage of Fund shares at any time.

**U.S. Government Securities**

The U.S. government securities that certain Funds may purchase include U.S. Treasury bills, notes and bonds, all of which are direct obligations of the U.S. Government. In addition, certain Funds may purchase securities issued or guaranteed by agencies and instrumentalities of the U.S. Government which are backed by the full faith and credit of the United States. Among the agencies and instrumentalities issuing these obligations are Government National Mortgage Association and the Federal Housing Administration. Also, certain Funds may purchase securities issued by agencies and instrumentalities which are not backed by the full faith and credit of the United States, but whose issuing agency or instrumentality has the right to borrow, to meet its obligations, from the U.S. Treasury. Among these agencies and instrumentalities are the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Federal Home Loan Banks. Further, certain Funds may purchase securities issued by agencies and instrumentalities which are backed solely by the credit of the issuing agency or instrumentality. Among these agencies and instrumentalities is the Federal Farm Credit System. Because these securities are not backed by the full faith and credit of the United States, there is a risk that the U.S. Government will not provide financial support to these agencies if it is not obligated to do so by law. The maximum potential liability of the issuers of some U.S. government securities held by a Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future. The interest from U.S. government securities generally is not subject to state and local taxation.

**Tender Option Bonds**

A tender option bond is a municipal obligation (generally held pursuant to a custodial arrangement) having a relatively long maturity and bearing interest at a fixed rate substantially higher than prevailing short-term, tax-exempt rates. The bond is typically issued in conjunction with the agreement of a third-party, such as a bank, broker-dealer or other financial institution, pursuant to which the institution grants the security holder the option, at periodic intervals, to tender its securities to the institution. As consideration for providing the option, the financial institution receives periodic fees equal to the difference between the bond's fixed coupon rate and the rate, as determined by a remarketing or similar agent, that would cause the securities, coupled with the tender option, to trade at par on the date of such determination. Thus, after payment of this fee, the security holder effectively holds a demand obligation that bears interest at the prevailing short-term, tax-exempt rate. An institution will normally not be obligated to accept tendered bonds in the event of certain defaults or significant downgrading in the credit rating assigned to the issuer of the bond. The tender option will be taken into account in determining the maturity of the tender option bonds and average portfolio maturity. There is a risk that the Fund will not be considered the owner of a tender option bond for federal income tax purposes, and thus will not be entitled to treat such interest as exempt from federal income tax. Certain tender option bonds may be illiquid or may become illiquid as a result of a credit rating downgrade, a payment default or a disqualification from tax-exempt status.

The residual interest certificates may be more volatile and less liquid than other municipal bonds of comparable maturity. In most circumstances, the residual interest certificates holder bears substantially all of the underlying fixed-rate municipal bond's downside investment risk and also benefits from any appreciation in the value of the underlying fixed-rate municipal bond. Investments in a residual interest certificate typically will involve greater risk than investments in fixed-rate municipal bonds.

The residual interest certificates held by a Fund provide a Fund with the right to: (1) cause the holders of the floating rate certificates to tender their notes at par, and (2) cause the sale of the fixed-rate municipal bond held by the tender option bond trust, thereby collapsing the tender option bond trust. Tender option bond trusts are generally supported by a liquidity facility provided by a third party bank or other financial institution (the "Liquidity Provider") that provides for the purchase of floating rate certificates that cannot be remarketed. The holders of the floating rate certificates have the right to tender their certificates in exchange for payment

**46**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

of par plus accrued interest on a periodic basis (typically weekly) or on the occurrence of certain mandatory tender events. The tendered floating rate certificates are remarketed by a remarketing agent, which is typically an affiliated entity of the Liquidity Provider. If the floating rate certificates cannot be remarketed, the floating rate certificates are purchased by the tender option bond trust either from the proceeds of a loan from the Liquidity Provider or from a liquidation of the fixed-rate municipal bond.

The tender option bond trust may also be collapsed without the consent of a Fund, as the residual interest certificate holder, upon the occurrence of certain "tender option termination events" (or "TOTEs") as defined in the tender option bond trust agreements. Such termination events typically include the bankruptcy or default of the municipal bond, a substantial downgrade in the credit quality of the municipal bond, or a judgment or ruling that interest on the fixed-rate municipal bond is subject to federal income taxation. Upon the occurrence of a termination event, the tender option bond trust would generally be liquidated in full with the proceeds typically applied first to any accrued fees owed to the trustee, remarketing agent and liquidity provider, and then to the holders of the floating rate certificates up to par plus accrued interest owed on the floating rate certificates and a portion of gain share, if any, with the balance paid out to the residual interest certificate holder. In the case of a mandatory termination event, after the payment of fees, the floating rate certificates holders would be paid before the residual interest certificates holders (i.e., the Fund). In contrast, in the case of a TOTE, after payment of fees, the floating rate certificates holders and the residual interest certificates holders would be paid pro rata in proportion to the respective face values of their certificates.

**Revenue Bonds**

Revenue bonds are municipal obligations that are secured by the revenue from a specific project. To the extent that such revenues do not materialize, the revenue bonds may not be repaid. If a Fund invests in revenue bonds that are issued by municipal issuers in the same economic sector, a Fund would be particularly susceptible to developments adversely affecting that sector. Revenue bonds historically have been subject to a greater risk of default than general obligation bonds because investors can look only to the revenue generated by the project or other revenue source backing the project, rather than to the general taxing authority of the state or local government issuer of the obligations. For example, investments in revenue bonds backed by receipts from hospitals are sensitive to hospital bond ratings, which are often based on feasibility studies that contain projections of expenses, revenues and occupancy levels. Additional factors which could affect a hospital's gross receipts and net income available to service its debt are demand for hospital services, the ability of the hospital to provide the services required, management capabilities, economic developments in the service area, efforts by insurers and government agencies to limit rates and expenses, reputational issues, competition, availability and expenses of malpractice insurance, Medicaid and Medicare funding and possible federal legislation regulating hospital charges.

**Repurchase Agreements**

Repurchase agreements are fixed-income securities in the form of agreements backed by collateral. These agreements typically involve the acquisition by a Fund of securities from the selling institution (such as a bank or a broker-dealer), coupled with the agreement that the selling institution will repurchase the underlying securities at a specified price and at a fixed time in the future (or on demand, if applicable). The underlying securities which serve as collateral for the repurchase agreements entered into by a Fund may include U.S. government securities, municipal securities, corporate debt obligations, convertible securities, and common and preferred stock and may be of below investment grade quality. These securities are marked-to-market daily in order to maintain full collateralization (typically purchase price plus accrued interest). The use of repurchase agreements involves certain risks. For example, if the selling institution defaults on its obligation to repurchase the underlying securities at a time when the value of the securities has declined, a Fund may incur a loss upon disposition of them. The risk of such loss may be greater when utilizing collateral other than U.S. government securities. In the event of an insolvency or bankruptcy by the selling institution, a Fund's right to control the collateral could be affected and result in certain costs and delays. Additionally, if the proceeds from the liquidation of such collateral after an insolvency were less than the repurchase price, the Fund could suffer a loss. Fund procedures are followed that are designed to minimize such risks.

**Reverse Repurchase Agreements**

Under a reverse repurchase agreement, the Fund sells a security and promises to repurchase that security at an agreed-upon future date and price. The price paid to repurchase the security reflects interest accrued during the term of the agreement. Reverse repurchase agreements may be entered into for, among other things, obtaining leverage, facilitating short-term liquidity or when the Adviser expects that the interest income to be earned from the investment of the transaction proceeds will be greater than the related interest expense. The Fund will earmark or segregate cash or liquid assets or establish a segregated account holding cash and other liquid assets in an amount not less than the purchase obligations of the agreement. Reverse repurchase agreements may be viewed as a speculative form of borrowing called leveraging. Furthermore, reverse repurchase agreements involve the risks that (i) the interest income earned in the investment of the proceeds will be less than the interest expense, (ii) the market value of the securities retained in lieu of sale by the Fund may decline below the price of the securities the Fund has sold but is obligated to repurchase, (iii) the market value of the securities sold will decline below the price at which the Fund is required to repurchase them and (iv) the securities will not be returned to the Fund.

In addition, the use of leverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking requirements. Leverage, including borrowing, may cause the Fund to be more volatile

**47**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

than if the Fund had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Fund's portfolio securities.

**Investment Companies**

Subject to the limitations set forth in the 1940 Act, or as otherwise permitted by the SEC, the Funds may acquire shares in other investment companies, including foreign investment companies and ETFs, which may be managed by the Adviser or its affiliates. The market value of the shares of other investment companies may differ from the NAV of the Funds. The shares of closed-end investment companies frequently trade at a discount to their NAV. As a shareholder in an investment company, the Funds would bear its ratable share of that entity's expenses, including its investment advisory and administration fees. At the same time, the Funds would continue to pay its own advisory and administration fees and other expenses. As a result, the Funds and its shareholders will directly bear the expenses of their investment in the Fund and indirectly bear the expenses of the Fund's investments in other investment companies.

**Exchange-Traded Funds**

Certain Funds may invest in ETFs. ETFs seek to track the performance of various portions or segments of the equity and fixed-income markets. Shares of ETFs have many of the same risks as direct investments in common stocks or bonds. In addition, the market value of ETF shares may differ from their NAV because the supply and demand in the market for ETF shares at any point in time is not always identical to the supply and demand in the market for the underlying securities. Also, ETFs that track particular indices typically will be unable to match the performance of the index exactly due to, among other things, the ETF's operating expenses and transaction costs. ETFs typically incur fees that are separate from those fees incurred directly by a Fund. Therefore, as a shareholder in an ETF, a Fund would bear its ratable share of that entity's expenses. At the same time, a Fund would continue to pay its own investment management fees and other expenses. As a result, shareholders will directly bear the expenses of their investment in a Fund and indirectly bear the expenses of a Fund's investments in ETFs with respect to investments in ETFs. Further, certain ETFs in which a Fund may invest are leveraged. While leveraged ETFs may offer the potential for greater return, the potential for loss and the speed at which losses can be realized also are greater. Leveraged ETFs can deviate substantially from the performance of their underlying benchmark over longer periods of time, particularly in volatile periods. Furthermore, disruptions in the markets for the securities underlying ETFs purchased or sold by a Fund could result in losses on a Fund's investment in ETFs.

**Municipals**

Municipal securities (also referred to as municipal obligations) include debt obligations of states, territories or possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, such as local or regional governments. The income on municipal securities is generally exempt from federal income tax at the time of issuance, in the opinion of bond counsel or other counsel to the issuers of such securities. However, the Funds may purchase municipal securities that pay interest that is subject to the federal alternative minimum tax, and municipal securities on which the interest payments are taxable. These securities typically are "general obligation" or "revenue" bonds, notes or commercial paper, including participations in lease obligations and installment purchase contracts of municipalities. General obligation bonds are secured by the issuer's full faith and credit including its taxing power for payment of principal and interest. Revenue bonds, however, are generally payable 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. These types of bonds involve the risk that the tax or other revenues so derived will not be sufficient to meet interest and or principal payment obligations. These obligations may have fixed, variable or floating rates.

Because certain Funds may invest in municipal securities, a Fund may be affected significantly by the economic, regulatory, legislative, tax or political developments affecting the ability of issuers of municipal securities to pay interest or repay principal. The risks of municipal securities generally depend on the financial and credit status of the issuer and may rely on a specific stream of revenue associated with a project or other revenue source. Thus, adverse developments related to a municipality's ability to raise revenue, including through its taxing authority, or the failure of specific revenues to materialize would negatively impact such investments. Changes in the financial health of an issuer of municipal securities may make it difficult for the issuer to make interest and principal payments when due. Some municipalities have had significant financial problems recently, and these and other municipalities could, potentially, continue to experience significant financial problems resulting from lower tax revenues and/or decreased aid from state and local governments in the event of an economic downturn. In addition, adverse legislative, tax, regulatory, demographic or political changes may negatively impact a Fund's investments in municipal securities. These events could decrease the Funds' income and/or adversely affect the Funds' performance and investments. Municipal securities also involve the risk that an issuer may call securities for redemption, which could force a Fund to reinvest the proceeds at a lower rate of interest, and the value of municipal securities may be affected by the rights of municipal security holders.

Municipal securities may be more susceptible to downgrades, defaults or loss of tax or other revenue during recessions or similar periods of economic stress. Factors contributing to the financial stress on municipalities may include lower property tax collections as a result of lower home values, lower sales tax revenue as a result of consumers cutting back spending and lower income tax revenue as a result of a higher unemployment rate. In addition, because some municipal obligations may be secured or guaranteed by banks and other institutions, the risk to a Fund associated with investments in such municipal securities could increase if the banking or financial sector suffers an economic downturn and/or if the credit ratings of the institutions issuing the guarantee are downgraded or

**48**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

at risk of being downgraded by a national rating organization. If such events occur, the value of the security could decrease or the value could be lost entirely, and it may be difficult or impossible for a Fund to sell the security at the time and the price that normally prevails in the market.

For example, recent public health emergencies have significantly stressed the financial resources of many municipalities and other issuers of municipal securities, which may impair their ability to meet their financial obligations and may harm the value or liquidity of a Fund's investments in municipal securities (or the income generated by such investments). In particular, responses by municipalities to recent public health emergencies have caused disruptions in business activities. These and other effects of recent public health emergencies, such as increased unemployment levels, have impacted tax and other revenues of municipalities and other issuers of municipal securities and the financial conditions of such issuers. As a result, there is an increased budgetary and financial pressure on municipalities and other issuers of municipal securities and heightened risk of default or other adverse credit or similar events for issuers of municipal securities, which would adversely impact a Fund's investments.

In addition, the ability of an issuer to make payments or repay interest may be affected by litigation or bankruptcy. In the event of bankruptcy of such an issuer, a Fund investing in the issuer's securities could experience delays in collecting principal and interest, and the Fund may not, in all circumstances, be able to collect all principal and interest to which it is entitled. To enforce its rights in the event of a default in the payment of interest or repayment of principal, or both, a Fund may, in some instances, take possession of, and manage, the assets securing the issuer's obligations on such securities, which may increase the Fund's operating expenses. Any income derived from the Fund's ownership or operation of such assets may not be tax-exempt. Municipal securities are subject to, among other risks, credit and interest rate risk and market and geopolitical risk.

Because many municipal securities are issued to finance similar projects (such as those relating to education, health care, housing, transportation, and utilities), conditions in those sectors may affect the overall municipal securities market. In addition, changes in the financial condition of an individual municipal issuer can affect the overall municipal market. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the supporting taxation or the inability to collect revenues for the specific project or specific assets.

Some municipal securities are subject to the risk that the U.S. Internal Revenue Service ("IRS") may determine that an issuer has not complied with applicable tax requirements (or the occurrence of other adverse tax developments) and that interest from the municipal security is taxable, which may result in a significant decline in the value of the security. In addition, interest on municipal obligations, while generally exempt from federal income tax, may not be exempt from the federal alternative minimum tax. Municipal securities may be less liquid than taxable bonds and there may be less publicly available information on the financial condition of municipal security issuers than for issuers of other securities, and the investment performance of a Fund investing in municipal securities may therefore be more dependent on the analytical abilities of the Adviser than if the Fund held other types of investments such as stocks or taxable bonds. The secondary market for municipal securities also tends to be less well developed or liquid than many other securities markets, which may adversely affect a Fund's ability to sell municipal securities it holds at attractive prices or value municipal securities. In addition, the demand for municipal securities is strongly influenced by the value of tax-exempt income to investors and lower income tax rates could reduce the advantage of owning municipal securities, which may also adversely affect the value and liquidity of municipal securities.

**Tax-Exempt Variable Rate Demand Notes**

Tax-exempt variable rate demand notes are variable rate tax-exempt debt obligations that give investors the right to demand principal repayment. Due to cyclical supply and demand considerations, at times the yields on these obligations can exceed the yield on taxable money market obligations. The interest rate on these instruments may be reset daily, weekly or on some other reset period and may have a floor or ceiling on interest rate changes. The interest rate of a floating rate instrument may be based on a known lending rate, such as a bank's prime rate, and is reset whenever such rate is adjusted. The interest rate on a variable rate demand note is reset at specified intervals at a market rate. A Fund's ability to receive payments of principal and interest and other amounts in connection with loans held by it will depend primarily on the financial condition of the issuer. The failure by a Fund to receive scheduled interest or principal payments on a loan would adversely affect the income of the Fund and would likely reduce the value of its assets, which would be reflected in a reduction in the Fund's NAV.

Floating rate and variable rate demand notes and bonds may have a stated maturity in excess of one year, but may have features that permit a holder to demand payment of principal plus accrued interest upon a specified number of days' notice. Frequently, such obligations are secured by letters of credit or other credit support arrangements provided by banks. If these obligations are not secured by letters of credit or other credit support arrangements, a Fund's right to demand payment will be dependent on the ability of the issuer to pay principal and interest on demand. In addition, these obligations frequently are not rated by credit rating agencies and may involve heightened risk of default by the issuer. The issuer of such obligations normally has a corresponding right, after a given period, to prepay in its discretion the outstanding principal of the obligation plus accrued interest upon a specific number of days' notice to the holders. There is no assurance that a Fund will be able to reinvest the proceeds of any prepayment at the same interest rate or on the same terms as those of the original instrument.

**49**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

In the absence of an active secondary market for floating rate and variable rate demand notes, a Fund may find it difficult to dispose of the instruments, and the Fund could suffer a loss if the issuer defaults or during periods in which the Fund is not entitled to exercise its demand rights. If a reliable trading market for the floating rate and variable rate instruments held by a Fund does not exist and the Fund may not demand payment of the principal amount of such instruments within seven days, the instruments may be deemed illiquid and therefore subject to the Fund's limitation on investments in illiquid securities.

**Financial Services**

A Fund is more susceptible to any economic, business, political, regulatory or other developments that adversely affect issuers in the financial services industry than a fund that does not invest significantly in the financial services industry. The profitability of many types of financial services companies may be adversely affected in certain market cycles, including periods of rising interest rates, which may restrict the availability and increase the cost of capital, and declining economic conditions, which may cause credit losses due to financial difficulties of borrowers. Financial services companies are also subject to extensive government regulation, including policy and legislative changes in the United States and other countries that are changing many aspects of financial regulation.

**Industrials**

To the extent that a Fund invests significantly in the industrials sector, the Fund will be particularly susceptible to the risks associated with companies operating in this sector. The value of securities issued by companies in the industrials sector may be adversely affected by a wide range of risks and developments, including changes in the supply of and demand for both their specific products or services and for industrials sector products in general. In addition, the products of manufacturing and industrials companies may face obsolescence due to rapid technological developments and frequent new product introduction. Moreover, government regulations, trade disputes, shipment and supply chain disruptions, domestic, regional and world events and economic conditions may also adversely affect the performance of companies in the industrials sector. The industrials sector may also be adversely affected by changes or trends in commodity prices and changes in interest or inflation rates, which may be influenced by unpredictable factors and sudden developments. For example, changes in commodity and material prices and supply used in the industrials sector can adversely affect the sector. Furthermore, companies in the industrials sector may be subject to liability for environmental damage, product liability claims, depletion of resources, and mandated expenditures for safety and pollution control, among other risks.

**Consumer Discretionary/Staples**

To the extent that a Fund invests significantly in the consumer discretionary or staples sectors, the Fund will be particularly susceptible to the risks associated with companies operating in such sector(s). Companies in the consumer discretionary and staples sectors are subject to risks, including fluctuations in domestic and international economic conditions and forecasts, inflation, shipment and supply chain disruptions and interest rate changes, currency exchange rates, increased competition and consumer confidence as well as increases in production-related costs. Performance of such companies also may be adversely affected by factors such as reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes. Companies in these sectors are subject to competitive forces (including competition brought by foreign brands), which may also have an adverse impact on their profitability and the value of their securities. These sectors may be strongly affected by fads, marketing campaigns, changes in demographics and consumer preferences, and other economic or social factors affecting consumer demand. Governmental regulation, including price controls and regulations on packaging, labeling, competition, and certification, may affect the profitability of companies in such sector(s). Companies operating in these sectors may also be adversely affected by government and private litigation.

**Investment Discretion**

In pursuing a Fund's investment objective, the Adviser has considerable leeway in deciding which investments it buys, holds or sells on a day-to-day basis, and which trading strategies it uses. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect a Fund's performance.

**Temporary Defensive Investments**

When the Adviser believes that changes in market, economic, political or other conditions warrant, each Fund may invest without limit in cash, cash equivalents or other fixed-income securities for temporary defensive purposes that may be inconsistent with a Fund's principal investment strategies. If the Adviser incorrectly predicts the effects of these changes, such defensive investments may adversely affect a Fund's performance and the Fund may not achieve its investment objective.

**Portfolio Turnover**

Consistent with their investment policies, certain Funds will purchase and sell securities without regard to the effect on portfolio turnover. Higher portfolio turnover (e.g., over 100% per year) will cause a Fund to incur additional transaction costs and may result in taxable gains being passed through to shareholders. A Fund may engage in frequent trading of securities to achieve its investment objective.

**50**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management

Adviser

Morgan Stanley Investment Management Inc., with principal offices at 522 Fifth Avenue, New York, NY 10036, conducts a worldwide portfolio management business and provides a broad range of portfolio management services to customers in the United States and abroad. Morgan Stanley (NYSE: "MS") is the parent of the Adviser, which is the parent of the Distributor. Morgan Stanley is a preeminent global financial services firm engaged in securities trading and brokerage activities, as well as providing investment banking, research and analysis, financing and financial advisory services. As of December 31, 2022, the Adviser, together with its affiliated asset management companies, had approximately $1.3 trillion in assets under management or supervision.

A discussion regarding the basis for the Board of Trustees' approval of the investment advisory agreements is available in each Fund's Annual Report to Shareholders for the fiscal year ended September 30, 2022.

Advisory Fees

For the fiscal year ended September 30, 2022, the Adviser received from each Fund the advisory fee (net of fee waivers, if applicable) set forth in the table below.

---

| | |
|:---|:---|
| **Fund (as a percentage of average daily net assets)** | **Fund (as a percentage of average daily net assets)** |
| Core Plus Fixed Income Portfolio | 0.21% |
| Corporate Bond Portfolio | 0.37% |
| High Yield Portfolio | 0.31% |
| Short Duration Income Portfolio | 0.08% |

---

The Adviser has agreed to reduce its advisory fee and/or reimburse each Fund, if necessary, if such fees would cause the total annual operating expenses of such Funds to exceed the percentage of average daily net assets set forth in the table below. In determining the actual amount of fee waiver and/or expense reimbursement for each Fund, if any, the Adviser excludes from total annual operating expenses acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation). The fee waivers and/or expense reimbursements for each Fund will continue for at least one year from the date of this Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. The Adviser may make additional voluntary fee waivers and/or expense reimbursements. The Adviser may discontinue these voluntary fee waivers and/or expense reimbursements at any time in the future.

A Fund's annual operating expenses may vary throughout the period and from year to year. A Fund's actual expenses may be different than the expenses listed in the Fund's fee and expense table based upon the extent and amount of a fee waiver and/or expense reimbursement.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Expense Cap** **Class I** | **Expense Cap** **Class A** | **Expense Cap** **Class L** | **Expense Cap** **Class C** | **Expense Cap** **Class R6** |
| Core Plus Fixed Income Portfolio | 0.42% | 0.77% | 1.02% | 1.52% | 0.37% |
| Corporate Bond Portfolio | 0.70% | 1.05% | 1.52% | 1.80% |  |
| High Yield Portfolio | 0.65% | 1.00% | 1.25% | 1.75% | 0.62% |
| Short Duration Income Portfolio | 0.30% | 0.55% | 0.80% | 1.30% | 0.25% |

---

Portfolio Management

**Core Plus Fixed Income Portfolio**

The Fund's assets are managed by members of the Fixed Income team. The team consists of portfolio managers and analysts. Current members of the team who are jointly and primarily responsible for the day-to-day management of the Fund are Neil Stone, Joseph Mehlman, Matthew Dunning, and Gregory Finck.

Mr. Stone has been associated with the Adviser in an investment management capacity since 1995. Mr. Mehlman has been associated with the Adviser in an investment management capacity since 2002. Mr. Dunning re-joined the Adviser in July 2014. Prior to re-joining the Adviser, Mr. Dunning managed the municipal valuation rates group and was a senior taxable municipal bond analyst at Bloomberg L.P. from March 2010 to July 2014. Prior to March 2010, he worked in various trading and portfolio management roles for the Adviser. Mr. Finck has been associated with the Adviser in an investment management capacity since December 2014. Prior to joining the Adviser, Mr. Finck was a managing director at Fortress Investment Group from 2008 to 2014. Prior to joining Fortress, Mr. Finck was a managing director at Goldman Sachs where he worked in the mortgage trading division from 1992 until 2008.

**51**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management (Con't)

**Corporate Bond Portfolio**

The Fund's assets are managed by members of the Fixed Income team. The team consists of portfolio managers and analysts. Current members of the team who are jointly and primarily responsible for the day-to-day management of the Fund are Joseph Mehlman, Angie Salam, and Stella Ma.

Mr. Mehlman has been associated with the Adviser in an investment management capacity since 2002. Ms. Salam has been associated with the Adviser in an investment management capacity since 2019. Ms. Ma has been associated with the Adviser in an investment management capacity since 2016.

All team members are responsible for the execution of the overall strategy of the Fund.

**High Yield Portfolio**

The Fund's assets are managed by members of the High Yield team. The team consists of portfolio managers and traders. Current members of the team who are jointly and primarily responsible for the day-to-day management of the Fund are Jack Cimarosa and Joseph F. Hurley. Messrs. Cimarosa and Hurley share portfolio management responsibilities. Mr. Cimarosa has been associated with the Adviser in an investment management capacity since April 2012 as a High Yield Trader and has been a portfolio manager of the Fund since 2017. Mr. Cimarosa was a High Yield Trader at Guggenheim Partners from April 2009 to March 2012 focusing on leveraged debt. Mr. Hurley has been associated with the Adviser in an investment management capacity since 2014.

All team members are responsible for the execution of the overall strategy of the Fund.

**Short Duration Income Portfolio**

The Fund's assets are managed by members of the Fixed Income team. The team consists of portfolio managers and analysts. Current members of the team who are jointly and primarily responsible for the day-to-day management of the Fund are Neil Stone, Matthew Dunning and Eric Jesionowski.

Mr. Stone has been associated with the Adviser in an investment management capacity since 1995. Mr. Dunning re-joined the Adviser in July 2014. Prior to re-joining the Adviser, Mr. Dunning managed the municipal valuation rates group and was a senior taxable municipal bond analyst at Bloomberg L.P. from March 2010 to July 2014. Prior to March 2010, he worked in various trading and portfolio management roles for the Adviser. Mr. Jesionowski has been associated with the Adviser in an investment management capacity since 1997.

**Additional Information**

The Funds' SAI provides additional information about the portfolio managers' compensation structure, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Funds.

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

**52**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information

**Share Class Arrangements**

*The Trust has suspended offering Class L shares of the Funds for sale to all investors. The Class L shareholders of the Funds do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders of the Funds may invest in additional Class L shares through reinvestment of dividends and distributions.   You do not currently have the option of purchasing Class L shares.*

The Trust currently offers investors Class I, Class A and Class C shares of each Fund and Class R6 shares of the Core Plus Fixed Income, High Yield, and Short Duration Income Portfolios. The Trust also offers Class IR and Class W shares of the High Yield Portfolio, which have different fees and expenses, through separate prospectuses. Class I and Class R6 shares are not subject to a sales charge and are not subject to a distribution and/or shareholder service (12b-1) fee. In addition, no sub-accounting or other similar fees, or any finder's fee payments are charged or paid on Class R6 shares and no finder's fee payments are charged or paid on Class A shares of Short Duration Income Portfolio. The Class L shares of the Funds are currently closed to all investors except in the limited circumstances set forth in this Prospectus. Class C shares are sold at NAV with no initial sales charge, but are subject to a CDSC of 1.00% on sales made within one year after the last day of the month of purchase. Class I and Class R6 shares generally require investments in minimum amounts that are substantially higher than Class A and Class C shares.

**Minimum Investment Amounts**

The minimum initial investment generally is $1 million for Class I shares and $1,000 for Class A and Class C shares of a Fund. The minimum initial investment amount may be waived by the Adviser for the following categories: (1) 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 advisory programs, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or (iv) certain other investment programs that do not charge an asset-based fee, as outlined in an agreement between the Distributor and such financial institution; (2) sales through a Financial Intermediary that has entered into an agreement with the Distributor to offer Fund shares to self-directed investment brokerage accounts, which may or may not charge a transaction fee; (3) qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions); (4) defined contribution, defined benefit and other employer-sponsored employee benefit plans, whether or not qualified under the Code, where such plans purchase Class A, Class C and/or Class I shares through a plan-level or omnibus account sponsored or serviced by a Financial Intermediary that has entered into an agreement with a Fund, the Distributor and/or the Adviser pursuant to which such Class A, Class C and/or Class I shares are available to such plans; (5) certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or its affiliates for their employees or the Trust's Trustees; (6) 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; (7) current or retired Directors or Trustees of the Morgan Stanley Funds (as defined herein), such persons' spouses, and children under the age of 21, and trust accounts for which any of such persons is a beneficiary; (8) certain other registered open-end investment companies whose shares are distributed by the Distributor; (9) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser; (10) the reinvestment of dividends from Class A, Class C or Class I shares of a Fund in additional shares of the same class of such Fund; or (11) certain other institutional investors based on assets under management or other considerations at the discretion of the Adviser. Each Fund no longer accepts direct purchases of Class C shares by accounts for which no broker-dealer or other Financial Intermediary is specified. Any direct purchase received by a Fund's transfer agent for Class C shares for such accounts will automatically be invested in Class A shares of the Fund.

Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Each Financial Intermediary may also have its own rules about minimum initial investment amounts, minimum account balances, share transactions and limits on the number of share transactions you are permitted to make in a given time period. When purchasing shares through a Financial Intermediary, you may not benefit from certain policies and procedures of the Funds as your eligibility may be dependent upon the policies and procedures of your Financial Intermediary, including those regarding reductions of sales charges. Please consult your Financial Intermediary for more information.

Class R6 shares are offered only to eligible investors meeting certain minimum investment requirements. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Code and in each case subject to the discretion of the Adviser. Initial omnibus trades of $5 million or more shall be accepted from certain platforms, including (i) banks and trust companies; (ii) insurance companies; and (iii) registered investment advisory firms. The $5 million minimum initial investment amount may be waived for Fund shares purchased by or through: (1) certain registered open-end investment companies whose shares are distributed by the Distributor; or (2) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.

If the value of your account falls below the applicable minimum initial investment amount for a class of shares of a Fund as a result of share redemptions or you no longer meet one of the waiver criteria set forth above, your account may be subject to involuntary

**53**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

conversion or involuntary redemption, as applicable. You will be notified prior to any such conversions or redemptions. No CDSC will be imposed on any involuntary conversion or involuntary redemption.

The Adviser, in its sole discretion, may waive a minimum initial investment amount in certain cases.

**Distribution of Fund Shares**

Morgan Stanley Distribution, Inc. is the exclusive distributor of shares of the Funds. The Distributor receives no compensation from the Fund for distributing Class I and Class R6 shares of a Fund. The Trust has adopted a Shareholder Services Plan with respect to the Class A shares of each Fund and a Distribution and Shareholder Services Plan with respect to the Class L and Class C shares of each Fund (the "Plans") pursuant to Rule 12b-1 under the 1940 Act. Under the Plans, each Fund pays the Distributor (i) a shareholder services fee of up to 0.25% of the average daily net assets of each of the Class A shares, Class L and Class C shares on an annualized basis and (ii) a distribution fee of up to 0.25% of the average daily net assets of Class L shares on an annualized basis and up to 0.75% of the average daily net assets of the Class C shares on an annualized basis. The Distributor has agreed to waive the 12b-1 fee on Class A shares of the Corporate Bond Portfolio to the extent it exceeds 0.15% of the average daily net assets of such shares on an annualized basis. This waiver will continue for at least one year from the date of this Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waiver when it deems such action is appropriate. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares. Such fees relate solely to the Class A, Class L and Class C shares and will reduce the net investment income and total return of the Class A, Class L and Class C shares, respectively. Because the fees are paid out of a Fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

The Adviser and/or Distributor may pay compensation to Financial Intermediaries in connection with the sale, distribution, marketing and retention of a Fund's shares and/or shareholder servicing. Such compensation may be significant in amount and the prospect of receiving any such additional compensation may provide affiliated or unaffiliated Financial Intermediaries with an incentive to favor sales of shares of a Fund over other investment options. Any such payments will not change the NAV or the price of a Fund's shares. For more information, please see the Funds' SAI.

**About Net Asset Value**

The NAV of a class of shares of a Fund is determined by dividing the total of the value of the Fund's investments and other assets attributable to the class, less any liabilities attributable to the class, by the total number of outstanding shares of that class of the Fund. In making this calculation, each Fund generally values its portfolio securities and other assets at market price. When no market quotations are readily available for a security or other asset, including circumstances under which the Adviser determines that a market quotation is not accurate, fair value for the security or other asset will be determined in good faith using methods approved by the Trust's Board of Trustees.

In addition, with respect to securities that primarily are listed on foreign exchanges, when an event occurs after the close of such exchanges that is likely to have changed the value of the securities (e.g., a percentage change in value of one or more U.S. securities indices in excess of specified thresholds), such securities will be valued at their fair value, as determined under procedures approved by the Trust's Board of Trustees. Securities also may be fair valued in the event of a significant development affecting a country or region or an issuer-specific development that is likely to have changed the value of the security. In these cases, a Fund's NAV will reflect certain portfolio securities' fair value rather than their market price. To the extent a Fund invests in open-end management companies (other than ETFs) that are registered under the 1940 Act, the Fund's NAV is calculated based in relevant part upon the NAV of such funds. The prospectuses for such funds explain the circumstances under which they will use fair value pricing and its effects.

Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security or other asset is materially different than the value that could be realized upon the sale of that security or other asset. With respect to securities that are primarily listed on foreign exchanges, the values of a Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. The NAV of a Fund (excluding any applicable sales charges) is based on the value of the Fund's portfolio securities or other assets. Although the assets of each class are invested in the same portfolio of securities or other assets, the NAV of each class will differ because the classes have different class specific expenses.

A Fund relies on various sources to calculate its NAV. The ability of a Fund's provider of administrative services to calculate the NAV per share of a Fund is subject to operational risks associated with processing or human errors, systems or technology failures, cyber attacks and errors caused by third party service providers, data sources, or trading counterparties. Such failures may result in delays in calculating a Fund's NAV and/or the inability to calculate NAV over extended periods. A Fund may be unable to recover any losses associated with such failures. In addition, if the third party service providers and/or data sources upon which a Fund directly or indirectly relies to calculate its NAV or price individual securities are unavailable or otherwise unable to calculate the NAV correctly, it may be necessary for alternative procedures to be utilized to price the securities at the time of determining a Fund's NAV.

**54**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

A Fund's NAV per share is subject to various investment and other risks. Please refer to the "Additional Information About the Funds' Investment Strategies and Related Risks" and "The Funds' Investments and Strategies" sections of the Prospectus and SAI, respectively, for more information regarding risks associated with an investment in a Fund.

**Pricing of Fund Shares**

You may buy or sell (redeem) shares of the Funds at the NAV next determined for the class after receipt of your order in good order, plus any applicable sales charge. The Trust determines the NAV for the Funds as of the close of the NYSE (normally 4:00 p.m. Eastern time) on each day that the NYSE is open for business (the "Pricing Time"). Shares generally will not be priced on days that the NYSE is closed, although shares may be priced on such days if the Securities Industry and Financial Markets Association ("SIFMA") recommends that the bond markets remain open for all or part of the day. On any business day when SIFMA recommends that the bond markets close early, a Fund reserves the right to close at or prior to the SIFMA recommended closing time. If the Fund does so, it will cease granting same day credit for purchase and redemption orders received after the Fund's closing time and credit will be given on the next business day. If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, a Fund reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate its NAV as of, the normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. A Fund may elect to remain open and price its shares on days when the NYSE is closed but the primary securities markets on which the Fund's securities trade remain open. Trading of securities that are primarily listed on foreign exchanges may take place on weekends and other days when a Fund does not price its shares. Therefore, to the extent, if any, that a Fund invests in securities primarily listed on foreign exchanges, the value of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares.

**Portfolio Holdings**

A description of the Trust's policies and procedures with respect to the disclosure of a Fund's portfolio securities is available in the Trust's SAI.

**How To Purchase Fund Shares**

You may purchase shares of a Fund on each day that the Fund is open for business by contacting your Financial Intermediary or directly from the Fund.

*Purchasing Shares Through a Financial Intermediary*

You may open a new account and purchase shares of a Fund through a Financial Intermediary. The Financial Intermediary will assist you with the procedures to invest in shares of a Fund. Investors purchasing or selling shares of a Fund through a Financial Intermediary, including Morgan Stanley Wealth Management, may be charged transaction-based or other fees by the Financial Intermediary for its services. If you are purchasing shares of a Fund through a Financial Intermediary, please consult your Financial Intermediary for more information regarding any such fees and for purchase instructions.

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

The availability of sales charge waivers and discounts may depend on whether you purchase Fund shares directly from the Fund (or the Distributor) or a Financial Intermediary. More information regarding sales charge discounts and waivers is summarized below. The Fund's sales charge waivers (and discounts) disclosed in this Prospectus are available for qualifying purchases made directly from the Fund (or the Distributor) and are generally available through Financial Intermediaries. The sales charge waivers (and discounts) available through certain other Financial Intermediaries are set forth in Appendix A to this Prospectus (Intermediary-Specific Sales Charge Waivers and Discounts), which may differ from those available for purchases made directly from the Fund (or the Distributor). Please contact your Financial Intermediary regarding applicable sales charge waivers (and discounts) and for information regarding the Financial Intermediary's related policies and procedures.

With respect to sales through Financial Intermediaries, no offers or sales of Fund shares may be made in any foreign jurisdiction, except with the consent of the Distributor.

*Purchasing Shares Directly From the Funds*

Initial Purchase

You may open a new account, subject to acceptance by a Fund, and purchase shares of the Fund by completing and signing a New Account Application provided by SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), the Funds' transfer agent, or Eaton Vance Management, the Funds' co-transfer agent, which you can obtain by calling Morgan Stanley Shareholder Services at 1-800-869-6397 and mailing it to Morgan Stanley Institutional Fund Trust, c/o SS&C Global Investor and Distribution

**55**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

Solutions, Inc., P.O. Box 219804, Kansas City, MO 64121-9804.

After submitting a completed New Account Application to SS&C GIDS, you may wire Federal Funds (monies credited by a Federal Reserve Bank) to State Street Bank and Trust Company (the "Custodian"). You should instruct your bank to send a Federal Funds wire in a specified amount to the Custodian using the following wire instructions:

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111-2101

ABA #011000028

DDA #00575373

Attn: Morgan Stanley Institutional Fund Trust

Subscription Account

Ref: (Fund Name, Account Number, Account Name)

Each Fund no longer accepts direct purchases of Class C shares by accounts for which no broker-dealer or other Financial Intermediary is specified (i.e., such purchasers are not eligible investors for Class C shares). Any direct purchase received by a Fund's transfer agent for Class C shares for such accounts will automatically be invested in Class A shares of the Fund. In addition, Class C shares held in an account for which no broker-dealer or other Financial Intermediary is specified and which are not subject to a CDSC will periodically be converted to Class A shares of a Fund.

Additional Investments

You may purchase additional shares of a Fund for your account at any time by contacting your Financial Intermediary or by contacting the Fund directly. For additional purchases directly from a Fund, you should write a "letter of instruction" that includes your account name, account number, the Fund name and the class selected, signed by the account owner(s), to assure proper crediting to your account. After mailing a "letter of instruction," you may wire Federal Funds by following the instructions under "Initial Purchase."

**Sales Charges Applicable to Purchases of Class A Shares**

Class A shares are subject to a sales charge equal to a maximum of 3.25% calculated as a percentage of the offering price on a single transaction as shown in the table below. For Class A shares sold by the Distributor, the Distributor will receive the sales charge imposed on purchases of Class A shares (or any CDSC paid on redemption) and will retain the full amount of such sales charge. As shown below, the sales charge is reduced for purchases of $100,000 and over.

---

| | | | |
|:---|:---|:---|:---|
|  | **Front-End Sales Charge** | **Front-End Sales Charge** | **Front-End Sales Charge** |
| **Amount of Single Transaction** | **Percentage of Public Offering Price** | **Approximate Percentage of Net** **Amount Invested** | **Dealer Commission as a** **Percentage of Offering Price** |
| Less than $100,000 | 3.25% | 3.36% | 2.75% |
| $100,000 but less than $250,000 | 2.00% | 2.04% | 1.50% |
| $250,000 but less than $500,000 | 1.00% | 1.01% | 0.50% |
| $500,000 and over\* | 0.00% | 0.00% | 0.00% |

---

\* The Distributor may pay a commission of up to 0.75% to a Financial Intermediary for purchase amounts of $500,000 or more.

With respect to the Short Duration Income Portfolio, Class A shares are subject to a sales charge equal to a maximum of 2.25% calculated as a percentage of the offering price on a single transaction as shown in the table below. For Class A shares sold by the Distributor, the Distributor will receive the sales charge imposed on purchases of Class A shares and will retain the full amount of such sales charge. As shown below, the sales charge is reduced for purchases of $100,000 and over.

---

| | | | |
|:---|:---|:---|:---|
|  | **Front-End Sales Charge** | **Front-End Sales Charge** | **Front-End Sales Charge** |
| **Amount of Single Transaction** | **Percentage of Public Offering Price** | **Approximate Percentage of Net** **Amount Invested** | **Dealer Commission as a** **Percentage of Offering Price** |
| Less than $100,000 | 2.25% | 2.30% | 2.00% |
| $100,000 but less than $250,000 | 1.00% | 1.01% | 0.75% |
| $250,000 and over\* | 0.00% | 0.00% | 0.00% |

---

\* The Distributor may pay a commission of up to 0.25% to a Financial Intermediary for purchase amount of $250,000 or more.

You may benefit from a reduced sales charge schedule (i.e., breakpoint discount) for purchases of Class A shares of a Fund, as applicable, by combining, in a single transaction, your purchase with purchases of Class A shares of the Fund by the following related accounts ("Related Accounts"):

**56**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• A single account (including an individual, a joint account, a trust or fiduciary account).

• A family member account (limited to spouse, and children under the age of 21, but include trust accounts established solely for the benefit of a spouse, or children under the age of 21).

• An UGMA/UTMA (Uniform Gifts to Minors Act/Uniform Transfers to Minors Act) account.

• An individual retirement account ("IRA").

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

Investments of $500,000 or more (with respect to each Fund other than the Short Duration Income Portfolio) are not subject to an initial sales charge, but are generally subject to a CDSC of 0.75% (with respect to each Fund other than the Short Duration Income Portfolio) on sales made within 12 months after purchase. Investments of $250,000 or more with respect to the Short Duration Income Portfolio are not subject to an initial sales charge, but are generally subject to a CDSC of 0.25% on sales made within 12 months after purchase.

For Class A shares of each Fund other than the Short Duration Income Portfolio purchased without an initial sales charge prior to April 29, 2022, such shares are generally subject to a 0.50% CDSC if sold during the first 12 months. For Class A shares of the Short Duration Income Portfolio purchased without an initial sales charge prior to April 29, 2022, such shares are not subject to a CDSC if sold during the first 12 months.

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

In addition to investments of $500,000 or more, or $250,000 or more with respect to the Short Duration Income Portfolio, purchases of Class A shares are not subject to a front-end sales charge if your account qualifies under one of the following categories:

• 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 advisory programs, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or (iv) certain other investment programs that do not charge an asset- based fee, as outlined in an agreement between the Distributor and such financial institution.

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

• Qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions).

• 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 account sponsored or serviced by a Financial Intermediary that has an agreement with the Fund, the Distributor and/or the Adviser pursuant to which Class A shares are available to such plans without an initial sales charge.

• Certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or its affiliates for their employees or the Trust's Trustees.

• 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.

• 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.

• Certain other registered open-end investment companies, whose shares are distributed by the Distributor.

• Investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.

• The reinvestment of dividends in additional Fund shares.

• The reinvestment of dividends from Class A shares of a Fund in additional Class A shares of the same Fund.

• Current employees of financial intermediaries or their affiliates that have executed a selling agreement with the Distributor, such persons' spouses, children under the age of 21, and trust accounts for which any such person is a beneficiary, as permitted by internal policies of their employer.

• Investment and institutional clients of the Adviser and its affiliates.

**57**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Direct purchases of shares by accounts where no financial intermediary is specified.

Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Please consult your Financial Intermediary for more information. For specific information with respect to sales charge waivers and discounts available through a specific Financial Intermediary, please refer to Appendix A attached to this Prospectus.

*Combined Purchase Privilege*

You will have the benefit of a reduced sales charge by combining your purchase of Class A shares of a Fund in a single transaction with your purchase of Class A shares of any other Morgan Stanley Multi-Class Fund (as defined herein) for any Related Account except for purchases of shares of Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income or Ultra-Short Municipal Income Portfolios.

With respect to the Short Duration Income Portfolio, you will have the benefit of a reduced sales charge by combining your purchase of Class A shares of the Fund in a single transaction with your purchase of Class A shares of Morgan Stanley Institutional Fund Trust Ultra-Short Income or Ultra-Short Municipal Income Portfolios for any Related Account.

*Right of Accumulation*

Your sales charge may be reduced if you invest $100,000 or more in a single transaction, as calculated below:

(a) the NAV of Class A shares of a Fund being purchased plus the total of the NAV of any Class A, Class L and Class C shares of the Fund held in Related Accounts as of the transaction date,

(b) plus the total of the NAV of Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (including shares of Morgan Stanley Money Market Funds (as defined herein) that you acquired in a prior exchange of Class A, Class L or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund, excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios) held in Related Accounts as of the transaction date.

With respect to the Short Duration Income Portfolio, your sales charge may be reduced if you invest $100,000 or more in a single transaction, as calculated below:

(a) the NAV of Class A shares of Short Duration Income Portfolio being purchased plus the total of the NAV of any Class A shares of the Fund held in Related Accounts as of the transaction date,

(b) plus the total of the NAV of Class A shares of Morgan Stanley Institutional Fund Trust Ultra-Short Income or Ultra-Short Municipal Income Portfolios held in Related Accounts as of the transaction date.

*Notification*

You must notify your Financial Intermediary (or the Trust's transfer agent, if you purchase shares of the Fund directly through the Trust) at the time a purchase order is placed that the purchase qualifies for a reduced sales charge under any of the privileges discussed above. The reduced sales charge will not be granted if: (i) notification is not furnished at the time of the order; or (ii) a review of the records of your Financial Intermediary or the Trust's transfer agent, SS&C GIDS, or Eaton Vance Management, the Funds' co-transfer agent, does not confirm your represented holdings. Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Please consult your Financial Intermediary for more information.

In order to obtain a reduced sales charge for Class A shares of a Fund under any of the privileges discussed above, it may be necessary at the time of purchase for you to inform your Financial Intermediary (or the Trust's transfer agent, if you purchase shares of the Fund directly through the Trust) of the existence of any Related Accounts in which there are holdings eligible to be aggregated to meet the sales load breakpoint and/or right of accumulation threshold. In order to verify your eligibility, you may be required to provide account statements and/or confirmations regarding your purchases and/or holdings of any Class A shares of a Fund or any other Morgan Stanley Multi-Class Fund (including shares of Morgan Stanley Money Market Funds that you acquired in an exchange from Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund except Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios, if applicable) held in all Related Accounts at your Financial Intermediary, in order to determine whether you have met the 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 you enter into a written "Letter of Intent." A Letter of Intent provides for the purchase of Class A shares of a Fund and Class A shares of other Morgan Stanley Multi-Class Funds, except Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios, within a 13-month period. With respect to the Short Duration Income Portfolio, a Letter of Intent for

**58**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

the Fund provides for the purchase of Class A shares of the Fund and Class A shares of Morgan Stanley Institutional Fund Trust Ultra-Short Income or Ultra-Short Municipal Income Portfolios within a 13-month period. The initial purchase of Class A shares of a Fund under a Letter of Intent must be at least 5% of the stated investment goal. The Letter of Intent does not preclude a Fund (or any other Morgan Stanley Multi-Class Fund) from discontinuing sales of its shares. To determine the applicable sales charge reduction, you may also include (1) the cost of Class A shares of a Fund or any other Morgan Stanley Multi-Class Fund that were previously purchased at a price including a front-end sales charge during the 90-day period prior to the Distributor receiving the Letter of Intent and (2) the historical cost of shares of any Morgan Stanley Money Market Fund that you acquired in an exchange from Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund purchased during that period at a price including a front-end sales charge. You may also combine purchases and exchanges by any Related Accounts during such 90-day period.

You should retain any records necessary to substantiate historical costs because a Fund, SS&C GIDS and your Financial Intermediary may not maintain this information. You can obtain a Letter of Intent by contacting your Financial Intermediary or by calling toll-free 1-800-869-6397. If you do not achieve the stated investment goal within the 13-month period, you are required to pay the difference between the sales charges otherwise applicable and sales charges actually paid, which may be deducted from your investment. Shares acquired through reinvestment of distributions are not aggregated to achieve the stated investment goal.

Class A shares also are offered at net asset value to investment and institutional clients of the Adviser and its affiliates and direct purchases of shares by accounts where no Financial Intermediary is specified.

**Conversion Features**

A shareholder currently holding Class A shares of a Fund in a fee-based advisory program ("Advisory Program") account, or currently holding Class A shares in a brokerage account but wishing to transfer into an Advisory Program account, may convert such shares to Class I shares of the Fund within the Advisory Program at any time. In addition, a shareholder holding Class C or Class L shares of a Fund through a brokerage account or an Advisory Program account may convert such shares to either Class A or Class I shares of the Fund within an Advisory Program at any time. Such conversions will be on the basis of the relative NAVs, without requiring any investment minimum to be met and without the imposition of any redemption fee or other charge. If a CDSC is applicable to such Class A or Class C shares, then the conversion may not occur until after the shareholder has held the shares for an 18-month or 12-month period, respectively, except that, a CDSC applicable to Class A and Class C shares converted to Class I shares through Traditional IRAs, Roth IRAs, Rollover IRAs, Inherited IRAs, SEP IRAs, SIMPLE IRAs, BASIC Plans, Educational Savings Accounts and Medical Savings Accounts on the Merrill Lynch platform will be waived. With respect to Class A shares, Merrill Lynch will remit to the Distributor the full amount of the CDSC otherwise payable upon sale of such shares. With respect to Class C shares, Merrill Lynch will remit the portion of the payment to be made to the Distributor in an amount equal to the CDSC multiplied by the number of months remaining on the CDSC period divided by the maximum number of months of the CDSC period.

In addition, a shareholder currently holding a class of shares of a Fund in a Merrill Lynch Advisory Program account may have such shares converted by Merrill Lynch to an eligible class of shares of the Fund for a Merrill Lynch brokerage account upon the transfer of the shares of the Fund from a Merrill Lynch Advisory Program account to a brokerage account with Merrill Lynch. Such conversions will be on the basis of the relative NAVs and without the imposition of any redemption fee or other charge. The fees and expenses of the new class may be higher than those of the previously held class.

After eight years, Class C shares of a Fund generally will convert automatically to Class A shares of the Fund with no initial sales charge, provided that the Fund or the Financial Intermediary through which a shareholder purchased or holds Class C shares has records verifying that the Class C shares have been held for at least eight years. The automatic conversion of Class C shares to Class A shares will not apply to shares held through group retirement plan recordkeeping platforms of certain Financial Intermediaries who hold such shares in an omnibus account and do not track participant level share lot aging to facilitate such a conversion. The eight-year period runs from the last day of the month in which the shares were purchased or, in the case of Class C shares acquired through an exchange, from the last day of the month in which the original Class C shares were purchased; the shares will convert to Class A shares based on their relative NAVs in the month following the eight-year period. At the same time, an equal proportion of Class C shares acquired through automatically reinvested distributions will convert to Class A shares on the same basis.

Furthermore, the Adviser may in its sole discretion permit a conversion of one share class to another share class of the same Fund in certain other circumstances, provided that the Fund's eligibility requirements are met, and subject to the shareholder's consent. Such conversions will be on the basis of the relative NAVs and without the imposition of any redemption fee or other charge.

A conversion of shares of one class directly for shares of another class of the same Fund normally should not be taxable for federal income tax purposes.

Please ask your financial advisor if you are eligible for converting a class of shares pursuant to these conversion features. A conversion feature's availability will be subject to the applicable classes being offered on a Financial Intermediary's platform. Shareholders should carefully review information in this Prospectus regarding share class features, including conversions and exchanges, or contact their financial advisor for more information. You should talk to your tax advisor before making a conversion.

**59**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

In addition, Class C shares held in an account for which no broker-dealer or other Financial Intermediary is specified and which are not subject to a CDSC will periodically be converted to Class A shares of the same Fund.

**General**

Shares of a Fund may, in the Fund's discretion, be purchased with investment securities (in lieu of or, in conjunction with, cash) acceptable to the Fund. The securities would be accepted by a Fund at their market value in return for Fund shares of equal value, taking into account any applicable sales charge.

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

When you buy Fund shares, the shares (plus any applicable sales charge) will be purchased at the next share price calculated after we receive your purchase order in good order. Purchase orders not received in good order prior to Pricing Time will be executed at the NAV next determined after the purchase order is received in good order. Certain institutional investors and financial institutions have entered into arrangements with a Fund, the Adviser and/or the Distributor pursuant to which they may place orders prior to the Pricing Time, but make payment in Federal Funds for those shares up to three days after the purchase order is placed, depending on the arrangement. We reserve the right to reject any order for the purchase of Fund shares for any reason.

The Trust may suspend the offering of shares, or any class of shares, of a Fund or reject any purchase orders when we think it is in the best interest of the Fund.

Certain patterns of past exchanges and/or purchase or sale transactions involving a Fund may result in the Fund rejecting, limiting or prohibiting, at its sole discretion and without prior notice, additional purchases and/or exchanges and may result in a shareholder's account being closed. Determinations in this regard may be made based on the frequency or dollar amount of previous exchanges or purchase or sale transactions. For more information, please refer to the section of this Prospectus entitled "Frequent Purchases and Redemptions of Shares."

**How To Redeem Fund Shares**

You may process a redemption request by contacting your Financial Intermediary. Otherwise, you may redeem shares of a Fund by mail or, if authorized, by telephone, at no charge other than as described below. The value of shares redeemed may be more or less than the purchase price, depending on the NAV at the time of redemption. Shares of a Fund will be redeemed at the NAV next determined after we receive your redemption request in good order and will be reduced by the amount of any applicable CDSC.

*Redemptions by Letter*

Requests should be addressed to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804.

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

(a) A letter of instruction, if required, or a stock assignment specifying the account name, the account number, the name of the Fund and the number of shares or dollar amount to be redeemed, signed by all registered owners of the shares in the exact names in which the shares are registered, and whether you wish to receive the redemption proceeds by check or by wire to the bank account we have on file for you;

(b) Any required signature guarantees if you are requesting payment to anyone other than the registered owner(s) or that payment be sent to any address other than the address of the registered owner(s) or pre-designated bank account; and

(c) Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianship, corporations, pension and profit sharing plans and other organizations.

*Redemptions by Telephone*

You automatically have telephone redemption and exchange privileges unless you indicate otherwise by checking the applicable box on the New Account Application or calling Morgan Stanley Shareholder Services to opt out of such privileges. You may request a redemption of shares of a Fund by calling the Morgan Stanley Shareholder Services at 1-800-869-6397 and requesting that the redemption proceeds be mailed or wired to you. You cannot redeem shares of a Fund by telephone if you hold share certificates for those shares. For your protection when calling a Fund, we will employ reasonable procedures to confirm that instructions communicated over the telephone are genuine. These procedures may include requiring various forms of personal identification (such

**60**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

as name, mailing address, social security number or other tax identification number), tape-recording telephone communications and providing written confirmation of instructions communicated by telephone. If reasonable procedures are employed, neither Morgan Stanley, SS&C GIDS nor a Fund will be liable for following telephone instructions that it reasonably believes to be genuine. Telephone redemptions and exchanges may not be available if you cannot reach Morgan Stanley Shareholder Services by telephone, whether because all telephone lines are busy or for any other reason; in such case, a shareholder would have to use a Fund's other redemption and exchange procedures described in this section. Telephone instructions will be accepted if received by Morgan Stanley Shareholder Services between 9:00 a.m. and 4:00 p.m. Eastern time on any day the NYSE is open for business. During periods of drastic economic or market changes, it is possible that the telephone privileges may be difficult to implement, although this has not been the case with the Funds in the past. To opt out of telephone privileges, please contact the Funds at 1-800-869-6397.

*Systematic Withdrawal Plan*

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's balance (provided the amount is at least $25), on a monthly, quarterly, semi-annual or annual basis, from any fund with a balance of at least $1,000. Each time you add a fund to the plan, you must meet the plan requirements.

Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under certain circumstances. See the Class A and Class C waiver categories listed below.

To sign up for the systematic withdrawal plan, contact your Morgan Stanley Financial Advisor or call toll-free 1-800-869-6397. You may terminate or suspend your plan at any time. Please remember that withdrawals from the plan are sales of shares, not Fund "distributions," and ultimately may exhaust your account balance. The Trust may terminate or revise the plan at any time.

*CDSC Waivers on Class A and Class C Shares*

The CDSC on Class A and Class C shares will be waived in connection with sales of Class A and Class C shares for which no commission or transaction fee was paid by the Distributor or Financial Intermediary at the time of purchase of such shares. In addition, a CDSC, if otherwise applicable, will be waived in the case of:

• 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 the shares are: (i) registered either in your individual name or in the names of you and your spouse as joint tenants with right of survivorship; (ii) registered in the name of a trust of which (a) you are the settlor and that is revocable by you (i.e., a "living trust") or (b) you and your spouse are the settlors and that is revocable by you or your spouse (i.e., a "joint living trust"); or (iii) held in a qualified corporate or self-employed retirement plan, IRA or 403(b) Custodial Account; provided in each case that the sale is requested within one year after your death or initial determination of disability.

• Sales in connection with the following retirement plan "distributions": (i) lump-sum or other distributions from a qualified 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 59½); (ii) required minimum distributions and certain other distributions (such as those following attainment of age 59½) from an IRA or 403(b) Custodial Account; or (iii) a tax-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).

• Sales of shares in connection with the systematic withdrawal plan of up to 12% annually of the value of each Fund from which plan sales are made. The percentage is determined on the date you establish the systematic withdrawal plan and based on the next calculated share price. You may have this CDSC waiver applied in amounts up to 1% per month, 3% per quarter, 6% semi- annually or 12% annually. Shares with no CDSC will be sold first, followed by those with the lowest CDSC. As such, the waiver benefit will be reduced by the amount of your shares that are not subject to a CDSC. If you suspend your participation in the plan, you may later resume plan payments without requiring 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 are eligible for a CDSC waiver, please contact your Financial Intermediary or call toll-free 1-800-869-6397.

*Redemption Proceeds*

Each Fund typically expects to pay redemption proceeds to you within two business days following receipt of your redemption request for those payments made to your brokerage account held with a Financial Intermediary. For redemption proceeds that are paid directly to you by a Fund, the Fund typically expects to pay redemption proceeds by check or by wire to you within one business day, following receipt of your redemption request; however, in all cases, it may take up to seven calendar days to pay redemption proceeds.

**61**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

Each Fund typically expects to meet redemption requests by using a combination of sales of securities held by the Fund and/or holdings of cash and cash equivalents. On a less regular basis, each Fund also reserves the right to use borrowings or interfund lending to meet redemption requests, and the Fund may use these methods during both normal and stressed market conditions.

If we determine that it is in the best interest of the Trust or a Fund not to pay redemption proceeds in cash, we may distribute to you securities held by the Fund. If requested, we will pay a portion of your redemption(s) in cash (during any 90 day period) up to the lesser of $250,000 or 1% of the net assets of a Fund at the beginning of such period. If a Fund redeems your shares in-kind, you will bear any market risks associated with the securities paid as redemption proceeds. Such in-kind securities may be illiquid and difficult or impossible for a shareholder to sell at a time and at a price that a shareholder would like. Redemptions paid in such securities generally will give rise to income, gain or loss for income tax purposes in the same manner as redemptions paid in cash. In addition, you may incur brokerage costs and a further gain or loss for income tax purposes when you ultimately sell the securities.

*Reinstatement Privilege*

If you redeem shares, you may reinvest at net asset value all or any portion of the redemption proceeds in the same account and in the same class of shares of the Fund you redeemed from or another Morgan Stanley Multi-Class Fund, provided that the reinvestment occurs within 90 days of the redemption, the privilege has not been used more than once in the prior 12 months, the redeemed shares were subject to a front-end sales charge or CDSC and that you are otherwise eligible to invest in that class. Under these circumstances your account will be credited with any CDSC paid in connection with the redemption. Any CDSC period applicable to the shares you acquire upon reinvestment will run from the date of your original share purchase. For requests for reinvestment sent to the Fund's transfer agent, the request must be in writing. At the time of a reinvestment, you or your Financial Intermediary must notify the Fund or the transfer agent that you are reinvesting redemption proceeds in accordance with this privilege. If you reinvest, your purchase will be at the next determined net asset value following receipt of your request.

**Exchange Privilege**

You may exchange shares of any class of a Fund for the same class of shares of any mutual fund (excluding money market funds) sponsored and advised by the Adviser (each, a "Morgan Stanley Multi-Class Fund"), if available, without the imposition of an exchange fee. Class L shares of a Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund even though Class L shares are closed to investors. In addition, you may exchange shares of any class of a Fund for shares of Morgan Stanley California Tax-Free Daily Income Trust, Morgan Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. Government Money Market Trust (each, a "Morgan Stanley Money Market Fund" and, together with the Morgan Stanley Multi-Class Funds, the "Morgan Stanley Funds"), if available, without the imposition of an exchange fee. Because purchases of Class A shares of Morgan Stanley Institutional Fund Trust Ultra-Short Income and Ultra-Short Municipal Income Portfolios are not subject to a sales charge, and purchases of Class A shares of Morgan Stanley Institutional Fund Trust Short Duration Income Portfolio are subject to a reduced sales charge, you may be subject to the payment of a sales charge by your Financial Intermediary, at time of exchange into Class A shares of a Morgan Stanley Fund, based on the amount that you would have owed if you directly purchased Class A shares of that Morgan Stanley Fund (less any sales charge previously paid in connection with shares exchanged for such shares of Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income or Ultra-Short Municipal Income Portfolios, as applicable). Class L shares of a Fund that are exchanged for shares of a Morgan Stanley Money Market Fund 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). Exchanges are effected based on the respective NAVs of the applicable Morgan Stanley Fund (subject to any applicable redemption fee) and in accordance with the eligibility requirements of such Fund. To obtain a prospectus for another Morgan Stanley Fund, contact your Financial Intermediary or call Morgan Stanley Shareholder Services at 1-800-869-6397. Prospectuses are also available on our Internet site at www.morganstanley.com/im. If you purchased Fund shares through a Financial Intermediary, certain Morgan Stanley Funds may be unavailable for exchange. Contact your Financial Intermediary for more information regarding the exchange privilege and to determine which Morgan Stanley Funds are available for exchange.

The current prospectus for each Morgan Stanley Fund describes its investment objective(s), policies, investment minimums and applicable sales charges, and should be read before investing. Since exchanges are available only into continuously offered Morgan Stanley Funds, exchanges are generally not available into Morgan Stanley Funds or classes of Morgan Stanley Funds that are not currently being offered for purchase.

You can process your exchange by contacting your Financial Intermediary. You may also send exchange requests to the Trust's transfer agent, SS&C GIDS, or Eaton Vance Management, the Funds' co-transfer agent, by mail to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804 or by calling 1-800-869-6397.

There are special considerations when you exchange Class A and Class C shares of a Fund that are subject to a CDSC. When determining the length of time you held the Class A or Class C shares, any period (starting at the end of the month) during which you held such shares will be counted. In addition, any period (starting at the end of the month) during which you held (i) Class A or Class C shares of other funds of the Trust; (ii) Class A or Class C shares of a Morgan Stanley Multi-Class Fund; or (iii) shares of a Morgan Stanley Money Market Fund, any of which you acquired in an exchange from such Class A or Class C shares of a Fund, will also be counted; however, if you sell shares of (a) such other fund of the Trust; (b) the Morgan Stanley Multi-Class Fund; or (c) the

**62**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

Morgan Stanley Money Market Fund, before the expiration of the CDSC "holding period," you will be charged the CDSC applicable to such shares.

You will be subject to the same minimum initial investment and account size as an initial purchase. Your exchange price will be the price calculated at the next Pricing Time after the Morgan Stanley Fund receives your exchange order. The Morgan Stanley Fund, in its sole discretion, may waive the minimum initial investment amount in certain cases. For direct accounts, the check writing privilege is not available for Morgan Stanley Money Market Fund shares you acquire in an exchange from a non-money market fund. If you are investing through a financial advisor, check with your advisor regarding the availability of check writing privileges. A Fund may terminate or revise the exchange privilege upon required notice or in certain cases without notice. A Fund reserves the right to reject an exchange order for any reason.

If you exchange shares of a Fund for shares of another Morgan Stanley Fund, there are important tax considerations. For tax purposes, the exchange out of a Fund is considered a sale of Fund shares and the exchange into the other fund is considered a purchase. As a result, you may realize a capital gain or loss. You should review the "Taxes" section and consult your own tax professional about the tax consequences of an exchange.

**Frequent Purchases and Redemptions of Shares**

Frequent purchases and redemptions of shares by Fund shareholders are referred to as "market-timing" or "short-term trading" and may present risks for other shareholders of a Fund, which may include, among other things, diluting the value of the Fund's shares held by long-term shareholders, interfering with the efficient management of the Fund, increasing brokerage and administrative costs, incurring unwanted taxable gains and forcing the Fund to hold excess levels of cash.

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

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

The Trust discourages and does not accommodate frequent purchases and redemptions of Fund shares by Fund shareholders and the Trust's Board of Trustees has adopted policies and procedures with respect to such frequent purchases and redemptions , except with respect to the Short Duration Income Portfolio.

With respect to the Short Duration Income Portfolio, the Fund does not anticipate that frequent purchases and redemptions, under normal circumstances, will have significant adverse consequences to the Fund or its shareholders. The Adviser believes that, because Short Duration Income Portfolio's investments will normally include a significant percentage of short term investments, it can accommodate more frequent purchases and redemptions than longer-term fixed-income funds. On this basis, the Fund's Board of Trustees has determined that it is appropriate for Short Duration Income Portfolio not to have a policy to discourage frequent trading of Fund shares. The Short Duration Income Portfolio reserves the right to implement frequent trading policies or other restrictions in the future. The Short Duration Income Portfolio also reserves the right to refuse any client or reject any purchase order for shares (including exchanges) for any reason.

The Trust's policies with respect to purchases, redemptions and exchanges of Fund shares are described in the "Shareholder Information—How To Purchase Fund Shares," "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares," "Shareholder Information—General," "Shareholder Information—How To Redeem Fund Shares" and "Shareholder Information—Exchange Privilege" sections of this Prospectus. Except as described in each of these sections, and with respect to trades that occur through omnibus accounts at Financial Intermediaries, as described below, the Trust's policies regarding frequent trading of Fund shares are applied uniformly to all shareholders. With respect to trades that occur through omnibus accounts at Financial Intermediaries, such as investment advisers, broker-dealers, transfer agents and third-party administrators, the Trust (i) has requested assurance that such Financial Intermediaries currently selling Fund shares have in place internal policies and procedures reasonably designed to address market-timing concerns and has instructed such Financial Intermediaries to notify the Fund immediately if they are unable to comply with such policies and procedures and (ii) requires all prospective Financial Intermediaries to agree to cooperate in enforcing the Trust's policies (or, upon prior written approval only, a Financial Intermediary's own policies) with respect to frequent purchases, redemptions and exchanges of Fund shares.

**63**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

With respect to trades that occur through omnibus accounts at Financial Intermediaries, to some extent, the Trust relies on the Financial Intermediary to monitor frequent short-term trading within a Fund by the Financial Intermediary's customers. However, a Fund has entered into agreements with Financial Intermediaries whereby Financial Intermediaries are required to provide certain customer identification and transaction information upon the Fund's request. The Fund may use this information to help identify and prevent market-timing activity in the Fund. There can be no assurance that the Fund will be able to identify or prevent all market-timing activities.

**Taxes**

As with any investment, you should consider how your Fund investment will be taxed. The tax information in this Prospectus is provided as general information. You should consult your own tax professional about the tax consequences of an investment in a Fund. Unless your investment in a Fund is through a tax deferred retirement account, such as a 401(k) plan or IRA, you need to be aware of the possible tax consequences when the Fund makes distributions and when you sell shares, including an exchange to another Morgan Stanley Fund.

*Taxation of Distributions.* Your distributions normally are subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares. A distribution also may be subject to local income tax. Any income dividend distributions and any short-term capital gain distributions are taxable to you as ordinary income. Any long-term capital gain distributions are taxable as long-term capital gains, no matter how long you have owned shares in the Fund. It is not anticipated that any portion of the distributions by a Fund would qualify for a lower tax rate as qualified dividend income. Further, such distributions are not anticipated to be eligible for a dividends-received deduction for corporate shareholders.

If you buy shares of a Fund before a distribution, you may be subject to tax on the entire amount of the taxable distribution you receive. Distributions are taxable to you even if they are paid from income or gain earned by a Fund before your investment (and thus were included in the price you paid for your Fund shares).

Investment income received by the Funds from sources within foreign countries may be subject to foreign income taxes.

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

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

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

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

When you open your account, you should provide your social security or tax identification number on your investment application. By providing this information, you will avoid being subject to federal backup withholding at the applicable rate on taxable distributions and redemption proceeds. Any withheld amount would be sent to the IRS as an advance payment of your taxes due on your income for such year.

Shareholders who are not citizens or residents of the United States and certain foreign entities will generally be subject to withholding of U.S. tax of 30% on distributions made by a Fund of investment income (other than "exempt-interest dividends" disclosed above) and short-term capital gains.

Each Fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive 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 provide additional information to a Fund to enable the Fund to determine whether withholding is required.

**64**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

Because each investor's tax circumstances are unique and the tax laws may change, you should consult your tax advisor about your investment.

**Dividends and Distributions**

Each Fund's policy is to distribute to shareholders substantially all of its net investment income, if any, in the form of a monthly dividend and to distribute net realized capital gains, if any, at least annually.

The Funds automatically reinvest all dividends and distributions in additional shares. However, you may elect to receive distributions in cash by giving written notice to a Fund or your Financial Intermediary or by checking the appropriate box in the Distribution Option section on the New Account Application.

For accounts held directly with a Fund's transfer agent for which the shareholder has elected to receive distributions via check, any distribution (dividend or capital gain) under $10.00 is automatically reinvested in additional shares regardless of your elected distribution option.

**Potential Conflicts of Interest**

As a diversified global financial services firm, Morgan Stanley, the parent company of the Adviser, engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley's interests or the interests of its clients may conflict with the interests of a Fund. Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with any new or successor funds, programs, accounts or businesses, the ''Affiliated Investment Accounts'') with a wide variety of investment objectives that in some instances may overlap or conflict with a Fund's investment objectives and present conflicts of interest. In addition, Morgan Stanley may also from time to time create new or successor Affiliated Investment Accounts that may compete with a Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and, in fact, they may not be. Conflicts of interest not described below may also exist.

For more information about conflicts of interest, see the section entitled "Potential Conflicts of Interest" in the SAI.

*Material Nonpublic Information.* It is expected that confidential or material nonpublic information regarding an investment or potential investment opportunity may become available to the Adviser. If such information becomes available, the Adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. Morgan Stanley has established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley. In limited circumstances, however, including for purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, personnel, including personnel of the investment adviser, on one side of an information barrier may have access to information and personnel on the other side of the information barrier through "wall crossings." The Adviser faces conflicts of interest in determining whether to engage in such wall crossings. Information obtained in connection with such wall crossings may limit or restrict the ability of the Adviser to engage in or otherwise effect transactions on behalf of the Funds (including purchasing or selling securities that the Adviser may otherwise have purchased or sold for a Fund in the absence of a wall crossing).

*Investments by Morgan Stanley and its Affiliated Investment Accounts.* In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the Adviser and the Investment team, may have obligations to other clients or investors in Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of a Fund or its shareholders. A Fund's investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a result, the members of an Investment team may face conflicts in the allocation of investment opportunities among a Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the Adviser. Certain Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts. To seek to reduce potential conflicts of interest and to attempt to allocate such investment opportunities in a fair and equitable manner, the Adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the Adviser, including the Funds, fair access to investment opportunities consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the Adviser.

*Payments to Broker-Dealers and Other Financial Intermediaries.* The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of a Fund, to certain Financial Intermediaries (which may include affiliates of the Adviser and Distributor), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Fund and/or shareholder servicing. The prospect of receiving, or the receipt of,

**65**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

additional compensation, as described above, by Financial Intermediaries may provide such Financial Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of a Fund over other investment options with respect to which these Financial Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of a Fund or the amount that the Fund receives to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any disclosures provided by Financial Intermediaries as to their compensation. In addition, in certain circumstances, the Adviser restricts, limits or reduces the amount of a Fund's investment, or restricts the type of governance or voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.

*Morgan Stanley Trading and Principal Investing Activities.* Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for a Fund's holdings, although these activities could have an adverse impact on the value of one or more of the Fund's investments, or could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and potentially adverse to, that of a Fund.

*Morgan Stanley's Investment Banking and Other Commercial Activities.* Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment funds that may compete with a Fund and with respect to investments that a Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve an action of a different timing or nature than the action taken, by a Fund. Morgan Stanley may give advice and provide recommendations to persons competing with a Fund and/or any of a Fund's investments that are contrary to the Fund's best interests and/or the best interests of any of its investments. Morgan Stanley's activities on behalf of its clients (such as engagements as an underwriter or placement agent) may restrict or otherwise limit investment opportunities that may otherwise be available to a Fund.

Morgan Stanley may be engaged to act as a financial advisor to a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in connection with such transactions. Morgan Stanley's compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, the Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to a merger or an acquisition.

**66**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

Financial Highlights

The financial highlights tables that follow are intended to help you understand the financial performance of the Class I, Class A, Class L, Class C and Class R6 shares of each Fund, as applicable, for the past five years or since inception if less than five years. Certain information reflects financial results for a single Fund share. The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in each Fund (assuming reinvestment of all dividends and distributions).

The ratio of expenses to average net assets listed in the tables below for each class of shares of a Fund are based on the average net assets of the Fund for each of the periods listed in the tables. To the extent that a Fund's average net assets decrease over the Fund's next fiscal year, such expense ratios can be expected to increase, potentially significantly, because certain fixed costs will be spread over a smaller amount of assets.

The information below has been derived from the financial statements audited by Ernst & Young LLP, the Funds' independent registered public accounting firm. Ernst & Young LLP's reports, along with each Fund's financial statements, are incorporated by reference into the Funds' SAI. The Annual Reports to Shareholders (which include each Fund's financial statements) and SAI are available at no cost from the Trust at the toll-free number noted on the back cover to this Prospectus.

**67**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Core Plus Fixed Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class I** | **Class I** | **Class I** | **Class I** | **Class I** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $11.53<br>| $11.91<br>| $11.58<br>| $10.84<br>| $11.17<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.29<br>| 0.26<br>| 0.31<br>| 0.37<br>| 0.34<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (2.06)<br>| (0.07)<br>| 0.40<br>| 0.78<br>| (0.38)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.77)<br>| 0.19<br>| 0.71<br>| 1.15<br>| (0.04)<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.28)<br>| (0.26)<br>| (0.30)<br>| (0.41)<br>| (0.29)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.03)<br>| (0.31)<br>| (0.08)<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.31)<br>| (0.57)<br>| (0.38)<br>| (0.41)<br>| (0.29)<br>|
| **Net Asset Value, End of Period** | $9.45<br>| $11.53<br>| $11.91<br>| $11.58<br>| $10.84<br>|
| **Total Return<sup>(2)</sup>**  | (15.58)%<br>| 1.61<br> %<br>| 6.27<br> %<br>| 10.83<br> %<br> <sup>(3)</sup> <br>| (0.36)%<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $470728<br>| $727989<br>| $662724<br>| $457610<br>| $257605<br>|
| Ratio of Expenses Before Expense Limitation | 0.63<br> %<br>| 0.62<br> %<br>| 0.64<br> %<br>| 0.67<br> %<br>| 0.70<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.41<br> %<br> <sup>(4)</sup> <br>| 0.41<br> %<br> <sup>(4)</sup> <br>| 0.40<br> %<br> <sup>(4)</sup> <br>| 0.41<br> %<br> <sup>(4)</sup> <br>| 0.40<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| N/A<br>| 0.40<br> %<br> <sup>(4)</sup> <br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income | 2.74<br> %<br> <sup>(4)</sup> <br>| 2.26<br> %<br> <sup>(4)</sup> <br>| 2.63<br> %<br> <sup>(4)</sup> <br>| 3.29<br> %<br> <sup>(4)</sup> <br>| 3.09<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.01<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>|
| Portfolio Turnover Rate | 266<br> %<br>| 434<br> %<br>| 287<br> %<br>| 217<br> %<br>| 248<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) Performance was positively impacted by approximately 0.20% due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class I shares would have been approximately 10.63%.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

**68**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Core Plus Fixed Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class A** | **Class A** | **Class A** | **Class A** | **Class A** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $11.54<br>| $11.93<br>| $11.60<br>| $10.85<br>| $11.18<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.26<br>| 0.22<br>| 0.27<br>| 0.33<br>| 0.30<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (2.05)<br>| (0.09)<br>| 0.40<br>| 0.79<br>| (0.38)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.79)<br>| 0.13<br>| 0.67<br>| 1.12<br>| (0.08)<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.25)<br>| (0.21)<br>| (0.26)<br>| (0.37)<br>| (0.25)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.03)<br>| (0.31)<br>| (0.08)<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.28)<br>| (0.52)<br>| (0.34)<br>| (0.37)<br>| (0.25)<br>|
| **Net Asset Value, End of Period** | $9.47<br>| $11.54<br>| $11.93<br>| $11.60<br>| $10.85<br>|
| **Total Return<sup>(2)</sup>**  | (15.75)%<br>| 1.17<br> %<br>| 5.91<br> %<br>| 10.49<br> %<br> <sup>(3)</sup> <br>| (0.70)%<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $61429<br>| $98339<br>| $114387<br>| $92191<br>| $65647<br>|
| Ratio of Expenses Before Expense Limitation | 0.89<br> %<br>| 0.90<br> %<br>| 0.92<br> %<br>| 0.97<br> %<br>| 1.00<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.73<br> %<br> <sup>(4)</sup> <br>| 0.75<br> %<br> <sup>(4)</sup> <br>| 0.74<br> %<br> <sup>(4)</sup> <br>| 0.75<br> %<br> <sup>(4)</sup> <br>| 0.75<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| N/A<br>| 0.74<br> %<br> <sup>(4)</sup> <br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income | 2.41<br> %<br> <sup>(4)</sup> <br>| 1.92<br> %<br> <sup>(4)</sup> <br>| 2.29<br> %<br> <sup>(4)</sup> <br>| 2.96<br> %<br> <sup>(4)</sup> <br>| 2.73<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.01<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>|
| Portfolio Turnover Rate | 266<br> %<br>| 434<br> %<br>| 287<br> %<br>| 217<br> %<br>| 248<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) Performance was positively impacted by approximately 0.20% due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class A shares would have been approximately 10.29%.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

**69**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Core Plus Fixed Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class L** | **Class L** | **Class L** | **Class L** | **Class L** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $11.56<br>| $11.94<br>| $11.61<br>| $10.86<br>| $11.17<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.23<br>| 0.19<br>| 0.24<br>| 0.30<br>| 0.27<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (2.06)<br>| (0.07)<br>| 0.40<br>| 0.78<br>| (0.37)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.83)<br>| 0.12<br>| 0.64<br>| 1.08<br>| (0.10)<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.22)<br>| (0.19)<br>| (0.23)<br>| (0.33)<br>| (0.21)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.03)<br>| (0.31)<br>| (0.08)<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.25)<br>| (0.50)<br>| (0.31)<br>| (0.33)<br>| (0.21)<br>|
| **Net Asset Value, End of Period** | $9.48<br>| $11.56<br>| $11.94<br>| $11.61<br>| $10.86<br>|
| **Total Return<sup>(2)</sup>**  | (16.05)%<br>| 1.00<br> %<br>| 5.63<br> %<br>| 10.12<br> %<br> <sup>(3)</sup> <br>| (0.95)%<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $859<br>| $1082<br>| $812<br>| $720<br>| $464<br>|
| Ratio of Expenses Before Expense Limitation | 1.31<br> %<br>| 1.27<br> %<br>| 1.37<br> %<br>| 1.45<br> %<br>| 1.41<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.01<br> %<br> <sup>(4)</sup> <br>| 1.01<br> %<br> <sup>(4)</sup> <br>| 1.00<br> %<br> <sup>(4)</sup> <br>| 1.01<br> %<br> <sup>(4)</sup> <br>| 1.00<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| N/A<br>| 1.00<br> %<br> <sup>(4)</sup> <br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income | 2.17<br> %<br> <sup>(4)</sup> <br>| 1.67<br> %<br> <sup>(4)</sup> <br>| 2.04<br> %<br> <sup>(4)</sup> <br>| 2.70<br> %<br> <sup>(4)</sup> <br>| 2.46<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.01<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>|
| Portfolio Turnover Rate | 266<br> %<br>| 434<br> %<br>| 287<br> %<br>| 217<br> %<br>| 248<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) Performance was positively impacted by approximately 0.20% due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class L shares would have been approximately 9.92%.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

**70**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Core Plus Fixed Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class C** | **Class C** | **Class C** | **Class C** | **Class C** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $11.45<br>| $11.84<br>| $11.52<br>| $10.77<br>| $11.10<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.18<br>| 0.14<br>| 0.18<br>| 0.25<br>| 0.22<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (2.03)<br>| (0.08)<br>| 0.41<br>| 0.78<br>| (0.37)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.85)<br>| 0.06<br>| 0.59<br>| 1.03<br>| (0.15)<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.17)<br>| (0.14)<br>| (0.19)<br>| (0.28)<br>| (0.18)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.03)<br>| (0.31)<br>| (0.08)<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.20)<br>| (0.45)<br>| (0.27)<br>| (0.28)<br>| (0.18)<br>|
| **Net Asset Value, End of Period** | $9.40<br>| $11.45<br>| $11.84<br>| $11.52<br>| $10.77<br>|
| **Total Return<sup>(2)</sup>**  | (16.32)%<br>| 0.49<br> %<br>| 5.16<br> %<br>| 9.70<br> %<br> <sup>(3)</sup> <br>| (1.39)%<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $14947<br>| $26063<br>| $25989<br>| $14684<br>| $6873<br>|
| Ratio of Expenses Before Expense Limitation | 1.62<br> %<br>| 1.60<br> %<br>| 1.62<br> %<br>| 1.68<br> %<br>| 1.73<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.45<br> %<br> <sup>(4)</sup> <br>| 1.44<br> %<br> <sup>(4)</sup> <br>| 1.43<br> %<br> <sup>(4)</sup> <br>| 1.46<br> %<br> <sup>(4)</sup> <br>| 1.50<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| N/A<br>| 1.43<br> %<br> <sup>(4)</sup> <br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income | 1.69<br> %<br> <sup>(4)</sup> <br>| 1.23<br> %<br> <sup>(4)</sup> <br>| 1.60<br> %<br> <sup>(4)</sup> <br>| 2.23<br> %<br> <sup>(4)</sup> <br>| 2.01<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.01<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>|
| Portfolio Turnover Rate | 266<br> %<br>| 434<br> %<br>| 287<br> %<br>| 217<br> %<br>| 248<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) Performance was positively impacted by approximately 0.20% due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class C shares would have been approximately 9.50%.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

**71**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Core Plus Fixed Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  |
|  | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Period from June 15, 2018<sup>(2)</sup>**<br>**to September 30, 2018** |
| **Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** |  |
| **Net Asset Value, Beginning of Period** | $11.52<br>| $11.91<br>| $11.58<br>| $10.84<br>| $10.85<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(3)</sup>  | 0.30<br>| 0.27<br>| 0.31<br>| 0.37<br>| 0.10<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (2.05)<br>| (0.09)<br>| 0.41<br>| 0.78<br>| (0.04)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.75)<br>| 0.18<br>| 0.72<br>| 1.15<br>| 0.06<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.29)<br>| (0.26)<br>| (0.31)<br>| (0.41)<br>| (0.07)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.03)<br>| (0.31)<br>| (0.08)<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.32)<br>| (0.57)<br>| (0.39)<br>| (0.41)<br>| (0.07)<br>|
| **Net Asset Value, End of Period** | $9.45<br>| $11.52<br>| $11.91<br>| $11.58<br>| $10.84<br>|
| **Total Return<sup>(4)</sup>**  | (15.46)%<br>| 1.66<br> %<br>| 6.24<br> %<br>| 10.89<br> %<br> <sup>(5)</sup> <br>| 0.56<br> %<br> <sup>(7)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $103331<br>| $126856<br>| $96251<br>| $11<br>| $10<br>|
| Ratio of Expenses Before Expense Limitation | 0.53<br> %<br>| 0.52<br> %<br>| 0.54<br> %<br>| 18.96<br> %<br>| 18.71<br> %<br> <sup>(8)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 0.36<br> %<br> <sup>(6)</sup> <br>| 0.36<br> %<br> <sup>(6)</sup> <br>| 0.35<br> %<br> <sup>(6)</sup> <br>| 0.35<br> %<br> <sup>(6)</sup> <br>| 0.35<br> %<br> <sup>(6)(8)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| N/A<br>| 0.35<br> %<br> <sup>(6)</sup> <br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income | 2.83<br> %<br> <sup>(6)</sup> <br>| 2.32<br> %<br> <sup>(6)</sup> <br>| 2.67<br> %<br> <sup>(6)</sup> <br>| 3.33<br> %<br> <sup>(6)</sup> <br>| 3.17<br> %<br> <sup>(6)(8)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.01<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br> <sup>(8)</sup> <br>|
| Portfolio Turnover Rate | 266<br> %<br>| 434<br> %<br>| 287<br> %<br>| 217<br> %<br>| 248<br> %<br> <sup>(7)</sup> <br>|

---

(1) Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2) Commencement of Offering.

(3) Per share amount is based on average shares outstanding.

(4) Calculated based on the net asset value as of the last business day of the period.

(5) Performance was positively impacted by approximately 0.20% due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings. This was one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class R6 shares would have been approximately 10.69%.

(6) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7) Not annualized.

(8) Annualized.

**72**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Corporate Bond Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class I** | **Class I** | **Class I** | **Class I** | **Class I** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $12.96<br>| $13.49<br>| $12.78<br>| $11.80<br>| $12.32<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.30<br>| 0.25<br>| 0.32<br>| 0.40<br>| 0.39<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (2.69)<br>| (0.05)<br>| 0.72<br>| 1.04<br>| (0.58)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (2.39)<br>| 0.20<br>| 1.04<br>| 1.44<br>| (0.19)<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.27)<br>| (0.25)<br>| (0.33)<br>| (0.46)<br>| (0.33)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.35)<br>| (0.48)<br>| —<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.62)<br>| (0.73)<br>| (0.33)<br>| (0.46)<br>| (0.33)<br>|
| **Net Asset Value, End of Period** | $9.95<br>| $12.96<br>| $13.49<br>| $12.78<br>| $11.80<br>|
| **Total Return<sup>(2)</sup>**  | (19.23)%<br>| 1.44<br> %<br>| 8.19<br> %<br>| 12.64<br> %<br>| (1.60)%<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $114804<br>| $161409<br>| $182070<br>| $122450<br>| $108809<br>|
| Ratio of Expenses Before Expense Limitation | 0.86<br> %<br>| 0.79<br> %<br>| 0.86<br> %<br>| 1.01<br> %<br>| 0.97<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.70<br> %<br> <sup>(3)</sup> <br>| 0.70<br> %<br> <sup>(3)</sup> <br>| 0.70<br> %<br> <sup>(3)</sup> <br>| 0.70<br> %<br> <sup>(3)</sup> <br>| 0.70<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Net Investment Income | 2.55<br> %<br> <sup>(3)</sup> <br>| 1.90<br> %<br> <sup>(3)</sup> <br>| 2.49<br> %<br> <sup>(3)</sup> <br>| 3.34<br> %<br> <sup>(3)</sup> <br>| 3.29<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>|
| Portfolio Turnover Rate | 110<br> %<br>| 125<br> %<br>| 133<br> %<br>| 64<br> %<br>| 37<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(4) Amount is less than 0.005%.

**73**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Corporate Bond Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class A** | **Class A** | **Class A** | **Class A** | **Class A** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $12.97<br>| $13.50<br>| $12.80<br>| $11.81<br>| $12.32<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.26<br>| 0.22<br>| 0.29<br>| 0.37<br>| 0.33<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (2.68)<br>| (0.05)<br>| 0.70<br>| 1.04<br>| (0.56)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (2.42)<br>| 0.17<br>| 0.99<br>| 1.41<br>| (0.23)<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.24)<br>| (0.22)<br>| (0.29)<br>| (0.42)<br>| (0.28)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.35)<br>| (0.48)<br>| —<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.59)<br>| (0.70)<br>| (0.29)<br>| (0.42)<br>| (0.28)<br>|
| **Net Asset Value, End of Period** | $9.96<br>| $12.97<br>| $13.50<br>| $12.80<br>| $11.81<br>|
| **Total Return<sup>(2)</sup>**  | (19.45)%<br>| 1.22<br> %<br>| 7.88<br> %<br>| 12.25<br> %<br>| (1.87)%<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $14158<br>| $19689<br>| $10807<br>| $6400<br>| $4496<br>|
| Ratio of Expenses Before Expense Limitation | 1.09<br> %<br>| 1.02<br> %<br>| 1.10<br> %<br>| 1.21<br> %<br>| 1.29<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.99<br> %<br> <sup>(3)</sup> <br>| 0.92<br> %<br> <sup>(3)</sup> <br>| 0.99<br> %<br> <sup>(3)</sup> <br>| 0.99<br> %<br> <sup>(3)</sup> <br>| 1.01<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Net Investment Income | 2.28<br> %<br> <sup>(3)</sup> <br>| 1.68<br> %<br> <sup>(3)</sup> <br>| 2.20<br> %<br> <sup>(3)</sup> <br>| 3.04<br> %<br> <sup>(3)</sup> <br>| 2.78<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>|
| Portfolio Turnover Rate | 110<br> %<br>| 125<br> %<br>| 133<br> %<br>| 64<br> %<br>| 37<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(4) Amount is less than 0.005%.

**74**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Corporate Bond Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class L** | **Class L** | **Class L** | **Class L** | **Class L** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $12.96<br>| $13.49<br>| $12.79<br>| $11.79<br>| $12.30<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.21<br>| 0.17<br>| 0.24<br>| 0.32<br>| 0.29<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (2.69)<br>| (0.05)<br>| 0.70<br>| 1.04<br>| (0.56)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (2.48)<br>| 0.12<br>| 0.94<br>| 1.36<br>| (0.27)<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.18)<br>| (0.17)<br>| (0.24)<br>| (0.36)<br>| (0.24)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.35)<br>| (0.48)<br>| —<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.53)<br>| (0.65)<br>| (0.24)<br>| (0.36)<br>| (0.24)<br>|
| **Net Asset Value, End of Period** | $9.95<br>| $12.96<br>| $13.49<br>| $12.79<br>| $11.79<br>|
| **Total Return<sup>(2)</sup>**  | (19.83)%<br>| 0.79<br> %<br>| 7.47<br> %<br>| 11.82<br> %<br>| (2.19)%<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $1049<br>| $1444<br>| $1727<br>| $1671<br>| $1499<br>|
| Ratio of Expenses Before Expense Limitation | 1.43<br> %<br>| N/A<br>| 1.39<br> %<br>| 1.49<br> %<br>| 1.56<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.43<br> %<br> <sup>(3)</sup> <br>| 1.33<br> %<br> <sup>(3)</sup> <br>| 1.38<br> %<br> <sup>(3)</sup> <br>| 1.38<br> %<br> <sup>(3)</sup> <br>| 1.38<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Net Investment Income | 1.84<br> %<br> <sup>(3)</sup> <br>| 1.27<br> %<br> <sup>(3)</sup> <br>| 1.84<br> %<br> <sup>(3)</sup> <br>| 2.67<br> %<br> <sup>(3)</sup> <br>| 2.45<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>|
| Portfolio Turnover Rate | 110<br> %<br>| 125<br> %<br>| 133<br> %<br>| 64<br> %<br>| 37<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(4) Amount is less than 0.005%.

**75**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Corporate Bond Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class C** | **Class C** | **Class C** | **Class C** | **Class C** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $12.87<br>| $13.41<br>| $12.71<br>| $11.72<br>| $12.25<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.16<br>| 0.10<br>| 0.18<br>| 0.27<br>| 0.25<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (2.65)<br>| (0.05)<br>| 0.71<br>| 1.03<br>| (0.57)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (2.49)<br>| 0.05<br>| 0.89<br>| 1.30<br>| (0.32)<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.14)<br>| (0.11)<br>| (0.19)<br>| (0.31)<br>| (0.21)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.35)<br>| (0.48)<br>| —<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.49)<br>| (0.59)<br>| (0.19)<br>| (0.31)<br>| (0.21)<br>|
| **Net Asset Value, End of Period** | $9.89<br>| $12.87<br>| $13.41<br>| $12.71<br>| $11.72<br>|
| **Total Return<sup>(2)</sup>**  | (20.05)%<br>| 0.28<br> %<br>| 7.09<br> %<br>| 11.34<br> %<br>| (2.64)%<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $1491<br>| $3111<br>| $3222<br>| $2801<br>| $2074<br>|
| Ratio of Expenses Before Expense Limitation | 1.92<br> %<br>| 1.81<br> %<br>| 1.90<br> %<br>| 2.01<br> %<br>| 2.15<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.80<br> %<br> <sup>(3)</sup> <br>| 1.80<br> %<br> <sup>(3)</sup> <br>| 1.80<br> %<br> <sup>(3)</sup> <br>| 1.80<br> %<br> <sup>(3)</sup> <br>| 1.80<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Net Investment Income | 1.40<br> %<br> <sup>(3)</sup> <br>| 0.80<br> %<br> <sup>(3)</sup> <br>| 1.42<br> %<br> <sup>(3)</sup> <br>| 2.24<br> %<br> <sup>(3)</sup> <br>| 2.10<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>|
| Portfolio Turnover Rate | 110<br> %<br>| 125<br> %<br>| 133<br> %<br>| 64<br> %<br>| 37<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(4) Amount is less than 0.005%.

**76**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**High Yield Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class I** | **Class I** | **Class I** | **Class I** | **Class I** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $9.68<br>| $9.19<br>| $9.78<br>| $9.96<br>| $10.15<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.50<br>| 0.53<br>| 0.57<br>| 0.63<br>| 0.65<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (1.83)<br>| 0.49<br>| (0.57)<br>| (0.19)<br>| (0.16)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.33)<br>| 1.02<br>| 0.00<br>| 0.44<br>| 0.49<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.51)<br>| (0.53)<br>| (0.59)<br>| (0.62)<br>| (0.68)<br>|
| **Net Asset Value, End of Period** | $7.84<br>| $9.68<br>| $9.19<br>| $9.78<br>| $9.96<br>|
| **Total Return<sup>(2)</sup>**  | (14.27)%<br>| 11.38<br> %<br>| 0.15<br> %<br>| 4.68<br> %<br>| 5.01<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $117898<br>| $161038<br>| $155539<br>| $176483<br>| $149683<br>|
| Ratio of Expenses Before Expense Limitation | 1.04<br> %<br>| 1.03<br> %<br>| 1.02<br> %<br>| 0.98<br> %<br>| 1.00<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.65<br> %<br> <sup>(3)</sup> <br>| 0.65<br> %<br> <sup>(3)</sup> <br>| 0.65<br> %<br> <sup>(3)</sup> <br>| 0.65<br> %<br> <sup>(3)</sup> <br>| 0.65<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 0.65<br> %<br> <sup>(3)</sup> <br>| 0.65<br> %<br> <sup>(3)</sup> <br>| 0.65<br> %<br> <sup>(3)</sup> <br>| 0.65<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Net Investment Income | 5.64<br> %<br> <sup>(3)</sup> <br>| 5.50<br> %<br> <sup>(3)</sup> <br>| 6.20<br> %<br> <sup>(3)</sup> <br>| 6.51<br> %<br> <sup>(3)</sup> <br>| 6.49<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>|
| Portfolio Turnover Rate | 28<br> %<br>| 54<br> %<br>| 69<br> %<br>| 42<br> %<br>| 39<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(4) Amount is less than 0.005%.

**77**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**High Yield Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class A** | **Class A** | **Class A** | **Class A** | **Class A** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $9.67<br>| $9.17<br>| $9.76<br>| $9.94<br>| $10.13<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.47<br>| 0.49<br>| 0.55<br>| 0.60<br>| 0.61<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (1.84)<br>| 0.51<br>| (0.58)<br>| (0.20)<br>| (0.16)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.37)<br>| 1.00<br>| (0.03)<br>| 0.40<br>| 0.45<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.48)<br>| (0.50)<br>| (0.56)<br>| (0.58)<br>| (0.64)<br>|
| **Net Asset Value, End of Period** | $7.82<br>| $9.67<br>| $9.17<br>| $9.76<br>| $9.94<br>|
| **Total Return<sup>(2)</sup>**  | (14.69)%<br>| 11.14<br> %<br>| (0.22)%<br>| 4.28<br> %<br>| 4.64<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $11573<br>| $17116<br>| $14595<br>| $24401<br>| $30242<br>|
| Ratio of Expenses Before Expense Limitation | 1.29<br> %<br>| 1.27<br> %<br>| 1.31<br> %<br>| 1.23<br> %<br>| 1.29<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.00<br> %<br> <sup>(3)</sup> <br>| 0.99<br> %<br> <sup>(3)</sup> <br>| 1.00<br> %<br> <sup>(3)</sup> <br>| 0.99<br> %<br> <sup>(3)</sup> <br>| 1.00<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 0.99<br> %<br> <sup>(3)</sup> <br>| 1.00<br> %<br> <sup>(3)</sup> <br>| 0.99<br> %<br> <sup>(3)</sup> <br>| 1.00<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Net Investment Income | 5.27<br> %<br> <sup>(3)</sup> <br>| 5.16<br> %<br> <sup>(3)</sup> <br>| 5.87<br> %<br> <sup>(3)</sup> <br>| 6.17<br> %<br> <sup>(3)</sup> <br>| 6.14<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>|
| Portfolio Turnover Rate | 28<br> %<br>| 54<br> %<br>| 69<br> %<br>| 42<br> %<br>| 39<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(4) Amount is less than 0.005%.

**78**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**High Yield Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class L** | **Class L** | **Class L** | **Class L** | **Class L** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $9.67<br>| $9.17<br>| $9.76<br>| $9.94<br>| $10.13<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.45<br>| 0.47<br>| 0.52<br>| 0.57<br>| 0.59<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (1.84)<br>| 0.51<br>| (0.58)<br>| (0.19)<br>| (0.16)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.39)<br>| 0.98<br>| (0.06)<br>| 0.38<br>| 0.43<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.45)<br>| (0.48)<br>| (0.53)<br>| (0.56)<br>| (0.62)<br>|
| **Net Asset Value, End of Period** | $7.83<br>| $9.67<br>| $9.17<br>| $9.76<br>| $9.94<br>|
| **Total Return<sup>(2)</sup>**  | (14.92)%<br>| 10.84<br> %<br>| (0.46)%<br>| 4.06<br> %<br>| 4.37<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $222<br>| $383<br>| $425<br>| $468<br>| $504<br>|
| Ratio of Expenses Before Expense Limitation | 2.16<br> %<br>| 1.98<br> %<br>| 1.91<br> %<br>| 1.86<br> %<br>| 1.91<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.25<br> %<br> <sup>(3)</sup> <br>| 1.25<br> %<br> <sup>(3)</sup> <br>| 1.25<br> %<br> <sup>(3)</sup> <br>| 1.25<br> %<br> <sup>(3)</sup> <br>| 1.25<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 1.25<br> %<br> <sup>(3)</sup> <br>| 1.25<br> %<br> <sup>(3)</sup> <br>| 1.25<br> %<br> <sup>(3)</sup> <br>| 1.25<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Net Investment Income | 5.02<br> %<br> <sup>(3)</sup> <br>| 4.90<br> %<br> <sup>(3)</sup> <br>| 5.60<br> %<br> <sup>(3)</sup> <br>| 5.93<br> %<br> <sup>(3)</sup> <br>| 5.90<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>|
| Portfolio Turnover Rate | 28<br> %<br>| 54<br> %<br>| 69<br> %<br>| 42<br> %<br>| 39<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(4) Amount is less than 0.005%.

**79**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**High Yield Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class C** | **Class C** | **Class C** | **Class C** | **Class C** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $9.65<br>| $9.16<br>| $9.75<br>| $9.93<br>| $10.12<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.40<br>| 0.42<br>| 0.46<br>| 0.52<br>| 0.54<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (1.83)<br>| 0.50<br>| (0.56)<br>| (0.19)<br>| (0.16)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.43)<br>| 0.92<br>| (0.10)<br>| 0.33<br>| 0.38<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.41)<br>| (0.43)<br>| (0.49)<br>| (0.51)<br>| (0.57)<br>|
| **Net Asset Value, End of Period** | $7.81<br>| $9.65<br>| $9.16<br>| $9.75<br>| $9.93<br>|
| **Total Return<sup>(2)</sup>**  | (15.27)%<br>| 10.20<br> %<br>| (0.93)%<br>| 3.55<br> %<br>| 3.91<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $4121<br>| $6418<br>| $7633<br>| $5226<br>| $5811<br>|
| Ratio of Expenses Before Expense Limitation | 2.05<br> %<br>| 2.01<br> %<br>| 2.02<br> %<br>| 1.98<br> %<br>| 2.01<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.75<br> %<br> <sup>(3)</sup> <br>| 1.74<br> %<br> <sup>(3)</sup> <br>| 1.74<br> %<br> <sup>(3)</sup> <br>| 1.74<br> %<br> <sup>(3)</sup> <br>| 1.73<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 1.74<br> %<br> <sup>(3)</sup> <br>| 1.74<br> %<br> <sup>(3)</sup> <br>| 1.74<br> %<br> <sup>(3)</sup> <br>| 1.73<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Net Investment Income | 4.51<br> %<br> <sup>(3)</sup> <br>| 4.41<br> %<br> <sup>(3)</sup> <br>| 5.06<br> %<br> <sup>(3)</sup> <br>| 5.43<br> %<br> <sup>(3)</sup> <br>| 5.41<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)</sup> <br>|
| Portfolio Turnover Rate | 28<br> %<br>| 54<br> %<br>| 69<br> %<br>| 42<br> %<br>| 39<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(4) Amount is less than 0.005%.

**80**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**High Yield Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $9.69<br>| $9.19<br>| $9.78<br>| $9.96<br>| $10.15<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.51<br>| 0.53<br>| 0.55<br>| 0.64<br>| 0.65<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (1.84)<br>| 0.50<br>| (0.55)<br>| (0.20)<br>| (0.16)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.33)<br>| 1.03<br>| 0.00<br>| 0.44<br>| 0.49<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.52)<br>| (0.53)<br>| (0.59)<br>| (0.62)<br>| (0.68)<br>|
| **Net Asset Value, End of Period** | $7.84<br>| $9.69<br>| $9.19<br>| $9.78<br>| $9.96<br>|
| **Total Return<sup>(3)</sup>**  | (14.30)%<br>| 11.49<br> %<br>| 0.18<br> %<br>| 4.71<br> %<br>| 5.04<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $8149<br>| $3526<br>| $5471<br>| $301<br>| $865<br>|
| Ratio of Expenses Before Expense Limitation | 0.94<br> %<br>| 0.94<br> %<br>| 0.94<br> %<br>| 1.11<br> %<br>| 1.15<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Net Investment Income | 5.82<br> %<br> <sup>(4)</sup> <br>| 5.54<br> %<br> <sup>(4)</sup> <br>| 6.20<br> %<br> <sup>(4)</sup> <br>| 6.55<br> %<br> <sup>(4)</sup> <br>| 6.52<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>|
| Portfolio Turnover Rate | 28<br> %<br>| 54<br> %<br>| 69<br> %<br>| 42<br> %<br>| 39<br> %<br>|

---

(1) Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

**81**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Short Duration Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class I** | **Class I** | **Class I** | **Class I** | **Class I** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $8.33<br>| $8.31<br>| $8.24<br>| $8.13<br>| $8.15<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.12<br>| 0.10<br>| 0.17<br>| 0.21<br>| 0.17<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.58)<br>| 0.03<br>| 0.09<br>| 0.10<br>| (0.03)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (0.46)<br>| 0.13<br>| 0.26<br>| 0.31<br>| 0.14<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.12)<br>| (0.11)<br>| (0.19)<br>| (0.20)<br>| (0.16)<br>|
| **Net Asset Value, End of Period** | $7.75<br>| $8.33<br>| $8.31<br>| $8.24<br>| $8.13<br>|
| **Total Return<sup>(2)</sup>**  | (5.62)%<br>| 1.57<br> %<br>| 3.20<br> %<br>| 3.93<br> %<br> <sup>(3)</sup> <br>| 1.79<br> %<br> <sup>(4)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $178175<br>| $255659<br>| $233816<br>| $174909<br>| $118810<br>|
| Ratio of Expenses Before Expense Limitation | 0.44<br> %<br>| 0.45<br> %<br>| 0.53<br> %<br>| 0.49<br> %<br>| 0.50<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.30<br> %<br> <sup>(5)</sup> <br>| 0.30<br> %<br> <sup>(5)</sup> <br>| 0.29<br> %<br> <sup>(5)</sup> <br>| 0.30<br> %<br> <sup>(5)</sup> <br>| 0.28<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Net Investment Income | 1.48<br> %<br> <sup>(5)</sup> <br>| 1.25<br> %<br> <sup>(5)</sup> <br>| 2.12<br> %<br> <sup>(5)</sup> <br>| 2.55<br> %<br> <sup>(5)</sup> <br>| 2.13<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(6)</sup> <br>| 0.00<br> %<br> <sup>(6)</sup> <br>| 0.01<br> %<br>| 0.00<br> %<br> <sup>(6)</sup> <br>| 0.00<br> %<br> <sup>(6)</sup> <br>|
| Portfolio Turnover Rate | 53<br> %<br>| 53<br> %<br>| 74<br> %<br>| 64<br> %<br>| 40<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) Performance was positively impacted by approximately 0.13% due to the receipt of proceeds from the settlement of class action suits involving the Fund's past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class I shares would have been approximately 3.80%.

(4) Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlement of class action suits involving the Fund's past holdings. These were one-time settlements, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had these settlements not occurred, the total return for Class I shares would have been approximately 1.54%.

(5) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6) Amount is less than 0.005%.

**82**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Short Duration Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class A** | **Class A** | **Class A** | **Class A** | **Class A** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $8.35<br>| $8.34<br>| $8.26<br>| $8.15<br>| $8.17<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.10<br>| 0.08<br>| 0.15<br>| 0.19<br>| 0.15<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.59)<br>| 0.02<br>| 0.10<br>| 0.10<br>| (0.03)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (0.49)<br>| 0.10<br>| 0.25<br>| 0.29<br>| 0.12<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.09)<br>| (0.09)<br>| (0.17)<br>| (0.18)<br>| (0.14)<br>|
| **Net Asset Value, End of Period** | $7.77<br>| $8.35<br>| $8.34<br>| $8.26<br>| $8.15<br>|
| **Total Return<sup>(2)</sup>**  | (5.85)%<br>| 1.20<br> %<br>| 3.06<br> %<br>| 3.66<br> %<br> <sup>(3)</sup> <br>| 1.51<br> %<br> <sup>(4)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $229782<br>| $320477<br>| $148771<br>| $83111<br>| $68517<br>|
| Ratio of Expenses Before Expense Limitation | 0.68<br> %<br>| 0.69<br> %<br>| 0.77<br> %<br>| 0.76<br> %<br>| 0.80<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.55<br> %<br> <sup>(5)</sup> <br>| 0.55<br> %<br> <sup>(5)</sup> <br>| 0.54<br> %<br> <sup>(5)</sup> <br>| 0.55<br> %<br> <sup>(5)</sup> <br>| 0.55<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Net Investment Income | 1.22<br> %<br> <sup>(5)</sup> <br>| 0.98<br> %<br> <sup>(5)</sup> <br>| 1.84<br> %<br> <sup>(5)</sup> <br>| 2.30<br> %<br> <sup>(5)</sup> <br>| 1.85<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(6)</sup> <br>| 0.00<br> %<br> <sup>(6)</sup> <br>| 0.01<br> %<br>| 0.00<br> %<br> <sup>(6)</sup> <br>| 0.00<br> %<br> <sup>(6)</sup> <br>|
| Portfolio Turnover Rate | 53<br> %<br>| 53<br> %<br>| 74<br> %<br>| 64<br> %<br>| 40<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) Performance was positively impacted by approximately 0.13% due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class A shares would have been approximately 3.53%.

(4) Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlement of class action suits involving the Fund's past holdings. These were one-time settlements, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had these settlements not occurred, the total return for Class A shares would have been approximately 1.26%.

(5) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6) Amount is less than 0.005%.

**83**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Short Duration Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class L** | **Class L** | **Class L** | **Class L** | **Class L** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $8.33<br>| $8.31<br>| $8.24<br>| $8.12<br>| $8.15<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.08<br>| 0.06<br>| 0.13<br>| 0.17<br>| 0.13<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.59)<br>| 0.03<br>| 0.09<br>| 0.11<br>| (0.04)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (0.51)<br>| 0.09<br>| 0.22<br>| 0.28<br>| 0.09<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.08)<br>| (0.07)<br>| (0.15)<br>| (0.16)<br>| (0.12)<br>|
| **Net Asset Value, End of Period** | $7.74<br>| $8.33<br>| $8.31<br>| $8.24<br>| $8.12<br>|
| **Total Return<sup>(2)</sup>**  | (6.21)%<br>| 1.06<br> %<br>| 2.69<br> %<br>| 3.52<br> %<br> <sup>(3)</sup> <br>| 1.14<br> %<br> <sup>(4)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $973<br>| $808<br>| $829<br>| $795<br>| $382<br>|
| Ratio of Expenses Before Expense Limitation | 1.15<br> %<br>| 1.17<br> %<br>| 1.26<br> %<br>| 1.25<br> %<br>| 1.52<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.80<br> %<br> <sup>(5)</sup> <br>| 0.80<br> %<br> <sup>(5)</sup> <br>| 0.79<br> %<br> <sup>(5)</sup> <br>| 0.80<br> %<br> <sup>(5)</sup> <br>| 0.80<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Net Investment Income | 1.00<br> %<br> <sup>(5)</sup> <br>| 0.76<br> %<br> <sup>(5)</sup> <br>| 1.64<br> %<br> <sup>(5)</sup> <br>| 2.07<br> %<br> <sup>(5)</sup> <br>| 1.61<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(6)</sup> <br>| 0.00<br> %<br> <sup>(6)</sup> <br>| 0.01<br> %<br>| 0.00<br> %<br> <sup>(6)</sup> <br>| 0.00<br> %<br> <sup>(6)</sup> <br>|
| Portfolio Turnover Rate | 53<br> %<br>| 53<br> %<br>| 74<br> %<br>| 64<br> %<br>| 40<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) Performance was positively impacted by approximately 0.13% due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class L shares would have been approximately 3.39%.

(4) Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlement of class action suits involving the Fund's past holdings. These were one-time settlements, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had these settlements not occurred, the total return for Class L shares would have been approximately 0.89%.

(5) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6) Amount is less than 0.005%.

**84**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Short Duration Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class C** | **Class C** | **Class C** | **Class C** | **Class C** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $8.29<br>| $8.29<br>| $8.22<br>| $8.10<br>| $8.13<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.04<br>| 0.01<br>| 0.09<br>| 0.13<br>| 0.09<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.57)<br>| 0.02<br>| 0.09<br>| 0.11<br>| (0.04)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (0.53)<br>| 0.03<br>| 0.18<br>| 0.24<br>| 0.05<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.04)<br>| (0.03)<br>| (0.11)<br>| (0.12)<br>| (0.08)<br>|
| **Net Asset Value, End of Period** | $7.72<br>| $8.29<br>| $8.29<br>| $8.22<br>| $8.10<br>|
| **Total Return<sup>(2)</sup>**  | (6.46)%<br>| 0.41<br> %<br>| 2.16<br> %<br>| 3.01<br> %<br> <sup>(3)</sup> <br>| 0.64<br> %<br> <sup>(4)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $3639<br>| $2670<br>| $37<br>| $36<br>| $52<br>|
| Ratio of Expenses Before Expense Limitation | 1.52<br> %<br>| 1.72<br> %<br>| 7.65<br> %<br>| 6.34<br> %<br>| 5.69<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.30<br> %<br> <sup>(5)</sup> <br>| 1.30<br> %<br> <sup>(5)</sup> <br>| 1.29<br> %<br> <sup>(5)</sup> <br>| 1.30<br> %<br> <sup>(5)</sup> <br>| 1.30<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Net Investment Income | 0.53<br> %<br> <sup>(5)</sup> <br>| 0.17<br> %<br> <sup>(5)</sup> <br>| 1.14<br> %<br> <sup>(5)</sup> <br>| 1.55<br> %<br> <sup>(5)</sup> <br>| 1.11<br> %<br> <sup>(5)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(6)</sup> <br>| 0.00<br> %<br> <sup>(6)</sup> <br>| 0.01<br> %<br>| 0.00<br> %<br> <sup>(6)</sup> <br>| 0.00<br> %<br> <sup>(6)</sup> <br>|
| Portfolio Turnover Rate | 53<br> %<br>| 53<br> %<br>| 74<br> %<br>| 64<br> %<br>| 40<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) Performance was positively impacted by approximately 0.13% due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class C shares would have been approximately 2.88%.

(4) Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlement of class action suits involving the Fund's past holdings. These were one-time settlements, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had these settlements not occurred, the total return for Class C shares would have been approximately 0.39%.

(5) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6) Amount is less than 0.005%.

**85**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Short Duration Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $8.34<br>| $8.32<br>| $8.24<br>| $8.13<br>| $8.15<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.12<br>| 0.11<br>| 0.18<br>| 0.21<br>| 0.18<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.59)<br>| 0.02<br>| 0.09<br>| 0.11<br>| (0.03)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (0.47)<br>| 0.13<br>| 0.27<br>| 0.32<br>| 0.15<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.12)<br>| (0.11)<br>| (0.19)<br>| (0.21)<br>| (0.17)<br>|
| **Net Asset Value, End of Period** | $7.75<br>| $8.34<br>| $8.32<br>| $8.24<br>| $8.13<br>|
| **Total Return<sup>(3)</sup>**  | (5.69)%<br>| 1.62<br> %<br>| 3.37<br> %<br>| 3.98<br> %<br> <sup>(4)</sup> <br>| 1.83<br> %<br> <sup>(5)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $11<br>| $11<br>| $14<br>| $16<br>| $11<br>|
| Ratio of Expenses Before Expense Limitation | 19.49<br> %<br>| 19.98<br> %<br>| 12.15<br> %<br>| 17.44<br> %<br>| 18.54<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.25<br> %<br> <sup>(6)</sup> <br>| 0.24<br> %<br> <sup>(6)</sup> <br>| 0.24<br> %<br> <sup>(6)</sup> <br>| 0.24<br> %<br> <sup>(6)</sup> <br>| 0.25<br> %<br> <sup>(6)</sup> <br>|
| Ratio of Net Investment Income | 1.54<br> %<br> <sup>(6)</sup> <br>| 1.32<br> %<br> <sup>(6)</sup> <br>| 2.21<br> %<br> <sup>(6)</sup> <br>| 2.61<br> %<br> <sup>(6)</sup> <br>| 2.16<br> %<br> <sup>(6)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(7)</sup> <br>| 0.00<br> %<br> <sup>(7)</sup> <br>| 0.01<br> %<br>| 0.00<br> %<br> <sup>(7)</sup> <br>| 0.00<br> %<br> <sup>(7)</sup> <br>|
| Portfolio Turnover Rate | 53<br> %<br>| 53<br> %<br>| 74<br> %<br>| 64<br> %<br>| 40<br> %<br>|

---

(1) Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) Performance was positively impacted by approximately 0.13% due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class IS shares would have been approximately 3.85%.

(5) Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlement of class action suits involving the Fund's past holdings. These were one-time settlements, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had these settlements not occurred, the total return for Class IS shares would have been approximately 1.58%.

(6) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7) Amount is less than 0.005%.

**86**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Prospectus \| **Appendix**

Appendix A

**Intermediary-Specific Sales Charge Waivers and Discounts**

The availability of certain sales charge waivers and discounts will depend on whether you purchase your shares directly from the Fund or through a Financial Intermediary. Financial Intermediaries may have different policies and procedures regarding the availability of front-end sales charge waivers or CDSC waivers, which are discussed below. In all instances, it is the purchaser's responsibility to notify the Fund or the purchaser's Financial Intermediary at the time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts. For waivers and discounts not available through a particular Financial Intermediary, shareholders will have to purchase Fund shares directly from the Fund (or the Distributor) or through another Financial Intermediary to receive these waivers or discounts. A Financial Intermediary's administration and implementation of its particular policies with respect to any variations, waivers and/or discounts is neither supervised nor verified by the Fund, the Adviser or the Distributor. The Fund and the Distributor do not provide investment advice or recommendations or any form of tax or legal advice to existing or potential shareholders with respect to investment transactions involving the Fund.

\*\*\*\*\*

**Merrill Lynch**

Shareholders purchasing Fund shares through a Merrill Lynch platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at Merrill Lynch**

• Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan

• Shares purchased by a 529 Plan (does not include 529 Plan units or 529-specific share classes or equivalents)

• Shares purchased through a Merrill Lynch affiliated investment advisory program

• Shares exchanged due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

• Shares purchased by third party investment advisors on behalf of their advisory clients through Merrill Lynch's platform

• Shares of funds purchased through the Merrill Edge Self-Directed platform (if applicable)

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family)

• Shares exchanged from Class C (i.e. level-load) shares of the same fund pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

• Employees and registered representatives of Merrill Lynch or its affiliates and their family members

• Directors or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus

• Eligible shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). Automated transactions (i.e. systematic purchases and withdrawals) and purchases made after shares are automatically sold to pay Merrill Lynch's account maintenance fees are not eligible for reinstatement

**CDSC Waivers on A and C Shares available at Merrill Lynch**

• Death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code

• Shares sold to pay Merrill Lynch fees but only if the transaction is initiated by Merrill Lynch

• Shares acquired through a right of reinstatement

• Shares held in retirement brokerage accounts, that are exchanged for a lower cost share class due to transfer to certain fee based accounts or platforms (applicable to A and C shares only)

**87**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Shares received through an exchange due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

**Front-end Load Discounts Available at Merrill Lynch: Breakpoints, Rights of Accumulation and Letters of Intent** 

• Breakpoints as described in this Prospectus

• Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts as described in the Fund's prospectus will be automatically calculated based on the aggregated holding of fund family assets held by accounts (including 529 program holdings, where applicable) within the purchaser's household at Merrill Lynch. Eligible fund family assets not held at Merrill Lynch may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent (LOI) which allow for breakpoint discounts based on anticipated purchases within a fund family, through Merrill Lynch, over a 13-month period of time (if applicable)

**Morgan Stanley Wealth Management**

Shareholders purchasing Fund shares through a Morgan Stanley Wealth Management transactional brokerage account will be eligible only for the following front-end sales charge waivers with respect to Class A shares, which may differ from and may be more limited than those disclosed elsewhere in this Prospectus or SAI, except that such shareholders will continue to be eligible for front-end sales charge breakpoint discounts as described in the Prospectus.

**Front-end Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management**

• Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or Keogh plans

• Morgan Stanley employee and employee-related accounts according to Morgan Stanley's account linking rules

• Shares purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund

• Shares purchased through a Morgan Stanley self-directed brokerage account

• Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management's share class conversion program

• Shares purchased from the proceeds of redemptions within the same fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge

**Raymond James & Associates, Inc., Raymond James Financial Services, Inc. and each entity's affiliates ("Raymond James")**

Shareholders purchasing fund shares through a Raymond James platform or account, or through an introducing broker-dealer or independent registered investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at Raymond James**

• Shares purchased in an investment advisory program

• Shares purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions

• Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement)

• A shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James

**CDSC Waivers on Classes A and C shares available at Raymond James**

• Death or disability of the shareholder

**88**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the Fund's Prospectus

• Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James

• Shares acquired through a right of reinstatement

**Front-end load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent**

• Breakpoints as described in this Prospectus

• Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor about such assets

• Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets

**Oppenheimer & Co. Inc. ("OPCO")**

Shareholders purchasing Fund shares through an OPCO platform or account are eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at OPCO**

• Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan

• Shares purchased by or through a 529 Plan

• Shares purchased through an OPCO affiliated investment advisory program

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Restatement).

• A shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO

• Employees and registered representatives of OPCO or its affiliates and their family members

• Directors or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus

**CDSC Waivers on A and C Shares available at OPCO**

• Death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the prospectus

• Shares sold to pay OPCO fees but only if the transaction is initiated by OPCO

• Shares acquired through a right of reinstatement

**89**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Front-end load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent**

• Breakpoints as described in this prospectus

• Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

**Janney**

If you purchase Fund shares through a Janney Montgomery Scott LLC ("Janney") brokerage account, you are eligible for the following load waivers (front-end sales charge waivers and CDSC, or back-end sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Prospectus or SAI.

**Front-end Sales Charge Waivers on Class A shares available at Janney**

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family)

• Shares purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e., right of reinstatement)

• Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or Keogh plans

• Shares acquired through a right of reinstatement

• Class C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Janney's policies and procedures

**CDSC Waivers on Class A and C shares available at Janney**

• Shares sold upon the death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Shares purchased in connection with a return of excess contributions from an IRA account

• Shares sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching age 70½ as described in the Fund's Prospectus

• Shares sold to pay Janney fees but only if the transaction is initiated by Janney

• Shares acquired through a right of reinstatement

• Shares exchanged into the same share class of a different fund

**Front-end Sales Charge\* Discounts available at Janney: Breakpoints, Rights of Accumulation and/or Letters of Intent**

• Breakpoints as described in this Prospectus

• Rights of Accumulation (ROA), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Janney. Eligible fund family assets not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets

\*Also referred to as an "initial sales charge."

**90**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Stifel, Nicolaus & Company, Incorporated ("Stifel")**

Effective July 1, 2020, shareholders purchasing Fund shares through a Stifel platform or account or who own shares for which Stifel or an affiliate is the broker-dealer of record are eligible for the following additional sales charge waiver.

**Front-end Sales Load Waiver on Class A Shares at Stifel**

• Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Stifel's policies and procedures. All other sales charge waivers and reductions described elsewhere in the Fund's Prospectus or SAI still apply.

**Robert W. Baird & Co. ("Baird")**

Shareholders purchasing fund shares through a Baird platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.

**Front-End Sales Charge Waivers on A-shares Available at Baird**

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund

• Shares purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird

• Shares purchased using the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same accounts, and (3) redeemed shares were subject to a front-end or deferred sales charge (known as rights of reinstatement)

• A shareholder in the Funds C Shares will have their share converted at net asset value to A shares of the same fund if the shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird

• Employer-sponsored retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs or SAR-SEPs

**CDSC Waivers on A and C shares Available at Baird**

• Shares sold due to death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Shares bought due to returns of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable Internal Revenue Service regulations as described in the Fund's prospectus

• Shares sold to pay Baird fees but only if the transaction is initiated by Baird

• Shares acquired through a right of reinstatement

**Front-End Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of Accumulations**

• Breakpoints as described in this prospectus

• Rights of accumulations which entitles shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Baird. Eligible fund family assets not held at Baird may be included in the rights of accumulations calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent (LOI) allow for breakpoint discounts based on anticipated purchases within a fund family, through Baird, over a 13-month period of time

**Ameriprise Financial**

The following information applies to Class A share purchases if you have an account with or otherwise purchase Fund shares through Ameriprise Financial:

**91**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Effective January 15, 2021, shareholders purchasing Fund shares through an Ameriprise Financial retail brokerage account are eligible for the following front-end sales charge waivers, which may differ from those disclosed elsewhere in this Prospectus or in the SAI.

• Employer-sponsored retirement plans (e.g., 401(k) plans 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not any other fund within the same fund family).

• Shares exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent that this Prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following a shorter holding period, that waiver will apply.

• Employees and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.

• Shares purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor's spouse, advisor's lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor's lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse of a covered family member who is a lineal descendant.

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e. Rights of Reinstatement).

**Edward D. Jones & Co., L.P. ("Edward Jones")**

Effective on or after April 29, 2022, the following information supersedes prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones (also referred to as "shareholders") purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible only for the following sales charge discounts (also referred to as "breakpoints") and waivers, which can differ from discounts and waivers described elsewhere in the mutual fund prospectus or statement of additional information or through another broker-dealer. In all instances, it is the shareholder's responsibility to inform Edward Jones at the time of purchase of any relationship, holdings of Fund shares, or other facts qualifying the purchaser for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they have questions regarding their eligibility for these discounts and waivers.

**Breakpoints**

• Breakpoint pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.

**Rights of Accumulation ("ROA")**

• The applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market funds and any assets held in group retirement plans) of Fund shares held by the shareholder or in an account grouped by Edward Jones with other accounts for the purpose of providing certain pricing considerations ("pricing groups"). If grouping assets as a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for shares purchased with a sales charge.

• The employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.

• ROA is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).

**Letter of Intent ("LOI")**

• Through a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period from the date Edward Jones receives the LOI. The LOI is determined by calculating the higher of cost or market value of qualifying holdings at LOI initiation in combination with the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint discounts. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies to the total amount. The inclusion of eligible fund family assets in the LOI calculation is dependent on the shareholder notifying Edward Jones of such assets at the

**92**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

time of calculation. Purchases made before the LOI is received by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if LOI is not met.

• If the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.

**Sales Charge Waivers**

Sales charges are waived for the following shareholders and in the following situations:

• Associates of Edward Jones and its affiliates and their family members who are in the same pricing group (as determined by Edward Jones under its policies and procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.

• Shares purchased in an Edward Jones fee-based program.

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment.

• Shares purchased from the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are from the sale of shares within 60 days of the purchase, and 2) the sale and purchase are made in the same share class and the same account or the purchase is made in an individual retirement account with proceeds from liquidations in a nonretirement account.

• Shares exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable sales charge as disclosed in the prospectus.

• Exchanges from Class C shares to Class A shares of the same fund, generally, in the 84th month following the anniversary of the purchase date or earlier at the discretion of Edward Jones.

**Contingent Deferred Sales Charge ("CDSC") Waivers**

If the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder is responsible to pay the CDSC except in the following conditions:

• The death or disability of the shareholder.

• Systematic withdrawals with up to 10% per year of the account value.

• Return of excess contributions from an Individual Retirement Account (IRA).

• Shares sold as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the shareholder reaches qualified age based on applicable IRS regulations.

• Shares sold to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.

• Shares exchanged in an Edward Jones fee-based program.

• Shares acquired through NAV reinstatement.

• Shares redeemed at the discretion of Edward Jones for Minimums Balances, as described below.

**Other Important Information Regarding Transactions Through Edward Jones**

**Minimum Purchase Amounts**

• Initial purchase minimum: $250

• Subsequent purchase minimum: none

**Minimum Balances**

• Edward Jones has the right to redeem at its discretion fund holdings with a balance of $250 or less. The following are examples of accounts that are not included in this policy:

○ A fee-based account held on an Edward Jones platform

○ A 529 account held on an Edward Jones platform

○ An account with an active systematic investment plan or LOI

**93**

------

[Back To **Table of Contents**](#TOC_15574)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Exchanging Share Classes**

• At any time it deems necessary, Edward Jones has the authority to exchange at NAV a shareholder's holdings in a fund to Class A shares of the same fund.

**94**

------

[Back To **Table of Contents**](#TOC_15574)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15574)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15574)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15574)

Where to Find Additional Information

In addition to this Prospectus, the Funds have an SAI, dated January 27, 2023 (as may be supplemented from time to time), which contains additional, more detailed information about the Trust and the Funds. The SAI is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus.

The Trust publishes Annual and Semi-Annual Reports ("Shareholder Reports") that contain additional information about the respective Fund's investments. In each Fund's Annual Report to Shareholders, you will find a discussion of the market conditions and the investment strategies that significantly affected such Fund's performance during the last fiscal year. For additional Trust information, including information regarding the investments comprising each of the Funds, please call the toll-free number below.

You may obtain the SAI and Shareholder Reports without charge by contacting the Trust at the toll-free number below or on our Internet site at: www.morganstanley.com/im. If you purchased shares through a Financial Intermediary, you may also obtain these documents, without charge, by contacting your Financial Intermediary.

Shareholder Reports and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.

Morgan Stanley Institutional Fund Trust

c/o SS&C Global Investor and

Distribution Solutions, Inc.

P.O. Box 219804 Kansas City, MO 64121-9804

For Shareholder Inquiries,

call toll-free 1-800-869-6397.

Prices and Investment Results are available at www.morganstanley.com/im.

The Trust's 1940 Act registration number is 811-03980.© 2023 Morgan Stanley

IFTFIPRO 01/23

------

![image](pr15553img002.jpg)

Morgan Stanley Institutional Fund Trust

**High Yield Portfolio**

------

**Prospectus** \| January 27, 2023

---

| | |
|:---|:---|
| **Share Class** | **Ticker Symbol** |
| Class IR | MRHYX |

---

![image](pr15553img001.jpg)

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

An investment in the Fund is not a bank deposit and is not insured by the Federal Deposit Insurance Corporation or any

other government agency. An investment in the Fund involves investment risks, and you may lose money in the fund.

IFTHYIRPRO 01/23

------

**Table of Contents**

---

| | |
|:---|:---|
|  | **Page** |
| [**Fund Summary**](#ref_chapter_2_15553)  | 1 |
| [**Details of the Fund**](#ref_chapter_3_15553)  | 7 |
| [**Additional Information about the Fund's Investment Strategies and Related Risks**](#ref_chapter_4_15553)  | 8 |
| [**Fund Management**](#ref_chapter_5_15553)  | 20 |
| [**Shareholder Information**](#ref_chapter_6_15553)  | 21 |
| [**Financial Highlights**](#ref_chapter_7_15553)  | 29 |

---

------

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio

**Investment Objective**

The High Yield Portfolio (the "Fund") seeks total return.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell Class IR shares of the Fund. **You may pay** **fees other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below. The Fund does not charge any sales loads or other** **fees when you purchase or redeem Class IR shares.**

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

---

| | |
|:---|:---|
|  | **Class IR** |
| Advisory Fee | 0.60% |
| Distribution and/or Shareholder Service (12b-1) Fee |  |
| Other Expenses | 19.01% |
| Total Annual Fund Operating Expenses<sup>1</sup>  | 19.61% |
| Fee Waiver and/or Expense Reimbursement<sup>1</sup>  | 18.99% |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>1</sup>  | 0.62% |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year). Although your actual costs may be higher or lower, based on these assumptions your costs would be:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class IR | $63  | $3581  | $6146  | $9916  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class IR | $63  | $3581  | $6146  | $9916  |

---

---

| | |
|:---|:---|
| 1 | The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.62% for Class IR. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust") acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 28% of the average value of its portfolio.

**Principal Investment Strategies**

Under normal circumstances, at least 80% of the Fund's assets will be invested in high yield securities (commonly referred to as "junk bonds"). This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. The Fund seeks to achieve its investment objective by investing primarily in high yield securities which are fixed-income securities rated by one or more rating agencies below Baa3 by Moody's Investors Service, Inc. ("Moody's"), below BBB- by S&P Global Ratings Group, a division of S&P Global Inc. ("S&P"), below BBB- by Fitch Ratings, Inc. ("Fitch") or, if unrated, considered by the Adviser to be of equivalent quality. The average maturity of the Fund's investments varies, and there is no limit on the maturity or on the credit quality of any security held by the Fund. The Fund's securities may include distressed and defaulted securities and mezzanine investments. The Fund also may invest in investment grade fixed-income securities, including U.S. and foreign government securities, corporate bonds and collateralized bond obligations. The Fund may also invest in preferred securities, equity securities and convertible securities.

**1**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

The Fund's investment process starts with top-down macroeconomic analysis to assess the optimal positioning of the Fund. The team then applies a combination of quantitative and qualitative filters to identify securities that meet the team's investment criteria in terms of competitive position, franchise value and management quality. The investment team's credit analysis focuses on financial risk, business risk, management ability and intentions. Valuation analysis is used to narrow the screened investment universe to a pool of investment candidates who are then assessed in order to determine relative valuation. Finally, the Fund is constructed with sector allocation driven primarily from bottom-up security selection. Integral to the Fund construction process is the measurement and monitoring of market risk, duration and volatility and credit risk through the use of proprietary risk measures and models.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

The Fund may also invest in loan-related investments, such as public bank loans made by banks or other financial institutions and loan participations and assignments, which may be rated investment grade or below investment grade.

The Fund may also invest in restricted and illiquid securities.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. 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. The Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities. Derivative instruments used by the Fund will be counted toward the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Credit and Interest Rate Risk.** Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. In such instances, the value of the Fund could decline and the Fund could lose money. Interest rate risk refers to the decline in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. The Fund may invest in variable and floating rate loans and other variable and floating rate securities. Although these instruments are generally less sensitive to interest rate changes than fixed rate instruments, the value of variable and floating rate loans and other securities may decline if their interest rates do not rise as quickly, or as much, as general interest rates. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.

• **Fixed-Income Securities.** Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). For example, a type of fixed-income securities in which the Fund may invest are corporate debt obligations. In addition to interest rate, credit and other risks, corporate debt obligations are also subject to factors directly related to the issuer, such as the credit rating of the corporation, the corporation's performance and perceptions of the corporation in the marketplace, and by factors not directly related to the issuer, such as general market liquidity, economic conditions and inflation. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). The Fund is not limited as to the maturities (when a debt security provides its final payment) or durations (measure of interest rate sensitivity) of the securities in which it may invest. Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made

**2**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

as scheduled. A portion of the Fund's fixed-income securities may be rated below investment grade. The Fund may be subject to certain liquidity risks that may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. To the extent that the Fund invests in convertible securities, and the convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying security.<br>

• **U.S. Government Securities.** Different types of U.S. government securities are subject to different levels of credit risk, including the risk of default, depending on the nature of the particular government support for that security. For example, a U.S. government- sponsored entity, such as Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, although chartered or sponsored by an Act of Congress, may issue securities that are neither insured nor guaranteed by the U.S. Treasury and, therefore, are not backed by the full faith and credit of the United States. With respect to U.S. government securities that are not backed by the full faith and credit of the United States, there is the risk that the U.S. Government will not provide financial support to such U.S. government agencies, instrumentalities or sponsored enterprises if it is not obligated to do so by law.

• **High Yield Securities ("Junk Bonds").** High yield securities offer a higher yield than other, higher rated securities, but they carry a greater degree of risk and are considered speculative by the major credit rating agencies. Changes in the value of high yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. Prices of fixed-income securities generally will move in correlation to changes in an issuer's credit rating and inversely to movements in interest rates. The Fund's investments in high yield securities expose it to a substantial degree of credit risk. Prices of high yield securities will rise and fall primarily in response to actual or perceived changes in the issuer's financial health, although changes in market interest rates also will affect prices. High yield securities may be issued by companies that are restructuring, are smaller and less creditworthy or are more highly indebted than other companies, and therefore they may have more difficulty making scheduled payments of principal and interest. High yield securities may experience reduced liquidity, and sudden and substantial decreases in price. An economic downturn affecting an issuer of high yield securities may result in an increased incidence of default. In the event of a default, the Fund may incur additional expenses to seek recovery.

• **Foreign and Emerging Market Securities.** Investments in foreign markets entail special risks such as currency, political (including geopolitical) , economic and market risks. There also may be greater market volatility, less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and custody costs, decreased market liquidity and less government and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The risks of investing in emerging market countries are greater than the risks associated with investments in foreign developed countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging market countries. In addition, the Fund's investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged, the value of those investments will fluctuate with U.S. dollar exchange rates. To the extent hedged by the use of foreign currency forward exchange contracts, the precise matching of the foreign currency forward exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. There is additional risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken and that foreign currency forward exchange contracts create exposure to currencies in which the Fund's securities are not denominated. The use of foreign currency forward exchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the

**3**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

contract. Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. Economic sanctions and other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities, negatively impact the value or liquidity of the Fund's investments, significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices, or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies.<br>

• **Loan-Related Investments.** In addition to risks generally associated with debt investments, loan-related investments, such as public bank loans and loan participations and assignments, are subject to other risks. Such investments may be subject to additional risks including subordination to other creditors, no collateral or limited rights in collateral, lack of a regular trading market, extended settlement periods, liquidity risks, prepayment risks, potentially less protection under the federal securities laws and lack of publicly available information. Bank loans are subject to the risk of default in the payment of interest or principal on a loan, which will result in a reduction of income to the Fund, and a potential decrease in the Fund's net asset value per share ("NAV"). The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates. Because public bank loans usually rank lower in priority of payment to senior loans, they present a greater degree of investment risk. These bank loans may exhibit greater price volatility as well.

• **Equity Securities.** In general, prices of equity securities are more volatile than those of fixed-income securities. The prices of equity securities fluctuate, and sometimes widely fluctuate, in response to activities specific to the issuer of the security as well as factors unrelated to the fundamental condition of the issuer, including general market, economic , political conditions and public health conditions. To the extent that the Fund invests in convertible securities, and the convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying security. During periods when equity securities experience heightened volatility, such as during periods of market, economic or financial uncertainty or distress, the Fund's investments in equity securities may be subject to heightened risks.

• **Preferred Securities.** Preferred stock is issued with a fixed par value and pays dividends based on a percentage of that par value at a fixed rate. As with fixed-income securities, which also make fixed payments, the market value of preferred stock is sensitive to changes in interest rates. Preferred stock generally decreases in value if interest rates rise and increases in value if interest rates fall.

• **Mezzanine Investments.** Mezzanine investments are subordinated debt securities that receive payments of interest and principal after other more senior security holders are paid. Mezzanine investments carry the risk that the issuer will not be able to meet its obligations and that the mezzanine investments may lose value.

• **Distressed and Defaulted Securities.** Distressed and defaulted securities are speculative and involve substantial risks in addition to the risks of investing in high yield securities. The Fund will generally not receive interest payments on the distressed securities and the repayment of principal may also be at risk. These securities may present a substantial risk of default or may be in default at the time of investment, requiring the Fund to incur additional costs. The repayment of defaulted securities is also subject to significant uncertainties. The Fund may incur substantial expenses in seeking recovery upon a default in the payment of principal of or interest on its portfolio holdings.

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **Derivatives.** Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument, including market risk, and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates , risks that the transactions may not be liquid , risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks . Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Investments in currency derivatives may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. Foreign currency forward exchange contracts and currency futures and options contracts create exposure to currencies in which the Fund's securities are not denominated.

• **Consumer Discretionary/Staples.** To the extent that the Fund invests significantly in the consumer discretionary or staples sectors, the Fund will be particularly susceptible to the risks associated with companies operating in such sector(s). Companies in the consumer discretionary and staples sectors are subject to risks, including fluctuations in the performance of the overall domestic and international economy, shipment and supply chain disruptions, interest rate changes, currency exchange rates, increased

**4**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

competition and consumer confidence. Performance of such companies may also be adversely affected by factors such as reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes.

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Class IR shares' performance from year-to-year and by showing how the Fund's average annual returns for the past one year period and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15553img003.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 06/30/20 | 10.06% |
| **Low Quarter** | 03/31/20 | -16.01% |

---

**Average Annual Total Returns**

(for the calendar periods ended December 31, 2022)

---

| | | |
|:---|:---|:---|
|  | **Past One** **Year** | **Since** **Inception** |
| **Class IR** (commenced operations on 6/15/18) | **Class IR** (commenced operations on 6/15/18) | **Class IR** (commenced operations on 6/15/18) |
| Return Before Taxes | -11.54% | 1.26% |
| Return After Taxes on Distributions<sup>1</sup>  | -13.66% | -1.24% |
| Return After Taxes on Distributions and Sale of Fund Shares | -6.79% | -0.04% |
| Bloomberg U.S. Corporate High Yield Index (reflects no deduction for fees, expenses or taxes)<sup>2</sup>  | -11.19% | 2.38%<sup>3</sup> |
| Lipper High Current Yield Bond Funds Index (reflects no deduction for taxes)<sup>4</sup>  | -10.28% | 2.10%<sup>3</sup> |

---

1 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

**5**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

---

| | |
|:---|:---|
| 2 | The Bloomberg U.S. Corporate High Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging market debt. It is not possible to invest directly in an index. |

---

3 Since Inception reflects the inception date of Class IR.

4 The Lipper High Current Yield Bond Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper High Current Yield Bond Funds classification. There are currently 30 funds represented in this index.

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of the High Yield team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began Managing Fund** |
| Jack Cimarosa | Managing Director | January 2017 |
| Joseph F. Hurley | Executive Director | September 2022 |

---

**Purchase and Sale of Fund Shares**

To purchase Class IR shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and in each case subject to the discretion of the Adviser. The minimum initial investment may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business directly from the Fund by mail (c/o SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-800-869-6397) or by contacting an authorized third-party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's "Distributor," Morgan Stanley Distribution, Inc. (each, a "Financial Intermediary"). For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase Class IR shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Class IR shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information. For additional information about the Fund's revenue sharing arrangements for Class IR shares, see the section of the Statement of Additional Information entitled "Revenue Sharing."

**6**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Details of the Fund**

High Yield Portfolio

**Investment Objective**

The High Yield Portfolio seeks total return.

The Fund's investment objective may be changed by the Trust's Board of Trustees without shareholder approval, but no change is anticipated. If the Fund's investment objective changes, the Fund will notify shareholders and shareholders should consider whether the Fund remains an appropriate investment in light of the change.

**Approach**

The Fund seeks to achieve its investment objective by investing primarily in high yield securities (commonly referred to as "junk bonds"). High yield securities are fixed-income securities rated by one or more rating agencies below Baa3 by Moody's, below BBB- by S&P, below BBB- by Fitch or, if unrated, considered by the Adviser to be of equivalent quality. The average maturity of the Fund's investments varies, and there is no limit on the maturity or on the credit quality of any security held by the Fund. The Fund's securities may include distressed and defaulted securities and mezzanine investments. The Fund also may invest in investment grade fixed-income securities, including U.S. and foreign government securities, corporate bonds and collateralized bond obligations. The Fund may also invest in preferred securities, equity securities and convertible securities.

The Fund may also invest in loan-related investments, such as public bank loans made by banks or other financial institutions and loan participations and assignments, which may be rated investment grade or below investment grade.

The Fund may purchase certain non-publicly traded "restricted" securities. These securities may include "144A" securities, which are exempt from registration that may only be resold to qualified institutional buyers. The Fund may invest in illiquid securities, including restricted securities that are illiquid. The Fund may invest an unlimited amount in restricted securities that are considered by the Adviser to be liquid and otherwise meet the Fund's investment policies.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based on the value of another underlying asset, interest rate, index or financial instrument. 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. The Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities.

**Process**

The Fund's investment process starts with top-down macroeconomic analysis to assess the optimal positioning of the Fund. The team then applies a combination of quantitative and qualitative filters to identify securities that meet the team's investment criteria in terms of competitive position, franchise value and management quality. The investment team's credit analysis focuses on financial risk, business risk, management ability and intentions. Valuation analysis is used to narrow the screened investment universe to a pool of investment candidates who are then assessed in order to determine relative valuation. Finally, the Fund is constructed with sector allocation driven primarily from bottom-up security selection. Integral to the Fund construction process is the measurement and monitoring of market risk, duration and volatility and credit risk through the use of proprietary risk measures and models.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

Under normal circumstances, at least 80% of the Fund's assets will be invested in high yield securities. This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. Derivative instruments used by the Fund will be counted toward the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

For purposes of policies adopted in accordance with Rule 35d-1 under the 1940 Act, the term "assets," as defined in Rule 35d-1 under the 1940 Act, means net assets plus the amount of any borrowings for investment purposes.

**7**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks

&nbsp;&nbsp;&nbsp; *This section discusses additional information relating to the Fund's investment strategies, other types of investments that the Fund may make and related risk factors. The Fund's investment practices and limitations are also described in more detail in the Statement of Additional Information ("SAI"), which is incorporated by reference and legally is a part of this Prospectus. For details on how to obtain a copy of the SAI and other reports and information, see the back cover of this Prospectus.*<br>

Economies and financial markets worldwide have recently experienced periods of increased volatility, uncertainty, distress, government spending, inflation and disruption to consumer demand, economic output and supply chains. To the extent these conditions continue, the risks associated with an investment in the Fund, including those described below, could be heightened and the Fund's investments (and thus a shareholder's investment in the Fund) may be particularly susceptible to sudden and substantial losses, reduced yield or income or other adverse developments. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time.

**Fixed-Income Securities**

Fixed-income securities are securities that pay a fixed or a variable rate of interest until a stated maturity date. Fixed-income securities include U.S. government securities, securities issued by federal or federally sponsored agencies and instrumentalities, corporate bonds and notes, asset-backed securities, mortgage securities, securities rated below investment grade (commonly referred to as "junk bonds" or "high yield/high risk securities") municipal bonds, loan participations and assignments, zero coupon bonds, convertible securities, Eurobonds, Brady Bonds, Yankee Bonds, repurchase agreements, commercial paper and cash equivalents.

Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. The Fund may be subject to liquidity risk, which may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. Fixed-income securities may be called (i.e., redeemed by the issuer) prior to final maturity. If a callable security is called, the Fund may have to reinvest the proceeds at a lower rate of interest.

**Credit and Interest Rate Risk**

Fixed-income securities, such as bonds, generally are subject to two types of risk: credit risk and interest rate risk. Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. The risk of defaults across issuers and/or counterparties increases in adverse market and economic conditions. Interest rate risk refers to fluctuations (such as a decline) in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. A low interest rate environment may prevent the Fund from providing a positive yield or paying Fund expenses out of current income. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.

In addition, under certain conditions, there may be an increasing amount of issuers that are unprofitable, have little cash on hand and/or are unable to pay the interest owed on their debt obligations and the number of such issuers may increase if demand for their goods and services falls, borrowing costs rise due to governmental action or inaction or other reasons.

**Convertible Securities**

A convertible security is a bond, debenture, note, preferred stock, right, warrant or other security that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities generally have characteristics similar to both debt and equity securities. The value of

**8**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Convertible securities ordinarily provide a stream of income with generally higher yields than those of common stock of the same or similar issuers. Convertible securities generally rank senior to common stock in a corporation's capital structure but are usually subordinated to other comparable nonconvertible fixed-income securities in such capital structure. Convertible securities generally do not participate directly in any dividend increases or decreases of the underlying securities although the market prices of convertible securities may be affected by any dividend changes or other changes in the underlying securities.

**Market and Geopolitical Risk**

The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. Price movements, sometimes called volatility, may be greater or less depending on the types of securities the Fund owns and the markets in which the securities trade. Volatility and disruption in financial markets and economies may be sudden and unexpected, expose the Fund to greater risk, including risks associated with reduced market liquidity and fair valuation, and adversely affect the Fund's operations. For example, the Adviser potentially will be prevented from executing investment decisions at an advantageous time or price as a result of any domestic or global market disruptions and reduced market liquidity may impact the Fund's ability to sell securities to meet redemptions.

The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. Inflation rates may change frequently and significantly because of various factors, including unexpected shifts in the domestic or global economy and changes in monetary or economic policies (or expectations that these policies may change). Changes in expected inflation rates may adversely affect market and economic conditions, the Fund's investments and an investment in the Fund. The market price of debt securities generally falls as inflation increases because the purchasing power of the future income and repaid principal is expected to be worth less when received by the Fund. The risk of inflation is greater for debt instruments with longer maturities and especially those that pay a fixed rather than variable interest rate. Other financial, economic and other global market and social developments or disruptions may result in similar adverse circumstances, and it is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). In general, the securities or other instruments that the Adviser believes represent an attractive investment opportunity or in which the Fund seeks to invest may be unavailable entirely or in the specific quantities sought by the Fund. As a result, the Fund may need to obtain the desired exposure through a less advantageous investment, forgo the investment at the time or seek to replicate the desired exposure through a derivative transaction or investment in another investment vehicle. Any such event(s) could have a significant adverse impact on the value and risk profile of the Fund's portfolio. There is a risk that you may lose money by investing in the Fund.

Social, political, economic and other conditions and events, such as war, natural disasters, health emergencies (e.g., the novel coronavirus outbreak, epidemics and other pandemics), terrorism, conflicts, social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and the Adviser's investment advisory activities and services of other service providers, which in turn could adversely affect the Fund's investments and other operations.

Government and other public debt, including municipal obligations in which the Fund may invest, can be adversely affected by large and sudden changes in local and global economic conditions that result in increased debt levels. Although high levels of government and other public debt do not necessarily indicate or cause economic problems, high levels of debt may create certain systemic risks if sound debt management practices are not implemented. A high debt level may increase market pressures to meet an issuer's funding needs, which may increase borrowing costs and cause a government or public or municipal entity to issue additional debt, thereby increasing the risk of refinancing. A high debt level also raises concerns that the issuer may be unable or unwilling to repay the principal or interest on its debt, which may adversely impact instruments held by the Fund that rely on such payments. Governmental and quasi-governmental responses to certain economic or other conditions may lead to increasing government and other public debt, which heighten these risks. Unsustainable debt levels can lead to declines in the value of currency, and can prevent a government from implementing effective counter-cyclical fiscal policy during economic downturns, can generate or contribute to an economic downturn or cause other adverse economic or market developments, such as increases in inflation or volatility. Increasing government and other public debt may adversely affect issuers, obligors, guarantors or instruments across a variety of asset classes.

**9**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

Global events may negatively impact broad segments of businesses and populations, cause a significant negative impact on the performance of the Fund's investments and exacerbate pre-existing political, social and economic risks to the Fund. The Fund's operations may be interrupted as a result, which may contribute to the negative impact on investment performance. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions that affect the instruments in which the Fund invests, or the issuers of such instruments, in ways that could have a significant negative impact on the Fund's investment performance.

**Distressed and Defaulted Securities**

Distressed and defaulted securities are speculative and involve substantial risks in addition to the risks of investing in high yield securities. The Fund will generally not receive interest payments on the distressed securities and the repayment of principal may also be at risk. These securities may present a substantial risk of default or may be in default at the time of investment. The repayment of defaulted securities is also subject to significant uncertainties. The Fund may incur substantial expenses in seeking recovery upon a default in the payment of principal of or interest on its portfolio holdings. If the portfolio company is forced to reorganize or liquidate, the Fund may lose its entire investment or may be required to accept cash or securities with a value less than its original investment. Distressed securities and any securities received in an exchange for such securities may be subject to restrictions on resale.

**Preferred Securities**

Preferred securities are subject to risks applicable generally to equity securities. In addition, a company's preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt, so the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company's financial condition or prospects. Preferred securities may pay fixed or adjustable rates of return. Like fixed-income securities, preferred stock generally decreases in value if interest rates rise and increases in value if interest rates fall.

**Mezzanine Investments**

Mezzanine investments are subordinated debt securities that receive payments of interest and principal after other more senior security holders are paid. Mezzanine investments generally are rated below investment grade and frequently are unrated and present many of the same risks as senior loans and non-investment grade bonds. However, unlike senior loans, mezzanine investments are not a senior or secondary secured obligation of the related borrower. They typically are the most subordinated debt obligation in an issuer's capital structure. Mezzanine investments also may often be unsecured. Mezzanine investments therefore are subject to the additional risk that the cash flow of the related borrower and the property securing the loan may be insufficient to repay as scheduled after giving effect to any senior obligations of the related borrower. Mezzanine investments are also expected to be a highly illiquid investment. Mezzanine investments will be subject to certain additional risks to the extent that such loans may not be protected by financial covenants or limitations upon additional indebtedness. Investment in mezzanine investments is a highly specialized investment practice that depends more heavily on independent credit analysis than investments in other types of debt obligations.

**Duration**

The average duration of a portfolio of fixed-income securities represents its exposure to changing interest rates. For example, when the level of interest rates increases by 1%, a fixed-income security having a positive duration of four years generally will decrease in value by 4%; when the level of interest rates decreases by 1%, the value of that same security generally will increase by 4%. A portfolio with a lower average duration generally will experience less price volatility in response to changes in interest rates than a portfolio with a higher average duration.

**Municipal Securities**

Municipal securities (also referred to as municipal obligations) include debt obligations of states, territories or possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, such as local or regional governments. The income on municipal securities is generally exempt from federal income tax at the time of issuance, in the opinion of bond counsel or other counsel to the issuers of such securities. However, the Fund may purchase municipal securities that pay interest that is subject to the federal alternative minimum tax, and municipal securities on which the interest payments are taxable. These securities typically are "general obligation" or "revenue" bonds, notes or commercial paper, including participations in lease obligations and installment purchase contracts of municipalities. General obligation bonds are secured by the issuer's full faith and credit including its taxing power for payment of principal and interest. Revenue bonds, however, are generally payable 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. These types of bonds involve the risk that the tax or other revenues so derived will not be sufficient to meet interest and or principal payment obligations. These obligations may have fixed, variable or floating rates.

Because the Fund may invest in municipal securities, the Fund may be affected significantly by the economic, regulatory, legislative, tax or political developments affecting the ability of issuers of municipal securities to pay interest or repay principal. The risks of municipal securities generally depend on the financial and credit status of the issuer and may rely on a specific stream of revenue associated with a project or other revenue source. Thus, adverse developments related to a municipality's ability to raise revenue, including through its taxing authority, or the failure of specific revenues to materialize would negatively impact such investments. Changes in the financial health of an issuer of municipal securities may make it difficult for the issuer to make interest and principal

**10**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

payments when due. Some municipalities have had significant financial problems recently, and these and other municipalities could, potentially, continue to experience significant financial problems resulting from lower tax revenues and/or decreased aid from state and local governments in the event of an economic downturn. In addition, adverse legislative, tax, regulatory, demographic or political changes may negatively impact the Fund's investments in municipal securities. These events could decrease the Fund's income and/or adversely affect the Fund's performance and investments. Municipal securities also involve the risk that an issuer may call securities for redemption, which could force the Fund to reinvest the proceeds at a lower rate of interest, and the value of municipal securities may be affected by the rights of municipal security holders.

Municipal securities may be more susceptible to downgrades, defaults or loss of tax or other revenue during recessions or similar periods of economic stress. Factors contributing to the financial stress on municipalities may include lower property tax collections as a result of lower home values, lower sales tax revenue as a result of consumers cutting back spending and lower income tax revenue as a result of a higher unemployment rate. In addition, because some municipal obligations may be secured or guaranteed by banks and other institutions, the risk to the Fund associated with investments in such municipal securities could increase if the banking or financial sector suffers an economic downturn and/or if the credit ratings of the institutions issuing the guarantee are downgraded or at risk of being downgraded by a national rating organization. If such events occur, the value of the security could decrease or the value could be lost entirely, and it may be difficult or impossible for the Fund to sell the security at the time and the price that normally prevails in the market.

For example, recent public health emergencies have significantly stressed the financial resources of many municipalities and other issuers of municipal securities, which may impair their ability to meet their financial obligations and may harm the value or liquidity of the Fund's investments in municipal securities (or the income generated by such investments). In particular, responses by municipalities to recent public health emergencies have caused disruptions in business activities. These and other effects of recent public health emergencies, such as increased unemployment levels, have impacted tax and other revenues of municipalities and other issuers of municipal securities and the financial conditions of such issuers. As a result, there is an increased budgetary and financial pressure on municipalities and other issuers of municipal securities and heightened risk of default or other adverse credit or similar events for issuers of municipal securities, which would adversely impact the Fund's investments.

In addition, the ability of an issuer to make payments or repay interest may be affected by litigation or bankruptcy. In the event of bankruptcy of such an issuer, the Fund investing in the issuer's securities could experience delays in collecting principal and interest, and the Fund may not, in all circumstances, be able to collect all principal and interest to which it is entitled. To enforce its rights in the event of a default in the payment of interest or repayment of principal, or both, the Fund may, in some instances, take possession of, and manage, the assets securing the issuer's obligations on such securities, which may increase the Fund's operating expenses. Any income derived from the Fund's ownership or operation of such assets may not be tax-exempt. Municipal securities are subject to, among other risks, credit and interest rate risk and market and geopolitical risk.

Because many municipal securities are issued to finance similar projects (such as those relating to education, health care, housing, transportation, and utilities), conditions in those sectors may affect the overall municipal securities market. In addition, changes in the financial condition of an individual municipal issuer can affect the overall municipal market. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the supporting taxation or the inability to collect revenues for the specific project or specific assets.

Some municipal securities are subject to the risk that the U.S. Internal Revenue Service ("IRS") may determine that an issuer has not complied with applicable tax requirements (or the occurrence of other adverse tax developments) and that interest from the municipal security is taxable, which may result in a significant decline in the value of the security. In addition, interest on municipal obligations, while generally exempt from federal income tax, may not be exempt from the federal alternative minimum tax. Municipal securities may be less liquid than taxable bonds and there may be less publicly available information on the financial condition of municipal security issuers than for issuers of other securities, and the investment performance of the Fund investing in municipal securities may therefore be more dependent on the analytical abilities of the Adviser than if the Fund held other types of investments such as stocks or taxable bonds. The secondary market for municipal securities also tends to be less well developed or liquid than many other securities markets, which may adversely affect the Fund's ability to sell municipal securities it holds at attractive prices or value municipal securities. In addition, the demand for municipal securities is strongly influenced by the value of tax-exempt income to investors and lower income tax rates could reduce the advantage of owning municipal securities, which may also adversely affect the value and liquidity of municipal securities.

**High Yield Securities**

Fixed-income securities that are not investment grade are commonly referred to as "junk bonds" or high yield, high risk securities. These securities offer a higher yield than other higher rated securities, but they carry a greater degree of risk. High yield securities are subject to greater risk of loss of income and principal than higher rated securities and may be considered speculative by the major credit rating agencies. High yield securities may be issued by companies that are restructuring, are smaller and less creditworthy or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal

**11**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

and interest. Changes in the value of high yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities.

In recent years, there has been a broad trend of weaker or less restrictive covenant protections in the high yield market. Among other things, under such weaker or less restrictive covenants, borrowers might be able to exercise more flexibility with respect to certain activities than borrowers who are subject to stronger or more protective covenants. For example, borrowers might be able to incur more debt, including secured debt, return more capital to shareholders, remove or reduce assets that are designated as collateral securing high yield securities, increase the claims against assets that are permitted against collateral securing high yield securities or otherwise manage their business in ways that could impact creditors negatively. In addition, certain privately held borrowers might be permitted to file less frequent, less detailed or less timely financial reporting or other information, which could negatively impact the value of the high yield securities issued by such borrowers. Each of these factors might negatively impact the high yield securities held by the Fund.

**Mortgage-Backed Securities**

Mortgage securities are fixed-income securities representing an interest in a pool of underlying mortgage loans. They are sensitive to changes in interest rates, but may respond to these changes differently from other fixed-income securities due to the possibility of prepayment of the underlying mortgage loans. As a result, it may not be possible to determine in advance the actual maturity date or average life of a mortgage security. Rising interest rates tend to discourage refinancings, with the result that the average life and volatility of the security will increase and its market price will decrease. When interest rates fall, however, mortgage securities may not gain as much in market value because additional mortgage prepayments must be reinvested at lower interest rates. Prepayment risk may make it difficult to calculate the average maturity of a portfolio of mortgage securities and, therefore, to assess the volatility risk of that portfolio.

The Fund may invest in mortgage securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities. These securities are either direct obligations of the U.S. Government or the issuing agency or instrumentality has the right to borrow from the U.S. Treasury to meet its obligations although it is not legally required to extend credit to the agency or instrumentality. Certain of these mortgage securities purchased by the Fund, such as those issued by the Government National Mortgage Association and the Federal Housing Administration, are backed by the full faith and credit of the United States. Other of these mortgage securities purchased by the Fund, such as those issued by the Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac"), are not backed by the full faith and credit of the United States and there is a risk that the U.S. Government will not provide financial support to these agencies if it is not obligated to do so by law. The maximum potential liability of the issuers of some of the mortgage securities held by the Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.

Non-agency mortgage-backed securities are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, mortgage-related securities held in the Fund's portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans. Non-agency mortgage-backed securities include securities that reflect an interest in, and are secured by, mortgage loans on commercial real property. Many of the risks of investing in CMBS reflect the risks of investing in

**12**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants.

The risks associated with mortgage-backed securities are elevated in distressed economic, market, health and labor conditions, notably, increased levels of unemployment, delays and delinquencies in payments of mortgage and rent obligations, and uncertainty regarding the effects and extent of government intervention with respect to mortgage payments and other economic matters.

Delinquencies, defaults and losses on residential mortgage loans may increase substantially over certain periods, which may affect the performance of the mortgage-backed securities in which the Fund may invest. Mortgage loans backing non-agency mortgage-backed securities are more sensitive to economic factors that could affect the ability of borrowers to pay their obligations under the mortgage loans backing these securities. In addition, housing prices and appraisal values in many states and localities over certain periods have declined or stopped appreciating. A sustained decline or an extended flattening of those values may result in additional increases in delinquencies and losses on mortgage-backed securities generally (including the mortgaged-backed securities that the Fund may invest in as described above). Adverse changes in market conditions and regulatory climate may reduce the cash flow which the Fund, to the extent it invests in mortgage-backed securities or other asset-backed securities, receives from such securities and increase the incidence and severity of credit events and losses in respect of such securities. In the event that interest rate spreads for mortgage-backed securities and other asset-backed securities widen following the purchase of such assets by the Fund, the market value of such securities is likely to decline and, in the case of a substantial spread widening, could decline by a substantial amount. Furthermore, adverse changes in market conditions may result in reduced liquidity in the market for mortgage-backed securities and other asset-backed securities (including the mortgage-backed securities and other asset-backed securities in which the Fund may invest) and an unwillingness by banks, financial institutions and investors to extend credit to servicers, originators and other participants in the market for mortgage-backed and other asset-backed securities. As a result, the liquidity and/or the market value of any mortgage-backed or asset-backed securities that are owned by the Fund may experience declines after they are purchased by the Fund.

Collateralized mortgage obligations ("CMOs") are debt obligations collateralized by mortgage loans or mortgage pass-through securities (collectively "Mortgage Assets"). Payments of principal and interest on the Mortgage Assets and any reinvestment income are used to make payments on the CMOs. CMOs are issued in multiple classes. Each class has a fixed or floating rate and a stated maturity or final distribution date. The principal and interest on the Mortgage Assets may be allocated among the classes in a number of different ways. Certain classes will, as a result of the allocation, have more predictable cash flows than others. As a general matter, the more predictable the cash flow, the lower the yield relative to other Mortgage Assets. The less predictable the cash flow, the higher the yield and the greater the risk. The Fund may invest in any class of CMO, including classes that vary inversely with interest rates and may be more volatile and sensitive to prepayment rates.

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

Stripped mortgage-backed securities ("SMBS") are derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S. Government, or by private originators. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class receives most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the interest only or "IO" class), while the other class will receive all of the principal (the principal-only or "PO" class). Investments in each class of SMBS are extremely sensitive to changes in interest rates. IOs tend to decrease in value substantially if interest rates decline and prepayment rates become more rapid. POs tend to decrease in value substantially if interest rates increase and the rate of prepayment decreases. If the Fund invests in SMBS and interest rates move in a manner not anticipated by management, it is possible that the Fund could lose all or substantially all of its investment.

Commercial mortgage-backed securities ("CMBS") are generally multi-class or pass-through securities backed by a mortgage loan or a pool of mortgage loans secured by commercial property, such as industrial and warehouse properties, office buildings, retail space and shopping malls, multifamily properties and cooperative apartments. The commercial mortgage loans that underlie CMBS are

**13**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

generally not amortizing or not fully amortizing. That is, at their maturity date, repayment of their remaining principal balance or "balloon" is due and is repaid through the attainment of an additional loan or sale of the property. An extension of a final payment on commercial mortgages will increase the average life of the CMBS, generally resulting in a lower yield for discount bonds and a higher yield for premium bonds.

CMBS are subject to credit risk and prepayment risk. Although prepayment risk is present, it is of a lesser degree in the CMBS market than in the residential mortgage market; commercial real estate property loans often contain provisions that substantially reduce the likelihood that such securities will be prepaid (e.g., significant prepayment penalties on loans and, in some cases, prohibition on principal payments for several years following origination).

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

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

**Asset-Backed Securities**

Asset-backed securities apply the securitization techniques used to develop mortgage-backed securities to a broad range of other assets. Various types of assets, primarily automobile and credit card receivables and home equity loans, are pooled and securitized in pass-through structures similar to pass-through structures developed with respect to mortgage securitizations. Asset-backed securities have risk characteristics similar to mortgage-backed securities. Like mortgage-backed securities, they generally decrease in value as a result of interest rate increases, but may benefit less than other fixed-income securities from declining interest rates, principally because of prepayments. Also, as in the case of mortgage-backed securities, prepayments generally increase during a period of declining interest rates, although other factors, such as changes in credit use and payment patterns, may also influence prepayment rates. Asset-backed securities also involve the risk that various federal and state consumer laws and other legal and economic factors may result in the collateral backing the securities being insufficient to support payment on the securities.

The Fund may invest in other asset-backed or similarly structured securities, such as collateralized debt obligations ("CDOs"), collateralized bond obligations ("CBOs"), and collateralized loan obligations ("CLOs") These investments are subject to many of the same risks as other forms of asset-backed securities, including interest rate risk, credit risk and default risk, and are also subject to additional risks, including but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the risk that the collateral may default or decline in value or be downgraded, if rated by a nationally recognized statistical rating organization; (iii) the Fund may invest in tranches of CDOs that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investors regarding the characterization of proceeds; (v) the investment return achieved by the Fund could be significantly different than those predicted by financial models; (vi) the lack of a readily available secondary market for CDOs; (vii) the risk of forced "fire sale" liquidation due to technical defaults such as coverage test failures; and (viii) the CDO's manager may perform poorly. Investments in CDOs, CBOs and CLOs are also subject to risks particular to their respective asset class and structure.

For example, because CLOs are backed primarily by commercial loans, CLOs also bear many of the same risks as investing in loans directly. However, in addition to the risks associated with investing in commercial loans, the complex structure and highly leveraged nature of a CLO poses additional risks. CLOs may experience substantial losses attributable to loan defaults or trading losses. Such losses on the underlying assets are borne first by the holders of subordinate tranches. In addition, a Fund's investments in CLOs may decrease in market value when the CLO's assets experience loan defaults or credit impairment, losses that exceed the most subordinate tranches, or market anticipation of loan defaults and investor aversion to CLO securities as a class. CDOs are structured similarly to CLOs and bear many of the same risks as CLOs as well as additional risks because they are backed by pools of assets other than commercial loans, including securities (such as other asset-backed securities), synthetic instruments or bonds, and may be highly leveraged. Like CLOs, losses incurred by a CDO are borne first by holders of the most subordinate tranches. Accordingly, the risks of CDOs depend largely on the type of underlying collateral and the tranche of CDOs in which the Fund invests. Moreover, CDOs that obtain their exposure through synthetic investments are exposed to risks associated with derivative instruments.

**Foreign Securities**

Foreign issuers generally are subject to different accounting, auditing and financial reporting standards than U.S. issuers. There may be less information available to the public about foreign issuers. Securities of foreign issuers can be less liquid and experience greater price movements. In addition, the prices of such securities may be susceptible to influence by large traders, due to the limited size of

**14**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

many foreign securities markets. Moreover, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Also, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. In some foreign countries, there is also the risk of government expropriation, excessive taxation, political or social instability, the imposition of currency controls or diplomatic developments that could affect the Fund's investment. There also can be difficulty obtaining and enforcing judgments against issuers in foreign countries. Foreign stock exchanges, broker-dealers and listed issuers may be subject to less government regulation and oversight. The cost of investing in foreign securities, including brokerage commissions and custodial expenses, can be higher than the cost of investing in domestic securities.

Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. International trade barriers or economic sanctions against foreign countries, organizations, companies, entities and/or individuals may adversely affect the Fund's foreign holdings or exposures. Investments in foreign markets may also be adversely affected by less stringent investor protections and disclosure standards, and governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. Governmental actions can have a significant effect on the economic conditions in foreign countries, which also may adversely affect the value and liquidity of the Fund's investments. Foreign investment in the securities markets of certain foreign countries is restricted or controlled to varying degrees. For example, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Moreover, if a deterioration occurs in a country's balance of payments, the country could impose temporary restrictions on foreign capital remittances. The Fund could also be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investment. Any of these actions could severely affect security prices, which could result in losses to the Fund and increased transaction costs, impair the Fund's ability to purchase or sell foreign securities or transfer the Fund's assets back into the United States, or otherwise adversely affect the Fund's operations. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. Certain foreign investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When the Fund holds illiquid investments, its portfolio may be harder to value.

Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. The Fund's investments in foreign securities are subject to economic sanctions and trade laws in the United States and other jurisdictions. These laws and related governmental actions, including counter-sanctions and other retaliatory measures, can, from time to time, prevent or prohibit the Fund from investing in certain foreign securities. In addition, economic sanctions could prohibit the Fund from transacting with particular countries, organizations, companies, entities and/or individuals by banning them from global payment systems that facilitate cross-border payments, restricting their ability to settle securities transactions, and freezing their assets. The imposition of sanctions and other similar measures could, among other things, cause a decline in the value of securities issued by the sanctioned country or companies located in, or economically linked to, the sanctioned country, downgrades in the credit ratings of the sanctioned country or companies located in, or economically linked to, the sanctioned country, devaluation of the sanctioned country's currency, and increased market volatility and disruption in the sanctioned country and throughout the world. Economic sanctions or other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities, negatively impact the value or liquidity of the Fund's investments, significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices, increase the Fund's transaction costs, make the Fund's investments more difficult to value or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies. These conditions may be in place for a substantial period of time and enacted with limited advance notice to the Fund.

The Fund may invest in debt obligations known as "sovereign debt," which are obligations of governmental issuers in emerging market or developing countries and industrialized countries. Certain emerging market or developing countries are among the largest debtors to commercial banks and foreign governments. The issuer or governmental authority that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or pay interest when due in accordance with the terms of such obligations. Uncertainty surrounding the level and sustainability of sovereign debt of certain countries has at times increased volatility in the financial markets. In addition, a number of Latin American countries are among the largest debtors of developing countries and have a long history of reliance on foreign debt. Additional factors that may influence the ability or willingness to service debt include, but are not limited to, a country's cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, the relative size of its debt service burden to the economy as a whole and its government's policy towards the International Monetary Fund, the World Bank and other multilateral agencies. A country whose exports are concentrated in a few commodities or whose economy depends on certain strategic imports could be vulnerable to fluctuations in international prices of these commodities

**15**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

or imports. If a foreign sovereign obligor cannot generate sufficient earnings from foreign trade to service its external debt, it may need to depend on continuing loans and aid from foreign governments, commercial banks and multilateral organizations, and inflows of foreign investment. The commitment on the part of these foreign governments, multilateral organizations and others to make such disbursements may be conditioned on the government's implementation of economic reforms and/or economic performance and the timely service of its obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third-parties' commitments to lend funds, which may further impair the foreign sovereign obligor's ability or willingness to timely service its debts. In addition, there is no legal process for collecting on a sovereign debt that a government does not pay or bankruptcy proceeding by which all or part of the sovereign debt that a government entity has not repaid may be collected.

In connection with its investments in foreign securities, the Fund also may enter into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Foreign currency forward exchange contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, the Fund may use cross currency hedging or proxy hedging with respect to currencies in which the Fund has or expects to have portfolio or currency exposure. Cross currency and proxy hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies.

**Foreign Currency**

Investments in foreign securities may be denominated in foreign currencies. The value of foreign currencies may fluctuate relative to the value of the U.S. dollar or other applicable foreign currency. Since the Fund may invest in such non-U.S. dollar-denominated securities, and therefore may convert the value of such securities into U.S. dollars, changes in currency exchange rates can increase or decrease the U.S. dollar value of the Fund's assets. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and the overall economic health of the issuer. Devaluation of a currency by a country's government or banking authority also will have a significant impact on the value of any investments denominated in that currency. The Adviser may use derivatives to reduce this risk. The Adviser may in its discretion choose not to hedge against currency risk. In addition, certain market conditions may make it impossible or uneconomical to hedge against currency risk.

**Emerging Market Securities**

The Fund may invest in emerging market or developing countries, which are countries that major international financial institutions generally consider to be less economically mature than developed nations (such as the United States or most nations in Western Europe). Emerging market or developing countries may be more likely to experience political turmoil or rapid changes in economic conditions than more developed countries, and the financial condition of issuers in emerging market or developing countries may be more precarious than in other countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging markets countries. In addition, due to jurisdictional limitations, U.S. authorities (e.g., SEC and the U.S. Department of Justice) may be limited in their ability to enforce regulatory or legal obligations in emerging market countries. In addition, emerging market securities generally are less liquid and subject to wider price and currency fluctuations than securities issued in more developed countries. These characteristics result in greater risk of price volatility in emerging market or developing countries, which may be heightened by currency fluctuations relative to the U.S. dollar.

**Loan-Related Investments**

Loan-related investments may include, without limitation, public bank loans made by banks or other financial institutions and loan participations and assignments. Such investments may be rated investment grade or below investment grade. To the extent these investments are second lien loans, which are lower in priority to senior loans, but have seniority in a company's capital structure to other liabilities, the company would be required to pay down these second lien loans prior to other lower-ranked claims on their assets. With respect to loan participations, the Fund may not always have direct recourse against a borrower if the borrower fails to pay scheduled principal and/or interest; may be subject to greater delays, expenses and risks than if the Fund had purchased a direct obligation of the borrower; and may be regarded as the creditor of the agent lender (rather than the borrower), subjecting the Fund to the creditworthiness of that lender as well.

Certain loans may be illiquid, meaning the Fund may not be able to sell them quickly at a fair price. Illiquid securities are also difficult to value. To the extent a loan has been deemed illiquid, it will be subject to the Fund's restrictions on investment in illiquid securities. The secondary market for loans may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. Because some loans may have a more limited secondary market, liquidity and valuation risk is more pronounced for the Fund than for funds that invest primarily in other types of fixed-income instruments or equity securities. In the case of extended trade settlement periods, the Fund may not receive the proceeds from the sale of a loan for a period after the sale. As a

**16**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

result, sale proceeds related to the sale of loans may not be available to make additional investments or to meet the Fund's redemption obligations for a period after the sale of the loans and, as a result, the Fund may have to sell other investments or engage in borrowing transactions, such as borrowing from its credit facility, if necessary to raise cash to meet its obligations. Loans are subject to the risk of default in the payment of interest or principal, which would result in a reduction of income to the Fund and a potential decrease in the Fund's NAV. Although a loan may be fully collateralized at the time of acquisition, the collateral may decline in value, be relatively illiquid or lose all or substantially all of its value subsequent to investment. Certain loans may not be considered securities under the federal securities laws and, therefore, investments in such loans may not be subject to certain protections under those laws.

The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates. Loans that are rated below investment grade share the same risks of other below investment grade securities. Because loans in which the Fund may invest could rank lower in priority of payment to senior loans, they present a greater degree of investment risk due to the fact that the cash flow or other property of the borrower securing the loan may be insufficient to meet scheduled payments after meeting the senior secured payment obligations of the borrower. These loans may exhibit greater price volatility as well. There is less readily available, reliable information about most loan investments than is the case for many other types of securities.

**Covenant Lite Investments**

Some of the loans or other obligations in which the Fund may invest or obtain exposure to may be "covenant lite" loans or other obligations. Certain financial institutions may define "covenant lite" loans or securities differently. Covenants contained in loan documentation are intended to protect lenders and investors by imposing certain restrictions and other limitations on a borrower's operations or assets and by providing certain information and consent rights to lenders. Covenant lite loans or securities, which have varied terms and conditions, may contain fewer or no restrictive covenants compared to other loans that might enable the Fund to, among other things, proactively enforce financial covenants or prevent undesired actions by the borrower. As a result, covenant lite loans generally carry greater risks because they allow borrowers to exercise more flexibility with respect to certain activities that may otherwise be limited or prohibited under similar loan obligations that are not covenant lite. In addition, the Fund may receive less or less frequent financial reporting from a borrower under a covenant-lite obligation, which may result in more limited access to financial information, difficulty evaluating the borrower's financial performance over time and delays in exercising rights and remedies in the event of a significant financial decline. The Fund may experience relatively greater difficulty or delays in enforcing its rights on its holdings of certain covenant lite loans and other similar obligations than its holdings of loans or securities with more traditional financial covenants, which may result in losses to the Fund. During certain market conditions, many new, restructured or reissued loans and similar debt obligations may not feature traditional financial maintenance covenants, which are intended to protect lenders and investors by imposing certain restrictions and other limitations on a borrower's operations or assets and by providing certain information and consent rights to lenders.

**Equity Securities**

Equity securities may include common and preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase common stocks, depositary receipts, shares of investment companies, limited partnership interests and other specialty securities having equity features. Many factors affect the value of equity securities, including earnings, earnings forecasts, corporate events and factors impacting the issuer's industry and the market generally. The Fund may invest in equity securities that are publicly traded on securities exchanges or over-the-counter ("OTC") or in equity securities that are not publicly traded. Securities that are not publicly traded may be more difficult to value or sell and their value may fluctuate more dramatically than other securities. The prices of convertible securities are affected by changes similar to those of equity and fixed-income securities.

A depositary receipt is generally issued by a bank or financial institution and represents the common stock or other equity securities of a foreign company. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts, or to pass through to them any voting rights with respect to the deposited securities.

**Liquidity**

The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. Illiquidity can be caused by, among other things, a drop in overall market trading volume, an inability to find a willing buyer, or legal restrictions on the securities' resale. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

**17**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

**Derivatives**

The Fund may, but is not required to, use derivatives and other similar instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivative instruments used by the Fund will be counted towards the Fund's exposure in the types of securities listed herein to the extent they have economic characteristics similar to such securities. A derivative is a financial instrument whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objective, there is no assurance that the use of derivatives will achieve this result.

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

*Futures.* A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. While the value of a futures contract tends to increase or decrease in tandem with the value of the underlying instrument, differences between the futures market and the market for the underlying asset may result in an imperfect correlation. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures contract.

*Options.* If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument, foreign currency or contract, such as a swap agreement or futures contract, on the underlying instrument or foreign currency at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument, swap, foreign currency, or futures contract on the underlying instrument or foreign currency at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

Investments in foreign currency options may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. There is a risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. The value of a foreign currency option is dependent upon the value of the underlying foreign currency relative to the U.S. dollar or other applicable foreign currency. The price of the option may vary with changes in the value of either or both currencies and has no relationship to the investment merits of a foreign security. Options on foreign currencies are affected by all of those factors that influence foreign exchange rates and foreign investment generally. Unanticipated changes in currency prices may result in losses to the Fund and poorer overall performance for the Fund than if it had not entered into such contracts. Options on foreign currencies are traded primarily in the OTC market, but may also be traded on U.S. and foreign exchanges.

Foreign currency options contracts may be used for hedging purposes or non-hedging purposes in pursuing the Fund's investment objective, such as when the Adviser anticipates that particular non-U.S. currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Fund's investment portfolio. Investing in foreign currencies for purposes of gaining from projected changes in exchange rates, as opposed to only hedging currency risks applicable to the Fund's holdings, further increases the Fund's exposure to foreign securities losses. There is no assurance that the Adviser's use of currency derivatives will benefit the Fund or that they will be, or can be, used at appropriate times.

**18**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

*Swaps.* The Fund may enter into OTC swap contracts or cleared swap transactions. An OTC swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Typically swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each party. Cleared swap transactions may help reduce counterparty credit risk. In a cleared swap, the Fund's ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial institution. OTC swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty. Certain swaps have begun trading on exchanges called swap execution facilities. Exchange trading is expected to increase liquidity of swaps trading. Both OTC and cleared swaps could result in losses if interest rates, foreign currency exchange rates or other factors are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments require the clearing and exchange trading of certain standardized swap transactions. Mandatory exchange-trading and clearing is occurring on a phased-in basis. The Fund may pay fees or incur costs each time it enters into, amends or terminates a swap agreement.

The Fund's use of swaps may include those based on the credit of an underlying security, commonly referred to as "credit default swaps." Where the Fund is the buyer of a credit default swap contract, it would typically be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by a third-party on the debt obligation. If no default occurs, the Fund would have paid to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract. When the Fund is the seller of a credit default swap contract, it typically receives the stream of payments but is obligated to pay an amount equal to the par (or other agreed-upon) value of a referenced debt obligation upon the default or similar event of the issuer of the referenced debt obligation.

**Consumer Discretionary/Staples**

To the extent that the Fund invests significantly in the consumer discretionary or staples sectors, the Fund will be particularly susceptible to the risks associated with companies operating in such sector(s). Companies in the consumer discretionary and staples sectors are subject to risks, including fluctuations in domestic and international economic conditions and forecasts, inflation, shipment and supply chain disruptions and interest rate changes, currency exchange rates, increased competition and consumer confidence as well as increases in production-related costs. Performance of such companies also may be adversely affected by factors such as reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes. Companies in these sectors are subject to competitive forces (including competition brought by foreign brands), which may also have an adverse impact on their profitability and the value of their securities. These sectors may be strongly affected by fads, marketing campaigns, changes in demographics and consumer preferences, and other economic or social factors affecting consumer demand. Governmental regulation, including price controls and regulations on packaging, labeling, competition, and certification, may affect the profitability of companies in such sector(s). Companies operating in these sectors may also be adversely affected by government and private litigation.

**Large Shareholder Transactions Risk**

The Fund may experience adverse effects when certain shareholders purchase or redeem large amounts of shares of the Fund. Such larger than normal redemptions may cause the Fund to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. Similarly, large Fund share purchases may adversely affect the Fund's performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would. These transactions may also accelerate the realization of taxable income to shareholders if such sales of investments resulted in gains, and may also increase transaction costs. In addition, a large redemption could result in the Fund's current expenses being allocated over a smaller asset base, leading to an increase in the Fund's expense ratio. Although large shareholder transactions may be more frequent under certain circumstances, the Fund is generally subject to the risk that shareholders can purchase or redeem a significant percentage of Fund shares at any time.

**Investment Discretion**

In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments it buys, holds or sells on a day-to-day basis, and which trading strategies it uses. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

**Temporary Defensive Investments**

When the Adviser believes that changes in market, economic, political or other conditions warrant, the Fund may invest without limit in cash, cash equivalents or other fixed-income securities for temporary defensive purposes that may be inconsistent with the Fund's principal investment strategies. If the Adviser incorrectly predicts the effects of these changes, such defensive investments may adversely affect the Fund's performance and the Fund may not achieve its investment objective.

**19**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management

Adviser

Morgan Stanley Investment Management Inc., with principal offices at 522 Fifth Avenue, New York, NY 10036, conducts a worldwide portfolio management business and provides a broad range of portfolio management services to customers in the United States and abroad. Morgan Stanley (NYSE: "MS") is the parent of the Adviser, which is the parent of the Distributor. Morgan Stanley is a preeminent global financial services firm engaged in securities trading and brokerage activities, as well as providing investment banking, research and analysis, financing and financial advisory services. As of December 31, 2022, the Adviser, together with its affiliated asset management companies, had approximately $1.3 trillion in assets under management or supervision.

A discussion regarding the basis for the Board of Trustees' approval of the investment advisory agreement is available in the Fund's Annual Report to Shareholders for the fiscal year ended September 30, 2022.

Advisory Fees

For the fiscal year ended September 30, 2022, the Adviser received a fee for advisory services (net of fee waivers, if applicable) equal to 0.31% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund, if necessary, if such fees would cause the total annual operating expenses of the Fund to exceed 0.62% for Class IR. In determining the actual amount of fee waiver and/or expense reimbursement for the Fund, if any, the Adviser excludes from total annual operating expenses acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation). The fee waivers and/or expense reimbursements for the Fund will continue for at least one year from the date of this Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. The Adviser may make additional voluntary fee waivers and/or expense reimbursements. The Adviser may discontinue these voluntary fee waivers and/or expense reimbursements at any time in the future.

The Fund's annual operating expenses may vary throughout the period and from year to year. The Fund's actual expenses may be different than the expenses listed in the Fund's fee and expense table based upon the extent and amount of a fee waiver and/or expense reimbursement

Portfolio Management

The Fund's assets are managed by members of the High Yield team. The team consists of portfolio managers and traders. Current members of the team who are jointly and primarily responsible for the day-to-day management of the Fund are Jack Cimarosa and Joseph F. Hurley. Messrs. Cimarosa and Hurley share portfolio management responsibilities. Mr. Cimarosa has been associated with the Adviser in an investment management capacity since April 2012 as a High Yield Trader and has been a portfolio manager of the Fund since 2017. Mr. Cimarosa was a High Yield Trader at Guggenheim Partners from April 2009 to March 2012 focusing on leveraged debt. Mr. Hurley has been associated with the Adviser in an investment management capacity since 2014.

All team members are responsible for the execution of the overall strategy of the Fund.

**Additional Information**

The Fund's SAI provides additional information about the portfolio managers' compensation structure, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Fund.

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

**20**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information

**Share Class Arrangements**

This Prospectus offers Class IR shares of the High Yield Portfolio. Shares of the Fund are available in other share classes that have different fees and expenses. The Trust also offers Class I, Class A, Class L, Class C, Class R6 and Class W shares of the Fund through separate prospectuses. Class L shares of the Fund are currently closed to investors except in the limited circumstances set forth in such prospectus. Class IR shares are not subject to a sales charge and are not subject to a distribution and/or shareholder service (12b-1) fee. In addition, no sub-accounting or other similar fees, or any finder's fee payments are charged or paid on Class IR shares.

**Minimum Investment Amounts**

Class IR shares are offered only to eligible investors meeting certain minimum investment requirements. To purchase Class IR shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Code and in each case subject to the discretion of the Adviser. Initial omnibus trades of $5 million or more shall be accepted from certain platforms, including (i) banks and trust companies; (ii) insurance companies; and (iii) registered investment advisory firms. The $5 million minimum initial investment amount may be waived for Fund shares purchased by or through: (1) certain registered open-end investment companies whose shares are distributed by the Distributor; or (2) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.

If the value of your account falls below the minimum initial investment amount for a class of shares of a Fund as a result of share redemptions, or you no longer meet one of the waiver criteria set forth above, as applicable, your account may be subject to involuntary conversion or involuntary redemption, as applicable. You will be notified prior to any such conversions or redemptions.

The Adviser, in its sole discretion, may waive a minimum initial investment amount in certain cases.

**Distribution of Fund Shares**

Morgan Stanley Distribution, Inc. is the exclusive distributor of the shares of the Fund. The Distributor receives no compensation from the Fund for distributing Class IR shares of the Fund.

The Adviser and/or Distributor may pay compensation to Financial Intermediaries in connection with the sale, distribution, marketing and retention of the Fund's shares and/or shareholder servicing. Such compensation may be significant in amount and the prospect of receiving any such additional compensation may provide affiliated or unaffiliated Financial Intermediaries with an incentive to favor sales of shares of the Fund over other investment options. Any such payments will not change the NAV or the price of the Fund's shares. For more information, please see the Fund's SAI.

**About Net Asset Value**

The NAV of a class of shares of the Fund is determined by dividing the total of the value of the Fund's investments and other assets attributable to the class, less any liabilities attributable to the class, by the total number of outstanding shares of that class of the Fund. In making this calculation, the Fund generally values its portfolio securities and other assets at market price. When no market quotations are readily available for a security or other asset, including circumstances under which the Adviser determines that a market quotation is not accurate, fair value for the security or other asset will be determined in good faith using methods approved by the Trust's Board of Trustees.

In addition, with respect to securities that primarily are listed on foreign exchanges, when an event occurs after the close of such exchanges that is likely to have changed the value of the securities (e.g., a percentage change in value of one or more U.S. securities indices in excess of specified thresholds), such securities will be valued at their fair value, as determined under procedures approved by the Trust's Board of Trustees. Securities also may be fair valued in the event of a significant development affecting a country or region or an issuer-specific development that is likely to have changed the value of the security. In these cases, the Fund's NAV will reflect certain portfolio securities' fair value rather than their market price. To the extent the Fund invests in open-end management companies (other than ETFs) that are registered under the 1940 Act, the Fund's NAV is calculated based in relevant part upon the NAV of such funds. The prospectuses for such funds explain the circumstances under which they will use fair value pricing and its effects.

Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security or other asset is materially different than the value that could be realized upon the sale of that security or other asset. With respect to securities that are primarily listed on foreign exchanges, the values of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. The NAV of the Fund (excluding any applicable sales charges) is based on the value of the Fund's portfolio securities or other assets. Although the assets of each class are invested in the same portfolio of securities or other assets, the NAV of each class will differ because the classes have different class specific expenses.

The Fund relies on various sources to calculate its NAV. The ability of the Fund's provider of administrative services to calculate the NAV per share of the Fund is subject to operational risks associated with processing or human errors, systems or technology failures,

**21**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

cyber attacks and errors caused by third party service providers, data sources, or trading counterparties. Such failures may result in delays in calculating the Fund's NAV and/or the inability to calculate NAV over extended periods. The Fund may be unable to recover any losses associated with such failures. In addition, if the third party service providers and/or data sources upon which the Fund directly or indirectly relies to calculate its NAV or price individual securities are unavailable or otherwise unable to calculate the NAV correctly, it may be necessary for alternative procedures to be utilized to price the securities at the time of determining the Fund's NAV.

The Fund's NAV per share is subject to various investment and other risks. Please refer to the "Additional Information About the Fund's Investment Strategies and Related Risks" and "The Fund's Investments and Strategies" sections of the Prospectus and SAI, respectively, for more information regarding risks associated with an investment in the Fund.

**Pricing of Fund Shares**

You may buy or sell (redeem) shares of the Fund at the NAV next determined for the class after receipt of your order in good order, plus any applicable sales charge. The Trust determines the NAV for the Fund as of the close of the NYSE (normally 4:00 p.m. Eastern time) on each day that the NYSE is open for business (the "Pricing Time"). Shares generally will not be priced on days that the NYSE is closed, although shares may be priced on such days if the Securities Industry and Financial Markets Association ("SIFMA") recommends that the bond markets remain open for all or part of the day. On any business day when SIFMA recommends that the bond markets close early, the Fund reserves the right to close at or prior to the SIFMA recommended closing time. If the Fund does so, it will cease granting same day credit for purchase and redemption orders received after the Fund's closing time and credit will be given on the next business day. If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the Fund reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate its NAV as of, the normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. The Fund may elect to remain open and price its shares on days when the NYSE is closed but the primary securities markets on which the Fund's securities trade remain open. Trading of securities that are primarily listed on foreign exchanges may take place on weekends and other days when the Fund does not price its shares. Therefore, to the extent, if any, that the Fund invests in securities primarily listed on foreign exchanges, the value of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares.

**Portfolio Holdings**

A description of the Trust's policies and procedures with respect to the disclosure of the Fund's portfolio securities is available in the Trust's SAI.

**How To Purchase Fund Shares**

You may purchase shares of the Fund on each day that the Fund is open for business by contacting your Financial Intermediary or directly from the Fund.

*Purchasing Shares Through a Financial Intermediary*

You may open a new account and purchase shares of the Fund through a Financial Intermediary. The Financial Intermediary will assist you with the procedures to invest in shares of the Fund. Investors purchasing or selling shares of the Fund through a Financial Intermediary may be charged transaction-based or other fees by the Financial Intermediary for its services. If you are purchasing shares of the Fund through a Financial Intermediary, please consult your Financial Intermediary for more information regarding any such fees and for purchase instructions.

With respect to sales through Financial Intermediaries, no offers or sales of Fund shares may be made in any foreign jurisdiction, except with the consent of the Distributor.

*Purchasing Shares Directly From the Fund*

Initial Purchase

You may open a new account, subject to acceptance by the Fund, and purchase shares of the Fund by completing and signing a New Account Application provided by SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), the Fund's transfer agent, or Eaton Vance Management, the Fund's co-transfer agent, which you can obtain by calling Morgan Stanley Shareholder Services at 1-800-869-6397 and mailing it to Morgan Stanley Institutional Fund Trust, c/o SS&C Global Investor and Distribution Solutions, Inc., P.O. Box 219804, Kansas City, MO 64121-9804.

After submitting a completed New Account Application to SS&C GIDS, you may wire Federal Funds (monies credited by a Federal Reserve Bank) to State Street Bank and Trust Company (the "Custodian"). You should instruct your bank to send a Federal Funds wire in a specified amount to the Custodian using the following wire instructions:

**22**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111-2101

ABA #011000028

DDA #00575373

Attn: Morgan Stanley Institutional Fund Trust

Subscription Account

Ref: (Fund Name, Account Number, Account Name)

Additional Investments

You may purchase additional shares of the Fund for your account at any time by contacting your Financial Intermediary or by contacting the Fund directly. For additional 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, signed by the account owner(s), to assure proper crediting to your account. After mailing a "letter of instruction," you may wire Federal Funds by following the instructions under "Initial Purchase."

**Conversion Feature**

The Adviser may in its sole discretion permit a conversion of one share class to another share class of the same Fund in certain circumstances, provided that the Fund's eligibility requirements are met, and subject to the shareholder's consent. Such conversions will be on the basis of the relative NAVs and without the imposition of any redemption fee or other charge.

A conversion of shares of one class directly for shares of another class of the same Fund normally should not be taxable for federal income tax purposes.

Please ask your financial advisor if you are eligible for converting a class of shares pursuant to this conversion feature. You should talk to your tax advisor before making a conversion.

**General**

Shares of the Fund may, in the Fund's discretion, be purchased with investment securities (in lieu of or, in conjunction with, cash) acceptable to the Fund. The securities would be accepted by the Fund at their market value in return for Fund shares of equal value, taking into account any applicable sales charge.

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

When you buy Fund shares, the shares (plus any applicable sales charge) will be purchased at the next share price calculated after we receive your purchase order in good order. Purchase orders not received in good order prior to Pricing Time will be executed at the NAV next determined after the purchase order is received in good order. Certain institutional investors and financial institutions have entered into arrangements with the Fund, the Adviser and/or the Distributor pursuant to which they may place orders prior to the Pricing Time, but make payment in Federal Funds for those shares up to three days after the purchase order is placed, depending on the arrangement. We reserve the right to reject any order for the purchase of Fund shares for any reason.

The Trust may suspend the offering of shares, or any class of shares, of the Fund or reject any purchase orders when we think it is in the best interest of the Fund.

Certain patterns of past exchanges and/or purchase or sale transactions involving the Fund may result in the Fund rejecting, limiting or prohibiting, at its sole discretion and without prior notice, additional purchases and/or exchanges and may result in a shareholder's account being closed. Determinations in this regard may be made based on the frequency or dollar amount of previous exchanges or purchase or sale transactions. For more information, please refer to the section of this Prospectus entitled "Frequent Purchases and Redemptions of Shares."

**How To Redeem Fund Shares**

You may process a redemption request by contacting your Financial Intermediary. Otherwise, you may redeem shares of the Fund by mail or, if authorized, by telephone, at no charge other than as described below. The value of shares redeemed may be more or less than the purchase price, depending on the NAV at the time of redemption. Shares of the Fund will be redeemed at the NAV next determined after we receive your redemption request in good order.

**23**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

*Redemptions by Letter*

Requests should be addressed to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804.

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

(a) A letter of instruction, if required, or a stock assignment specifying the account name, the account number, the name of the Fund and the number of shares or dollar amount to be redeemed, signed by all registered owners of the shares in the exact names in which the shares are registered, and whether you wish to receive the redemption proceeds by wire to the bank account we have on file for you;

(b) Any required signature guarantees if you are requesting payment to anyone other than the registered owner(s) or that payment be sent to any address other than the address of the registered owner(s) or pre-designated bank account; and

(c) Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianship, corporations, pension and profit sharing plans and other organizations.

*Redemptions by Telephone*

You automatically have telephone redemption and exchange privileges unless you indicate otherwise by checking the applicable box on the New Account Application or calling Morgan Stanley Shareholder Services to opt out of such privileges. You may request a redemption of shares of the Fund by calling the Morgan Stanley Shareholder Services at 1-800-869-6397 and requesting that the redemption proceeds be mailed or wired to you. You cannot redeem shares of the Fund by telephone if you hold share certificates for those shares. For your protection when calling the Fund, we will employ reasonable procedures to confirm that instructions communicated over the telephone are genuine. These procedures may include requiring various forms of personal identification (such as name, mailing address, social security number or other tax identification number), tape-recording telephone communications and providing written confirmation of instructions communicated by telephone. If reasonable procedures are employed, neither Morgan Stanley, SS&C GIDS nor the Fund will be liable for following telephone instructions that it reasonably believes to be genuine. Telephone redemptions and exchanges may not be available if you cannot reach Morgan Stanley Shareholder Services by telephone, whether because all telephone lines are busy or for any other reason; in such case, a shareholder would have to use the Fund's other redemption and exchange procedures described in this section. Telephone instructions will be accepted if received by Morgan Stanley Shareholder Services between 9:00 a.m. and 4:00 p.m. Eastern time on any day the NYSE is open for business. During periods of drastic economic or market changes, it is possible that the telephone privileges may be difficult to implement, although this has not been the case with the Fund in the past. To opt out of telephone privileges, please contact the Fund at 1-800-869-6397.

*Redemption Proceeds*

The Fund typically expects to pay redemption proceeds to you within two business days following receipt of your redemption request for those payments made to your brokerage account held with a Financial Intermediary. For redemption proceeds that are paid directly to you by the Fund, the Fund typically expects to pay redemption proceeds by wire to you within one business day, following receipt of your redemption request; however, in all cases, it may take up to seven calendar days to pay redemption proceeds.

The Fund typically expects to meet redemption requests by using a combination of sales of securities held by the Fund and/or holdings of cash and cash equivalents. On a less regular basis, the Fund also reserves the right to use borrowings or interfund lending to meet redemption requests, and the Fund may use these methods during both normal and stressed market conditions.

If we determine that it is in the best interest of the Trust or the Fund not to pay redemption proceeds in cash, we may distribute to you securities held by the Fund. If requested, we will pay a portion of your redemption(s) in cash (during any 90 day period) up to the lesser of $250,000 or 1% of the net assets of the Fund at the beginning of such period. If the Fund redeems your shares in-kind, you will bear any market risks associated with the securities paid as redemption proceeds. Such in-kind securities may be illiquid and difficult or impossible for a shareholder to sell at a time and at a price that a shareholder would like. Redemptions paid in such securities generally will give rise to income, gain or loss for income tax purposes in the same manner as redemptions paid in cash. In addition, you may incur brokerage costs and a further gain or loss for income tax purposes when you ultimately sell the securities.

*Reinstatement Privilege*

If you redeem shares, you may reinvest at net asset value all or any portion of the redemption proceeds in the same account and in the same class of shares of the Fund you redeemed from or another Morgan Stanley Multi-Class Fund, provided that the reinvestment occurs within 90 days of the redemption, the privilege has not been used more than once in the prior 12 months, the redeemed shares were subject to a front-end sales charge or CDSC and that you are otherwise eligible to invest in that class. Under these circumstances your account will be credited with any CDSC paid in connection with the redemption. Any CDSC period applicable to the shares you acquire upon reinvestment will run from the date of your original share purchase. For requests for reinvestment sent to the Fund's transfer agent, the request must be in writing. At the time of a reinvestment, you or your Financial Intermediary must notify the Fund or the transfer agent that you are reinvesting redemption proceeds in accordance with this

**24**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

privilege. If you reinvest, your purchase will be at the next determined net asset value following receipt of your request.

**Exchange Privilege**

You may exchange shares of any class of the Fund for the same class of shares of any mutual fund (excluding money market funds) sponsored and advised by the Adviser (each, a "Morgan Stanley Multi-Class Fund"), if available, without the imposition of an exchange fee. In addition, you may exchange shares of any class of the Fund for shares of Morgan Stanley California Tax-Free Daily Income Trust, Morgan Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. Government Money Market Trust (each, a "Morgan Stanley Money Market Fund" and, together with the Morgan Stanley Multi-Class Funds, the "Morgan Stanley Funds"), if available, without the imposition of an exchange fee. Exchanges are effected based on the respective NAVs of the applicable Morgan Stanley Fund (subject to any applicable redemption fee) and in accordance with the eligibility requirements of such Fund. To obtain a prospectus for another Morgan Stanley Fund, contact your Financial Intermediary or call Morgan Stanley Shareholder Services at 1-800-548-7786. Prospectuses are also available on our Internet site at www.morganstanley.com/im. If you purchased Fund shares through a Financial Intermediary, certain Morgan Stanley Funds may be unavailable for exchange. Contact your Financial Intermediary for more information SS&C GIDS, or the Fund's co-transfer agent, Eaton Vance Management, regarding the exchange privilege and to determine which Morgan Stanley Funds are available for exchange.

The current prospectus for each Morgan Stanley Fund describes its investment objective(s), policies and investment minimums, and should be read before investing. Since exchanges are available only into continuously offered Morgan Stanley Funds, exchanges are generally not available into Morgan Stanley Funds or classes of Morgan Stanley Funds that are not currently being offered for purchase.

You can process your exchange by contacting your Financial Intermediary. You may also send exchange requests to the Trust's transfer agent, SS&C GIDS, the Funds' transfer agent, or Eaton Vance Management, the Funds' co-transfer agent, by mail to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804 or by calling 1-800-869-6397.

You will be subject to the same minimum initial investment and account size as an initial purchase. Your exchange price will be the price calculated at the next Pricing Time after the Morgan Stanley Fund receives your exchange order. The Morgan Stanley Fund, in its sole discretion, may waive the minimum initial investment amount in certain cases. For direct accounts, the check writing privilege is not available for Morgan Stanley Money Market Fund shares you acquire in an exchange from a non-money market fund. If you are investing through a financial advisor, check with your advisor regarding the availability of check writing privileges. The Fund may terminate or revise the exchange privilege upon required notice or in certain cases without notice. The Fund reserves the right to reject an exchange order for any reason.

If you exchange shares of 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 Fund shares and the exchange into the other fund is considered a purchase. As a result, you may realize a capital gain or loss. You should review the "Taxes" section and consult your own tax professional about the tax consequences of an exchange.

**Frequent Purchases and Redemptions of Shares**

Frequent purchases and redemptions of shares by Fund shareholders are referred to as "market-timing" or "short-term trading" and may present risks for other shareholders of the Fund, which may include, among other things, diluting the value of the Fund's shares held by long-term shareholders, interfering with the efficient management of the Fund, increasing brokerage and administrative costs, incurring unwanted taxable gains and forcing the Fund to hold excess levels of cash.

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

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

The Trust discourages and does not accommodate frequent purchases and redemptions of Fund shares by Fund shareholders and the Trust's Board of Trustees has adopted policies and procedures with respect to such frequent purchases and redemptions.

**25**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

The Trust's policies with respect to purchases, redemptions and exchanges of Fund shares are described in the "Shareholder Information—How To Purchase Fund Shares," "Shareholder Information—General," "Shareholder Information—How To Redeem Fund Shares" and "Shareholder Information—Exchange Privilege" sections of this Prospectus. Except as described in each of these sections, and with respect to trades that occur through omnibus accounts at Financial Intermediaries, as described below, the Trust's policies regarding frequent trading of Fund shares are applied uniformly to all shareholders. With respect to trades that occur through omnibus accounts at Financial Intermediaries, such as investment advisers, broker-dealers, transfer agents and third-party administrators, the Fund (i) has requested assurance that such Financial Intermediaries currently selling Fund shares have in place internal policies and procedures reasonably designed to address market-timing concerns and has instructed such Financial Intermediaries to notify the Fund immediately if they are unable to comply with such policies and procedures and (ii) requires all prospective Financial Intermediaries to agree to cooperate in enforcing the Trust's policies (or, upon prior written approval only, a Financial Intermediary's own policies) with respect to frequent purchases, redemptions and exchanges of Fund shares.

With respect to trades that occur through omnibus accounts at Financial Intermediaries, to some extent, the Fund relies on the Financial Intermediary to monitor frequent short-term trading within the Fund by the Financial Intermediary's customers. However, the Fund has entered into agreements with Financial Intermediaries whereby Financial Intermediaries are required to provide certain customer identification and transaction information upon the Fund's request. The Fund may use this information to help identify and prevent market-timing activity in the Fund. There can be no assurance that the Fund will be able to identify or prevent all market-timing activities.

**Taxes**

As with any investment, you should consider how your Fund investment will be taxed. The tax information in this Prospectus is provided as general information. You should consult your own tax professional about the tax consequences of an investment in a Fund. Unless your investment in a Fund is through a tax-deferred retirement account, such as a 401(k) plan or IRA, you need to be aware of the possible tax consequences when the Fund makes distributions and when you sell shares, including an exchange to another Morgan Stanley Fund.

*Taxation of Distributions.* Your distributions normally are subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares. A distribution also may be subject to local income tax. Any income dividend distributions and any short-term capital gain distributions are taxable to you as ordinary income. Any long-term capital gain distributions are taxable as long-term capital gains, no matter how long you have owned shares in the Fund. It is not anticipated that any portion of the distributions by a Fund would qualify for a lower tax rate as qualified dividend income. Further, such distributions are not anticipated to be eligible for a dividends-received deduction for corporate shareholders.

If you buy shares of a Fund before a distribution, you may be subject to tax on the entire amount of the taxable distribution you receive. Distributions are taxable to you even if they are paid from income or gain earned by a Fund before your investment (and thus were included in the price you paid for your Fund shares).

Investment income received by the Fund from sources within foreign countries may be subject to foreign income taxes.

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

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

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

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

**26**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

When you open your account, you should provide your social security or tax identification number on your investment application. By providing this information, you will avoid being subject to federal backup withholding at the applicable rate on taxable distributions and redemption proceeds. Any withheld amount would be sent to the IRS as an advance payment of your taxes due on your income for such year.

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

A Fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive 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 provide additional information to a Fund to enable the Fund to determine whether withholding is required.

Because each investor's tax circumstances are unique and the tax laws may change, you should consult your tax advisor about your investment.

**Dividends and Distributions**

The Fund's policy is to distribute to shareholders substantially all of its net investment income, if any, in the form of a monthly dividend and to distribute net realized capital gains, if any, at least annually.

The Fund automatically reinvests all dividends and distributions in additional shares. However, you may elect to receive distributions in cash by giving written notice to the Fund or your Financial Intermediary or by checking the appropriate box in the Distribution Option section on the New Account Application.

For accounts held directly with the Fund's transfer agent for which the shareholder has elected to receive distributions via check, any distribution (dividend or capital gain) under $10.00 is automatically reinvested in additional shares regardless of your elected distribution option.

**Potential Conflicts of Interest**

As a diversified global financial services firm, Morgan Stanley, the parent company of the Adviser, engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley's interests or the interests of its clients may conflict with the interests of the Fund. Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with any new or successor funds, programs, accounts or businesses, the ''Affiliated Investment Accounts'') with a wide variety of investment objectives that in some instances may overlap or conflict with the Fund's investment objectives and present conflicts of interest. In addition, Morgan Stanley may also from time to time create new or successor Affiliated Investment Accounts that may compete with the Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and, in fact, they may not be. Conflicts of interest not described below may also exist.

For more information about conflicts of interest, see the section entitled "Potential Conflicts of Interest" in the SAI.

*Material Nonpublic Information.* It is expected that confidential or material nonpublic information regarding an investment or potential investment opportunity may become available to the Adviser. If such information becomes available, the Adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. Morgan Stanley has established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley. In limited circumstances, however, including for purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, personnel, including personnel of the investment adviser, on one side of an information barrier may have access to information and personnel on the other side of the information barrier through "wall crossings." The Adviser faces conflicts of interest in determining whether to engage in such wall crossings. Information obtained in connection with such wall crossings may limit or restrict the ability of the Adviser to engage in or otherwise effect transactions on behalf of the Fund (including purchasing or selling securities that the Adviser may otherwise have purchased or sold for the Fund in the absence of a wall crossing).

*Investments by Morgan Stanley and its Affiliated Investment Accounts.* In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the Adviser and the Investment team, may have obligations to other clients or investors in Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of the Fund or its shareholders. The Fund's investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a result, the members

**27**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

of an Investment team may face conflicts in the allocation of investment opportunities among the Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the Adviser. Certain Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts. To seek to reduce potential conflicts of interest and to attempt to allocate such investment opportunities in a fair and equitable manner, the Adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the Adviser, including the Fund, fair access to investment opportunities consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the Adviser.

*Payments to Broker-Dealers and Other Financial Intermediaries.* The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of the Fund, to certain Financial Intermediaries (which may include affiliates of the Adviser and Distributor), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Fund and/or shareholder servicing. The prospect of receiving, or the receipt of, additional compensation, as described above, by Financial Intermediaries may provide such Financial Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Fund over other investment options with respect to which these Financial Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Fund or the amount that the Fund receives to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any disclosures provided by Financial Intermediaries as to their compensation. In addition, in certain circumstances, the Adviser restricts, limits or reduces the amount of the Fund's investment, or restricts the type of governance or voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.

*Morgan Stanley Trading and Principal Investing Activities.* Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for the Fund's holdings, although these activities could have an adverse impact on the value of one or more of the Fund's investments, or could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and potentially adverse to, that of the Fund.

*Morgan Stanley's Investment Banking and Other Commercial Activities.* Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment funds that may compete with the Fund and with respect to investments that the Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve an action of a different timing or nature than the action taken, by the Fund. Morgan Stanley may give advice and provide recommendations to persons competing with the Fund and/or any of the Fund's investments that are contrary to the Fund's best interests and/or the best interests of any of its investments. Morgan Stanley's activities on behalf of its clients (such as engagements as an underwriter or placement agent) may restrict or otherwise limit investment opportunities that may otherwise be available to the Fund.

Morgan Stanley may be engaged to act as a financial advisor to a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in connection with such transactions. Morgan Stanley's compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, the Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to a merger or an acquisition.

**28**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

Financial Highlights

The financial highlights table that follows is intended to help you understand the financial performance of the Class IR shares of the Fund for the past four years and since inception. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).

The ratio of expenses to average net assets listed in the table below for Class IR shares of the Fund are based on the average net assets of the Fund for each of the periods listed in the table. To the extent that the Fund's average net assets decrease over the Fund's next fiscal year, such expense ratios can be expected to increase, potentially significantly, because certain fixed costs will be spread over a smaller amount of assets.

The information below has been derived from the financial statements audited by Ernst & Young LLP, the Fund's independent registered public accounting firm. Ernst & Young LLP's report, along with the Fund's financial statements, are incorporated by reference into the Fund's SAI. The Annual Report to Shareholders (which includes the Fund's financial statements) and SAI are available at no cost from the Trust at the toll-free number noted on the back cover to this Prospectus.

**29**

------

[Back To **Table of Contents**](#TOC_15553)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**High Yield Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class IR** | **Class IR** | **Class IR** | **Class IR** | **Class IR** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Period from June 15, 2018<sup>(1)</sup>**<br>**to September 30, 2018**  |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **Period from June 15, 2018<sup>(1)</sup>**<br>**to September 30, 2018**  |
| **Net Asset Value, Beginning of Period** | $9.69<br>| $9.19<br>| $9.78<br>| $9.96<br>| $9.93<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.48<br>| 0.50<br>| 0.52<br>| 0.56<br>| 0.16<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (1.81)<br>| 0.53<br>| (0.52)<br>| (0.12)<br>| 0.03<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.33)<br>| 1.03<br>| 0.00<br>| 0.44<br>| 0.19<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.52)<br>| (0.53)<br>| (0.59)<br>| (0.62)<br>| (0.16)<br>|
| **Net Asset Value, End of Period** | $7.84<br>| $9.69<br>| $9.19<br>| $9.78<br>| $9.96<br>|
| **Total Return<sup>(3)</sup>**  | (14.30)%<br>| 11.49<br> %<br>| 0.18<br> %<br>| 4.71<br> %<br>| 1.92<br> %<br> <sup>(6)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period, (Thousands) | $10<br>| $11<br>| $10<br>| $10<br>| $10<br>|
| Ratio of Expenses Before Expense Limitation | 19.61<br> %<br>| 18.97<br> %<br>| 20.43<br> %<br>| 20.17<br> %<br>| 18.62<br> %<br> <sup>(7)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)</sup> <br>| 0.62<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Net Investment Income | 5.38<br> %<br> <sup>(4)</sup> <br>| 5.26<br> %<br> <sup>(4)</sup> <br>| 5.70<br> %<br> <sup>(4)</sup> <br>| 5.80<br> %<br> <sup>(4)</sup> <br>| 5.75<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)(7)</sup> <br>|
| Portfolio Turnover Rate | 28<br> %<br>| 54<br> %<br>| 69<br> %<br>| 42<br> %<br>| 39<br> %<br> <sup>(6)</sup> <br>|

---

(1) Commencement of Offering.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

(6) Not annualized.

(7) Annualized.

**30**

------

[Back To **Table of Contents**](#TOC_15553)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15553)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15553)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15553)

Where to Find Additional Information

In addition to this Prospectus, the Fund has an SAI, dated January 27, 2023 (as may be supplemented from time to time), which contains additional, more detailed information about the Trust and the Fund. The SAI is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus.

The Trust publishes Annual and Semi-Annual Reports ("Shareholder Reports") that contain additional information about the Fund's investments. In the Fund's Annual Report to Shareholders, you will find a discussion of the market conditions and the investment strategies that significantly affected the Fund's performance during the last fiscal year. For additional Trust information, including information regarding the investments comprising the Fund, please call the toll-free number below.

You may obtain the SAI and Shareholder Reports without charge by contacting the Trust at the toll-free number below or on our Internet site at: www.morganstanley.com/im. If you purchased shares through a Financial Intermediary, you may also obtain these documents, without charge, by contacting your Financial Intermediary.

Shareholder Reports and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.

Morgan Stanley Institutional Fund Trust

c/o SS&C Global Investor and

Distribution Solutions, Inc.

P.O. Box 219804 Kansas City, MO 64121-9804

For Shareholder Inquiries,

call toll-free 1-800-869-6397.

Prices and Investment Results are available at www.morganstanley.com/im.

The Trust's 1940 Act registration number is 811-03980.© 2023 Morgan Stanley

IFTHYIRPRO 01/23

------

![image](pr15552img002.jpg)

Morgan Stanley Institutional Fund Trust

**High Yield Portfolio**

------

**Prospectus** \| January 27, 2023

---

| | |
|:---|:---|
| **Share Class** | **Ticker Symbol** |
| Class W | MSYWX |

---

![image](pr15552img001.jpg)

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

An investment in the Fund is not a bank deposit and is not insured by the Federal Deposit Insurance Corporation or any

other government agency. An investment in the Fund involves investment risks, and you may lose money in the fund.

IFTHYWPRO 1/23

------

**Table of Contents**

---

| | |
|:---|:---|
|  | **Page** |
| [**Fund Summary**](#ref_chapter_2_15552)  | 1 |
| [**Details of the Fund**](#ref_chapter_3_15552)  | 7 |
| [**Additional Information about the Fund's Investment Strategies and Related Risks**](#ref_chapter_4_15552)  | 8 |
| [**Fund Management**](#ref_chapter_5_15552)  | 20 |
| [**Shareholder Information**](#ref_chapter_6_15552)  | 21 |
| [**Financial Highlights**](#ref_chapter_7_15552)  | 27 |

---

------

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio

**Investment Objective**

The High Yield Portfolio (the "Fund") seeks total return.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell Class W shares of the Fund. **You may pay** **fees other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below.** The Fund does not charge any sales loads or other fees when you purchase or redeem Class W shares. Participants in a wrap fee program eligible to invest in the Fund pay fees to the program sponsor and should review the wrap program brochure provided by the sponsor for a discussion of fees and expenses charged.

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

---

| | |
|:---|:---|
|  | **Class W** |
| Advisory Fee | 0.60% |
| Distribution and/or Shareholder Service (12b-1) Fee |  |
| Other Expenses | 19.84% |
| Total Annual Fund Operating Expenses<sup>1</sup>  | 20.44% |
| Fee Waiver and/or Expense Reimbursement<sup>1</sup>  | 20.44% |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>1</sup>  | 0.00% |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class W | $0  | $0  | $0  | $0  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class W | $0  | $0  | $0  | $0  |

---

---

| | |
|:---|:---|
| 1 | The Fund's "Adviser," Morgan Stanley Investment Management Inc., is contractually obligated to waive its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation) will not exceed 0.00% for Class W. The Adviser expects this obligation to remain in effect indefinitely, unless changed or terminated by the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust"). |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 28% of the average value of its portfolio.

**Principal Investment Strategies**

Under normal circumstances, at least 80% of the Fund's assets will be invested in high yield securities (commonly referred to as "junk bonds"). This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. The Fund seeks to achieve its investment objective by investing primarily in high yield securities which are fixed-income securities rated by one or more rating agencies below Baa3 by Moody's Investors Service, Inc. ("Moody's"), below BBB- by S&P Global Ratings Group, a division of S&P Global Inc. ("S&P"), below BBB- by Fitch Ratings, Inc. ("Fitch") or, if unrated, considered by the Adviser to be of equivalent quality. The average maturity of the Fund's investments varies, and there is no limit on the maturity or on the credit quality of any security held by the Fund. The Fund's securities may include distressed and defaulted securities and mezzanine investments. The Fund also may invest in investment grade fixed-income securities, including U.S. and foreign government securities, corporate bonds and collateralized bond obligations. The Fund may also invest in preferred securities, equity securities and convertible securities.

**1**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

The Fund's investment process starts with top-down macroeconomic analysis to assess the optimal positioning of the Fund. The team then applies a combination of quantitative and qualitative filters to identify securities that meet the team's investment criteria in terms of competitive position, franchise value and management quality. The investment team's credit analysis focuses on financial risk, business risk, management ability and intentions. Valuation analysis is used to narrow the screened investment universe to a pool of investment candidates who are then assessed in order to determine relative valuation. Finally, the Fund is constructed with sector allocation driven primarily from bottom-up security selection. Integral to the Fund construction process is the measurement and monitoring of market risk, duration and volatility and credit risk through the use of proprietary risk measures and models.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

The Fund may also invest in loan-related investments, such as public bank loans made by banks or other financial institutions and loan participations and assignments, which may be rated investment grade or below investment grade.

The Fund may also invest in restricted and illiquid securities.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. 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. The Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities. Derivative instruments used by the Fund will be counted toward the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Credit and Interest Rate Risk.** Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. In such instances, the value of the Fund could decline and the Fund could lose money. Interest rate risk refers to the decline in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. The Fund may invest in variable and floating rate loans and other variable and floating rate securities. Although these instruments are generally less sensitive to interest rate changes than fixed rate instruments, the value of variable and floating rate loans and other securities may decline if their interest rates do not rise as quickly, or as much, as general interest rates. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.

• **Fixed-Income Securities.** Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). For example, a type of fixed-income securities in which the Fund may invest are corporate debt obligations. In addition to interest rate, credit and other risks, corporate debt obligations are also subject to factors directly related to the issuer, such as the credit rating of the corporation, the corporation's performance and perceptions of the corporation in the marketplace, and by factors not directly related to the issuer, such as general market liquidity, economic conditions and inflation. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). The Fund is not limited as to the maturities (when a debt security provides its final payment) or durations (measure of interest rate sensitivity) of the securities in which it may invest. Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made

**2**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

as scheduled. A portion of the Fund's fixed-income securities may be rated below investment grade. The Fund may be subject to certain liquidity risks that may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. To the extent that the Fund invests in convertible securities, and the convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying security.<br>

• **High Yield Securities ("Junk Bonds").** High yield securities offer a higher yield than other, higher rated securities, but they carry a greater degree of risk and are considered speculative by the major credit rating agencies. Changes in the value of high yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. Prices of fixed-income securities generally will move in correlation to changes in an issuer's credit rating and inversely to movements in interest rates. The Fund's investments in high yield securities expose it to a substantial degree of credit risk. Prices of high yield securities will rise and fall primarily in response to actual or perceived changes in the issuer's financial health, although changes in market interest rates also will affect prices. High yield securities may be issued by companies that are restructuring, are smaller and less creditworthy or are more highly indebted than other companies, and therefore they may have more difficulty making scheduled payments of principal and interest. High yield securities may experience reduced liquidity, and sudden and substantial decreases in price. An economic downturn affecting an issuer of high yield securities may result in an increased incidence of default. In the event of a default, the Fund may incur additional expenses to seek recovery.

• **U.S. Government Securities.** Different types of U.S. government securities are subject to different levels of credit risk, including the risk of default, depending on the nature of the particular government support for that security. For example, a U.S. government- sponsored entity, such as Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, although chartered or sponsored by an Act of Congress, may issue securities that are neither insured nor guaranteed by the U.S. Treasury and, therefore, are not backed by the full faith and credit of the United States. With respect to U.S. government securities that are not backed by the full faith and credit of the United States, there is the risk that the U.S. Government will not provide financial support to such U.S. government agencies, instrumentalities or sponsored enterprises if it is not obligated to do so by law.

• **Foreign and Emerging Market Securities.** Investments in foreign markets entail special risks such as currency, political (including geopolitical) , economic and market risks. There also may be greater market volatility, less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and custody costs, decreased market liquidity and less government and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The risks of investing in emerging market countries are greater than the risks associated with investments in foreign developed countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging market countries. In addition, the Fund's investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged, the value of those investments will fluctuate with U.S. dollar exchange rates. To the extent hedged by the use of foreign currency forward exchange contracts, the precise matching of the foreign currency forward exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. There is additional risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken and that foreign currency forward exchange contracts create exposure to currencies in which the Fund's securities are not denominated. The use of foreign currency forward exchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the

**3**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

contract. Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. Economic sanctions and other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities, negatively impact the value or liquidity of the Fund's investments, significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices, or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies.<br>

• **Loan-Related Investments.** In addition to risks generally associated with debt investments, loan-related investments, such as public bank loans and loan participations and assignments, are subject to other risks. Such investments may be subject to additional risks including subordination to other creditors, no collateral or limited rights in collateral, lack of a regular trading market, extended settlement periods, liquidity risks, prepayment risks, potentially less protection under the federal securities laws and lack of publicly available information. Bank loans are subject to the risk of default in the payment of interest or principal on a loan, which will result in a reduction of income to the Fund, and a potential decrease in the Fund's net asset value per share ("NAV"). The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates. Because public bank loans usually rank lower in priority of payment to senior loans, they present a greater degree of investment risk. These bank loans may exhibit greater price volatility as well.

• **Equity Securities.** In general, prices of equity securities are more volatile than those of fixed-income securities. The prices of equity securities fluctuate, and sometimes widely fluctuate, in response to activities specific to the issuer of the security as well as factors unrelated to the fundamental condition of the issuer, including general market, economic , political conditions and public health conditions. To the extent that the Fund invests in convertible securities, and the convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying security. During periods when equity securities experience heightened volatility, such as during periods of market, economic or financial uncertainty or distress, the Fund's investments in equity securities may be subject to heightened risks.

• **Preferred Securities.** Preferred stock is issued with a fixed par value and pays dividends based on a percentage of that par value at a fixed rate. As with fixed-income securities, which also make fixed payments, the market value of preferred stock is sensitive to changes in interest rates. Preferred stock generally decreases in value if interest rates rise and increases in value if interest rates fall.

• **Mezzanine Investments.** Mezzanine investments are subordinated debt securities that receive payments of interest and principal after other more senior security holders are paid. Mezzanine investments carry the risk that the issuer will not be able to meet its obligations and that the mezzanine investments may lose value.

• **Distressed and Defaulted Securities.** Distressed and defaulted securities are speculative and involve substantial risks in addition to the risks of investing in high yield securities. The Fund will generally not receive interest payments on the distressed securities and the repayment of principal may also be at risk. These securities may present a substantial risk of default or may be in default at the time of investment, requiring the Fund to incur additional costs. The repayment of defaulted securities is also subject to significant uncertainties. The Fund may incur substantial expenses in seeking recovery upon a default in the payment of principal of or interest on its portfolio holdings.

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **Derivatives.** Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument, including market risk, and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates , risks that the transactions may not be liquid , risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks . Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Investments in currency derivatives may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. Foreign currency forward exchange contracts and currency futures and options contracts create exposure to currencies in which the Fund's securities are not denominated.

• **Consumer Discretionary/Staples.** To the extent that the Fund invests significantly in the consumer discretionary or staples sectors, the Fund will be particularly susceptible to the risks associated with companies operating in such sector(s). Companies in the consumer discretionary and staples sectors are subject to risks, including fluctuations in the performance of the overall domestic and international economy, shipment and supply chain disruptions, interest rate changes, currency exchange rates, increased

**4**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

competition and consumer confidence. Performance of such companies may also be adversely affected by factors such as reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes.

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Class W shares' performance from year-to-year and by showing how the Fund's Class W shares' average annual returns for the past one year period and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15552img003.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 12/31/22 | 3.86% |
| **Low Quarter** | 06/30/22 | -10.51% |

---

**Average Annual Total Returns**

(for the calendar periods ended December 31, 2022)

---

| | | |
|:---|:---|:---|
|  | **Past One** **Year** | **Since** **Inception** |
| **Class W** (Commenced operations on 11/16/20) | **Class W** (Commenced operations on 11/16/20) | **Class W** (Commenced operations on 11/16/20) |
| Return Before Taxes | -10.99% | -1.41% |
| Return After Taxes on Distributions<sup>1</sup>  | -13.35% | -4.01% |
| Return After Taxes on Distributions and Sale of Fund Shares | -6.47% | -2.07% |
| Bloomberg U.S. Corporate High Yield Index (reflects no deduction for fees, expenses or taxes)<sup>2</sup>  | -11.19% | -1.79%<sup>3</sup> |
| Lipper High Current Yield Bond Funds Index (reflects no deduction for taxes)<sup>4</sup>  | -10.28% | -1.02%<sup>3</sup> |

---

1 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

**5**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

High Yield Portfolio (Con't)

---

| | |
|:---|:---|
| 2 | The Bloomberg U.S. Corporate High Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging market debt. It is not possible to invest directly in an index. |

---

3 Since Inception reflects the inception date of Class W.

4 The Lipper High Current Yield Bond Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper High Current Yield Bond Funds classification. There are currently 30 funds represented in this index.

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of the High Yield team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began Managing Fund** |
| Jack Cimarosa | Managing Director | January 2017 |
| Joseph F. Hurley | Executive Director | September 2022 |

---

**Purchase and Sale of Fund Shares**

Class W shares of the Fund are available for purchase only at the direction of a wrap account sponsor or the Investment Adviser on behalf of investors that are either (i) eligible wrap accounts sponsored by an adviser or broker-dealer that has entered into an agreement with the Adviser, the "Distributor," Morgan Stanley Distribution, Inc. or one of their affiliates to make the Fund available to such wrap accounts or (ii) eligible clients of the Adviser or its affiliates that have entered into a separate investment management or advisory agreement pursuant to which such clients pay an investment management or advisory fee, including investment vehicles that are sponsored, managed, advised or sub-advised by the Adviser or its affiliates. A wrap account sponsor or adviser acting on behalf of an eligible investor must submit redemption orders to the Fund's transfer agent, either directly or through an appropriate clearing agency. Shares of the Fund may be held only by eligible investors and cannot be transferred or exchanged. The Fund reserves the right to redeem shares of any investor if the investor ceases to be an eligible investor.

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase Class W shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Class W shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information. For additional information about the Fund's revenue sharing arrangements for Class W shares, see the section of the Statement of Additional Information entitled "Revenue Sharing."

**6**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Details of the Fund**

High Yield Portfolio

**Investment Objective**

The High Yield Portfolio seeks total return.

The Fund's investment objective may be changed by the Trust's Board of Trustees without shareholder approval, but no change is anticipated. If the Fund's investment objective changes, the Fund will notify shareholders and shareholders should consider whether the Fund remains an appropriate investment in light of the change.

**Approach**

The Fund seeks to achieve its investment objective by investing primarily in high yield securities (commonly referred to as "junk bonds"). High yield securities are fixed-income securities rated by one or more rating agencies below Baa3 by Moody's, below BBB- by S&P, below BBB- by Fitch or, if unrated, considered by the Adviser to be of equivalent quality. The average maturity of the Fund's investments varies, and there is no limit on the maturity or on the credit quality of any security held by the Fund. The Fund's securities may include distressed and defaulted securities and mezzanine investments. The Fund also may invest in investment grade fixed-income securities, including U.S. and foreign government securities, corporate bonds and collateralized bond obligations. The Fund may also invest in preferred securities, equity securities and convertible securities.

The Fund may also invest in loan-related investments, such as public bank loans made by banks or other financial institutions and loan participations and assignments, which may be rated investment grade or below investment grade.

The Fund may purchase certain non-publicly traded "restricted" securities. These securities may include "144A" securities, which are exempt from registration that may only be resold to qualified institutional buyers. The Fund may invest in illiquid securities, including restricted securities that are illiquid. The Fund may invest an unlimited amount in restricted securities that are considered by the Adviser to be liquid and otherwise meet the Fund's investment policies.

The Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based on the value of another underlying asset, interest rate, index or financial instrument. 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. The Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities.

**Process**

The Fund's investment process starts with top-down macroeconomic analysis to assess the optimal positioning of the Fund. The team then applies a combination of quantitative and qualitative filters to identify securities that meet the team's investment criteria in terms of competitive position, franchise value and management quality. The investment team's credit analysis focuses on financial risk, business risk, management ability and intentions. Valuation analysis is used to narrow the screened investment universe to a pool of investment candidates who are then assessed in order to determine relative valuation. Finally, the Fund is constructed with sector allocation driven primarily from bottom-up security selection. Integral to the Fund construction process is the measurement and monitoring of market risk, duration and volatility and credit risk through the use of proprietary risk measures and models.

The Fund's investment process incorporates information about environmental, social and governance issues (also referred to as ESG) via an integrated approach within the investment team's fundamental investment analysis framework. The Adviser may engage with management of certain issuers regarding corporate governance practices as well as what the Adviser deems to be materially important environmental and/or social issues facing a company.

Under normal circumstances, at least 80% of the Fund's assets will be invested in high yield securities. This policy may be changed without shareholder approval; however, you would be notified upon 60 days' notice in writing of any changes. Derivative instruments used by the Fund will be counted toward the Fund's 80% policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

For purposes of policies adopted in accordance with Rule 35d-1 under the 1940 Act, the term "assets," as defined in Rule 35d-1 under the 1940 Act, means net assets plus the amount of any borrowings for investment purposes.

**7**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks

&nbsp;&nbsp;&nbsp; *This section discusses additional information relating to the Fund's investment strategies, other types of investments that the Fund may make and related risk factors. The Fund's investment practices and limitations are also described in more detail in the Statement of Additional Information ("SAI"), which is incorporated by reference and legally is a part of this Prospectus. For details on how to obtain a copy of the SAI and other reports and information, see the back cover of this Prospectus.*<br>

Economies and financial markets worldwide have recently experienced periods of increased volatility, uncertainty, distress, government spending, inflation and disruption to consumer demand, economic output and supply chains. To the extent these conditions continue, the risks associated with an investment in the Fund, including those described below, could be heightened and the Fund's investments (and thus a shareholder's investment in the Fund) may be particularly susceptible to sudden and substantial losses, reduced yield or income or other adverse developments. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time.

**Fixed-Income Securities**

Fixed-income securities are securities that pay a fixed or a variable rate of interest until a stated maturity date. Fixed-income securities include U.S. government securities, securities issued by federal or federally sponsored agencies and instrumentalities, corporate bonds and notes, asset-backed securities, mortgage securities, securities rated below investment grade (commonly referred to as "junk bonds" or "high yield/high risk securities") municipal bonds, loan participations and assignments, zero coupon bonds, convertible securities, Eurobonds, Brady Bonds, Yankee Bonds, repurchase agreements, commercial paper and cash equivalents.

Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. The Fund may be subject to liquidity risk, which may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. Fixed-income securities may be called (i.e., redeemed by the issuer) prior to final maturity. If a callable security is called, the Fund may have to reinvest the proceeds at a lower rate of interest.

**Credit and Interest Rate Risk**

Fixed-income securities, such as bonds, generally are subject to two types of risk: credit risk and interest rate risk. Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. The risk of defaults across issuers and/or counterparties increases in adverse market and economic conditions. Interest rate risk refers to fluctuations (such as a decline) in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. A low interest rate environment may prevent the Fund from providing a positive yield or paying Fund expenses out of current income. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.

In addition, under certain conditions, there may be an increasing amount of issuers that are unprofitable, have little cash on hand and/or are unable to pay the interest owed on their debt obligations and the number of such issuers may increase if demand for their goods and services falls, borrowing costs rise due to governmental action or inaction or other reasons.

**Convertible Securities**

A convertible security is a bond, debenture, note, preferred stock, right, warrant or other security that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities generally have characteristics similar to both debt and equity securities. The value of

**8**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Convertible securities ordinarily provide a stream of income with generally higher yields than those of common stock of the same or similar issuers. Convertible securities generally rank senior to common stock in a corporation's capital structure but are usually subordinated to other comparable nonconvertible fixed-income securities in such capital structure. Convertible securities generally do not participate directly in any dividend increases or decreases of the underlying securities although the market prices of convertible securities may be affected by any dividend changes or other changes in the underlying securities.

**Market and Geopolitical Risk**

The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. Price movements, sometimes called volatility, may be greater or less depending on the types of securities the Fund owns and the markets in which the securities trade. Volatility and disruption in financial markets and economies may be sudden and unexpected, expose the Fund to greater risk, including risks associated with reduced market liquidity and fair valuation, and adversely affect the Fund's operations. For example, the Adviser potentially will be prevented from executing investment decisions at an advantageous time or price as a result of any domestic or global market disruptions and reduced market liquidity may impact the Fund's ability to sell securities to meet redemptions.

The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. Inflation rates may change frequently and significantly because of various factors, including unexpected shifts in the domestic or global economy and changes in monetary or economic policies (or expectations that these policies may change). Changes in expected inflation rates may adversely affect market and economic conditions, the Fund's investments and an investment in the Fund. The market price of debt securities generally falls as inflation increases because the purchasing power of the future income and repaid principal is expected to be worth less when received by the Fund. The risk of inflation is greater for debt instruments with longer maturities and especially those that pay a fixed rather than variable interest rate. Other financial, economic and other global market and social developments or disruptions may result in similar adverse circumstances, and it is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). In general, the securities or other instruments that the Adviser believes represent an attractive investment opportunity or in which the Fund seeks to invest may be unavailable entirely or in the specific quantities sought by the Fund. As a result, the Fund may need to obtain the desired exposure through a less advantageous investment, forgo the investment at the time or seek to replicate the desired exposure through a derivative transaction or investment in another investment vehicle. Any such event(s) could have a significant adverse impact on the value and risk profile of the Fund's portfolio. There is a risk that you may lose money by investing in the Fund.

Social, political, economic and other conditions and events, such as war, natural disasters, health emergencies (e.g., the novel coronavirus outbreak, epidemics and other pandemics), terrorism, conflicts, social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and the Adviser's investment advisory activities and services of other service providers, which in turn could adversely affect the Fund's investments and other operations.

Government and other public debt, including municipal obligations in which the Fund may invest, can be adversely affected by large and sudden changes in local and global economic conditions that result in increased debt levels. Although high levels of government and other public debt do not necessarily indicate or cause economic problems, high levels of debt may create certain systemic risks if sound debt management practices are not implemented. A high debt level may increase market pressures to meet an issuer's funding needs, which may increase borrowing costs and cause a government or public or municipal entity to issue additional debt, thereby increasing the risk of refinancing. A high debt level also raises concerns that the issuer may be unable or unwilling to repay the principal or interest on its debt, which may adversely impact instruments held by the Fund that rely on such payments. Governmental and quasi-governmental responses to certain economic or other conditions may lead to increasing government and other public debt, which heighten these risks. Unsustainable debt levels can lead to declines in the value of currency, and can prevent a government from implementing effective counter-cyclical fiscal policy during economic downturns, can generate or contribute to an economic downturn or cause other adverse economic or market developments, such as increases in inflation or volatility. Increasing government and other public debt may adversely affect issuers, obligors, guarantors or instruments across a variety of asset classes.

**9**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

Global events may negatively impact broad segments of businesses and populations, cause a significant negative impact on the performance of the Fund's investments and exacerbate pre-existing political, social and economic risks to the Fund. The Fund's operations may be interrupted as a result, which may contribute to the negative impact on investment performance. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions that affect the instruments in which the Fund invests, or the issuers of such instruments, in ways that could have a significant negative impact on the Fund's investment performance.

**Distressed and Defaulted Securities**

Distressed and defaulted securities are speculative and involve substantial risks in addition to the risks of investing in high yield securities. The Fund will generally not receive interest payments on the distressed securities and the repayment of principal may also be at risk. These securities may present a substantial risk of default or may be in default at the time of investment. The repayment of defaulted securities is also subject to significant uncertainties. The Fund may incur substantial expenses in seeking recovery upon a default in the payment of principal of or interest on its portfolio holdings. If the portfolio company is forced to reorganize or liquidate, the Fund may lose its entire investment or may be required to accept cash or securities with a value less than its original investment. Distressed securities and any securities received in an exchange for such securities may be subject to restrictions on resale.

**Preferred Securities**

Preferred securities are subject to risks applicable generally to equity securities. In addition, a company's preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt, so the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company's financial condition or prospects. Preferred securities may pay fixed or adjustable rates of return. Like fixed-income securities, preferred stock generally decreases in value if interest rates rise and increases in value if interest rates fall.

**Mezzanine Investments**

Mezzanine investments are subordinated debt securities that receive payments of interest and principal after other more senior security holders are paid. Mezzanine investments generally are rated below investment grade and frequently are unrated and present many of the same risks as senior loans and non-investment grade bonds. However, unlike senior loans, mezzanine investments are not a senior or secondary secured obligation of the related borrower. They typically are the most subordinated debt obligation in an issuer's capital structure. Mezzanine investments also may often be unsecured. Mezzanine investments therefore are subject to the additional risk that the cash flow of the related borrower and the property securing the loan may be insufficient to repay as scheduled after giving effect to any senior obligations of the related borrower. Mezzanine investments are also expected to be a highly illiquid investment. Mezzanine investments will be subject to certain additional risks to the extent that such loans may not be protected by financial covenants or limitations upon additional indebtedness. Investment in mezzanine investments is a highly specialized investment practice that depends more heavily on independent credit analysis than investments in other types of debt obligations.

**Duration**

The average duration of a portfolio of fixed-income securities represents its exposure to changing interest rates. For example, when the level of interest rates increases by 1%, a fixed-income security having a positive duration of four years generally will decrease in value by 4%; when the level of interest rates decreases by 1%, the value of that same security generally will increase by 4%. A portfolio with a lower average duration generally will experience less price volatility in response to changes in interest rates than a portfolio with a higher average duration.

**Municipal Securities**

Municipal securities (also referred to as municipal obligations) include debt obligations of states, territories or possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, such as local or regional governments. The income on municipal securities is generally exempt from federal income tax at the time of issuance, in the opinion of bond counsel or other counsel to the issuers of such securities. However, the Fund may purchase municipal securities that pay interest that is subject to the federal alternative minimum tax, and municipal securities on which the interest payments are taxable. These securities typically are "general obligation" or "revenue" bonds, notes or commercial paper, including participations in lease obligations and installment purchase contracts of municipalities. General obligation bonds are secured by the issuer's full faith and credit including its taxing power for payment of principal and interest. Revenue bonds, however, are generally payable 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. These types of bonds involve the risk that the tax or other revenues so derived will not be sufficient to meet interest and or principal payment obligations. These obligations may have fixed, variable or floating rates.

Because the Fund may invest in municipal securities, the Fund may be affected significantly by the economic, regulatory, legislative, tax or political developments affecting the ability of issuers of municipal securities to pay interest or repay principal. The risks of municipal securities generally depend on the financial and credit status of the issuer and may rely on a specific stream of revenue associated with a project or other revenue source. Thus, adverse developments related to a municipality's ability to raise revenue, including through its taxing authority, or the failure of specific revenues to materialize would negatively impact such investments. Changes in the financial health of an issuer of municipal securities may make it difficult for the issuer to make interest and principal

**10**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

payments when due. Some municipalities have had significant financial problems recently, and these and other municipalities could, potentially, continue to experience significant financial problems resulting from lower tax revenues and/or decreased aid from state and local governments in the event of an economic downturn. In addition, adverse legislative, tax, regulatory, demographic or political changes may negatively impact the Fund's investments in municipal securities. These events could decrease the Fund's income and/or adversely affect the Fund's performance and investments. Municipal securities also involve the risk that an issuer may call securities for redemption, which could force the Fund to reinvest the proceeds at a lower rate of interest, and the value of municipal securities may be affected by the rights of municipal security holders.

Municipal securities may be more susceptible to downgrades, defaults or loss of tax or other revenue during recessions or similar periods of economic stress. Factors contributing to the financial stress on municipalities may include lower property tax collections as a result of lower home values, lower sales tax revenue as a result of consumers cutting back spending and lower income tax revenue as a result of a higher unemployment rate. In addition, because some municipal obligations may be secured or guaranteed by banks and other institutions, the risk to the Fund associated with investments in such municipal securities could increase if the banking or financial sector suffers an economic downturn and/or if the credit ratings of the institutions issuing the guarantee are downgraded or at risk of being downgraded by a national rating organization. If such events occur, the value of the security could decrease or the value could be lost entirely, and it may be difficult or impossible for the Fund to sell the security at the time and the price that normally prevails in the market.

For example, recent public health emergencies have significantly stressed the financial resources of many municipalities and other issuers of municipal securities, which may impair their ability to meet their financial obligations and may harm the value or liquidity of the Fund's investments in municipal securities (or the income generated by such investments). In particular, responses by municipalities to recent public health emergencies have caused disruptions in business activities. These and other effects of recent public health emergencies, such as increased unemployment levels, have impacted tax and other revenues of municipalities and other issuers of municipal securities and the financial conditions of such issuers. As a result, there is an increased budgetary and financial pressure on municipalities and other issuers of municipal securities and heightened risk of default or other adverse credit or similar events for issuers of municipal securities, which would adversely impact the Fund's investments.

In addition, the ability of an issuer to make payments or repay interest may be affected by litigation or bankruptcy. In the event of bankruptcy of such an issuer, the Fund investing in the issuer's securities could experience delays in collecting principal and interest, and the Fund may not, in all circumstances, be able to collect all principal and interest to which it is entitled. To enforce its rights in the event of a default in the payment of interest or repayment of principal, or both, the Fund may, in some instances, take possession of, and manage, the assets securing the issuer's obligations on such securities, which may increase the Fund's operating expenses. Any income derived from the Fund's ownership or operation of such assets may not be tax-exempt. Municipal securities are subject to, among other risks, credit and interest rate risk and market and geopolitical risk.

Because many municipal securities are issued to finance similar projects (such as those relating to education, health care, housing, transportation, and utilities), conditions in those sectors may affect the overall municipal securities market. In addition, changes in the financial condition of an individual municipal issuer can affect the overall municipal market. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the supporting taxation or the inability to collect revenues for the specific project or specific assets.

Some municipal securities are subject to the risk that the U.S. Internal Revenue Service ("IRS") may determine that an issuer has not complied with applicable tax requirements (or the occurrence of other adverse tax developments) and that interest from the municipal security is taxable, which may result in a significant decline in the value of the security. In addition, interest on municipal obligations, while generally exempt from federal income tax, may not be exempt from the federal alternative minimum tax. Municipal securities may be less liquid than taxable bonds and there may be less publicly available information on the financial condition of municipal security issuers than for issuers of other securities, and the investment performance of the Fund investing in municipal securities may therefore be more dependent on the analytical abilities of the Adviser than if the Fund held other types of investments such as stocks or taxable bonds. The secondary market for municipal securities also tends to be less well developed or liquid than many other securities markets, which may adversely affect the Fund's ability to sell municipal securities it holds at attractive prices or value municipal securities. In addition, the demand for municipal securities is strongly influenced by the value of tax-exempt income to investors and lower income tax rates could reduce the advantage of owning municipal securities, which may also adversely affect the value and liquidity of municipal securities.

**High Yield Securities**

Fixed-income securities that are not investment grade are commonly referred to as "junk bonds" or high yield, high risk securities. These securities offer a higher yield than other higher rated securities, but they carry a greater degree of risk. High yield securities are subject to greater risk of loss of income and principal than higher rated securities and may be considered speculative by the major credit rating agencies. High yield securities may be issued by companies that are restructuring, are smaller and less creditworthy or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal

**11**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

and interest. Changes in the value of high yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities.

In recent years, there has been a broad trend of weaker or less restrictive covenant protections in the high yield market. Among other things, under such weaker or less restrictive covenants, borrowers might be able to exercise more flexibility with respect to certain activities than borrowers who are subject to stronger or more protective covenants. For example, borrowers might be able to incur more debt, including secured debt, return more capital to shareholders, remove or reduce assets that are designated as collateral securing high yield securities, increase the claims against assets that are permitted against collateral securing high yield securities or otherwise manage their business in ways that could impact creditors negatively. In addition, certain privately held borrowers might be permitted to file less frequent, less detailed or less timely financial reporting or other information, which could negatively impact the value of the high yield securities issued by such borrowers. Each of these factors might negatively impact the high yield securities held by the Fund.

**Mortgage-Backed Securities**

Mortgage securities are fixed-income securities representing an interest in a pool of underlying mortgage loans. They are sensitive to changes in interest rates, but may respond to these changes differently from other fixed-income securities due to the possibility of prepayment of the underlying mortgage loans. As a result, it may not be possible to determine in advance the actual maturity date or average life of a mortgage security. Rising interest rates tend to discourage refinancings, with the result that the average life and volatility of the security will increase and its market price will decrease. When interest rates fall, however, mortgage securities may not gain as much in market value because additional mortgage prepayments must be reinvested at lower interest rates. Prepayment risk may make it difficult to calculate the average maturity of a portfolio of mortgage securities and, therefore, to assess the volatility risk of that portfolio.

The Fund may invest in mortgage securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities. These securities are either direct obligations of the U.S. Government or the issuing agency or instrumentality has the right to borrow from the U.S. Treasury to meet its obligations although it is not legally required to extend credit to the agency or instrumentality. Certain of these mortgage securities purchased by the Fund, such as those issued by the Government National Mortgage Association and the Federal Housing Administration, are backed by the full faith and credit of the United States. Other of these mortgage securities purchased by the Fund, such as those issued by the Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac"), are not backed by the full faith and credit of the United States and there is a risk that the U.S. Government will not provide financial support to these agencies if it is not obligated to do so by law. The maximum potential liability of the issuers of some of the mortgage securities held by the Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.

Non-agency mortgage-backed securities are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, mortgage-related securities held in the Fund's portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans. Non-agency mortgage-backed securities include securities that reflect an interest in, and are secured by, mortgage loans on commercial real property. Many of the risks of investing in CMBS reflect the risks of investing in

**12**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants.

The risks associated with mortgage-backed securities are elevated in distressed economic, market, health and labor conditions, notably, increased levels of unemployment, delays and delinquencies in payments of mortgage and rent obligations, and uncertainty regarding the effects and extent of government intervention with respect to mortgage payments and other economic matters.

Delinquencies, defaults and losses on residential mortgage loans may increase substantially over certain periods, which may affect the performance of the mortgage-backed securities in which the Fund may invest. Mortgage loans backing non-agency mortgage-backed securities are more sensitive to economic factors that could affect the ability of borrowers to pay their obligations under the mortgage loans backing these securities. In addition, housing prices and appraisal values in many states and localities over certain periods have declined or stopped appreciating. A sustained decline or an extended flattening of those values may result in additional increases in delinquencies and losses on mortgage-backed securities generally (including the mortgaged-backed securities that the Fund may invest in as described above). Adverse changes in market conditions and regulatory climate may reduce the cash flow which the Fund, to the extent it invests in mortgage-backed securities or other asset-backed securities, receives from such securities and increase the incidence and severity of credit events and losses in respect of such securities. In the event that interest rate spreads for mortgage-backed securities and other asset-backed securities widen following the purchase of such assets by the Fund, the market value of such securities is likely to decline and, in the case of a substantial spread widening, could decline by a substantial amount. Furthermore, adverse changes in market conditions may result in reduced liquidity in the market for mortgage-backed securities and other asset-backed securities (including the mortgage-backed securities and other asset-backed securities in which the Fund may invest) and an unwillingness by banks, financial institutions and investors to extend credit to servicers, originators and other participants in the market for mortgage-backed and other asset-backed securities. As a result, the liquidity and/or the market value of any mortgage-backed or asset-backed securities that are owned by the Fund may experience declines after they are purchased by the Fund.

Collateralized mortgage obligations ("CMOs") are debt obligations collateralized by mortgage loans or mortgage pass-through securities (collectively "Mortgage Assets"). Payments of principal and interest on the Mortgage Assets and any reinvestment income are used to make payments on the CMOs. CMOs are issued in multiple classes. Each class has a fixed or floating rate and a stated maturity or final distribution date. The principal and interest on the Mortgage Assets may be allocated among the classes in a number of different ways. Certain classes will, as a result of the allocation, have more predictable cash flows than others. As a general matter, the more predictable the cash flow, the lower the yield relative to other Mortgage Assets. The less predictable the cash flow, the higher the yield and the greater the risk. The Fund may invest in any class of CMO, including classes that vary inversely with interest rates and may be more volatile and sensitive to prepayment rates.

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

Stripped mortgage-backed securities ("SMBS") are derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S. Government, or by private originators. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class receives most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the interest only or "IO" class), while the other class will receive all of the principal (the principal-only or "PO" class). Investments in each class of SMBS are extremely sensitive to changes in interest rates. IOs tend to decrease in value substantially if interest rates decline and prepayment rates become more rapid. POs tend to decrease in value substantially if interest rates increase and the rate of prepayment decreases. If the Fund invests in SMBS and interest rates move in a manner not anticipated by management, it is possible that the Fund could lose all or substantially all of its investment.

Commercial mortgage-backed securities ("CMBS") are generally multi-class or pass-through securities backed by a mortgage loan or a pool of mortgage loans secured by commercial property, such as industrial and warehouse properties, office buildings, retail space and shopping malls, multifamily properties and cooperative apartments. The commercial mortgage loans that underlie CMBS are

**13**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

generally not amortizing or not fully amortizing. That is, at their maturity date, repayment of their remaining principal balance or "balloon" is due and is repaid through the attainment of an additional loan or sale of the property. An extension of a final payment on commercial mortgages will increase the average life of the CMBS, generally resulting in a lower yield for discount bonds and a higher yield for premium bonds.

CMBS are subject to credit risk and prepayment risk. Although prepayment risk is present, it is of a lesser degree in the CMBS market than in the residential mortgage market; commercial real estate property loans often contain provisions that substantially reduce the likelihood that such securities will be prepaid (e.g., significant prepayment penalties on loans and, in some cases, prohibition on principal payments for several years following origination).

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

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

**Asset-Backed Securities**

Asset-backed securities apply the securitization techniques used to develop mortgage-backed securities to a broad range of other assets. Various types of assets, primarily automobile and credit card receivables and home equity loans, are pooled and securitized in pass-through structures similar to pass-through structures developed with respect to mortgage securitizations. Asset-backed securities have risk characteristics similar to mortgage-backed securities. Like mortgage-backed securities, they generally decrease in value as a result of interest rate increases, but may benefit less than other fixed-income securities from declining interest rates, principally because of prepayments. Also, as in the case of mortgage-backed securities, prepayments generally increase during a period of declining interest rates, although other factors, such as changes in credit use and payment patterns, may also influence prepayment rates. Asset-backed securities also involve the risk that various federal and state consumer laws and other legal and economic factors may result in the collateral backing the securities being insufficient to support payment on the securities.

The Fund may invest in other asset-backed or similarly structured securities, such as collateralized debt obligations ("CDOs"), collateralized bond obligations ("CBOs"), and collateralized loan obligations ("CLOs") These investments are subject to many of the same risks as other forms of asset-backed securities, including interest rate risk, credit risk and default risk, and are also subject to additional risks, including but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the risk that the collateral may default or decline in value or be downgraded, if rated by a nationally recognized statistical rating organization; (iii) the Fund may invest in tranches of CDOs that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investors regarding the characterization of proceeds; (v) the investment return achieved by the Fund could be significantly different than those predicted by financial models; (vi) the lack of a readily available secondary market for CDOs; (vii) the risk of forced "fire sale" liquidation due to technical defaults such as coverage test failures; and (viii) the CDO's manager may perform poorly. Investments in CDOs, CBOs and CLOs are also subject to risks particular to their respective asset class and structure.

For example, because CLOs are backed primarily by commercial loans, CLOs also bear many of the same risks as investing in loans directly. However, in addition to the risks associated with investing in commercial loans, the complex structure and highly leveraged nature of a CLO poses additional risks. CLOs may experience substantial losses attributable to loan defaults or trading losses. Such losses on the underlying assets are borne first by the holders of subordinate tranches. In addition, a Fund's investments in CLOs may decrease in market value when the CLO's assets experience loan defaults or credit impairment, losses that exceed the most subordinate tranches, or market anticipation of loan defaults and investor aversion to CLO securities as a class. CDOs are structured similarly to CLOs and bear many of the same risks as CLOs as well as additional risks because they are backed by pools of assets other than commercial loans, including securities (such as other asset-backed securities), synthetic instruments or bonds, and may be highly leveraged. Like CLOs, losses incurred by a CDO are borne first by holders of the most subordinate tranches. Accordingly, the risks of CDOs depend largely on the type of underlying collateral and the tranche of CDOs in which the Fund invests. Moreover, CDOs that obtain their exposure through synthetic investments are exposed to risks associated with derivative instruments.

**Foreign Securities**

Foreign issuers generally are subject to different accounting, auditing and financial reporting standards than U.S. issuers. There may be less information available to the public about foreign issuers. Securities of foreign issuers can be less liquid and experience greater price movements. In addition, the prices of such securities may be susceptible to influence by large traders, due to the limited size of

**14**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

many foreign securities markets. Moreover, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Also, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. In some foreign countries, there is also the risk of government expropriation, excessive taxation, political or social instability, the imposition of currency controls or diplomatic developments that could affect the Fund's investment. There also can be difficulty obtaining and enforcing judgments against issuers in foreign countries. Foreign stock exchanges, broker-dealers and listed issuers may be subject to less government regulation and oversight. The cost of investing in foreign securities, including brokerage commissions and custodial expenses, can be higher than the cost of investing in domestic securities.

Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. International trade barriers or economic sanctions against foreign countries, organizations, companies, entities and/or individuals may adversely affect the Fund's foreign holdings or exposures. Investments in foreign markets may also be adversely affected by less stringent investor protections and disclosure standards, and governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. Governmental actions can have a significant effect on the economic conditions in foreign countries, which also may adversely affect the value and liquidity of the Fund's investments. Foreign investment in the securities markets of certain foreign countries is restricted or controlled to varying degrees. For example, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Moreover, if a deterioration occurs in a country's balance of payments, the country could impose temporary restrictions on foreign capital remittances. The Fund could also be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investment. Any of these actions could severely affect security prices, which could result in losses to the Fund and increased transaction costs, impair the Fund's ability to purchase or sell foreign securities or transfer the Fund's assets back into the United States, or otherwise adversely affect the Fund's operations. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. Certain foreign investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When the Fund holds illiquid investments, its portfolio may be harder to value.

Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. The Fund's investments in foreign securities are subject to economic sanctions and trade laws in the United States and other jurisdictions. These laws and related governmental actions, including counter-sanctions and other retaliatory measures, can, from time to time, prevent or prohibit the Fund from investing in certain foreign securities. In addition, economic sanctions could prohibit the Fund from transacting with particular countries, organizations, companies, entities and/or individuals by banning them from global payment systems that facilitate cross-border payments, restricting their ability to settle securities transactions, and freezing their assets. The imposition of sanctions and other similar measures could, among other things, cause a decline in the value of securities issued by the sanctioned country or companies located in, or economically linked to, the sanctioned country, downgrades in the credit ratings of the sanctioned country or companies located in, or economically linked to, the sanctioned country, devaluation of the sanctioned country's currency, and increased market volatility and disruption in the sanctioned country and throughout the world. Economic sanctions or other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities, negatively impact the value or liquidity of the Fund's investments, significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices, increase the Fund's transaction costs, make the Fund's investments more difficult to value or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies. These conditions may be in place for a substantial period of time and enacted with limited advance notice to the Fund.

The Fund may invest in debt obligations known as "sovereign debt," which are obligations of governmental issuers in emerging market or developing countries and industrialized countries. Certain emerging market or developing countries are among the largest debtors to commercial banks and foreign governments. The issuer or governmental authority that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or pay interest when due in accordance with the terms of such obligations. Uncertainty surrounding the level and sustainability of sovereign debt of certain countries has at times increased volatility in the financial markets. In addition, a number of Latin American countries are among the largest debtors of developing countries and have a long history of reliance on foreign debt. Additional factors that may influence the ability or willingness to service debt include, but are not limited to, a country's cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, the relative size of its debt service burden to the economy as a whole and its government's policy towards the International Monetary Fund, the World Bank and other multilateral agencies. A country whose exports are concentrated in a few commodities or whose economy depends on certain strategic imports could be vulnerable to fluctuations in international prices of these commodities

**15**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

or imports. If a foreign sovereign obligor cannot generate sufficient earnings from foreign trade to service its external debt, it may need to depend on continuing loans and aid from foreign governments, commercial banks and multilateral organizations, and inflows of foreign investment. The commitment on the part of these foreign governments, multilateral organizations and others to make such disbursements may be conditioned on the government's implementation of economic reforms and/or economic performance and the timely service of its obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third-parties' commitments to lend funds, which may further impair the foreign sovereign obligor's ability or willingness to timely service its debts. In addition, there is no legal process for collecting on a sovereign debt that a government does not pay or bankruptcy proceeding by which all or part of the sovereign debt that a government entity has not repaid may be collected.

In connection with its investments in foreign securities, the Fund also may enter into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Foreign currency forward exchange contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, the Fund may use cross currency hedging or proxy hedging with respect to currencies in which the Fund has or expects to have portfolio or currency exposure. Cross currency and proxy hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies.

**Foreign Currency**

Investments in foreign securities may be denominated in foreign currencies. The value of foreign currencies may fluctuate relative to the value of the U.S. dollar or other applicable foreign currency. Since the Fund may invest in such non-U.S. dollar-denominated securities, and therefore may convert the value of such securities into U.S. dollars, changes in currency exchange rates can increase or decrease the U.S. dollar value of the Fund's assets. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and the overall economic health of the issuer. Devaluation of a currency by a country's government or banking authority also will have a significant impact on the value of any investments denominated in that currency. The Adviser may use derivatives to reduce this risk. The Adviser may in its discretion choose not to hedge against currency risk. In addition, certain market conditions may make it impossible or uneconomical to hedge against currency risk.

**Emerging Market Securities**

The Fund may invest in emerging market or developing countries, which are countries that major international financial institutions generally consider to be less economically mature than developed nations (such as the United States or most nations in Western Europe). Emerging market or developing countries may be more likely to experience political turmoil or rapid changes in economic conditions than more developed countries, and the financial condition of issuers in emerging market or developing countries may be more precarious than in other countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging markets countries. In addition, due to jurisdictional limitations, U.S. authorities (e.g., SEC and the U.S. Department of Justice) may be limited in their ability to enforce regulatory or legal obligations in emerging market countries. In addition, emerging market securities generally are less liquid and subject to wider price and currency fluctuations than securities issued in more developed countries. These characteristics result in greater risk of price volatility in emerging market or developing countries, which may be heightened by currency fluctuations relative to the U.S. dollar.

**Loan-Related Investments**

Loan-related investments may include, without limitation, public bank loans made by banks or other financial institutions and loan participations and assignments. Such investments may be rated investment grade or below investment grade. To the extent these investments are second lien loans, which are lower in priority to senior loans, but have seniority in a company's capital structure to other liabilities, the company would be required to pay down these second lien loans prior to other lower-ranked claims on their assets. With respect to loan participations, the Fund may not always have direct recourse against a borrower if the borrower fails to pay scheduled principal and/or interest; may be subject to greater delays, expenses and risks than if the Fund had purchased a direct obligation of the borrower; and may be regarded as the creditor of the agent lender (rather than the borrower), subjecting the Fund to the creditworthiness of that lender as well.

Certain loans may be illiquid, meaning the Fund may not be able to sell them quickly at a fair price. Illiquid securities are also difficult to value. To the extent a loan has been deemed illiquid, it will be subject to the Fund's restrictions on investment in illiquid securities. The secondary market for loans may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. Because some loans may have a more limited secondary market, liquidity and valuation risk is more pronounced for the Fund than for funds that invest primarily in other types of fixed-income instruments or equity securities. In the case of extended trade settlement periods, the Fund may not receive the proceeds from the sale of a loan for a period after the sale. As a

**16**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

result, sale proceeds related to the sale of loans may not be available to make additional investments or to meet the Fund's redemption obligations for a period after the sale of the loans and, as a result, the Fund may have to sell other investments or engage in borrowing transactions, such as borrowing from its credit facility, if necessary to raise cash to meet its obligations. Loans are subject to the risk of default in the payment of interest or principal, which would result in a reduction of income to the Fund and a potential decrease in the Fund's NAV. Although a loan may be fully collateralized at the time of acquisition, the collateral may decline in value, be relatively illiquid or lose all or substantially all of its value subsequent to investment. Certain loans may not be considered securities under the federal securities laws and, therefore, investments in such loans may not be subject to certain protections under those laws.

The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates. Loans that are rated below investment grade share the same risks of other below investment grade securities. Because loans in which the Fund may invest could rank lower in priority of payment to senior loans, they present a greater degree of investment risk due to the fact that the cash flow or other property of the borrower securing the loan may be insufficient to meet scheduled payments after meeting the senior secured payment obligations of the borrower. These loans may exhibit greater price volatility as well. There is less readily available, reliable information about most loan investments than is the case for many other types of securities.

**Covenant Lite Investments**

Some of the loans or other obligations in which the Fund may invest or obtain exposure to may be "covenant lite" loans or other obligations. Certain financial institutions may define "covenant lite" loans or securities differently. Covenants contained in loan documentation are intended to protect lenders and investors by imposing certain restrictions and other limitations on a borrower's operations or assets and by providing certain information and consent rights to lenders. Covenant lite loans or securities, which have varied terms and conditions, may contain fewer or no restrictive covenants compared to other loans that might enable the Fund to, among other things, proactively enforce financial covenants or prevent undesired actions by the borrower. As a result, covenant lite loans generally carry greater risks because they allow borrowers to exercise more flexibility with respect to certain activities that may otherwise be limited or prohibited under similar loan obligations that are not covenant lite. In addition, the Fund may receive less or less frequent financial reporting from a borrower under a covenant-lite obligation, which may result in more limited access to financial information, difficulty evaluating the borrower's financial performance over time and delays in exercising rights and remedies in the event of a significant financial decline. The Fund may experience relatively greater difficulty or delays in enforcing its rights on its holdings of certain covenant lite loans and other similar obligations than its holdings of loans or securities with more traditional financial covenants, which may result in losses to the Fund. During certain market conditions, many new, restructured or reissued loans and similar debt obligations may not feature traditional financial maintenance covenants, which are intended to protect lenders and investors by imposing certain restrictions and other limitations on a borrower's operations or assets and by providing certain information and consent rights to lenders.

**Equity Securities**

Equity securities may include common and preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase common stocks, depositary receipts, shares of investment companies, limited partnership interests and other specialty securities having equity features. Many factors affect the value of equity securities, including earnings, earnings forecasts, corporate events and factors impacting the issuer's industry and the market generally. The Fund may invest in equity securities that are publicly traded on securities exchanges or over-the-counter ("OTC") or in equity securities that are not publicly traded. Securities that are not publicly traded may be more difficult to value or sell and their value may fluctuate more dramatically than other securities. The prices of convertible securities are affected by changes similar to those of equity and fixed-income securities.

A depositary receipt is generally issued by a bank or financial institution and represents the common stock or other equity securities of a foreign company. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts, or to pass through to them any voting rights with respect to the deposited securities.

**Liquidity**

The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. Illiquidity can be caused by, among other things, a drop in overall market trading volume, an inability to find a willing buyer, or legal restrictions on the securities' resale. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

**17**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

**Derivatives**

The Fund may, but is not required to, use derivatives and other similar instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivative instruments used by the Fund will be counted towards the Fund's exposure in the types of securities listed herein to the extent they have economic characteristics similar to such securities. A derivative is a financial instrument whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objective, there is no assurance that the use of derivatives will achieve this result.

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

*Futures.* A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. While the value of a futures contract tends to increase or decrease in tandem with the value of the underlying instrument, differences between the futures market and the market for the underlying asset may result in an imperfect correlation. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures contract.

*Options.* If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument, foreign currency or contract, such as a swap agreement or futures contract, on the underlying instrument or foreign currency at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument, swap, foreign currency, or futures contract on the underlying instrument or foreign currency at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

Investments in foreign currency options may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. There is a risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. The value of a foreign currency option is dependent upon the value of the underlying foreign currency relative to the U.S. dollar or other applicable foreign currency. The price of the option may vary with changes in the value of either or both currencies and has no relationship to the investment merits of a foreign security. Options on foreign currencies are affected by all of those factors that influence foreign exchange rates and foreign investment generally. Unanticipated changes in currency prices may result in losses to the Fund and poorer overall performance for the Fund than if it had not entered into such contracts. Options on foreign currencies are traded primarily in the OTC market, but may also be traded on U.S. and foreign exchanges.

Foreign currency options contracts may be used for hedging purposes or non-hedging purposes in pursuing the Fund's investment objective, such as when the Adviser anticipates that particular non-U.S. currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Fund's investment portfolio. Investing in foreign currencies for purposes of gaining from projected changes in exchange rates, as opposed to only hedging currency risks applicable to the Fund's holdings, further increases the Fund's exposure to foreign securities losses. There is no assurance that the Adviser's use of currency derivatives will benefit the Fund or that they will be, or can be, used at appropriate times.

**18**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

*Swaps.* The Fund may enter into OTC swap contracts or cleared swap transactions. An OTC swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Typically swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each party. Cleared swap transactions may help reduce counterparty credit risk. In a cleared swap, the Fund's ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial institution. OTC swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty. Certain swaps have begun trading on exchanges called swap execution facilities. Exchange trading is expected to increase liquidity of swaps trading. Both OTC and cleared swaps could result in losses if interest rates, foreign currency exchange rates or other factors are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments require the clearing and exchange trading of certain standardized swap transactions. Mandatory exchange-trading and clearing is occurring on a phased-in basis. The Fund may pay fees or incur costs each time it enters into, amends or terminates a swap agreement.

The Fund's use of swaps may include those based on the credit of an underlying security, commonly referred to as "credit default swaps." Where the Fund is the buyer of a credit default swap contract, it would typically be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by a third-party on the debt obligation. If no default occurs, the Fund would have paid to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract. When the Fund is the seller of a credit default swap contract, it typically receives the stream of payments but is obligated to pay an amount equal to the par (or other agreed-upon) value of a referenced debt obligation upon the default or similar event of the issuer of the referenced debt obligation.

**Consumer Discretionary/Staples**

To the extent that the Fund invests significantly in the consumer discretionary or staples sectors, the Fund will be particularly susceptible to the risks associated with companies operating in such sector(s). Companies in the consumer discretionary and staples sectors are subject to risks, including fluctuations in domestic and international economic conditions and forecasts, inflation, shipment and supply chain disruptions and interest rate changes, currency exchange rates, increased competition and consumer confidence as well as increases in production-related costs. Performance of such companies also may be adversely affected by factors such as reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes. Companies in these sectors are subject to competitive forces (including competition brought by foreign brands), which may also have an adverse impact on their profitability and the value of their securities. These sectors may be strongly affected by fads, marketing campaigns, changes in demographics and consumer preferences, and other economic or social factors affecting consumer demand. Governmental regulation, including price controls and regulations on packaging, labeling, competition, and certification, may affect the profitability of companies in such sector(s). Companies operating in these sectors may also be adversely affected by government and private litigation.

**Large Shareholder Transactions Risk**

The Fund may experience adverse effects when certain shareholders purchase or redeem large amounts of shares of the Fund. Such larger than normal redemptions may cause the Fund to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. Similarly, large Fund share purchases may adversely affect the Fund's performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would. These transactions may also accelerate the realization of taxable income to shareholders if such sales of investments resulted in gains, and may also increase transaction costs. In addition, a large redemption could result in the Fund's current expenses being allocated over a smaller asset base, leading to an increase in the Fund's expense ratio. Although large shareholder transactions may be more frequent under certain circumstances, the Fund is generally subject to the risk that shareholders can purchase or redeem a significant percentage of Fund shares at any time.

**Investment Discretion**

In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments it buys, holds or sells on a day-to-day basis, and which trading strategies it uses. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

**Temporary Defensive Investments**

When the Adviser believes that changes in market, economic, political or other conditions warrant, the Fund may invest without limit in cash, cash equivalents or other fixed-income securities for temporary defensive purposes that may be inconsistent with the Fund's principal investment strategies. If the Adviser incorrectly predicts the effects of these changes, such defensive investments may adversely affect the Fund's performance and the Fund may not achieve its investment objective.

**19**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management

Adviser

Morgan Stanley Investment Management Inc., with principal offices at 522 Fifth Avenue, New York, NY 10036, conducts a worldwide portfolio management business and provides a broad range of portfolio management services to customers in the United States and abroad. Morgan Stanley (NYSE: "MS") is the parent of the Adviser, which is the parent of the Distributor. Morgan Stanley is a preeminent global financial services firm engaged in securities trading and brokerage activities, as well as providing investment banking, research and analysis, financing and financial advisory services. As of December 31, 2022, the Adviser, together with its affiliated asset management companies, had approximately $1.3 trillion in assets under management or supervision.

A discussion regarding the basis for the Board of Trustees' approval of the investment advisory agreement is available in the Fund's Annual Report to Shareholders for the fiscal year ended September 30, 2022.

Advisory Fees

For the fiscal year ended September 30, 2022, the Adviser received a fee for advisory services (net of fee waivers, if applicable) equal to 0.31% of the Fund's average daily net assets.

The Adviser is contractually obligated to waive its advisory fee and/or reimburse the Fund, if necessary, if such fees would cause the total annual operating expenses of the Fund to exceed 0.00% for Class W. In determining the actual amount of fee waiver and/or expense reimbursement for the Fund, if any, the Adviser excludes from total annual operating expenses, acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation). The Adviser expects this obligation to remain in effect indefinitely, unless changed or terminated by the Trust's Board of Trustees. The Adviser may make additional voluntary fee waivers and/or expense reimbursements. The Adviser may discontinue these voluntary fee waivers and/or expense reimbursements at any time in the future.

The Fund's annual operating expenses may vary throughout the period and from year to year. The Fund's actual expenses may be different than the expenses listed in the Fund's fee and expense table based upon the extent and amount of a fee waiver and/or expense reimbursement.

Portfolio Management

The Fund's assets are managed by members of the High Yield team. The team consists of portfolio managers and traders. Current members of the team who are jointly and primarily responsible for the day-to-day management of the Fund are Jack Cimarosa and Joseph F. Hurley. Messrs. Cimarosa and Hurley share portfolio management responsibilities. Mr. Cimarosa has been associated with the Adviser in an investment management capacity since April 2012 as a High Yield Trader and has been a portfolio manager of the Fund since 2017. Mr. Cimarosa was a High Yield Trader at Guggenheim Partners from April 2009 to March 2012 focusing on leveraged debt. Mr. Hurley has been associated with the Adviser in an investment management capacity since 2014.

All team members are responsible for the execution of the overall strategy of the Fund.

**Additional Information**

The Fund's SAI provides additional information about the portfolio managers' compensation structure, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Fund.

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

**20**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information

**Share Class Arrangements**

This Prospectus offers Class W shares of the High Yield Portfolio. Shares of the Fund are available in other share classes that have different fees and expenses. The Trust also offers Class I, Class A, Class L, Class C, Class R6 and Class IR shares of the Fund through separate prospectuses. Class L shares of the Fund are currently closed to investors except in the limited circumstances set forth in such prospectus. Class W shares are not subject to a sales charge and are not subject to a distribution and/or shareholder service (12b-1) fee. In addition, no sub-accounting or other similar fees, or any finder's fee payments are charged or paid on Class W shares.

**Distribution of Fund Shares**

Morgan Stanley Distribution, Inc. is the exclusive distributor of the shares of the Fund. The Distributor receives no compensation from the Fund for distributing Class W shares of the Fund.

The Adviser and/or Distributor may pay compensation to Financial Intermediaries in connection with the sale, distribution, marketing and retention of the Fund's shares and/or shareholder servicing. Such compensation may be significant in amount and the prospect of receiving any such additional compensation may provide affiliated or unaffiliated Financial Intermediaries with an incentive to favor sales of shares of the Fund over other investment options. Any such payments will not change the NAV or the price of the Fund's shares. For more information, please see the Fund's SAI.

**About Net Asset Value**

The NAV of a class of shares of the Fund is determined by dividing the total of the value of the Fund's investments and other assets attributable to the class, less any liabilities attributable to the class, by the total number of outstanding shares of that class of the Fund. In making this calculation, the Fund generally values its portfolio securities and other assets at market price. When no market quotations are readily available for a security or other asset, including circumstances under which the Adviser determines that a market quotation is not accurate, fair value for the security or other asset will be determined in good faith using methods approved by the Trust's Board of Trustees.

In addition, with respect to securities that primarily are listed on foreign exchanges, when an event occurs after the close of such exchanges that is likely to have changed the value of the securities (e.g., a percentage change in value of one or more U.S. securities indices in excess of specified thresholds), such securities will be valued at their fair value, as determined under procedures approved by the Trust's Board of Trustees. Securities also may be fair valued in the event of a significant development affecting a country or region or an issuer-specific development that is likely to have changed the value of the security. In these cases, the Fund's NAV will reflect certain portfolio securities' fair value rather than their market price. To the extent the Fund invests in open-end management companies (other than ETFs) that are registered under the 1940 Act, the Fund's NAV is calculated based in relevant part upon the NAV of such funds. The prospectuses for such funds explain the circumstances under which they will use fair value pricing and its effects.

Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security or other asset is materially different than the value that could be realized upon the sale of that security or other asset. With respect to securities that are primarily listed on foreign exchanges, the values of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. The NAV of the Fund (excluding any applicable sales charges) is based on the value of the Fund's portfolio securities or other assets. Although the assets of each class are invested in the same portfolio of securities or other assets, the NAV of each class will differ because the classes have different class specific expenses.

The Fund relies on various sources to calculate its NAV. The ability of the Fund's provider of administrative services to calculate the NAV per share of the Fund is subject to operational risks associated with processing or human errors, systems or technology failures, cyber attacks and errors caused by third party service providers, data sources, or trading counterparties. Such failures may result in delays in calculating the Fund's NAV and/or the inability to calculate NAV over extended periods. The Fund may be unable to recover any losses associated with such failures. In addition, if the third party service providers and/or data sources upon which the Fund directly or indirectly relies to calculate its NAV or price individual securities are unavailable or otherwise unable to calculate the NAV correctly, it may be necessary for alternative procedures to be utilized to price the securities at the time of determining the Fund's NAV.

The Fund's NAV per share is subject to various investment and other risks. Please refer to the "Additional Information About the Fund's Investment Strategies and Related Risks" and "The Fund's Investments and Strategies" sections of the Prospectus and SAI, respectively, for more information regarding risks associated with an investment in the Fund.

**Pricing of Fund Shares**

You may buy or sell (redeem) shares of the Fund at the NAV next determined for the class after receipt of your order in good order, plus any applicable sales charge. The Trust determines the NAV for the Fund as of the close of the NYSE (normally 4:00 p.m. Eastern time) on each day that the NYSE is open for business (the "Pricing Time"). Shares generally will not be priced on days that the NYSE is closed, although shares may be priced on such days if the Securities Industry and Financial Markets Association ("SIFMA") recommends that the bond markets remain open for all or part of the day. On any business day when SIFMA

**21**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

recommends that the bond markets close early, the Fund reserves the right to close at or prior to the SIFMA recommended closing time. If the Fund does so, it will cease granting same day credit for purchase and redemption orders received after the Fund's closing time and credit will be given on the next business day. If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the Fund reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate its NAV as of, the normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. The Fund may elect to remain open and price its shares on days when the NYSE is closed but the primary securities markets on which the Fund's securities trade remain open. Trading of securities that are primarily listed on foreign exchanges may take place on weekends and other days when the Fund does not price its shares. Therefore, to the extent, if any, that the Fund invests in securities primarily listed on foreign exchanges, the value of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares.

**Portfolio Holdings**

A description of the Trust's policies and procedures with respect to the disclosure of the Fund's portfolio securities is available in the Trust's SAI.

**How To Purchase Fund Shares**

Class W shares of the Fund are available for purchase only at the direction of a wrap account sponsor or the Investment Adviser on behalf of investors that are either (i) eligible wrap accounts sponsored by an adviser or broker-dealer that has entered into an agreement with the Adviser, the Distributor or one of their affiliates to make the Fund available to such wrap accounts or (ii) eligible clients of the Adviser or its affiliates that have entered into a separate investment management or advisory agreement pursuant to which such clients pay an investment management or advisory fee, including investment vehicles that are sponsored, managed, advised or sub-advised by the Adviser or its affiliates. Class W Shares are not subject to a sales charge.

Purchase orders must be submitted to the Fund's transfer agent, either directly or through an appropriate clearing agency. The wrap account sponsor or adviser submitting the order must arrange to have federal funds wired to the transfer agent using the following wire instructions:

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111-2101

ABA #011000028

DDA #00575373

Attn: Morgan Stanley Institutional Fund Trust

Subscription Account

Ref: (Fund Name, Account Number, Account Name)

Share certificates will not be issued for the Fund.

**How To Redeem Fund Shares**

A wrap account sponsor or adviser acting on behalf of an eligible investor must submit redemption orders to the Fund's transfer agent, either directly or through an appropriate clearing agency. Shares of the Fund may be held only by eligible investors and cannot be transferred or exchanged. The Fund reserves the right to redeem shares of any investor if the investor ceases to be an eligible investor. Shares of the Fund will be redeemed at the NAV next determined after a redemption request is received in good order. Investors who are no longer eligible investors may receive their redemption proceeds by check.

*Redemption Proceeds*

The Fund typically expects to pay redemption proceeds to you within two business days following receipt of your redemption request for those payments made to your brokerage account held with a Financial Intermediary. For redemption proceeds that are paid directly to you by the Fund, the Fund typically expects to pay redemption proceeds by wire to you within one business day, following receipt of your redemption request; however, in all cases, it may take up to seven calendar days to pay redemption proceeds.

The Fund typically expects to meet redemption requests by using a combination of sales of securities held by the Fund and/or holdings of cash and cash equivalents. On a less regular basis, the Fund also reserves the right to use borrowings or interfund lending to meet redemption requests, and the Fund may use these methods during both normal and stressed market conditions.

If we determine that it is in the best interest of the Trust or the Fund not to pay redemption proceeds in cash, we may distribute to you securities held by the Fund. If requested, we will pay a portion of your redemption(s) in cash (during any 90 day period) up to the lesser of $250,000 or 1% of the net assets of the Fund at the beginning of such period. If the Fund redeems your shares in-kind, you will bear any market risks associated with the securities paid as redemption proceeds. Such in-kind securities may be illiquid and difficult or impossible for a shareholder to sell at a time and at a price that a shareholder would like. Redemptions paid in such

**22**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

securities generally will give rise to income, gain or loss for income tax purposes in the same manner as redemptions paid in cash. In addition, you may incur brokerage costs and a further gain or loss for income tax purposes when you ultimately sell the securities.

*Reinstatement Privilege*

If you redeem shares, you may reinvest at net asset value all or any portion of the redemption proceeds in the same account and in the same class of shares of the Fund you redeemed from or another Morgan Stanley Multi-Class Fund, provided that the reinvestment occurs within 90 days of the redemption, the privilege has not been used more than once in the prior 12 months, the redeemed shares were subject to a front-end sales charge or CDSC and that you are otherwise eligible to invest in that class. Under these circumstances your account will be credited with any CDSC paid in connection with the redemption. Any CDSC period applicable to the shares you acquire upon reinvestment will run from the date of your original share purchase. For requests for reinvestment sent to the Fund's transfer agent, the request must be in writing. At the time of a reinvestment, you or your Financial Intermediary must notify the Fund or the transfer agent that you are reinvesting redemption proceeds in accordance with this privilege. If you reinvest, your purchase will be at the next determined net asset value following receipt of your request.

**Frequent Purchases and Redemptions of Shares**

Frequent purchases and redemptions of shares by Fund shareholders are referred to as "market-timing" or "short-term trading" and may present risks for other shareholders of the Fund, which may include, among other things, diluting the value of the Fund's shares held by long-term shareholders, interfering with the efficient management of the Fund, increasing brokerage and administrative costs, incurring unwanted taxable gains and forcing the Fund to hold excess levels of cash.

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

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

The Trust discourages and does not accommodate frequent purchases and redemptions of Fund shares by Fund shareholders and the Trust's Board of Trustees has adopted policies and procedures with respect to such frequent purchases and redemptions.

The Trust's policies with respect to purchases, redemptions and exchanges of Fund shares are described in the "Shareholder Information—How To Purchase Fund Shares," "Shareholder Information—General," and "Shareholder Information—How To Redeem Fund Shares" sections of this Prospectus. Except as described in each of these sections, and with respect to trades that occur through omnibus accounts at Financial Intermediaries, as described below, the Trust's policies regarding frequent trading of Fund shares are applied uniformly to all shareholders. With respect to trades that occur through omnibus accounts at Financial Intermediaries, such as investment advisers, broker-dealers, transfer agents and third-party administrators, the Fund (i) has requested assurance that such Financial Intermediaries currently selling Fund shares have in place internal policies and procedures reasonably designed to address market-timing concerns and has instructed such Financial Intermediaries to notify the Fund immediately if they are unable to comply with such policies and procedures and (ii) requires all prospective Financial Intermediaries to agree to cooperate in enforcing the Trust's policies (or, upon prior written approval only, a Financial Intermediary's own policies) with respect to frequent purchases, redemptions and exchanges of Fund shares.

With respect to trades that occur through omnibus accounts at Financial Intermediaries, to some extent, the Fund relies on the Financial Intermediary to monitor frequent short-term trading within the Fund by the Financial Intermediary's customers. However, the Fund has entered into agreements with Financial Intermediaries whereby Financial Intermediaries are required to provide certain customer identification and transaction information upon the Fund's request. The Fund may use this information to help identify and prevent market-timing activity in the Fund. There can be no assurance that the Fund will be able to identify or prevent all market-timing activities.

**Taxes**

As with any investment, you should consider how your Fund investment will be taxed. The tax information in this Prospectus is provided as general information. You should consult your own tax professional about the tax consequences of an investment in a Fund. Unless your investment in a Fund is through a tax-deferred retirement account, such as a 401(k) plan or IRA, you need to be aware of the possible tax consequences when the Fund makes distributions and when you sell shares, including an exchange to another Morgan Stanley Fund.

**23**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

*Taxation of Distributions.* Your distributions normally are subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares. A distribution also may be subject to local income tax. Any income dividend distributions and any short-term capital gain distributions are taxable to you as ordinary income. Any long-term capital gain distributions are taxable as long-term capital gains, no matter how long you have owned shares in the Fund. It is not anticipated that any portion of the distributions by a Fund would qualify for a lower tax rate as qualified dividend income. Further, such distributions are not anticipated to be eligible for a dividends-received deduction for corporate shareholders.

If you buy shares of a Fund before a distribution, you may be subject to tax on the entire amount of the taxable distribution you receive. Distributions are taxable to you even if they are paid from income or gain earned by a Fund before your investment (and thus were included in the price you paid for your Fund shares).

Investment income received by the Fund from sources within foreign countries may be subject to foreign income taxes.

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

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

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

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

When you open your account, you should provide your social security or tax identification number on your investment application. By providing this information, you will avoid being subject to federal backup withholding at the applicable rate on taxable distributions and redemption proceeds. Any withheld amount would be sent to the IRS as an advance payment of your taxes due on your income for such year.

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

A Fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive 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 provide additional information to a Fund to enable the Fund to determine whether withholding is required.

Because each investor's tax circumstances are unique and the tax laws may change, you should consult your tax advisor about your investment.

**Dividends and Distributions**

The Fund's policy is to distribute to shareholders substantially all of its net investment income, if any, in the form of a monthly dividend and to distribute net realized capital gains, if any, at least annually.

The Fund automatically reinvests all dividends and distributions in additional shares. However, you may elect to receive distributions in cash by giving written notice to the Fund or your Financial Intermediary or by checking the appropriate box in the Distribution Option section on the New Account Application.

For accounts held directly with the Fund's transfer agent for which the shareholder has elected to receive distributions via check, any distribution (dividend or capital gain) under $10.00 is automatically reinvested in additional shares regardless of your elected distribution option.

**24**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

**Potential Conflicts of Interest**

As a diversified global financial services firm, Morgan Stanley, the parent company of the Adviser, engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley's interests or the interests of its clients may conflict with the interests of the Fund. Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with any new or successor funds, programs, accounts or businesses, the ''Affiliated Investment Accounts'') with a wide variety of investment objectives that in some instances may overlap or conflict with the Fund's investment objectives and present conflicts of interest. In addition, Morgan Stanley may also from time to time create new or successor Affiliated Investment Accounts that may compete with the Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and, in fact, they may not be. Conflicts of interest not described below may also exist.

For more information about conflicts of interest, see the section entitled "Potential Conflicts of Interest" in the SAI.

*Material Nonpublic Information.* It is expected that confidential or material nonpublic information regarding an investment or potential investment opportunity may become available to the Adviser. If such information becomes available, the Adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. Morgan Stanley has established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley. In limited circumstances, however, including for purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, personnel, including personnel of the investment adviser, on one side of an information barrier may have access to information and personnel on the other side of the information barrier through "wall crossings." The Adviser faces conflicts of interest in determining whether to engage in such wall crossings. Information obtained in connection with such wall crossings may limit or restrict the ability of the Adviser to engage in or otherwise effect transactions on behalf of the Fund (including purchasing or selling securities that the Adviser may otherwise have purchased or sold for the Fund in the absence of a wall crossing).

*Investments by Morgan Stanley and its Affiliated Investment Accounts.* In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the Adviser and the Investment team, may have obligations to other clients or investors in Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of the Fund or its shareholders. The Fund's investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a result, the members of an Investment team may face conflicts in the allocation of investment opportunities among the Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the Adviser. Certain Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts. To seek to reduce potential conflicts of interest and to attempt to allocate such investment opportunities in a fair and equitable manner, the Adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the Adviser, including the Fund, fair access to investment opportunities consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the Adviser.

*Payments to Broker-Dealers and Other Financial Intermediaries.* The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of the Fund, to certain Financial Intermediaries (which may include affiliates of the Adviser and Distributor), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Fund and/or shareholder servicing. The prospect of receiving, or the receipt of, additional compensation, as described above, by Financial Intermediaries may provide such Financial Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Fund over other investment options with respect to which these Financial Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Fund or the amount that the Fund receives to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any disclosures provided by Financial Intermediaries as to their compensation. In addition, in certain circumstances, the Adviser restricts, limits or reduces the amount of the Fund's investment, or restricts the type of governance or voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.

*Morgan Stanley Trading and Principal Investing Activities.* Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for the Fund's holdings, although these activities could have an adverse impact on the value of one or more of the Fund's investments, or

**25**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and potentially adverse to, that of the Fund.

*Morgan Stanley's Investment Banking and Other Commercial Activities.* Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment funds that may compete with the Fund and with respect to investments that the Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve an action of a different timing or nature than the action taken, by the Fund. Morgan Stanley may give advice and provide recommendations to persons competing with the Fund and/or any of the Fund's investments that are contrary to the Fund's best interests and/or the best interests of any of its investments. Morgan Stanley's activities on behalf of its clients (such as engagements as an underwriter or placement agent) may restrict or otherwise limit investment opportunities that may otherwise be available to the Fund.

Morgan Stanley may be engaged to act as a financial advisor to a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in connection with such transactions. Morgan Stanley's compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, the Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to a merger or an acquisition.

**26**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

Financial Highlights

The financial highlights table that follows is intended to help you understand the financial performance of the Class W shares of the Fund since inception. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).

The ratios of expenses to average net assets listed in the table below for Class W shares of the Fund are based on the average net assets of the Fund for each of the periods listed in the table. To the extent that the Fund's average net assets decrease over the Fund's next fiscal year, such expense ratios can be expected to increase, potentially significantly, because certain fixed costs will be spread over a smaller amount of assets.

The information below has been derived from the financial statements audited by Ernst & Young LLP, the Fund's independent registered public accounting firm. Ernst & Young LLP's report, along with the Fund's financial statements, are incorporated by reference into the Fund's SAI. The Annual Report to Shareholders (which includes the Fund's financial statements) and SAI are available at no cost from the Trust at the toll-free number noted on the back cover to this Prospectus.

**27**

------

[Back To **Table of Contents**](#TOC_15552)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**High Yield Portfolio**

---

| | | |
|:---|:---|:---|
| | **Class W** | **Class W** |
| <br>**Selected Per Share Data and Ratios** | **Year Ended**<br>**September 30, 2022** | **Period from November 16, 2020<sup>(1)</sup>**<br>**to September 30, 2021** |
| **Net Asset Value, Beginning of Period** | $9.69<br>| $9.42<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.56<br>| 0.51<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (1.84)<br>| 0.26<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (1.28)<br>| 0.77<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.57)<br>| (0.50)<br>|
| **Net Asset Value, End of Period** | $7.84<br>| $9.69<br>|
| **Total Return<sup>(3)</sup>**  | (13.80)%<br>| 8.39<br> %<br> <sup>(6)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $9<br>| $11<br>|
| Ratio of Expenses Before Expense Limitation | 20.44<br> %<br>| 20.81<br> %<br> <sup>(7)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 0.00<br> %<br> <sup>(4)</sup> <br>| 0.00<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding Interest Expenses | N/A<br>| 0.00<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Net Investment Income | 6.27<br> %<br> <sup>(4)</sup> <br>| 6.09<br> %<br> <sup>(4)(7)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.00<br> %<br> <sup>(5)</sup> <br>| 0.00<br> %<br> <sup>(5)(7)</sup> <br>|
| Portfolio Turnover Rate | 28<br> %<br>| 54<br> %<br> <sup>(6)</sup> <br>|

---

(1) Commencement of Offering.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5) Amount is less than 0.005%.

(6) Not annualized.

(7) Annualized.

**28**

------

[Back To **Table of Contents**](#TOC_15552)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15552)

Where to Find Additional Information

In addition to this Prospectus, the Fund has an SAI, dated January 27, 2023 (as may be supplemented from time to time), which contains additional, more detailed information about the Trust and the Fund. The SAI is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus.

The Trust publishes Annual and Semi-Annual Reports ("Shareholder Reports") that contain additional information about the Fund's investments. In the Fund's Annual Report to Shareholders, you will find a discussion of the market conditions and the investment strategies that significantly affected the Fund's performance during the last fiscal year. For additional Trust information, including information regarding the investments comprising the Fund, please call the toll-free number below.

You may obtain the SAI and Shareholder Reports without charge by contacting the Trust at the toll-free number below or on our Internet site at: www.morganstanley.com/im. If you purchased shares through a Financial Intermediary, you may also obtain these documents, without charge, by contacting your Financial Intermediary.

Shareholder Reports and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.

Morgan Stanley Institutional Fund Trust

c/o SS&C Global Investor and

Distribution Solutions, Inc.

P.O. Box 219804 Kansas City, MO 64121-9804

For Shareholder Inquiries,

call toll-free 1-800-869-6397.

Prices and Investment Results are available at www.morganstanley.com/im.

The Trust's 1940 Act registration number is 811-03980.© 2023 Morgan Stanley

IFTHYWPRO 1/23

------

![image](pr15575img002.jpg)

Morgan Stanley Institutional Fund Trust

**Ultra-Short Portfolios**

Ultra-Short Income Portfolio

Ultra-Short Municipal Income Portfolio

------

**Prospectus** \| January 27, 2023

---

| | |
|:---|:---|
| **Ultra-Short Income Portfolio**<br>**Share Class** | **Ticker Symbol** |
| Class IR | MULSX |
| Institutional Class | MUIIX |
| Class A | MUAIX |

---

---

| | |
|:---|:---|
| **Ultra-Short Municipal Income Portfolio** <br>**Share Class** | **Ticker Symbol** |
| Class IR | MULMX |
| Institutional Class | MUIMX |
| Class A | MUAMX |

---

![image](pr15575img001.jpg)

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

An investment in a Fund is not a bank deposit and is not insured by the Federal Deposit Insurance Corporation or any other

government agency. An investment in a Fund involves investment risks, and you may lose money in the fund.

IFTUSIPRO 01/23

------

**Table of Contents**

---

| | |
|:---|:---|
|  | **Page** |
| [**Fund Summary**](#ref_chapter_2_15575)  | 1 |
| [Ultra-Short Income Portfolio](#ref_chapter_2-sect1_1_15575)  | 1 |
| [Ultra-Short Municipal Income Portfolio](#ref_chapter_2-sect1_11_15575)  | 7 |
| [**Details of the Funds**](#ref_chapter_3_15575)  | 13 |
| [Ultra-Short Income Portfolio](#ref_chapter_3-sect1_1_15575)  | 13 |
| [Ultra-Short Municipal Income Portfolio](#ref_chapter_3-sect1_2_15575)  | 14 |
| [**Additional Information about the Funds' Investment Strategies and Related Risks**](#ref_chapter_4_15575)  | 15 |
| [**Fund Management**](#ref_chapter_5_15575)  | 23 |
| [**Shareholder Information**](#ref_chapter_6_15575)  | 25 |
| [**Financial Highlights**](#ref_chapter_7_15575)  | 34 |
| [Ultra-Short Income Portfolio](#ref_chapter_7-sect1_2_15575)  | 35 |
| [Ultra-Short Municipal Income Portfolio](#ref_chapter_7-sect1_3_15575)  | 38 |

---

------

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Income Portfolio

**Investment Objective**

The Ultra-Short Income Portfolio (the "Fund") seeks current income with capital preservation while maintaining liquidity.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay fees** **other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below. The Fund does not charge any sales loads or other** **fees when you purchase or redeem shares.**

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

---

| | | | |
|:---|:---|:---|:---|
|  | **Class IR** | **Institutional Class** | **Class A** |
| Advisory Fee | 0.20% | 0.20% | 0.20% |
| Shareholder Service or 12b-1 Fee |  | 0.05% | 0.25%<sup>1</sup> |
| Other Expenses | 0.09% | 0.09% | 0.09% |
| Total Annual Fund Operating Expenses<sup>2</sup>  | 0.29% | 0.34% | 0.54%<sup>1</sup> |
| Fee Waiver and/or Expense Reimbursement<sup>2</sup>  | 0.04% | 0.04% | 0.15%<sup>1</sup><sup>,</sup><sup>3</sup> |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>2</sup>  | 0.25% | 0.30% | 0.39%<sup>1</sup><sup>,</sup><sup>3</sup> |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year). Although your actual costs may be higher or lower, based on these assumptions your costs would be:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class IR | $26 | $89 | $159 | $364  |
| Institutional Class | $31 | $105  | $187 | $427 |
| Class A | $40  | $158 | $287  | $663  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class IR | $26 | $89 | $159 | $364  |
| Institutional Class | $31 | $105  | $187 | $427 |
| Class A | $40  | $158 | $287  | $663  |

---

---

| | |
|:---|:---|
| 1 | The Fund's "Distributor," Morgan Stanley Distribution, Inc., has agreed to waive the 12b-1 fee on Class A shares of the Fund to the extent it exceeds 0.10% of the average daily net assets of such shares on an annualized basis. This waiver will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust") acts to discontinue all or a portion of such waiver when it deems such action is appropriate. |

---

---

| | |
|:---|:---|
| 2 | The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.25% for Class IR, 0.30% for Institutional Class and 0.40% for Class A. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of the Trust acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |

---

---

| | |
|:---|:---|
| 3 | Fee Waiver and/or Expense Reimbursement and Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement have been restated to reflect the current expense limitation arrangement. |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the reporting period, the Fund did not hold any long-term investments and accordingly portfolio turnover is not applicable.

**1**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Income Portfolio (Con't)

**Principal Investment Strategies**

The Fund invests primarily in liquid, high quality U.S. dollar-denominated money market instruments of U.S. and foreign financial issuers and non-financial issuers. The Fund also invests in obligations issued or guaranteed by the U.S. Government and its agencies and instrumentalities. The Fund's money market investments may include commercial paper, corporate debt obligations, debt obligations (including certificates of deposit and promissory notes) of U.S. banks or foreign banks, or of U.S. branches or subsidiaries of foreign banks, or foreign branches of U.S. banks (such as Yankee obligations), certificates of deposit of savings banks and savings and loan organizations, asset-backed securities, repurchase agreements and municipal obligations.

Pursuant to a fundamental policy adopted by the Fund, the Fund invests, under normal circumstances, at least 25% of its total assets in securities issued by companies in the financial services industry, including banks, broker-dealers and insurance companies.

Securities purchased by the Fund (or the issuers of such securities) will carry a rating in the highest two rating categories, A-2, P-2 or F2 or better by S&P Global Ratings Group, a division of S&P Global Inc. ("S&P"), Moody's Investors Service, Inc. ("Moody's"), or Fitch Ratings, Inc. ("Fitch"), respectively, or the equivalent by another nationally recognized statistical rating organization ("NRSRO"), or if unrated, considered by the Adviser to be of equivalent quality. The Fund may invest up to 5% of its assets, determined at the time of investment, in securities (or the issuers of such securities) rated A-2, P-2 or F2 by S&P, Moody's or Fitch, respectively, and no more than 1% of its assets will be invested in an individual security or issuer with such rating. In the case of a security that is rated differently by these three rating agencies, where two rating agencies rate the security in the highest rating category and the third rating agency rates the security in the second highest rating category, the security will be treated as rated in the highest rating category. In the case of a security that is differently rated by only two of these rating agencies, the security will be treated as rated in the lower rating category.

Under normal circumstances, the Fund intends to maintain a maximum weighted average maturity of 90 days and a maximum weighted average life of 180 days.

The Fund is not a money market fund and does not seek to maintain a stable net asset value per share ("NAV").

The Adviser follows a multi-pronged investment process with respect to credit risk, interest rate risk and liquidity. Securities are reviewed on an ongoing basis to maintain or improve creditworthiness taking into consideration factors such as cash flow, asset quality, debt service coverage ratios and economic developments. Additionally, exposure to guarantors and liquidity providers is monitored separately as are the various diversification requirements. The Adviser manages the Fund's assets in an attempt to reduce credit and interest rate risks.

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Fixed-Income Securities.** Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). For example, a type of fixed-income securities in which the Fund may invest are corporate debt obligations. In addition to interest rate, credit and other risks, corporate debt obligations are also subject to factors directly related to the issuer, such as the credit rating of the corporation, the corporation's performance and perceptions of the corporation in the marketplace, and by factors not directly related to the issuer, such as general market liquidity, economic conditions and inflation. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. The Fund may be subject to certain liquidity risks that may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities .

• **Financial Services.** The Fund is more susceptible to any economic, business, political, regulatory or other developments that adversely affect issuers in the financial services industry than a fund that does not invest significantly in the financial services industry. The profitability of many types of financial services companies may be adversely affected in certain market cycles, including periods of rising interest rates, which may restrict the availability and increase the cost of capital, and declining economic conditions, which may cause credit losses due to financial difficulties of borrowers. Financial services companies are also subject to extensive government regulation, including policy and legislative changes in the United States and other countries that are changing many aspects of financial regulation.

• **Credit and Interest Rate Risk.** Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. In such instances, the value of the Fund could decline and the Fund could lose money. Interest rate risk refers to the decline in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most

**2**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Income Portfolio (Con't)

fixed-income securities go up. The Fund may invest in variable and floating rate loans and other variable and floating rate securities. Although these instruments are generally less sensitive to interest rate changes than fixed rate instruments, the value of variable and floating rate loans and other securities may decline if their interest rates do not rise as quickly, or as much, as general interest rates. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.<br>

• **U.S. Government Securities.** Different types of U.S. government securities are subject to different levels of credit risk, including the risk of default, depending on the nature of the particular government support for that security. For example, a U.S. government- sponsored entity, such as Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, although chartered or sponsored by an Act of Congress, may issue securities that are neither insured nor guaranteed by the U.S. Treasury and, therefore, are not backed by the full faith and credit of the United States. With respect to U.S. government securities that are not backed by the full faith and credit of the United States, there is the risk that the U.S. Government will not provide financial support to such U.S. government agencies, instrumentalities or sponsored enterprises if it is not obligated to do so by law.

• **Asset-Backed Securities.** Asset-backed securities are subject to credit (such as a borrower's default on its mortgage obligation and the default or failure of a guarantee underlying the asset-backed security), interest rate and certain additional risks, including the risk that various federal and state consumer laws and other legal and economic factors may result in the collateral backing the securities being insufficient to support payment on the securities. Some asset-backed securities also entail prepayment risk and extension risk, which may vary depending on the type of asset. Due to these risks, asset-backed securities may become more volatile in certain interest rate environments.

• **Repurchase Agreements.** Repurchase agreements are subject to risks associated with the possibility of default by the seller at a time when the collateral has declined in value, or insolvency of the seller, which may affect the Fund's right to control the collateral and result in certain costs and delays. Repurchase agreements may involve a greater degree of credit risk than investments in U.S. government securities.

• **Foreign Money Market Securities.** Investing in money market securities of foreign issuers involves some additional risks, including the possibility of adverse political, economic or other developments affecting the issuers of these securities.

• **Foreign Securities.** The Fund may invest in U.S. dollar-denominated securities issued by foreign governmental or corporate issuers. Investing in securities of foreign issuers involves some additional risks than securities of U.S. issuers. While these securities are subject to the same type of risks that pertain to domestic issuers, namely credit risk and interest rate risk, they are also subject to other additional risks. Foreign issuers generally are subject to different accounting, auditing and financial reporting standards than U.S. issuers. There may be less information available to the public about foreign issuers. In some foreign countries, there is also the risk of government expropriation, excessive taxation, political or social instability, economic sanctions or other similar governmental activity or diplomatic developments that could affect an investment. There also can be difficulty obtaining and enforcing judgments against issuers in foreign countries. Governmental actions can have a significant effect on the economic conditions in foreign countries, which also may adversely affect the Fund's investments in foreign issuers.

• **Municipals.** Because the Fund may invest in municipal securities (also referred to as municipal obligations), the Fund may be susceptible to political, legislative, economic, regulatory, tax or other factors affecting issuers of these municipal securities, such as state and local governments and their agencies. To the extent that the Fund invests in municipal securities of issuers in the same economic sector, it could be more sensitive to economic, business or political developments that affect such sector. Municipal securities and their issuers may be more susceptible to downgrade, loss of revenue, default and bankruptcy because of recent periods of economic stress. Municipal securities also involve the risk that an issuer may call the securities for redemption, which could force the Fund to reinvest the proceeds at a lower rate of interest.

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **LIBOR Discontinuance or Unavailability Risk.** The London InterBank Offered Rate ("LIBOR") is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. The Financial

**3**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Income Portfolio (Con't)

Conduct Authority (the "FCA"), which is the regulatory authority that oversees financial services firms, financial markets in the U.K. and the administrator of LIBOR, announced that, after the end of 2021, one-week and two-month U.S. Dollar LIBOR and all non-U.S. Dollar LIBOR settings have either ended or are no longer representative of the underlying market they seek to measure. The FCA also announced that the most commonly used U.S. dollar LIBOR settings may continue to be provided on a representative basis until mid-2023. However, in connection with supervisory guidance from regulators, some regulated entities may no longer enter into most new LIBOR-based contracts. As a result of the foregoing, LIBOR may no longer be available or no longer deemed an appropriate reference rate upon which to determine the interest rate on or impacting certain loans, notes, derivatives and other instruments or investments held by the Fund.<br>

• **Commercial Paper.** Commercial paper is subject to interest rate risk and is susceptible to changes in the issuer's financial condition or credit quality. Commercial paper is typically repaid with the proceeds from the issuance of new commercial paper. Thus, investments in commercial paper are subject to the risk (commonly referred to as rollover risk) that the issuer will be unable to issue sufficient new commercial paper to meet the repayment obligations under its outstanding commercial paper. Because commercial paper is typically unsecured, investments in commercial paper are subject to increased credit risk.

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Institutional Class shares' performance from year-to-year and by showing how the Fund's average annual returns for the past one and five year periods and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The performance of the other classes, which is shown in the table below, will differ because the classes have different ongoing fees. The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15575img003.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 12/31/22 | 0.95% |
| **Low Quarter** | 03/31/20 | -0.17% |

---

**4**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Income Portfolio (Con't)

**Average Annual Total Returns**

(for the calendar periods ended December 31, 2022)

---

| | | | |
|:---|:---|:---|:---|
|  | **Past One Year** | **Past Five Years** | **Since Inception** |
| **Institutional Class** (commenced operations on 4/28/2016) | **Institutional Class** (commenced operations on 4/28/2016) | **Institutional Class** (commenced operations on 4/28/2016) | **Institutional Class** (commenced operations on 4/28/2016) |
| Return Before Taxes | 1.67% | 1.36% | 1.27% |
| Return After Taxes on Distributions<sup>1</sup>  | 0.95% | 0.77% | 0.73% |
| Return After Taxes on Distributions and Sale of Fund Shares | 0.99% | 0.79% | 0.74% |
| **Class A** (commenced operations on 4/28/2016) | **Class A** (commenced operations on 4/28/2016) | **Class A** (commenced operations on 4/28/2016) | **Class A** (commenced operations on 4/28/2016) |
| Return Before Taxes | 1.61% | 1.24% | 1.12% |
| **Class IR** (commenced operations on 4/28/2016) | **Class IR** (commenced operations on 4/28/2016) | **Class IR** (commenced operations on 4/28/2016) | **Class IR** (commenced operations on 4/28/2016) |
| Return Before Taxes | 1.72% | 1.41% | 1.32% |
| ICE BofA 3-Month U.S. Treasury Bill Index (reflects no deductions for fees, expenses or taxes)<sup>2</sup>  | 1.46% | 1.26% | 1.11%<sup>3</sup> |
| Lipper Ultra Short Obligations Funds Index (reflects no deduction for taxes)<sup>4</sup>  | 0.02% | 1.33% | 1.35%<sup>3</sup> |

---

1 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

2 The ICE BofA (Intercontinental Exchange Bank of America) 3-Month U.S. Treasury Bill Index tracks the performance of U.S. Treasury bills with a remaining maturity of three months. It is not possible to invest directly in an index.

3 Since Inception reflects the inception date of the Fund.

4 The Lipper Ultra Short Obligations Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Ultra Short Obligations Funds classification. There are currently 30 funds represented in this Index.

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Fund's other classes will vary from Institutional Class shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of the Global Liquidity team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began** **Managing Fund** |
| Jonas Kolk | Managing Director | Since Inception |
| Michael Cha | Executive Director | Since Inception |
| David Schoenfeld | Executive Director | January 2018 |

---

**Purchase and Sale of Fund Shares**

The minimum initial investment generally is $5 million for Institutional Class shares and $1,000 for Class A shares of the Fund. To purchase Class IR shares, an investor must meet a minimum initial investment of $10 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades on an omnibus level, whether or not qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and in each case subject to the discretion of the Adviser. The minimum initial investment requirements may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business (except when the following federal holidays are observed: Columbus Day and Veterans Day) directly from the Fund by mail (c/o SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-888-378-1630) or by contacting an authorized third-party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's Distributor (each, a "Financial Intermediary"). In addition, you can sell Fund shares at any time by enrolling in a systematic withdrawal plan. For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**5**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Income Portfolio (Con't)

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Fund shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

**6**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Municipal Income Portfolio

**Investment Objective**

The Ultra-Short Municipal Income Portfolio (the "Fund") seeks current income exempt from federal income tax and capital preservation while maintaining liquidity.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay fees** **other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below. The Fund does not charge any sales loads or other** **fees when you purchase or redeem shares.**

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

---

| | | | |
|:---|:---|:---|:---|
|  | **Class IR** | **Institutional Class** | **Class A** |
| Advisory Fee | 0.20% | 0.20% | 0.20% |
| Shareholder Service or 12b-1 Fee |  | 0.10% | 0.20%<sup>1</sup> |
| Other Expenses | 0.26% | 0.30% | 0.26% |
| Total Annual Fund Operating Expenses<sup>2</sup>  | 0.46% | 0.60% | 0.66%<sup>1</sup> |
| Fee Waiver and/or Expense Reimbursement<sup>2</sup>  | 0.21% | 0.25% | 0.31%<sup>1</sup><sup>,</sup><sup>3</sup> |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>2</sup>  | 0.25% | 0.35% | 0.35%<sup>1</sup><sup>,</sup><sup>3</sup> |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year). Although your actual costs may be higher or lower, based on these assumptions your costs would be:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class IR | $26  | $126 | $237 | $559  |
| Institutional Class | $36 | $167 | $310  | $726 |
| Class A | $36 | $180  | $337 | $793 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class IR | $26  | $126 | $237 | $559  |
| Institutional Class | $36 | $167 | $310  | $726 |
| Class A | $36 | $180  | $337 | $793 |

---

---

| | |
|:---|:---|
| 1 | The Fund's "Distributor," Morgan Stanley Distribution, Inc., has agreed to waive the 12b-1 fee on Class A shares of the Fund to the extent it exceeds 0.10% of the average daily net assets of such shares on an annualized basis. This waiver will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust") acts to discontinue all or a portion of such waiver when it deems such action is appropriate. |

---

---

| | |
|:---|:---|
| 2 | The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.25% for Class IR, 0.35% for Institutional Class and 0.35% for Class A. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of the Trust acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |

---

---

| | |
|:---|:---|
| 3 | Fee Waiver and/or Expense Reimbursement and Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement have been restated to reflect the current expense limitation arrangement. |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the reporting period, the Fund did not hold any long-term investments and accordingly portfolio turnover is not applicable.

**7**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Municipal Income Portfolio (Con't)

**Principal Investment Strategies**

Under normal circumstances, the Fund invests at least 80% of its net assets in municipal securities, the income from which is exempt from federal income tax. This policy is fundamental and may not be changed without shareholder approval. The Fund may also invest in variable and floating rate demand instruments and tender option bonds.

The Fund may invest up to 100% of its assets in municipal securities, the interest on which may be subject to the federal alternative minimum tax for individuals. In addition, the Fund may invest up to 20% of its assets in securities subject to federal income tax.

Securities purchased by the Fund (or the issuers of such securities) will carry a rating in the highest two rating categories, A-2, P-2 or F2 or better by S&P Global Ratings Group, a division of S&P Global Inc. ("S&P"), Moody's Investors Service, Inc. ("Moody's") or Fitch Ratings, Inc. ("Fitch"), respectively, or the equivalent by another nationally recognized statistical rating organization ("NRSRO"), or if unrated, considered by the Adviser to be of equivalent quality. The Fund may invest up to 15% of its assets, determined at the time of investment, in securities (or the issuers of such securities) rated A-2, P-2 or F2 by S&P, Moody's or Fitch, respectively, and up to 5% of its assets in unrated securities. In the case of a security that is rated differently by these three rating agencies, where two rating agencies rate the security in the highest rating category and the third rating agency rates the security in the second highest rating category, the security will be treated as rated in the highest rating category. In the case of a security that is differently rated by only two of these rating agencies, the security will be treated as rated in the lower rating category.

Under normal circumstances, the Fund intends to maintain a maximum weighted average maturity of 90 days and a maximum weighted average life of 180 days. In addition, the Fund may only purchase securities with a maximum final maturity of two years.

The Fund is not a money market fund and does not seek to maintain a stable NAV.

The Adviser follows a multi-pronged investment process with respect to credit risk, interest rate risk and liquidity. Securities are reviewed on an ongoing basis to maintain or improve creditworthiness taking into consideration factors such as cash flow, asset quality, debt service coverage ratios and economic developments. Additionally, exposure to guarantors and liquidity providers is monitored separately as are the various diversification requirements. The Adviser manages the Fund's assets in an attempt to reduce credit and interest rate risks.

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Fixed-Income Securities.** Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). For example, a type of fixed-income securities in which the Fund may invest are corporate debt obligations. In addition to interest rate, credit and other risks, corporate debt obligations are also subject to factors directly related to the issuer, such as the credit rating of the corporation, the corporation's performance and perceptions of the corporation in the marketplace, and by factors not directly related to the issuer, such as general market liquidity, economic conditions and inflation. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. The Fund may be subject to certain liquidity risks that may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities .

• **Credit and Interest Rate Risk.** Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. In such instances, the value of the Fund could decline and the Fund could lose money. Interest rate risk refers to the decline in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. The Fund may invest in variable and floating rate loans and other variable and floating rate securities. Although these instruments are generally less sensitive to interest rate changes than fixed rate instruments, the value of variable and floating rate loans and other securities may decline if their interest rates do not rise as quickly, or as much, as general interest rates. The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). During periods when interest rates are low or there are negative interest rates, the Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer

**8**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Municipal Income Portfolio (Con't)

can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for the Fund to sell at an advantageous price or time.

• **U.S. Government Securities.** Different types of U.S. government securities are subject to different levels of credit risk, including the risk of default, depending on the nature of the particular government support for that security. For example, a U.S. government- sponsored entity, such as Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, although chartered or sponsored by an Act of Congress, may issue securities that are neither insured nor guaranteed by the U.S. Treasury and, therefore, are not backed by the full faith and credit of the United States. With respect to U.S. government securities that are not backed by the full faith and credit of the United States, there is the risk that the U.S. Government will not provide financial support to such U.S. government agencies, instrumentalities or sponsored enterprises if it is not obligated to do so by law.

• **Municipals.** Because the Fund invests in municipal securities (also referred to as municipal obligations), the Fund may be susceptible to political, legislative, economic, regulatory, tax or other factors affecting issuers of these municipal securities, such as state and local governments and their agencies. To the extent that the Fund invests in municipal securities of issuers in the same economic sector, it could be more sensitive to economic, business or political developments that affect such sector. Municipal securities and their issuers may be more susceptible to downgrade, loss of revenue, default and bankruptcy because of recent periods of economic stress. Municipal securities also involve the risk that an issuer may call the securities for redemption, which could force the Fund to reinvest the proceeds at a lower rate of interest.

• **Tender Option Bonds.** The risks of tender option bonds include the risk that the owner of such instrument may not be considered the owner for federal income tax purposes and thus will not be entitled to treat such interest as exempt from federal income tax. Additionally, the occurrence of certain defaults or a credit rating downgrade on the underlying security may impair the ability to tender the bond back to the third-party provider of the demand option, thus causing the bond to become illiquid.

• **Taxability Risk**. Changes in tax laws or adverse determinations by the Internal Revenue Service ("IRS") may make the income from some municipal obligations taxable.

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **LIBOR Discontinuance or Unavailability Risk.** The London InterBank Offered Rate ("LIBOR") is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. The Financial Conduct Authority (the "FCA"), which is the regulatory authority that oversees financial services firms , financial markets in the U.K. and the administrator of LIBOR, announced that, after the end of 2021, one-week and two-month U.S. Dollar LIBOR and all non-U.S. Dollar LIBOR settings have either ended or are no longer representative of the underlying market they seek to measure. The FCA also announced that the most commonly used U.S. dollar LIBOR settings may continue to be provided on a representative basis until mid-2023. However, in connection with supervisory guidance from regulators, some regulated entities may no longer enter into most new LIBOR-based contracts . As a result of the foregoing , LIBOR may no longer be available or no longer deemed an appropriate reference rate upon which to determine the interest rate on or impacting certain loans, notes, derivatives and other instruments or investments held by the Fund .

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

**9**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Municipal Income Portfolio (Con't)

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**10**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Municipal Income Portfolio (Con't)

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing the Fund's Institutional Class shares' performance from year-to-year and by showing how the Fund's average annual returns for the past one year period and since inception compare with those of a broad measure of market performance, as well as an index that represents a group of similar mutual funds, over time. The performance of the other classes, which is shown in the table below, will differ because the classes have different ongoing fees. The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15575img004.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 12/31/22 | 0.61% |
| **Low Quarter** | 03/31/21 | -0.10% |

---

**Average Annual Total Returns**

(for the calendar periods ended December 31, 2022)

---

| | | |
|:---|:---|:---|
|  | **Past One Year** | **Since Inception** |
| **Institutional Class** (commenced operations on 12/19/2018) | **Institutional Class** (commenced operations on 12/19/2018) | **Institutional Class** (commenced operations on 12/19/2018) |
| Return Before Taxes | 1.00% | 0.76% |
| Return After Taxes on Distributions<sup>1</sup>  | 0.55% | 0.45% |
| Return After Taxes on Distributions and Sale of Fund Shares | 0.59% | 0.45% |
| **Class A** (commenced operations on 12/19/2018) | **Class A** (commenced operations on 12/19/2018) | **Class A** (commenced operations on 12/19/2018) |
| Return Before Taxes | 1.08% | 0.72% |
| **Class IR** (commenced operations on 12/19/2018) | **Class IR** (commenced operations on 12/19/2018) | **Class IR** (commenced operations on 12/19/2018) |
| Return Before Taxes | 1.19% | 0.84% |
| Bloomberg BVAL Municipal AAA Yield Curve (Callable) 3 Month Index (reflects no deduction for fees, expenses or taxes)<sup>2</sup>  | 1.44% | 0.80%<sup>3</sup> |
| Lipper Short Municipal Debt Funds Index (reflects no deduction for taxes)<sup>4</sup>  | -1.91% | 0.66%<sup>3</sup> |

---

1 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

---

| | |
|:---|:---|
| 2 | Bloomberg BVAL Municipal AAA Yield Curve (Callable) 3-Month Index is Bloomberg's evaluated pricing service, BVAL, provides a municipal "AAA" 5% coupon benchmark yield curve that is the baseline curve for BVAL tax-exempt municipals. It is populated with high quality U.S. municipal bonds with an average rating of "AAA" from Moody's and S&P. The yield curve is built using nonparametric fit of market data obtained from the Municipal Securities Rulemaking Board, new issues and other proprietary contributed prices. The benchmark is updated hourly and utilizes eligible "AAA" traded observations throughout the day and accessible on through Bloomberg services. It is not possible to invest directly in an index. |

---

3 Since Inception reflects the inception date of the Fund.

4 The Lipper Short Municipal Debt Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Short Municipal Debt Funds classification. There are currently 30 funds represented in this Index.

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Fund's other classes will vary from Institutional Class shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**11**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Ultra-Short Municipal Income Portfolio (Con't)

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Portfolio Managers.** The Fund is managed by members of the Global Liquidity team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began** **Managing Fund** |
| Jonas Kolk | Managing Director | Since Inception |
| Paul Daggy | Executive Director | Since Inception |

---

**Purchase and Sale of Fund Shares**

The minimum initial investment generally is $10 million for Institutional Class shares and $1,000 for Class A shares of the Fund. To purchase Class IR shares, an investor must meet a minimum initial investment of $15 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades on an omnibus level, whether or not qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and in each case subject to the discretion of the Adviser. The minimum initial investment requirements may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business (except when the following federal holidays are observed: Columbus Day and Veterans Day) directly from the Fund by mail (c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-888-378-1630) or by contacting an authorized third-party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's Distributor (each, a "Financial Intermediary"). In addition, you can sell Fund shares at any time by enrolling in a systematic withdrawal plan. For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**Tax Information**

Your income dividend distributions are normally exempt from federal tax to the extent they are derived from municipal obligations. Income derived from other portfolio securities may be subject to federal, state and/or local income taxes. Income derived from some municipal securities is subject to the federal "alternative minimum tax." If the Fund makes any capital gain distributions, those distributions will normally be subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Fund shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

**12**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Details of the Funds

Ultra-Short Income Portfolio

**Investment Objective**

The Ultra-Short Income Portfolio seeks current income with capital preservation while maintaining liquidity.

The Fund's investment objective may be changed by the Trust's Board of Trustees without shareholder approval, but no change is anticipated. If the Fund's investment objective changes, the Fund will notify shareholders and shareholders should consider whether the Fund remains an appropriate investment in light of the change.

**Approach**

The Fund invests primarily in liquid, high quality U.S. dollar-denominated money market instruments of U.S. and foreign financial issuers and non-financial issuers. The Fund also invests in obligations issued or guaranteed by the U.S. Government and its agencies and instrumentalities. The Fund's money market investments may include commercial paper, corporate debt obligations, debt obligations (including certificates of deposit and promissory notes) of U.S. banks or foreign banks, or of U.S. branches or subsidiaries of foreign banks, or foreign branches of U.S. banks (such as Yankee obligations), certificates of deposit of savings banks and savings and loan organizations, asset-backed securities, repurchase agreements and municipal obligations.

Pursuant to a fundamental policy adopted by the Fund, the Fund invests, under normal circumstances, at least 25% of its total assets in securities issued by companies in the financial services industry, including banks, broker-dealers and insurance companies.

Securities purchased by the Fund (or the issuers of such securities) will carry a rating in the highest two rating categories, A-2, P-2 or F2 or better by S&P, Moody's or Fitch, respectively, or the equivalent by another NRSRO, or if unrated, considered by the Adviser to be of equivalent quality. The Fund may invest up to 5% of its assets, determined at the time of investment, in securities (or the issuers of such securities) rated A-2, P-2 or F2 by S&P, Moody's or Fitch, respectively, and no more than 1% of its assets will be invested in an individual security or issuer with such rating. In the case of a security that is rated differently by these three rating agencies, where two rating agencies rate the security in the highest rating category and the third rating agency rates the security in the second highest rating category, the security will be treated as rated in the highest rating category. In the case of a security that is differently rated by only two of these rating agencies, the security will be treated as rated in the lower rating category.

Under normal circumstances, the Fund intends to maintain a maximum weighted average maturity of 90 days and a maximum weighted average life of 180 days.

The Fund is not a money market fund and does not seek to maintain a stable NAV.

**Process**

The Adviser follows a multi-pronged investment process with respect to credit risk, interest rate risk and liquidity. Securities are reviewed on an ongoing basis to maintain or improve creditworthiness taking into consideration factors such as cash flow, asset quality, debt service coverage ratios and economic developments. Additionally, exposure to guarantors and liquidity providers is monitored separately as are the various diversification requirements. The Adviser manages the Fund's assets in an attempt to reduce credit and interest rate risks.

**13**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Details of the Funds

Ultra-Short Municipal Income Portfolio

**Investment Objective**

The Ultra-Short Municipal Income Portfolio seeks current income exempt from federal income tax and capital preservation while maintaining liquidity.

The Fund's investment objective may be changed by the Trust's Board of Trustees without shareholder approval, but no change is anticipated. If the Fund's investment objective changes, the Fund will notify shareholders and shareholders should consider whether the Fund remains an appropriate investment in light of the change.

**Approach**

Under normal circumstances, the Fund invests at least 80% of its net assets in municipal securities, the income from which is exempt from federal income tax. This policy is fundamental and may not be changed without shareholder approval. Municipal obligations are securities issued by state and local governments and their agencies and typically are either general obligation or revenue bonds, notes or commercial paper. General obligation securities are secured by the issuer's full faith and credit including its taxing power for payment of principal and interest. Revenue bonds, however, are generally payable 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. Included within the revenue bonds category are participations in lease obligations and installment purchase contracts of municipalities. Additionally, the Fund's investments may include variable and floating rate demand instruments, tender option bonds and investments in other investment companies, including money market funds.

The Fund may invest up to 100% of its assets in municipal securities, the interest on which may be subject to the federal alternative minimum tax for individuals. In addition, the Fund may invest up to 20% of its assets in securities subject to federal income tax.

Securities purchased by the Fund (or the issuers of such securities) will carry a rating in the highest two rating categories, A-2, P-2 or F2 or better by S&P, Moody's or Fitch, respectively, or the equivalent by another NRSRO, or if unrated, considered by the Adviser to be of equivalent quality. The Fund may invest up to 15% of its assets, determined at the time of investment, in securities (or the issuers of such securities) rated A-2, P-2 or F2 by S&P, Moody's or Fitch, respectively, and up to 5% of its assets in unrated securities. In the case of a security that is rated differently by these three rating agencies, where two rating agencies rate the security in the highest rating category and the third rating agency rates the security in the second highest rating category, the security will be treated as rated in the highest rating category. In the case of a security that is differently rated by only two of these rating agencies, the security will be treated as rated in the lower rating category.

Under normal circumstances, the Fund intends to maintain a maximum weighted average maturity of 90 days and a maximum weighted average life of 180 days. In addition, the Fund may only purchase securities with a maximum final maturity of two years.

The Fund is not a money market fund and does not seek to maintain a stable NAV.

**Process**

The Adviser follows a multi-pronged investment process with respect to credit risk, interest rate risk and liquidity. Securities are reviewed on an ongoing basis to maintain or improve creditworthiness taking into consideration factors such as cash flow, asset quality, debt service coverage ratios and economic developments. Additionally, exposure to guarantors and liquidity providers is monitored separately as are the various diversification requirements. The Adviser manages the Fund's assets in an attempt to reduce credit and interest rate risks.

For purposes of policies adopted in accordance with Rule 35d-1 under the 1940 Act, the term "assets," as defined in Rule 35d-1 under the 1940 Act, means net assets plus the amount of any borrowings for investment purposes.

**14**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks

&nbsp;&nbsp;&nbsp; *This section discusses additional information relating to the Funds' investment strategies, other types of investments that the Funds may make and related risk factors. The Funds' investment practices and limitations are also described in more detail in the Statement of Additional Information ("SAI"), which is incorporated by reference and legally is a part of this Prospectus. For details on how to obtain a copy of the SAI and other reports and information, see the back cover of this Prospectus.*<br>

Economies and financial markets worldwide have recently experienced periods of increased volatility, uncertainty, distress, government spending, inflation and disruption to consumer demand, economic output and supply chains. To the extent these conditions continue, the risks associated with an investment in a Fund, including those described below, could be heightened and a Fund's investments (and thus a shareholder's investment in a Fund) may be particularly susceptible to sudden and substantial losses, reduced yield or income or other adverse developments. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time.

**Fixed-Income Securities**

Fixed-income securities are securities that pay a fixed or a variable rate of interest until a stated maturity date. Fixed-income securities include U.S. government securities, securities issued by federal or federally sponsored agencies and instrumentalities, corporate bonds and notes, asset-backed securities, mortgage securities, municipal bonds, zero coupon bonds, Eurobonds, Yankee Bonds, repurchase agreements, commercial paper and cash equivalents.

Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Funds may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. The Funds may be subject to liquidity risk, which may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. Fixed-income securities may be called (i.e., redeemed by the issuer) prior to final maturity. If a callable security is called, a Fund may have to reinvest the proceeds at a lower rate of interest.

**Financial Services**

A Fund is more susceptible to any economic, business, political, regulatory or other developments that adversely affect issuers in the financial services industry than a fund that does not invest significantly in the financial services industry. The profitability of many types of financial services companies may be adversely affected in certain market cycles, including periods of rising interest rates, which may restrict the availability and increase the cost of capital, and declining economic conditions, which may cause credit losses due to financial difficulties of borrowers. Financial services companies are also subject to extensive government regulation, including policy and legislative changes in the United States and other countries that are changing many aspects of financial regulation.

**Credit and Interest Rate Risk**

Fixed-income securities, such as bonds, generally are subject to two types of risk: credit risk and interest rate risk. Credit risk refers to the possibility that the issuer or guarantor of a security will be unable or unwilling or perceived to be unable or unwilling to make interest payments and/or repay the principal on its debt. The risk of defaults across issuers and/or counterparties increases in adverse market and economic conditions. Interest rate risk refers to fluctuations (such as a decline) in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. A low interest rate environment may prevent a Fund from providing a positive yield or paying Fund expenses out of current income. The Funds may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. During periods when interest rates are low or there are negative interest rates, a Fund's yield (and total return) also may be low or otherwise adversely affected or the Fund may be unable to maintain positive returns. Credit ratings may not be an accurate assessment of liquidity or credit risk. Although credit quality may not accurately reflect the true credit risk of an instrument, a change in the credit rating of an instrument or an issuer can have a rapid, adverse effect on the instrument's liquidity and make it more difficult for a Fund to sell at an advantageous price or time.

In addition, under certain conditions, there may be an increasing amount of issuers that are unprofitable, have little cash on hand and/or are unable to pay the interest owed on their debt obligations and the number of such issuers may increase if demand for their goods and services falls, borrowing costs rise due to governmental action or inaction or other reasons.

**15**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

**Market and Geopolitical Risk**

The value of your investment in a Fund is based on the values of a Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. Price movements, sometimes called volatility, may be greater or less depending on the types of securities a Fund owns and the markets in which the securities trade. Volatility and disruption in financial markets and economies may be sudden and unexpected, expose a Fund to greater risk, including risks associated with reduced market liquidity and fair valuation, and adversely affect a Fund's operations. For example, the Adviser potentially will be prevented from executing investment decisions at an advantageous time or price as a result of any domestic or global market disruptions and reduced market liquidity may impact a Fund's ability to sell securities to meet redemptions.

The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in a Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. Inflation rates may change frequently and significantly because of various factors, including unexpected shifts in the domestic or global economy and changes in monetary or economic policies (or expectations that these policies may change). Changes in expected inflation rates may adversely affect market and economic conditions, a Fund's investments and an investment in a Fund. Other financial, economic and other global market and social developments or disruptions may result in similar adverse circumstances, and it is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). In general, the securities or other instruments that the Adviser believes represent an attractive investment opportunity or in which a Fund seeks to invest may be unavailable entirely or in the specific quantities sought by a Fund. As a result, a Fund may need to obtain the desired exposure through a less advantageous investment, forgo the investment at the time or seek to replicate the desired exposure through a derivative transaction or investment in another investment vehicle. Any such event(s) could have a significant adverse impact on the value and risk profile of a Fund's portfolio. There is a risk that you may lose money by investing in a Fund.

Social, political, economic and other conditions and events, such as war, natural disasters, health emergencies (e.g., the novel coronavirus outbreak, epidemics and other pandemics), terrorism, conflicts, social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and the Adviser's investment advisory activities and services of other service providers, which in turn could adversely affect a Fund's investments and other operations.

Government and other public debt, including municipal obligations in which a Fund may invest, can be adversely affected by large and sudden changes in local and global economic conditions that result in increased debt levels. Although high levels of government and other public debt do not necessarily indicate or cause economic problems, high levels of debt may create certain systemic risks if sound debt management practices are not implemented. A high debt level may increase market pressures to meet an issuer's funding needs, which may increase borrowing costs and cause a government or public or municipal entity to issue additional debt, thereby increasing the risk of refinancing. A high debt level also raises concerns that the issuer may be unable or unwilling to repay the principal or interest on its debt, which may adversely impact instruments held by a Fund that rely on such payments. Governmental and quasi-governmental responses to certain economic or other conditions may lead to increasing government and other public debt, which heighten these risks. Unsustainable debt levels can lead to declines in the value of currency, and can prevent a government from implementing effective counter-cyclical fiscal policy during economic downturns, can generate or contribute to an economic downturn or cause other adverse economic or market developments, such as increases in inflation or volatility. Increasing government and other public debt may adversely affect issuers, obligors, guarantors or instruments across a variety of asset classes.

Global events may negatively impact broad segments of businesses and populations, cause a significant negative impact on the performance of a Fund's investments and exacerbate pre-existing political, social and economic risks to a Fund. A Fund's operations may be interrupted as a result, which may contribute to the negative impact on investment performance. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions that affect the instruments in which a Fund invests, or the issuers of such instruments, in ways that could have a significant negative impact on a Fund's investment performance.

**U.S. Government Securities**

The U.S. government securities that the Funds may purchase include U.S. Treasury bills, notes and bonds, all of which are direct obligations of the U.S. Government. In addition, the Funds may purchase securities issued or guaranteed by agencies and instrumentalities of the U.S. Government which are backed by the full faith and credit of the United States. Among the agencies and instrumentalities issuing these obligations are the Government National Mortgage Association and the Federal Housing Administration. Also, the Funds may purchase securities issued by agencies and instrumentalities which are not backed by the full

**16**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

faith and credit of the United States, but whose issuing agency or instrumentality has the right to borrow, to meet its obligations, from the U.S. Treasury. Among these agencies and instrumentalities are the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Federal Home Loan Banks. Further, the Funds may purchase securities issued by agencies and instrumentalities which are backed solely by the credit of the issuing agency or instrumentality. Among these agencies and instrumentalities is the Federal Farm Credit System. Because these securities are not backed by the full faith and credit of the United States, there is a risk that the U.S. Government will not provide financial support to these agencies if it is not obligated to do so by law. The maximum potential liability of the issuers of some U.S. government securities held by a Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future. The interest from U.S. government securities generally is not subject to state and local taxation.

**Taxability Risk**

Changes in tax laws or adverse determinations by the Internal Revenue Service ("IRS") may make the income from some municipal obligations taxable.

**Liquidity**

A Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities illiquidity can be caused by, among other things, a drop in overall market trading volume, an inability to find a willing buyer, or legal restrictions on the securities' resale. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If a Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

**Foreign Securities**

Investments in foreign securities, including in foreign government obligations, entail special risks such as political, economic and market risks. There also may be less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and custody costs and less government regulation. In addition, investments in foreign securities may become subject to increased risk due to ongoing developments and changing conditions in such countries. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies in other countries or regions. Certain foreign countries may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign securities may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes.

**Tender Option Bonds**

A tender option bond is a municipal obligation (generally held pursuant to a custodial arrangement) having a relatively long maturity and bearing interest at a fixed rate substantially higher than prevailing short-term, tax-exempt rates. The bond is typically issued in conjunction with the agreement of a third-party, such as a bank, broker-dealer or other financial institution, pursuant to which the institution grants the security holder the option, at periodic intervals, to tender its securities to the institution. As consideration for providing the option, the financial institution receives periodic fees equal to the difference between the bond's fixed coupon rate and the rate, as determined by a remarketing or similar agent, that would cause the securities, coupled with the tender option, to trade at par on the date of such determination. Thus, after payment of this fee, the security holder effectively holds a demand obligation that bears interest at the prevailing short-term, tax-exempt rate. An institution will normally not be obligated to accept tendered bonds in the event of certain defaults or significant downgrading in the credit rating assigned to the issuer of the bond. The tender option will be taken into account in determining the maturity of the tender option bonds and average portfolio maturity. There is a risk that the Fund will not be considered the owner of a tender option bond for federal income tax purposes, and thus will not be entitled to treat such interest as exempt from federal income tax. Certain tender option bonds may be illiquid or may become illiquid as a result of a credit rating downgrade, a payment default or a disqualification from tax-exempt status.

The residual interest certificates may be more volatile and less liquid than other municipal bonds of comparable maturity. In most circumstances, the residual interest certificates holder bears substantially all of the underlying fixed-rate municipal bond's downside investment risk and also benefits from any appreciation in the value of the underlying fixed-rate municipal bond. Investments in a residual interest certificate typically will involve greater risk than investments in fixed-rate municipal bonds.

The residual interest certificates held by a Fund provide a Fund with the right to: (1) cause the holders of the floating rate certificates to tender their notes at par, and (2) cause the sale of the fixed-rate municipal bond held by the tender option bond trust, thereby collapsing the tender option bond trust. Tender option bond trusts are generally supported by a liquidity facility provided by a third

**17**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

party bank or other financial institution (the "Liquidity Provider") that provides for the purchase of floating rate certificates that cannot be remarketed. The holders of the floating rate certificates have the right to tender their certificates in exchange for payment of par plus accrued interest on a periodic basis (typically weekly) or on the occurrence of certain mandatory tender events. The tendered floating rate certificates are remarketed by a remarketing agent, which is typically an affiliated entity of the Liquidity Provider. If the floating rate certificates cannot be remarketed, the floating rate certificates are purchased by the tender option bond trust either from the proceeds of a loan from the Liquidity Provider or from a liquidation of the fixed-rate municipal bond.

The tender option bond trust may also be collapsed without the consent of a Fund, as the residual interest certificate holder, upon the occurrence of certain "tender option termination events" (or "TOTEs") as defined in the tender option bond trust agreements. Such termination events typically include the bankruptcy or default of the municipal bond, a substantial downgrade in the credit quality of the municipal bond, or a judgment or ruling that interest on the fixed-rate municipal bond is subject to federal income taxation. Upon the occurrence of a termination event, the tender option bond trust would generally be liquidated in full with the proceeds typically applied first to any accrued fees owed to the trustee, remarketing agent and liquidity provider, and then to the holders of the floating rate certificates up to par plus accrued interest owed on the floating rate certificates and a portion of gain share, if any, with the balance paid out to the residual interest certificate holder. In the case of a mandatory termination event, after the payment of fees, the floating rate certificates holders would be paid before the residual interest certificates holders (i.e., the Fund). In contrast, in the case of a TOTE, after payment of fees, the floating rate certificates holders and the residual interest certificates holders would be paid pro rata in proportion to the respective face values of their certificates.

**Corporate Debt Obligations**

Corporate debt obligations are fixed-income securities issued by private corporations. Debtholders, as creditors, have a prior legal claim over common and preferred stockholders of the corporation as to both income and assets for the principal and interest due to the bondholder.

**Revenue Bonds**

Revenue bonds are municipal obligations that are secured by the revenue from a specific project. To the extent that such revenues do not materialize, the revenue bonds may not be repaid. If a Fund invests in revenue bonds that are issued by municipal issuers in the same economic sector, a Fund would be particularly susceptible to developments adversely affecting that sector. Revenue bonds historically have been subject to a greater risk of default than general obligation bonds because investors can look only to the revenue generated by the project or other revenue source backing the project, rather than to the general taxing authority of the state or local government issuer of the obligations. For example, investments in revenue bonds backed by receipts from hospitals are sensitive to hospital bond ratings, which are often based on feasibility studies that contain projections of expenses, revenues and occupancy levels. Additional factors which could affect a hospital's gross receipts and net income available to service its debt are demand for hospital services, the ability of the hospital to provide the services required, management capabilities, economic developments in the service area, efforts by insurers and government agencies to limit rates and expenses, reputational issues, competition, availability and expenses of malpractice insurance, Medicaid and Medicare funding and possible federal legislation regulating hospital charges.

**Asset-Backed Securities**

Asset-backed securities represent an interest in a pool of assets such as automobile loans, credit card receivables or mortgage or home equity loans, or certificates of participation or lease obligations or other municipal debt obligations, that have been securitized in pass-through structures. These types of pass-through securities provide for monthly payments that are a "pass-through" of the monthly interest and principal payments made by the individual borrowers on the pooled receivables. Such securities also may be debt instruments, which are also known as collateralized obligations and are generally issued as the debt of a special purpose entity, such as a trust, organized solely for the purpose of owning such assets and issuing such debt. Credit support for asset-backed securities may be based on the underlying assets and/or provided by a third-party through credit enhancements. Credit enhancement techniques include letters of credit, insurance bonds, limited guarantees (which are generally provided by the issuer), senior-subordinated structures and over-collateralization.

Asset-backed securities are not issued or guaranteed by the U.S. Government or its agencies or instrumentalities; however, the payment of principal and interest on such obligations may be guaranteed up to certain amounts for a certain period by a letter of credit issued by a financial institution (such as a bank or insurance company) unaffiliated with the issuers of such securities. The purchase of asset-backed securities raises risk considerations specific to the financing of the instruments underlying such securities. For example, there is a risk that another party could acquire an interest in the obligations superior to that of the holders of the asset-backed securities. Asset-backed securities entail prepayment risk, which may vary depending on the type of asset. Securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Other factors, such as changes in credit card use and payment patterns, may also influence prepayment rates. Asset-backed securities also involve the risk that various federal and state consumer laws and other legal and economic factors such as defaults on the underlying loans may result in the collateral backing the securities being insufficient to support payment on the securities. The risk of such defaults is generally

**18**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

higher in the case of mortgage pools that include sub-prime mortgages. There is also the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on those securities.

**Repurchase Agreements**

Repurchase agreements are fixed-income securities in the form of agreements backed by collateral. These agreements typically involve the acquisition by a Fund of securities from the selling institution (such as a bank or a broker-dealer), coupled with the agreement that the selling institution will repurchase the underlying securities at a specified price and at a fixed time in the future (or on demand, if applicable). The underlying securities which serve as collateral for the repurchase agreements entered into by a Fund may include U.S. government securities, municipal securities, corporate debt obligations, convertible securities, and common and preferred stock and may be of below investment grade quality. These securities are marked-to-market daily in order to maintain full collateralization (typically purchase price plus accrued interest). The use of repurchase agreements involves certain risks. For example, if the selling institution defaults on its obligation to repurchase the underlying securities at a time when the value of the securities has declined, a Fund may incur a loss upon disposition of them. The risk of such loss may be greater when utilizing collateral other than U.S. government securities. In the event of an insolvency or bankruptcy by the selling institution, a Fund's right to control the collateral could be affected and result in certain costs and delays. Additionally, if the proceeds from the liquidation of such collateral after an insolvency were less than the repurchase price, the Fund could suffer a loss. Fund procedures are followed that are designed to minimize such risks.

**Investment** **Company Securities**

Subject to the limitations set forth in the 1940 Act, or as otherwise permitted by the SEC, the Funds may acquire shares in other investment companies, including foreign investment companies and ETFs, which may be managed by the Adviser or its affiliates. The market value of the shares of other investment companies may differ from the NAV of the Funds. The shares of closed-end investment companies frequently trade at a discount to their NAV. As a shareholder in an investment company, the Funds would bear its ratable share of that entity's expenses, including its investment advisory and administration fees. At the same time, the Funds would continue to pay its own advisory and administration fees and other expenses. As a result, the Funds and its shareholders will directly bear the expenses of their investment in the Fund and indirectly bear the expenses of the Fund's investments in other investment companies.

**Promissory Notes**

Promissory notes are generally debt obligations of the issuing entity and are subject to the risks of investing in the banking industry.

**Tax-Exempt Variable Rate Demand Notes**

Tax-exempt variable rate demand notes are variable rate tax-exempt debt obligations that give investors the right to demand principal repayment. Due to cyclical supply and demand considerations, at times the yields on these obligations can exceed the yield on taxable money market obligations. The interest rate on these instruments may be reset daily, weekly or on some other reset period and may have a floor or ceiling on interest rate changes. The interest rate of a floating rate instrument may be based on a known lending rate, such as a bank's prime rate, and is reset whenever such rate is adjusted. The interest rate on a variable rate demand note is reset at specified intervals at a market rate. A Fund's ability to receive payments of principal and interest and other amounts in connection with loans held by it will depend primarily on the financial condition of the issuer. The failure by a Fund to receive scheduled interest or principal payments on a loan would adversely affect the income of the Fund and would likely reduce the value of its assets, which would be reflected in a reduction in the Fund's NAV.

Floating rate and variable rate demand notes and bonds may have a stated maturity in excess of one year, but may have features that permit a holder to demand payment of principal plus accrued interest upon a specified number of days' notice. Frequently, such obligations are secured by letters of credit or other credit support arrangements provided by banks. If these obligations are not secured by letters of credit or other credit support arrangements, a Fund's right to demand payment will be dependent on the ability of the issuer to pay principal and interest on demand. In addition, these obligations frequently are not rated by credit rating agencies and may involve heightened risk of default by the issuer. The issuer of such obligations normally has a corresponding right, after a given period, to prepay in its discretion the outstanding principal of the obligation plus accrued interest upon a specific number of days' notice to the holders. There is no assurance that a Fund will be able to reinvest the proceeds of any prepayment at the same interest rate or on the same terms as those of the original instrument.

In the absence of an active secondary market for floating rate and variable rate demand notes, a Fund may find it difficult to dispose of the instruments, and the Fund could suffer a loss if the issuer defaults or during periods in which the Fund is not entitled to exercise its demand rights. If a reliable trading market for the floating rate and variable rate instruments held by a Fund does not exist and the Fund may not demand payment of the principal amount of such instruments within seven days, the instruments may be deemed illiquid and therefore subject to the Fund's limitation on investments in illiquid securities.

**Municipals**

Municipal securities (also referred to as municipal obligations) include debt obligations of states, territories or possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, such as local or regional

**19**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

governments. The income on municipal securities is generally exempt from federal income tax at the time of issuance, in the opinion of bond counsel or other counsel to the issuers of such securities. However, the Funds may purchase municipal securities that pay interest that is subject to the federal alternative minimum tax, and municipal securities on which the interest payments are taxable. These securities typically are "general obligation" or "revenue" bonds, notes or commercial paper, including participations in lease obligations and installment purchase contracts of municipalities. General obligation bonds are secured by the issuer's full faith and credit including its taxing power for payment of principal and interest. Revenue bonds, however, are generally payable 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. These types of bonds involve the risk that the tax or other revenues so derived will not be sufficient to meet interest and or principal payment obligations. These obligations may have fixed, variable or floating rates.

Because the Funds may invest in municipal securities, a Fund may be affected significantly by the economic, regulatory, legislative, tax or political developments affecting the ability of issuers of municipal securities to pay interest or repay principal. The risks of municipal securities generally depend on the financial and credit status of the issuer and may rely on a specific stream of revenue associated with a project or other revenue source. Thus, adverse developments related to a municipality's ability to raise revenue, including through its taxing authority, or the failure of specific revenues to materialize would negatively impact such investments. Changes in the financial health of an issuer of municipal securities may make it difficult for the issuer to make interest and principal payments when due. Some municipalities have had significant financial problems recently, and these and other municipalities could, potentially, continue to experience significant financial problems resulting from lower tax revenues and/or decreased aid from state and local governments in the event of an economic downturn. In addition, adverse legislative, tax, regulatory, demographic or political changes may negatively impact a Fund's investments in municipal securities. These events could decrease the Funds' income and/or adversely affect the Funds' performance and investments. Municipal securities also involve the risk that an issuer may call securities for redemption, which could force a Fund to reinvest the proceeds at a lower rate of interest, and the value of municipal securities may be affected by the rights of municipal security holders.

Municipal securities may be more susceptible to downgrades, defaults or loss of tax or other revenue during recessions or similar periods of economic stress. Factors contributing to the financial stress on municipalities may include lower property tax collections as a result of lower home values, lower sales tax revenue as a result of consumers cutting back spending and lower income tax revenue as a result of a higher unemployment rate. In addition, because some municipal obligations may be secured or guaranteed by banks and other institutions, the risk to a Fund associated with investments in such municipal securities could increase if the banking or financial sector suffers an economic downturn and/or if the credit ratings of the institutions issuing the guarantee are downgraded or at risk of being downgraded by a national rating organization. If such events occur, the value of the security could decrease or the value could be lost entirely, and it may be difficult or impossible for a Fund to sell the security at the time and the price that normally prevails in the market.

For example, the current COVID-19 pandemic has significantly stressed the financial resources of many municipalities and other issuers of municipal securities, which may impair their ability to meet their financial obligations and may harm the value or liquidity of a Fund's investments in municipal securities (or the income generated by such investments). In particular, responses by municipalities to the COVID-19 pandemic have caused disruptions in business activities. These and other effects of the COVID-19 pandemic, such as increased unemployment levels, have impacted tax and other revenues of municipalities and other issuers of municipal securities and the financial conditions of such issuers. As a result, there is an increased budgetary and financial pressure on municipalities and other issuers of municipal securities and heightened risk of default or other adverse credit or similar events for issuers of municipal securities, which would adversely impact a Fund's investments.

In addition, the ability of an issuer to make payments or repay interest may be affected by litigation or bankruptcy. In the event of bankruptcy of such an issuer, a Fund investing in the issuer's securities could experience delays in collecting principal and interest, and the Fund may not, in all circumstances, be able to collect all principal and interest to which it is entitled. To enforce its rights in the event of a default in the payment of interest or repayment of principal, or both, a Fund may, in some instances, take possession of, and manage, the assets securing the issuer's obligations on such securities, which may increase the Fund's operating expenses. Any income derived from the Fund's ownership or operation of such assets may not be tax-exempt. Municipal securities are subject to, among other risks, credit and interest rate risk and market and geopolitical risk.

Because many municipal securities are issued to finance similar projects (such as those relating to education, health care, housing, transportation, and utilities), conditions in those sectors may affect the overall municipal securities market. In addition, changes in the financial condition of an individual municipal issuer can affect the overall municipal market. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the supporting taxation or the inability to collect revenues for the specific project or specific assets.

Some municipal securities are subject to the risk that the Internal Revenue Service may determine that an issuer has not complied with applicable tax requirements (or the occurrence of other adverse tax developments) and that interest from the municipal security is taxable, which may result in a significant decline in the value of the security. In addition, interest on municipal obligations, while generally exempt from federal income tax, may not be exempt from the federal alternative minimum tax. Municipal securities may be

**20**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

less liquid than taxable bonds and there may be less publicly available information on the financial condition of municipal security issuers than for issuers of other securities, and the investment performance of a Fund investing in municipal securities may therefore be more dependent on the analytical abilities of the Adviser than if the Fund held other types of investments such as stocks or taxable bonds. The secondary market for municipal securities also tends to be less well developed or liquid than many other securities markets, which may adversely affect a Fund's ability to sell municipal securities it holds at attractive prices or value municipal securities. In addition, the demand for municipal securities is strongly influenced by the value of tax-exempt income to investors and lower income tax rates could reduce the advantage of owning municipal securities, which may also adversely affect the value and liquidity of municipal securities.

**Commercial Paper**

A Fund may invest in commercial paper. Commercial paper normally represents short-term unsecured promissory notes issued in bearer form by banks or bank holding companies, corporations, finance companies and other issuers. Commercial paper is subject to interest rate risk and is susceptible to changes in the issuer's financial condition or credit quality. Commercial paper is typically repaid with the proceeds from the issuance of new commercial paper. Thus, investments in commercial paper are subject to the risk (commonly referred to as rollover risk) that the issuer will be unable to issue sufficient new commercial paper to meet the repayment obligations under its outstanding commercial paper. Because commercial paper is typically unsecured, investments in commercial paper are subject to increased credit risk.

**Large Shareholder Transactions Risk**

A Fund may experience adverse effects when certain shareholders purchase or redeem large amounts of shares of a Fund. Such larger than normal redemptions may cause a Fund to sell portfolio securities at times when it would not otherwise do so, which may negatively impact a Fund's NAV and liquidity. Similarly, large Fund share purchases may adversely affect a Fund's performance to the extent that a Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would. These transactions may also accelerate the realization of taxable income to shareholders if such sales of investments resulted in gains, and may also increase transaction costs. In addition, a large redemption could result in a Fund's current expenses being allocated over a smaller asset base, leading to an increase in a Fund's expense ratio. Although large shareholder transactions may be more frequent under certain circumstances, a Fund is generally subject to the risk that shareholders can purchase or redeem a significant percentage of Fund shares at any time.

**LIBOR Discontinuance or Unavailability Risk.**

LIBOR is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. The Financial Conduct Authority (the "FCA"), which is the regulatory authority that oversees financial services firms, financial markets in the U.K. and the administrator of LIBOR, announced that, after the end of 2021, one-week and two-month U.S. Dollar LIBOR and all non-U.S. Dollar LIBOR settings have either ended or are no longer representative of the underlying market they seek to measure. The FCA also announced that the most commonly used U.S. Dollar LIBOR settings may continue to be provided on a representative basis until mid-2023. However, in connection with supervisory guidance from regulators, some regulated entities may no longer enter into most new LIBOR-based contracts. As a result of the foregoing, LIBOR may no longer be available or no longer deemed an appropriate reference rate upon which to determine the interest rate on or impacting certain derivatives and other instruments or investments held by a Fund. In light of this eventuality, public and private sector industry initiatives are currently underway to establish new or alternative reference rates to be used in place of LIBOR. There is no assurance that the composition or characteristics of any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that it will have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability, which may affect the value or liquidity or return on certain of a Fund's investments and result in costs incurred in connection with closing out positions and entering into new trades.

Neither the effect of the LIBOR transition process nor its ultimate success can yet be known. The transition process might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. While some existing LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, there may be significant uncertainty regarding the effectiveness of any such alternative methodologies to replicate LIBOR. Not all existing LIBOR-based instruments may have alternative rate-setting provisions and there remains uncertainty regarding the willingness and ability of issuers to add alternative rate-setting provisions in certain existing instruments. Although state and federal statutes have been enacted to address difficult LIBOR transition issues, the application and effect of these statutes are uncertain. In addition, a liquid market for newly-issued instruments that use a reference rate other than LIBOR is still developing. There may also be challenges for a Fund to enter into hedging transactions against such newly-issued instruments until a market for such hedging transactions develops. All of the aforementioned may adversely affect the Fund's investments (including their volatility, value and liquidity) and, as a result, the performance or NAV.

**Investment Discretion**

In pursuing a Fund's investment objective, the Adviser has considerable leeway in deciding which investments it buys, holds or sells on a day-to-day basis, and which trading strategies it uses. For example, the Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect a Fund's performance.

**21**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Funds' Investment Strategies and Related Risks

Additional Information About the Funds' Investment Strategies and Related Risks (Con't)

**Temporary Defensive Investments**

When the Adviser believes that changes in market, economic, political or other conditions warrant, each Fund may invest without limit in cash, cash equivalents or other fixed-income securities for temporary defensive purposes that may be inconsistent with a Fund's principal investment strategies. If the Adviser incorrectly predicts the effects of these changes, such defensive investments may adversely affect a Fund's performance and the Fund may not achieve its investment objective.

**22**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management

Adviser

Morgan Stanley Investment Management Inc., with principal offices at 522 Fifth Avenue, New York, NY 10036, conducts a worldwide portfolio management business and provides a broad range of portfolio management services to customers in the United States and abroad. Morgan Stanley (NYSE: "MS") is the parent of the Adviser, which is the parent of the Distributor. Morgan Stanley is a preeminent global financial services firm engaged in securities trading and brokerage activities, as well as providing investment banking, research and analysis, financing and financial advisory services. As of December 31, 2022, the Adviser, together with its affiliated asset management companies, had approximately $[ ] trillion in assets under management or supervision.

A discussion regarding the basis for the Board of Trustees' approval of the investment advisory agreements is available in each Fund's Annual Report to Shareholders for the fiscal year ended September 30, 2022.

Advisory Fees

For the fiscal year ended September 30, 2022, the Adviser received from each Fund the advisory fee (net of fee waivers, if applicable) set forth in the table below.

---

| | |
|:---|:---|
| **Fund (as a percentage of average daily net assets)** | **Fund (as a percentage of average daily net assets)** |
| Ultra-Short Income Portfolio | 0.11% |
| Ultra-Short Municipal Income Portfolio | 0.00% |

---

The Adviser has agreed to reduce its advisory fee and/or reimburse each Fund, if necessary, if such fees would cause the total annual operating expenses of such Funds to exceed the percentage of average daily net assets set forth in the table below. In determining the actual amount of fee waiver and/or expense reimbursement for each Fund, if any, the Adviser excludes from total annual operating expenses acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation). The fee waivers and/or expense reimbursements for each Fund will continue for at least one year from the date of this Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. The Distributor, the Adviser and the Administrator may also waive distribution fees, advisory fees, administration fees and/or reimburse expenses to enable the Fund to maintain a minimum level of daily net investment income. The Adviser may make additional voluntary fee waivers and/or expense reimbursements. The Distributor, the Adviser and the Administrator may discontinue these voluntary fee waivers and/or expense reimbursements at any time in the future.

A Fund's annual operating expenses may vary throughout the period and from year to year. A Fund's actual expenses may be different than the expenses listed in the Fund's fee and expense table based upon the extent and amount of a fee waiver and/or expense reimbursement.

---

| | | | |
|:---|:---|:---|:---|
|  | **Expense Cap** **Class IR** | **Expense Cap** **Institutional Class** | **Expense Cap** **Class A** |
| Ultra-Short Income Portfolio | 0.25% | 0.30% | 0.40% |
| Ultra-Short Municipal Income Portfolio | 0.25% | 0.35% | 0.35% |

---

Portfolio Management

**Ultra-Short Income Portfolio**

The Fund is managed by members of the Global Liquidity team. The team consists of portfolio managers and analysts. Current members of the team who are jointly and primarily responsible for the day-to-day management of the Fund are Jonas Kolk, Michael Cha and David Schoenfeld.

Messrs. Kolk, Cha and Schoenfeld have been associated with the Adviser in an investment management capacity since 2004, 2008 and 2012, respectively.

**Ultra-Short Municipal Income Portfolio**

The Fund is managed by members of the Global Liquidity team. The team consists of portfolio managers and analysts. Current members of the team who are jointly and primarily responsible for the day-to-day management of the Fund are Jonas Kolk and Paul Daggy.

Messrs. Kolk and Daggy have been associated with the Adviser in an investment management capacity since 2004 and 2008, respectively.

**23**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management (Con't)

**Additional Information**

The Funds' SAI provides additional information about the portfolio managers' compensation structure, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Funds.

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

**24**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information

**Share Class Arrangements**

The Trust currently offers investors Class IR, Institutional Class and Class A shares of each Fund. Class IR, Institutional Class and Class A shares of each Fund are not subject to a sales charge, and Class IR shares are not subject to a shareholder service or 12b-1 fee. In addition, no sub-accounting or other similar fees, or any finder's fee payments are charged or paid on Class IR, Institutional Class or Class A shares. Class IR and Institutional Class shares generally require investments in minimum amounts that are substantially higher than Class A shares.

**Minimum Investment Amounts**

*Institutional Class Shares*

Institutional Class shares are available to investors who at the time of initial purchase make a minimum investment of $5 million with respect to the Ultra-Short Income Portfolio and $10 million with respect to the Ultra-Short Municipal Income Portfolio. Each Fund, in its sole discretion, may waive the minimum initial investment amount in certain cases including, but not limited to, shares of the Fund purchased through a Financial Intermediary, when the Adviser anticipates the combined value of a client's investments will meet or exceed the minimum or to clients of the Adviser's broker-dealer affiliates.

*Class A Shares*

The minimum initial investment amount is generally $1,000 for Class A shares of a Fund. The minimum initial investment amount may be waived by the Adviser for the following categories: (1) 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 advisory programs, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or (iv) certain other investment programs that do not charge an asset-based fee, as outlined in an agreement between the Distributor and such financial institution; (2) sales through a Financial Intermediary that has entered into an agreement with the Distributor to offer Fund shares to self-directed investment brokerage accounts, which may or may not charge a transaction fee; (3) qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions); (4) 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 account sponsored or serviced by a Financial Intermediary that has entered into an agreement with a Fund, the Distributor and/or the Adviser pursuant to which such Class A shares are available to such plans; (5) certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or its affiliates for their employees or the Trust's Trustees; (6) 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; (7) current or retired Directors or Trustees of the Morgan Stanley Funds (as defined herein), such persons' spouses, and children under the age of 21, and trust accounts for which any of such persons is a beneficiary; (8) certain other registered open-end investment companies, whose shares are distributed by the Distributor; (9) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser; (10) the reinvestment of dividends from Class A shares of the Fund in additional Class A shares of the Fund; or (11) certain other institutional investors based on assets under management or other considerations at the discretion of the Adviser.

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

*Class IR Shares*

Class IR shares are offered only to eligible investors meeting certain minimum investment requirements at the discretion of the Adviser. To purchase Class IR shares, an investor must meet a minimum initial investment of $10 million with respect to the Ultra-Short Income Portfolio and $15 million with respect to the Ultra-Short Municipal Income Portfolio or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, whether or not qualified under the Code, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account and in each case subject to the discretion of the Adviser. Initial omnibus trades of $10 million or $15 million or more, as the case may be, may be accepted from certain platforms, including (i) banks and trust companies; (ii) insurance companies; and (iii) registered investment advisory firms. The applicable minimum initial investment amount may be waived for Fund shares purchased: (1) by or through certain other registered open-end investment companies whose shares are distributed by the Distributor; (2) by investments made in connection with certain mergers and/or reorganizations as approved by the Adviser; or (3) when the Adviser anticipates the combined value of a client's investments will meet or exceed the minimum.

*General*

If the value of your account falls below the minimum initial investment amount for a class of shares of a Fund as a result of share redemptions or you no longer meet one of the waiver criteria set forth above, as applicable, your account may be subject to involuntary conversion or involuntary redemption, as applicable. You will be notified prior to any such conversions or redemptions.

The Adviser, in its sole discretion, may waive a minimum initial investment amount in certain cases.

**25**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

**Distribution of Fund Shares**

Morgan Stanley Distribution, Inc. is the exclusive distributor of the shares of the Funds. The Distributor receives no compensation from the Funds for distributing Class IR shares of each Fund. The Trust has adopted a Shareholder Services Plan with respect to Institutional Class shares of each Fund, under which the Funds pay the Distributor a shareholder services fee of up to 0.05% or 0.10% of the average daily net assets of Institutional Class shares of the Ultra-Short Income Portfolio or the Ultra-Short Municipal Income Portfolio, respectively. The Trust has adopted a Shareholder Services Plan with respect to the Class A shares of each Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), under which the Funds pay the Distributor a shareholder services fee of up to 0.25% or 0.20% of the average daily net assets of the Class A shares of the Ultra-Short Income Portfolio or the Ultra-Short Municipal Income Portfolio, respectively. For at least one year from the date of this Prospectus, the Distributor has agreed to waive the 12b-1 fee on Class A shares of the Ultra-Short Income and Ultra-Short Municipal Income Portfolios to the extent it exceeds 0.10% of the average daily net assets of such shares on an annualized basis. This waiver will continue for at least one year from the date of this Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waiver when it deems such action is appropriate. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Institutional Class or Class A shares. Such fees relate solely to Institutional Class or Class A shares and will reduce the net investment income and total return of Institutional Class or Class A shares. The Distributor may waive distribution fees to enable a Fund to maintain a minimum level of daily net investment income. The Distributor may discontinue these voluntary fee waivers at any time in the future. Because the fees are paid out of a Fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

The Adviser and/or Distributor may pay compensation to Financial Intermediaries in connection with the sale, distribution, marketing and retention of the Funds' shares and/or shareholder servicing. Such compensation may be significant in amount and the prospect of receiving any such additional compensation may provide affiliated or unaffiliated Financial Intermediaries with an incentive to favor sales of shares of a Fund over other investment options. Any such payments will not change the NAV or the price of a Fund's shares. For more information, please see the Funds' SAI.

**About Net Asset Value**

The NAV of a class of shares of a Fund is determined by dividing the total of the value of the Fund's investments and other assets attributable to the class, less any liabilities attributable to the class, by the total number of outstanding shares of that class of the Fund. In making this calculation, each Fund values its securities at market value. When no market quotations are readily available for securities, including circumstances under which the Adviser determines that a security's market price is not accurate, we will determine the value for those securities in good faith at fair value using methods approved by the Trust's Board of Trustees. Fair value pricing involves subjective judgment and it is possible that the fair value determined for a security is materially different than the value that could be realized upon the sale of that security.

To the extent a Fund invests in open-end management companies (other than exchange-traded funds) that are registered under the 1940 Act, the Fund's NAV is calculated based in relevant part upon the NAV of such funds. The prospectuses for such funds explain the circumstances under which they will use fair value pricing and its effects.

Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security or other asset is materially different than the value that could be realized upon the sale of that security or other asset. With respect to securities that are primarily listed on foreign exchanges, the values of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. The NAV of the Fund (excluding any applicable sales charges) is based on the value of the Fund's portfolio securities or other assets. Although the assets of each class are invested in the same portfolio of securities or other assets, the NAV of each class will differ because the classes have different class specific expenses.

The Fund relies on various sources to calculate their NAVs. The ability of the Fund's provider of administrative services to calculate the NAV per share of the Fund is subject to operational risks associated with processing or human errors, systems or technology failures, cyber attacks and errors caused by third party service providers, data sources, or trading counterparties. Such failures may result in delays in calculating the Fund's NAV and/or the inability to calculate NAV over extended periods. The Fund may be unable to recover any losses associated with such failures. In addition, if the third party service providers and/or data sources upon which the Fund directly or indirectly relies to calculate its NAV or price individual securities are unavailable or otherwise unable to calculate the NAV correctly, it may be necessary for alternative procedures to be utilized to price the securities at the time of determining the Fund's NAV.

The Fund's NAV per share is subject to various investment and other risks. Please refer to the "Additional Information About the Fund's Investment Strategies and Related Risks" and "The Fund's Investments and Strategies" sections of the Prospectus and SAI, respectively, for more information regarding risks associated with an investment in the Fund.

**26**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

**Pricing of Fund Shares**

Shares of the Funds may be purchased or sold (redeemed) at the NAV next determined after the Fund receives your order in good order and State Street Bank and Trust Company (the "Custodian") receives monies credited by a Federal Reserve Bank ("Federal Funds") prior to the close of the Federal Reserve Wire Network. You begin earning dividends the same day your Shares are purchased provided a Fund receives your purchase amount in Federal Funds that day as set forth above. Orders to purchase shares of a Fund must be received by the Fund prior to 4:00 p.m. Eastern time. The Trust determines the NAV for each Fund as of the close of the NYSE (normally 4:00 p.m. Eastern time) on each day the NYSE is open for business (the "Pricing Time"), except when the following federal holidays are observed: Columbus Day and Veterans Day. On any business day that the NYSE closes early, or when Securities Industry and Financial Markets Association ("SIFMA") recommends that the securities markets close early, the Funds may close early and purchase orders received after such earlier closing times will be processed the following business day. If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, each Fund reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate its NAV as of, the normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. The Funds may elect to remain open and price their shares on days when the NYSE is closed or closes early but on which SIFMA recommends that the bond markets remain open for all or part of the day. Trading of securities that are primarily listed on foreign exchanges may take place on weekends and other days when a Fund does not price its shares. Therefore, to the extent, if any, that a Fund invests in securities primarily listed on foreign exchanges, the value of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. Purchase orders received by the Funds and not funded by 6:45 p.m. Eastern time on the trade date may be subject to an overdraft charge.

**Portfolio Holdings**

A description of the Trust's policies and procedures with respect to the disclosure of a Fund's portfolio securities is available in the Trust's SAI.

**How To Purchase Fund Shares**

You may purchase shares of a Fund on each day that the Fund is open for business by contacting your Financial Intermediary or directly from the Fund.

*Purchasing Shares Through a Financial Intermediary*

You may open a new account and purchase shares of a Fund through a Financial Intermediary. The Financial Intermediary will assist you with the procedures to invest in shares of a Fund. Investors purchasing or selling shares of a Fund through a Financial Intermediary, including Morgan Stanley Wealth Management, may be charged transaction-based or other fees by the Financial Intermediary for its services. If you are purchasing shares of a Fund through a Financial Intermediary, please consult your Financial Intermediary for more information regarding any such fees and for purchase instructions.

You should discuss with your Financial Intermediary which share class is most appropriate for you based on the size of your investment, your expected time horizon for holding the shares and other factors.

With respect to sales through Financial Intermediaries, no offers or sales of Fund shares may be made in any foreign jurisdiction, except with the consent of the Distributor.

*Purchasing Shares Directly From the Funds*

Initial Purchase

You may open a new account, subject to acceptance by a Fund, and purchase shares of the Fund by completing and signing a New Account Application which you can obtain by calling Morgan Stanley Services Company Inc. or the Fund at (888) 378-1630 (which is generally accessible weekdays 8:00 a.m.-6:00 p.m. Eastern time) and mailing it to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804.

After submitting a completed New Account Application to SS&C GIDS, you may wire Federal Funds (monies credited by a Federal Reserve Bank) to the Custodian. You should instruct your bank to send a Federal Funds wire in a specified amount to the Custodian using the following wire instructions:

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111-2101

ABA #011000028

DDA #00575373

Attn: Morgan Stanley Institutional Fund Trust

Subscription Account

Ref: (Fund Name, Account Number, Account Name)

**27**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

Purchase by Internet

If you have properly authorized the Internet Trading Option on your New Account Application and completed, signed and returned to the Fund an Electronic Transactions Agreement, you may place a purchase order for additional shares online through Morgan Stanley's Treasury Investment Portal service at www.morganstanley.com/liquidity. For more information, call Morgan Stanley Services Company Inc. at 1-888-378-1630.

You are responsible for transmitting payments for shares purchased via the Internet in a timely fashion, as set forth above.

Purchase by Internet is not available for the Ultra-Short Municipal Income Portfolio.

Automatic Purchases

Selected accounts that utilize the Funds as their sweep vehicle will be reviewed on each business day to determine whether the account has a positive balance as a result of credits incurred that day. If an account has a positive (credit) balance, shares of a Fund will automatically be purchased. Any positive (credit) balance will be reduced by any debits to the account on that day and shares of a Fund will automatically be sold.

Additional Investments

You may purchase additional shares of a Fund for your account at any time by contacting your Financial Intermediary or by contacting the Fund directly. For additional purchases directly from a Fund, you should write a "letter of instruction" that includes your account name, account number, the Fund name and the class selected, signed by the account owner(s), to assure proper crediting to your account. After mailing a "letter of instruction," you may wire Federal Funds by following the instructions under "Initial Purchase."

**General**

Shares of a Fund may, in the Fund's discretion, be purchased with investment securities (in lieu of or, in conjunction with, cash) acceptable to the Fund. The securities would be accepted by a Fund at their market value in return for Fund shares of equal value, taking into account any applicable sales charge.

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

When you buy Fund shares, the shares (plus any applicable sales charge) will be purchased at the next share price calculated after we receive your purchase order in good order. Your payment is due on the next business day after you place your purchase order. We reserve the right to reject any order for the purchase of Fund shares for any reason.

The Trust may suspend the offering of shares, or any class of shares, of a Fund or reject any purchase orders when we think it is in the best interest of the Fund.

Certain patterns of past exchanges and/or purchase or sale transactions involving a Fund may result in the Fund rejecting, limiting or prohibiting, at its sole discretion and without prior notice, additional purchases and/or exchanges and may result in a shareholder's account being closed. Determinations in this regard may be made based on the frequency or dollar amount of previous exchanges or purchase or sale transactions. For more information, please refer to the section of this Prospectus entitled "Frequent Purchases and Redemptions of Shares."

**How To Redeem Fund Shares**

You may process a redemption request by contacting your Financial Intermediary. Otherwise, you may redeem shares of a Fund by mail or, if authorized, by telephone, at no charge other than as described below. The value of shares redeemed may be more or less than the purchase price, depending on the NAV at the time of redemption. Shares of a Fund will be redeemed at the NAV next determined after we receive your redemption request in good order.

*Redemptions by Letter*

Requests should be addressed to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804.

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

**28**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

(a) A letter of instruction, if required, or a stock assignment specifying the account name, the account number, the name of the Fund and the number of shares or dollar amount to be redeemed, signed by all registered owners of the shares in the exact names in which the shares are registered, and whether you wish to receive the redemption proceeds by wire to the bank account we have on file for you;

(b) Any required signature guarantees if you are requesting payment to anyone other than the registered owner(s) or that payment be sent to any address other than the address of the registered owner(s) or pre-designated bank account; and

(c) Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianship, corporations, pension and profit sharing plans and other organizations.

*Redemptions by Telephone*

You automatically have telephone redemption and exchange privileges unless you indicate otherwise by checking the applicable box on the New Account Application or calling Morgan Stanley Shareholder Services to opt out of such privileges. You may request a redemption of shares of a Fund by calling the Morgan Stanley Shareholder Services at 1-888-378-1630 and requesting that the redemption proceeds be mailed or wired to you. You cannot redeem shares of a Fund by telephone if you hold share certificates for those shares. For your protection when calling a Fund, we will employ reasonable procedures to confirm that instructions communicated over the telephone are genuine. These procedures may include requiring various forms of personal identification (such as name, mailing address, social security number or other tax identification number), tape-recording telephone communications and providing written confirmation of instructions communicated by telephone. If reasonable procedures are employed, neither Morgan Stanley, SS&C GIDS nor a Fund will be liable for following telephone instructions that it reasonably believes to be genuine. Telephone redemptions and exchanges may not be available if you cannot reach Morgan Stanley Shareholder Services by telephone, whether because all telephone lines are busy or for any other reason; in such case, a shareholder would have to use a Fund's other redemption and exchange procedures described in this section. Telephone instructions will be accepted if received by Morgan Stanley Shareholder Services between 9:00 a.m. and 4:00 p.m. Eastern time on any day the NYSE is open for business, except when the following federal holidays are observed: Columbus Day and Veterans Day. During periods of drastic economic or market changes, it is possible that the telephone privileges may be difficult to implement, although this has not been the case with the Funds in the past. To opt out of telephone privileges, please contact the Funds at 1-888-378-1630.

Redemption by Internet

You may redeem shares online through Morgan Stanley's Treasury Investment Portal service at www.morganstanley.com/ liquidity, provided you have a pre-established Internet trading account, as set forth above under "How To Purchase Fund Shares." For more information, call the Fund at 1-888-378-1630.

Redemption by Internet is not available for the Ultra-Short Municipal Income Portfolio.

Automatic Redemptions

Selected accounts that utilize a Fund as their sweep vehicle will be reviewed on each business day to determine whether the account has any debits that were incurred that day and shares of the Fund will automatically be redeemed to cover the debits if such debits have not been reduced by any credits which may have accrued to the account on the same day.

*Systematic Withdrawal Plan*

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's balance (provided the amount is at least $25), on a monthly, quarterly, semi-annual or annual basis, from any fund with a balance of at least $1,000. Each time you add a fund to the plan, you must meet the plan requirements.

To sign up for the systematic withdrawal plan, contact your Morgan Stanley Financial Advisor or call toll-free 1-888-378-1630. You may terminate or suspend your plan at any time. Please remember that withdrawals from the plan are sales of shares, not Fund "distributions," and ultimately may exhaust your account balance. The Trust may terminate or revise the plan at any time.

*Redemption Proceeds*

Each Fund typically expects to pay redemption proceeds to you within two business days following receipt of your redemption request for those payments made to your brokerage account held with a Financial Intermediary. For redemption proceeds that are paid directly to you by a Fund, the Fund typically expects to pay redemption proceeds by wire to you within one business day, following receipt of your redemption request; however, in all cases, it may take up to seven calendar days to pay redemption proceeds.

Each Fund typically expects to meet redemption requests by using a combination of sales of securities held by the Fund and/or holdings of cash and cash equivalents. On a less regular basis, each Fund also reserves the right to use borrowings or interfund lending to meet redemption requests, and the Fund may use these methods during both normal and stressed market conditions.

**29**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

If we determine that it is in the best interest of the Trust or a Fund not to pay redemption proceeds in cash, we may distribute to you securities held by the Fund. If requested, we will pay a portion of your redemption(s) in cash (during any 90 day period) up to the lesser of $250,000 or 1% of the net assets of a Fund at the beginning of such period. If a Fund redeems your shares in-kind, you will bear any market risks associated with the securities paid as redemption proceeds. Such in-kind securities may be illiquid and difficult or impossible for a shareholder to sell at a time and at a price that a shareholder would like. Redemptions paid in such securities generally will give rise to income, gain or loss for income tax purposes in the same manner as redemptions paid in cash. In addition, you may incur brokerage costs and a further gain or loss for income tax purposes when you ultimately sell the securities.

**Exchange Privilege**

You may exchange shares of any class of a Fund for the same class (Class I with respect to Institutional Class) of shares of any mutual fund (excluding money market funds) sponsored and advised by the Adviser (each, a "Morgan Stanley Multi-Class Fund"), if available, without the imposition of an exchange fee. In addition, you may exchange shares of any class of a Fund for shares of Morgan Stanley California Tax-Free Daily Income Trust, Morgan Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. Government Money Market Trust (each, a "Morgan Stanley Money Market Fund" and, together with the Morgan Stanley Multi-Class Funds, the "Morgan Stanley Funds"), if available, without the imposition of an exchange fee. Because purchases of Class A shares of Morgan Stanley Institutional Fund Trust Ultra-Short Income and Ultra-Short Municipal Income Portfolios are not subject to a sales charge, and purchases of Class A shares of Morgan Stanley Institutional Fund Trust Short Duration Income Portfolio are subject to a reduced sales charge, you may be subject to the payment of a sales charge by your Financial Intermediary, at time of exchange into Class A shares of a Morgan Stanley Fund, based on the amount that you would have owed if you directly purchased Class A shares of that Morgan Stanley Fund (less any sales charge previously paid in connection with shares exchanged for such shares of Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income or Ultra-Short Municipal Income Portfolios, as applicable). Exchanges are effected based on the respective NAVs of the applicable Morgan Stanley Fund (subject to any applicable redemption fee) and in accordance with the eligibility requirements of such Fund. To obtain a prospectus for another Morgan Stanley Fund, contact your Financial Intermediary or call the Fund at 1-888-378-1630. Prospectuses are also available on our Internet site at www.morganstanley.com/im. If you purchased Fund shares through a Financial Intermediary, certain Morgan Stanley Funds may be unavailable for exchange. Contact your Financial Intermediary for more information regarding the exchange privilege and to determine which Morgan Stanley Funds are available for exchange.

The current prospectus for each Morgan Stanley Fund describes its investment objective(s), policies, investment minimums and applicable sales charges, and should be read before investing. Since exchanges are available only into continuously offered Morgan Stanley Funds, exchanges are generally not available into Morgan Stanley Funds or classes of Morgan Stanley Funds that are not currently being offered for purchase.

You can process your exchange by contacting your Financial Intermediary. You may also send exchange requests to the Trust's transfer agent, SS&C GIDS, by mail to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804 or by calling 1-888-378-1630.

You will be subject to the same minimum initial investment and account size as an initial purchase. Your exchange price will be the price calculated at the next Pricing Time after the Morgan Stanley Fund receives your exchange order. The Morgan Stanley Fund, in its sole discretion, may waive the minimum initial investment amount in certain cases. For direct accounts, the check writing privilege is not available for Morgan Stanley Money Market Fund shares you acquire in an exchange from a non-money market fund. If you are investing through a financial advisor, check with your advisor regarding the availability of check writing privileges. A Fund may terminate or revise the exchange privilege upon required notice or in certain cases without notice. A Fund reserves the right to reject an exchange order for any reason.

If you exchange shares of a Fund for shares of another Morgan Stanley Fund, there are important tax considerations. For tax purposes, the exchange out of a Fund is considered a sale of Fund shares and the exchange into the other fund is considered a purchase. As a result, you may realize a capital gain or loss. You should review the "Taxes" section and consult your own tax professional about the tax consequences of an exchange.

**Frequent Purchases and Redemptions of Shares**

We expect that the Funds may be used by shareholders for short-term investing. Therefore, reasonably frequent purchases and redemptions of Fund shares by shareholders do not present risks for other shareholders of the Fund, and the policies and procedures adopted by the Board of Trustees/Directors as applicable to other funds in the Morgan Stanley family of funds are generally not applicable with respect to frequent purchases and redemptions of Fund shares. However, frequent trading by shareholders can disrupt management of a Fund and raise its expenses. Therefore, we may not accept any request for a purchase or exchange when we think it is being used as a tool for market-timing, and we may bar a shareholder who trades excessively from making further purchases for an indefinite period.

**30**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

**Taxes**

As with any investment, you should consider how your Fund investment will be taxed. The tax information in this Prospectus is provided as general information. You should consult your own tax professional about the tax consequences of an investment in a Fund. Unless your investment in a Fund is through a tax deferred retirement account, such as a 401(k) plan or IRA, you need to be aware of the possible tax consequences when the Fund makes distributions and when you sell shares, including an exchange to another Morgan Stanley Fund.

*Taxation of Distributions.* With respect to the Ultra-Short Income Portfolio, your distributions normally are subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares. A distribution also may be subject to local income tax. Any income dividend distributions and any short-term capital gain distributions are taxable to you as ordinary income. Any long-term capital gain distributions are taxable as long-term capital gains, no matter how long you have owned shares in the Fund. It is not anticipated that any portion of the distributions by the Fund would qualify for a lower tax rate as qualified dividend income. Further, such distributions are not anticipated to be eligible for a dividends-received deduction for corporate shareholders.

With respect to the Ultra-Short Municipal Income Portfolio, your income dividend distributions are normally exempt from federal income tax—to the extent they are derived from municipal obligations. Income derived from other portfolio securities may be subject to federal, state and/or local income taxes. Income derived from some municipal securities is subject to the federal "alternative minimum tax." Certain tax-exempt securities whose proceeds are used to finance private, for-profit organizations are subject to this special tax system that ensures that individuals pay at least some federal taxes. Although interest on these securities is generally exempt from federal income tax, some individual taxpayers who have many tax deductions or exemptions nevertheless may have to pay tax on the income. However, the alternative minimum tax consequences discussed in this paragraph do not apply with respect to interest paid on bonds issued after December 31, 2008 and before January 1, 2011 (including refunding bonds issued during that period to refund bonds originally issued after December 31, 2003 and before January 1, 2009).

The Fund may derive gains in part from municipal obligations that the Fund purchased below their principal or face values. All or a portion of these gains may be taxable to you as ordinary income rather than capital gains. If the Fund makes any capital gain distributions, those distributions will normally be subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares. Any short-term capital gain distributions are taxable to you as ordinary income. Any long-term capital gain distributions are taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund. The Fund does not anticipate that it will make any distributions eligible for the reduced rate of taxation applicable to qualified dividend income.

If you borrow money to purchase shares of the Fund, the interest on the borrowed money is generally not deductible for income tax purposes.

Investment income received by the Funds from sources within foreign countries may be subject to foreign income taxes.

You will be sent a statement (IRS Form 1099-DIV) by February of each year showing the taxable distributions paid to you in the previous year. The statement provides information on your dividends and any capital gains for tax purposes.

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

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

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

When you open your account, you should provide your social security or tax identification number on your investment application. By providing this information, you will avoid being subject to federal backup withholding at the applicable rate on taxable

**31**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

distributions and redemption proceeds. Any withheld amount would be sent to the IRS as an advance payment of your taxes due on your income for such year.

Shareholders who are not citizens or residents of the United States and certain foreign entities will generally be subject to withholding of U.S. tax of 30% on distributions made by a Fund of investment income (other than "exempt-interest dividends" disclosed above) and short-term capital gains.

Dividends paid by the Funds to shareholders who are nonresident aliens or foreign entities that are derived from short-term capital gains and qualifying U.S. source net interest income (including income from original issue discount and market discount), and that are designated by the Funds as "interest-related dividends" or "short-term capital gain dividends," will generally not be subject to U.S. withholding tax, provided that the income would not be subject to U.S. federal income tax if earned directly by the foreign shareholder. However, depending on the circumstances, the Funds may designate all, some or none of the Fund's potentially eligible dividends as exempt.

Each Fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive 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 provide additional information to a Fund to enable the Fund to determine whether withholding is required.

Because each investor's tax circumstances are unique and the tax laws may change, you should consult your tax advisor about your investment.

**Dividends and Distributions**

Each Fund's policy is to declare income dividends daily on each business day and pay them monthly to shareholders.

Each Fund's policy is to distribute net realized capital gains, if any, at least annually. Each Fund automatically reinvests all dividends and distributions in additional shares. However, you may elect to receive distributions in cash by giving written notice to the Funds or your Financial Intermediary or by checking the appropriate box in the Distribution Option section on the New Account Application.

For accounts held directly with a Fund's transfer agent for which the shareholder has elected to receive distributions via check, any distribution (dividend or capital gain) under $10.00 is automatically reinvested in additional shares regardless of your elected distribution option.

**Potential Conflicts of Interest**

As a diversified global financial services firm, Morgan Stanley, the parent company of the Adviser, engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley's interests or the interests of its clients may conflict with the interests of a Fund. Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with any new or successor funds, programs, accounts or businesses, the ''Affiliated Investment Accounts'') with a wide variety of investment objectives that in some instances may overlap or conflict with a Fund's investment objectives and present conflicts of interest. In addition, Morgan Stanley may also from time to time create new or successor Affiliated Investment Accounts that may compete with a Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and, in fact, they may not be. Conflicts of interest not described below may also exist.

For more information about conflicts of interest, see the section entitled "Potential Conflicts of Interest" in the SAI.

*Material Nonpublic Information.* It is expected that confidential or material nonpublic information regarding an investment or potential investment opportunity may become available to the Adviser. If such information becomes available, the Adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. Morgan Stanley has established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley. In limited circumstances, however, including for purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, personnel, including personnel of the investment adviser, on one side of an information barrier may have access to information and personnel on the other side of the information barrier through "wall crossings." The Adviser faces conflicts of interest in determining whether to engage in such wall crossings. Information obtained in connection with such wall crossings may

**32**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

limit or restrict the ability of the Adviser to engage in or otherwise effect transactions on behalf of the Funds (including purchasing or selling securities that the Adviser may otherwise have purchased or sold for a Fund in the absence of a wall crossing).

*Investments by Morgan Stanley and its Affiliated Investment Accounts.* In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the Adviser and the Investment team, may have obligations to other clients or investors in Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of a Fund or its shareholders. A Fund's investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a result, the members of an Investment team may face conflicts in the allocation of investment opportunities among a Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the Adviser. Certain Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts. To seek to reduce potential conflicts of interest and to attempt to allocate such investment opportunities in a fair and equitable manner, the Adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the Adviser, including the Funds, fair access to investment opportunities consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the Adviser.

*Payments to Broker-Dealers and Other Financial Intermediaries.* The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of a Fund, to certain Financial Intermediaries (which may include affiliates of the Adviser and Distributor), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Fund and/or shareholder servicing. The prospect of receiving, or the receipt of, additional compensation, as described above, by Financial Intermediaries may provide such Financial Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of a Fund over other investment options with respect to which these Financial Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of a Fund or the amount that the Fund receives to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any disclosures provided by Financial Intermediaries as to their compensation. In addition, in certain circumstances, the Adviser restricts, limits or reduces the amount of a Fund's investment, or restricts the type of governance or voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.

*Morgan Stanley Trading and Principal Investing Activities.* Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for a Fund's holdings, although these activities could have an adverse impact on the value of one or more of the Fund's investments, or could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and potentially adverse to, that of a Fund.

*Morgan Stanley's Investment Banking and Other Commercial Activities.* Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment funds that may compete with a Fund and with respect to investments that a Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve an action of a different timing or nature than the action taken, by a Fund. Morgan Stanley may give advice and provide recommendations to persons competing with a Fund and/or any of a Fund's investments that are contrary to the Fund's best interests and/or the best interests of any of its investments. Morgan Stanley's activities on behalf of its clients (such as engagements as an underwriter or placement agent) may restrict or otherwise limit investment opportunities that may otherwise be available to a Fund.

Morgan Stanley may be engaged to act as a financial advisor to a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in connection with such transactions. Morgan Stanley's compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, the Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to a merger or an acquisition.

**33**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

Financial Highlights

The financial highlights tables that follow are intended to help you understand the financial performance of the Class IR, Institutional Class and Class A shares of each Fund for the past five years or since inception if less than five years. Certain information reflects financial results for a single Fund share. The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in each Fund (assuming reinvestment of all dividends and distributions).

The ratio of expenses to average net assets listed in the tables below for each class of shares of a Fund are based on the average net assets of the Fund for each of the periods listed in the tables. To the extent that a Fund's average net assets decrease over the Fund's next fiscal year, such expense ratios can be expected to increase, potentially significantly, because certain fixed costs will be spread over a smaller amount of assets.

The information below has been derived from the financial statements audited by Ernst & Young LLP, the Funds' independent registered public accounting firm. Ernst & Young LLP's reports, along with each Fund's financial statements, are incorporated by reference into the Funds' SAI. The Annual Reports to Shareholders (which include each Fund's financial statements) and SAI are available at no cost from the Trust at the toll-free number noted on the back cover to this Prospectus.

**34**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Ultra-Short Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class IR** | **Class IR** | **Class IR** | **Class IR** | **Class IR** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $9.98<br>| $9.99<br>| $10.02<br>| $10.01<br>| $10.01<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.10<br>| 0.02<br>| 0.13<br>| 0.25<br>| 0.19<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.02)<br>| (0.01)<br>| (0.03)<br>| 0.01<br>| (0.01)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | 0.08<br>| 0.01<br>| 0.10<br>| 0.26<br>| 0.18<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.09)<br>| (0.02)<br>| (0.13)<br>| (0.25)<br>| (0.18)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | —<br>| —<br>| —<br>| —<br>| (0.00)<br> <sup>(2)</sup> <br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.09)<br>| (0.02)<br>| (0.13)<br>| (0.25)<br>| (0.18)<br>|
| **Net Asset Value, End of Period** | $9.97<br>| $9.98<br>| $9.99<br>| $10.02<br>| $10.01<br>|
| **Total Return<sup>(3)</sup>**  | 0.79<br> %<br>| 0.10<br> %<br>| 1.03<br> %<br>| 2.68<br> %<br>| 1.87<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $4945966<br>| $5014307<br>| $5388750<br>| $4765201<br>| $1840647<br>|
| Ratio of Expenses Before Expense Limitation | 0.29<br> %<br>| 0.30<br> %<br>| 0.31<br> %<br>| 0.30<br> %<br>| 0.30<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.20<br> %<br>| 0.18<br> %<br>| 0.24<br> %<br>| 0.24<br> %<br>| 0.23<br> %<br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| N/A<br>| 0.24<br> %<br>| 0.24<br> %<br>| N/A<br>|
| Ratio of Net Investment Income | 0.96<br> %<br>| 0.21<br> %<br>| 1.34<br> %<br>| 2.53<br> %<br>| 1.86<br> %<br>|
| Portfolio Turnover Rate | N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Amount is less than $0.005 per share.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) During the reporting period, the Fund did not hold any long-term investments and accordingly portfolio turnover is not applicable.

**35**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Ultra-Short Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Institutional Class** | **Institutional Class** | **Institutional Class** | **Institutional Class** | **Institutional Class** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $9.98<br>| $9.99<br>| $10.02<br>| $10.01<br>| $10.01<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.08<br>| 0.02<br>| 0.14<br>| 0.25<br>| 0.18<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.01)<br>| (0.01)<br>| (0.04)<br>| 0.01<br>| 0.00<br><sup>(2)</sup> <br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | 0.07<br>| 0.01<br>| 0.10<br>| 0.26<br>| 0.18<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.08)<br>| (0.02)<br>| (0.13)<br>| (0.25)<br>| (0.18)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | —<br>| —<br>| —<br>| —<br>| (0.00)<br> <sup>(2)</sup> <br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.08)<br>| (0.02)<br>| (0.13)<br>| (0.25)<br>| (0.18)<br>|
| **Net Asset Value, End of Period** | $9.97<br>| $9.98<br>| $9.99<br>| $10.02<br>| $10.01<br>|
| **Total Return<sup>(3)</sup>**  | 0.74<br> %<br>| 0.05<br> %<br>| 0.98<br> %<br>| 2.62<br> %<br>| 1.82<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $2006592<br>| $1834410<br>| $2544657<br>| $3085210<br>| $2722775<br>|
| Ratio of Expenses Before Expense Limitation | 0.34<br> %<br>| 0.35<br> %<br>| 0.36<br> %<br>| 0.34<br> %<br>| 0.35<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.25<br> %<br>| 0.23<br> %<br>| 0.29<br> %<br>| 0.29<br> %<br>| 0.28<br> %<br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| N/A<br>| 0.29<br> %<br>| 0.29<br> %<br>| N/A<br>|
| Ratio of Net Investment Income | 0.79<br> %<br>| 0.16<br> %<br>| 1.39<br> %<br>| 2.48<br> %<br>| 1.84<br> %<br>|
| Portfolio Turnover Rate | N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Amount is less than $0.005 per share.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) During the reporting period, the Fund did not hold any long-term investments and accordingly portfolio turnover is not applicable.

**36**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Ultra-Short Income Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class A** | **Class A** | **Class A** | **Class A** | **Class A** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $9.98<br>| $9.99<br>| $10.02<br>| $10.01<br>| $10.01<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.07<br>| 0.01<br>| 0.12<br>| 0.23<br>| 0.17<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | 0.00<br><sup>(2)</sup> <br>| (0.01)<br>| (0.04)<br>| 0.01<br>| (0.01)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | 0.07<br>| (0.00)<br> <sup>(2)</sup> <br>| 0.08<br>| 0.24<br>| 0.16<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.08)<br>| (0.01)<br>| (0.11)<br>| (0.23)<br>| (0.16)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | —<br>| —<br>| —<br>| —<br>| (0.00)<br> <sup>(2)</sup> <br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.08)<br>| (0.01)<br>| (0.11)<br>| (0.23)<br>| (0.16)<br>|
| **Net Asset Value, End of Period** | $9.97<br>| $9.98<br>| $9.99<br>| $10.02<br>| $10.01<br>|
| **Total Return<sup>(3)</sup>**  | 0.67<br> %<br>| (0.03)%<br>| 0.80<br> %<br>| 2.42<br> %<br>| 1.61<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $4451324<br>| $5973299<br>| $9923736<br>| $10784226<br>| $6266177<br>|
| Ratio of Expenses Before Expense Limitation | 0.54<br> %<br>| 0.55<br> %<br>| 0.56<br> %<br>| 0.55<br> %<br>| 0.55<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.31<br> %<br>| 0.32<br> %<br>| 0.46<br> %<br>| 0.49<br> %<br>| 0.48<br> %<br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| N/A<br>| 0.46<br> %<br>| 0.49<br> %<br>| N/A<br>|
| Ratio of Net Investment Income | 0.70<br> %<br>| 0.08<br> %<br>| 1.16<br> %<br>| 2.29<br> %<br>| 1.68<br> %<br>|
| Portfolio Turnover Rate | N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>| N/A<br><sup>(4)</sup> <br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Amount is less than $0.005 per share.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) During the reporting period, the Fund did not hold any long-term investments and accordingly portfolio turnover is not applicable.

**37**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Ultra-Short Municipal Income Portfolio**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Class IR** | **Class IR** | **Class IR** | **Class IR** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **Period from December 19, 2018<sup>(1)</sup>**<br>**to September 30, 2019** |
| **Net Asset Value, Beginning of Period** | $10.00<br>| $10.00<br>| $10.00<br>| $10.00<br>|
| **Income from Investment Operations:** | **Income from Investment Operations:** | **Income from Investment Operations:** | **Income from Investment Operations:** | **Income from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.06<br>| 0.01<br>| 0.09<br>| 0.12<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain  | 0.00<br><sup>(3)</sup> <br>| 0.00<br><sup>(3)</sup> <br>| 0.00<br><sup>(3)</sup> <br>| 0.00<br><sup>(3)</sup> <br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | 0.06<br>| 0.01<br>| 0.09<br>| 0.12<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.06)<br>| (0.01)<br>| (0.09)<br>| (0.12)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.00)<br> <sup>(3)</sup> <br>| —<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.06)<br>| (0.01)<br>| (0.09)<br>| (0.12)<br>|
| **Net Asset Value, End of Period** | $10.00<br>| $10.00<br>| $10.00<br>| $10.00<br>|
| **Total Return<sup>(4)</sup>**  | 0.61<br> %<br>| 0.06<br> %<br>| 0.91<br> %<br>| 1.19<br> %<br> <sup>(5)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $71284<br>| $66358<br>| $118335<br>| $67174<br>|
| Ratio of Expenses Before Expense Limitation | 0.46<br> %<br>| 0.40<br> %<br>| 0.40<br> %<br>| 0.52<br> %<br> <sup>(6)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 0.13<br> %<br>| 0.13<br> %<br>| 0.13<br> %<br>| 0.13<br> %<br> <sup>(6)</sup> <br>|
| Ratio of Net Investment Income | 0.59<br> %<br>| 0.07<br> %<br>| 0.78<br> %<br>| 1.49<br> %<br> <sup>(6)</sup> <br>|
| Portfolio Turnover Rate | N/A<br><sup>(7)</sup> <br>| N/A<br><sup>(7)</sup> <br>| N/A<br><sup>(7)</sup> <br>| N/A<br><sup>(7)</sup> <br>|

---

(1) Commencement of Operations.

(2) Per share amount is based on average shares outstanding.

(3) Amount is less than $0.005 per share.

(4) Calculated based on the net asset value as of the last business day of the period.

(5) Not annualized.

(6) Annualized.

(7) During the reporting period, the Fund did not hold any long-term investments and accordingly portfolio turnover is not applicable.

**38**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Ultra-Short Municipal Income Portfolio**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Institutional Class** | **Institutional Class** | **Institutional Class** | **Institutional Class** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **Period from December 19, 2018<sup>(1)</sup>**<br>**to September 30, 2019** |
| **Net Asset Value, Beginning of Period** | $10.01<br>| $10.02<br>| $10.00<br>| $10.00<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.07<br>| 0.00<br><sup>(3)</sup> <br>| 0.10<br>| 0.11<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (0.03)<br>| (0.01)<br>| 0.00<br><sup>(3)</sup> <br>| 0.00<br><sup>(3)</sup> <br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | 0.04<br>| (0.01)<br>| 0.10<br>| 0.11<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.05)<br>| (0.00)<br> <sup>(3)</sup> <br>| (0.08)<br>| (0.11)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.00)<br> <sup>(3)</sup> <br>| —<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.05)<br>| (0.00)<br> <sup>(3)</sup> <br>| (0.08)<br>| (0.11)<br>|
| **Net Asset Value, End of Period** | $10.00<br>| $10.01<br>| $10.02<br>| $10.00<br>|
| **Total Return<sup>(4)</sup>**  | 0.44<br> %<br>| (0.09)%<br>| 1.01<br> %<br>| 1.11<br> %<br> <sup>(5)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $10477<br>| $5292<br>| $9997<br>| $40250<br>|
| Ratio of Expenses Before Expense Limitation | 0.60<br> %<br>| 0.53<br> %<br>| 0.49<br> %<br>| 0.62<br> %<br> <sup>(6)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 0.21<br> %<br>| 0.18<br> %<br>| 0.23<br> %<br>| 0.23<br> %<br> <sup>(6)</sup> <br>|
| Ratio of Net Investment Income (Loss) | 0.74<br> %<br>| (0.01)%<br>| 1.03<br> %<br>| 1.39<br> %<br> <sup>(6)</sup> <br>|
| Portfolio Turnover Rate | N/A<br><sup>(7)</sup> <br>| N/A<br><sup>(7)</sup> <br>| N/A<br><sup>(7)</sup> <br>| N/A<br><sup>(7)</sup> <br>|

---

(1) Commencement of Operations.

(2) Per share amount is based on average shares outstanding.

(3) Amount is less than $0.005 per share.

(4) Calculated based on the net asset value as of the last business day of the period.

(5) Not annualized.

(6) Annualized.

(7) During the reporting period, the Fund did not hold any long-term investments and accordingly portfolio turnover is not applicable.

**39**

------

[Back To **Table of Contents**](#TOC_15575)

Morgan Stanley Institutional Fund Trust Prospectus \| **Financial Highlights**

**Ultra-Short Municipal Income Portfolio**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Class A** | **Class A** | **Class A** | **Class A** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **Period from December 19, 2018<sup>(1)</sup>**<br>**to September 30, 2019** |
| **Net Asset Value, Beginning of Period** | $10.00<br>| $10.00<br>| $10.00<br>| $10.00<br>|
| **Income from Investment Operations:** | **Income from Investment Operations:** | **Income from Investment Operations:** | **Income from Investment Operations:** | **Income from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.04<br>| 0.00<br><sup>(3)</sup> <br>| 0.07<br>| 0.10<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain  | 0.01<br>| 0.00<br><sup>(3)</sup> <br>| 0.00<br><sup>(3)</sup> <br>| 0.00<br><sup>(3)</sup> <br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | 0.05<br>| 0.00<br><sup>(3)</sup> <br>| 0.07<br>| 0.10<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.05)<br>| (0.00)<br> <sup>(3)</sup> <br>| (0.07)<br>| (0.10)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (0.00)<br> <sup>(3)</sup> <br>| —<br>| —<br>| —<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (0.05)<br>| (0.00)<br> <sup>(3)</sup> <br>| (0.07)<br>| (0.10)<br>|
| **Net Asset Value, End of Period** | $10.00<br>| $10.00<br>| $10.00<br>| $10.00<br>|
| **Total Return<sup>(4)</sup>**  | 0.53<br> %<br>| 0.01<br> %<br>| 0.73<br> %<br>| 1.04<br> %<br> <sup>(5)</sup> <br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $66004<br>| $90201<br>| $185866<br>| $132882<br>|
| Ratio of Expenses Before Expense Limitation | 0.66<br> %<br>| 0.60<br> %<br>| 0.59<br> %<br>| 0.72<br> %<br> <sup>(6)</sup> <br>|
| Ratio of Expenses After Expense Limitation | 0.21<br> %<br>| 0.19<br> %<br>| 0.32<br> %<br>| 0.33<br> %<br> <sup>(6)</sup> <br>|
| Ratio of Net Investment Income (Loss) | 0.44<br> %<br>| (0.02)%<br>| 0.68<br> %<br>| 1.30<br> %<br> <sup>(6)</sup> <br>|
| Portfolio Turnover Rate | N/A<br><sup>(7)</sup> <br>| N/A<br><sup>(7)</sup> <br>| N/A<br><sup>(7)</sup> <br>| N/A<br><sup>(7)</sup> <br>|

---

(1) Commencement of Operations.

(2) Per share amount is based on average shares outstanding.

(3) Amount is less than $0.005 per share.

(4) Calculated based on the net asset value as of the last business day of the period.

(5) Not annualized.

(6) Annualized.

(7) During the reporting period, the Fund did not hold any long-term investments and accordingly portfolio turnover is not applicable.

**40**

------

[Back To **Table of Contents**](#TOC_15575)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15575)

Where to Find Additional Information

In addition to this Prospectus, the Funds have an SAI, dated January 27, 2023 (as may be supplemented from time to time), which contains additional, more detailed information about the Trust and the Funds. The SAI is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus.

The Trust publishes Annual and Semi-Annual Reports ("Shareholder Reports") that contain additional information about the respective Fund's investments. In each Fund's Annual Report to Shareholders, you will find a discussion of the market conditions and the investment strategies that significantly affected such Fund's performance during the last fiscal year. For additional Trust information, including information regarding the investments comprising each of the Funds, please call the toll-free number below.

You may obtain the SAI and Shareholder Reports without charge by contacting the Trust at the toll-free number below or on our Internet site at: www.morganstanley.com/im. If you purchased shares through a Financial Intermediary, you may also obtain these documents, without charge, by contacting your Financial Intermediary.

Shareholder Reports and other information about the Funds are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.

Morgan Stanley Institutional Fund Trust

c/o SS&C GIDS

P.O. Box 219804

Kansas City, MO 64121-9804

For Shareholder Inquiries,

call toll-free 1-888-378-1630.

Prices and Investment Results are available at www.morganstanley.com/im.

The Trust's 1940 Act registration number is 811-03980.© 2023 Morgan Stanley

IFTUSIPRO 01/23

------

![image](pr15626img002.jpg)

Morgan Stanley Institutional Fund Trust

**Global Strategist Portfolio**

------

**Prospectus** \| January 27, 2023

---

| | |
|:---|:---|
| **Share Class** | **Ticker Symbol** |
| Class I | MPBAX |
| Class A | MBAAX |
| Class L | MSDLX |
| Class C | MSSOX |
| Class R6 | MGPOX |

---

![image](pr15626img001.jpg)

The Securities and Exchange Commission ("SEC") and the Commodities Futures Trading Commission have not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

An investment in the Fund is not a bank deposit and is not insured by the Federal Deposit Insurance Corporation or any other government agency. An investment in the Fund involves investment risks, and you may lose money in the Fund.

IFTGLBSTRATPRO 01/23

------

**Table of Contents**

---

| | |
|:---|:---|
|  | **Page** |
| [**Fund Summary**](#ref_chapter_2_15626)  | 1 |
| [**Details of the Fund**](#ref_chapter_3_15626)  | 10 |
| [**Additional Information about the Fund's Investment Strategies and Related Risks**](#ref_chapter_4_15626)  | 12 |
| [**Fund Management**](#ref_chapter_5_15626)  | 23 |
| [**Shareholder Information**](#ref_chapter_6_15626)  | 25 |
| [**Consolidated Financial Highlights**](#ref_chapter_7_15626)  | 39 |
| [**Appendix A**](#ref_chapter_8_15626)  | 45 |

---

------

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Global Strategist Portfolio

**Investment Objective**

The Global Strategist Portfolio (the "Fund") seeks above-average total return over a market cycle of three to five years.

**Fees and Expenses**

The table below describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. **You may pay fees** **other than the fees and expenses of the Fund, such as brokerage commissions and other fees charged by financial** **intermediaries, which are not reflected in the tables and examples below.**

For purchases of Class A shares, you may qualify for a sales charge discount if the cumulative net asset value per share ("NAV") of Class A shares of the Fund being purchased in a single transaction, together with the NAV of any Class A, Class L and Class C shares of the Fund already held in Related Accounts (as defined in the section of the Prospectus entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares") as of the date of the transaction as well as Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") and including shares of Morgan Stanley Money Market Funds (as defined in the section of the Prospectus entitled "Shareholder Information—Exchange Privilege") that you acquired in an exchange of Class A, Class L or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios already held in Related Accounts as of the date of the transaction, amounts to $50,000 or more. More information about this combined purchase discount and other discounts is available from your financial intermediary, on page 27 of the Prospectus in the section entitled "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares" and in Appendix A attached to the Prospectus.

Class I shares may be available on brokerage platforms of firms that have agreements with the Fund's principal underwriter permitting such firms to (i) offer Class I shares solely when acting as an agent for the investor and (ii) impose on an investor transacting in Class I shares through such platforms a commission and/or other forms of compensation to the broker. Shares of the Fund are available in other share classes that have different fees and expenses.

**Shareholder Fees** (fees paid directly from your investment)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Maximum sales charge (load) imposed on purchases (as a percentage of offering price) |  | 5.25% |  |  |  |
| Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or NAV at redemption) |  | None<sup>1</sup> |  | 1.00%<sup>2</sup> |  |

---

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class I** | **Class A** | **Class L** | **Class C** | **Class R6** |
| Advisory Fee<sup>3</sup>  | 0.45% | 0.45% | 0.45% | 0.45% | 0.45% |
| Distribution and/or Shareholder Service (12b-1) Fee |  | 0.25% | 0.75% | 1.00% |  |
| Other Expenses<sup>4</sup>  | 0.38% | 0.35% | 0.36% | 0.47% | 0.26% |
| Acquired Fund Fees and Expenses | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% |
| Total Annual Fund Operating Expenses <sup>5</sup>  | 0.84% | 1.06% | 1.57% | 1.93% | 0.72% |
| Fee Waiver and/or Expense Reimbursement<sup>5</sup>  | 0.09% | 0.00% | 0.00% | 0.08% | 0.00% |
| Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement<sup>5</sup>  | 0.75% | 1.06% | 1.57% | 1.85% | 0.72% |

---

**Example**

The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year and that the Fund's operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year). After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund. The example for Class C shares reflects the conversion to Class A shares after eight years. Please refer to the section of the Prospectus entitled "Shareholder Information—Conversion Features" for more information. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

**1**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Global Strategist Portfolio (Con't)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  | **If You SOLD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $77 | $259 | $457 | $1029  |
| Class A | $627 | $845 | $1079 | $1751 |
| Class L | $160 | $496  | $855 | $1867 |
| Class C | $288  | $598 | $1034  | $2021 |
| Class R6 | $74 | $230 | $401 | $894 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  | **If You HELD Your Shares**  |
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Class I | $77 | $259 | $457 | $1029  |
| Class A | $627 | $845 | $1079 | $1751 |
| Class L | $160  | $496  | $855 | $1867 |
| Class C | $188 | $598 | $1034  | $2021 |
| Class R6 | $74 | $230 | $401 | $894 |

---

---

| | |
|:---|:---|
| 1 | Investments in Class A shares that are not subject to any sales charges at the time of purchase are subject to a contingent deferred sales charge ("CDSC") of 1.00% that will be imposed if you sell your shares within 12 months after purchase, except for certain specific circumstances. See "Shareholder Information—How To Redeem Fund Shares" for further information about the CDSC waiver categories. |

---

2 The Class C CDSC is only applicable if you sell your shares within one year after the last day of the month of purchase. See "Shareholder Information—How To Redeem Fund Shares" for a complete discussion of the CDSC.

---

| | |
|:---|:---|
| 3 | "Advisory Fee" includes the management fee of the Subsidiary (as defined below). The Fund's "Adviser," Morgan Stanley Investment Management Inc., has agreed to waive or credit a portion of the advisory fee in an amount equal to the management fee paid to the Adviser by the Subsidiary. |

---

4 "Other Expenses" include expenses of the Fund's and Subsidiary's most recent fiscal year.

---

| | |
|:---|:---|
| 5 | The Fund's Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that Total Annual Fund Operating Expenses, excluding acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.74% for Class I, 1.09% for Class A, 1.59% for Class L, 1.84% for Class C and 0.71% for Class R6. The fee waivers and/or expense reimbursements will continue for at least one year from the date of this Prospectus or until such time as the Board of Trustees of Morgan Stanley Institutional Fund Trust (the "Trust") acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. |

---

**Portfolio Turnover**

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 93% of the average value of its portfolio.

**Principal Investment Strategies**

The Adviser and/or "Sub-Adviser," Morgan Stanley Investment Management Limited, seek to achieve the Fund's investment objective by investing primarily in a blend of equity and fixed-income securities of U.S. and non-U.S. issuers. Equity securities may include common and preferred stocks, depositary receipts, convertible securities, equity-linked securities, real estate investment trusts ("REITs"), rights and warrants to purchase equity securities and limited partnership interests. Fixed-income securities may include mortgage-related or mortgage-backed securities, floating rate securities, inflation-linked fixed-income securities, securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, securities issued or guaranteed by non-U.S. governments, their agencies or instrumentalities, corporate bonds and notes issued by U.S. and non-U.S. entities.

The Adviser and/or Sub-Adviser will utilize a top-down investment approach that focuses on asset class, sector, region, country and currency and thematic allocations. The Fund's allocations will be based upon the Adviser's and/or Sub-Adviser's evaluations and analyses, taking into account results of its fundamental market research and recommendations generated by the Adviser's and/or Sub-Adviser's quantitative models. The Adviser's and/or Sub-Adviser's research process focuses on the following factors across asset classes: 1) valuation (both relative and absolute), 2) dynamics, including earnings revisions, interest rate policy and inflation expectations and 3) technicals, such as investor flows and sentiment. The Fund may invest in any country, including developing or emerging market countries. The Fund's investments may be U.S. and non-U.S. dollar denominated. In determining whether to sell a security, the Adviser and/or Sub-Adviser consider a number of factors, including changes in capital appreciation potential, or the overall assessment of asset class, sector, region, country, and currency and thematic allocation shifts.

The Fund may invest a portion of its assets in below investment grade fixed-income securities (commonly referred to as "junk bonds"). The Fund may also invest in restricted and illiquid securities. The mortgage-backed securities in which the Fund may invest

**2**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Global Strategist Portfolio (Con't)

include mortgage pass-through securities that represent a participation interest in a pool of mortgage loans originated by U.S. governmental or private lenders such as banks.

The Fund may also invest up to 10% of its total assets in other investment companies, including exchange-traded funds ("ETFs").

The Fund may, but it is not required to, use derivatives and similar instruments for a variety of purposes, including hedging, risk management, Fund management or to earn income. The Fund's use of derivatives may involve the purchase and sale of derivative instruments such as futures, options, swaps and structured investments (including commodity-linked notes), and other similar instruments and techniques. The Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities. Derivative instruments used by the Fund will be counted toward the Fund's exposure to the types of securities listed above to the extent they have economic characteristics similar to such securities.

The Fund may, consistent with its principal investment strategies, invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands (the "Subsidiary"). The Subsidiary may invest, directly or indirectly through the use of derivatives, in securities, commodities, commodity-related instruments and other investments, primarily futures, swaps and notes. The Subsidiary is advised by the Adviser.

Investments in the Subsidiary are intended to provide the Fund with exposure to commodities markets within the limitations of the federal tax requirements that apply to the Fund. The Subsidiary primarily obtains its commodity exposure by investing in commodity-linked derivative instruments, which may include, but are not limited to, total return swaps, commodity (U.S. or foreign) futures and commodity-linked notes. The Subsidiary may also invest in other instruments, including fixed-income securities, either as investments or to serve as margin or collateral for its swap positions and foreign currency transactions (including forward contracts).

**Principal Risks**

There is no assurance that the Fund will achieve its investment objective, and you can lose money investing in this Fund. The principal risks of investing in the Fund include:

• **Equity Securities.** In general, prices of equity securities are more volatile than those of fixed-income securities. The prices of equity securities fluctuate, and sometimes widely fluctuate, in response to activities specific to the issuer of the security as well as factors unrelated to the fundamental condition of the issuer, including general market, economic , political conditions and public health conditions. To the extent that the Fund invests in convertible securities, and the convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying security. During periods when equity securities experience heightened volatility, such as during periods of market, economic or financial uncertainty or distress, the Fund's investments in equity securities may be subject to heightened risks.

• **Fixed-Income Securities.** Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). The Fund is not limited as to the maturities (when a debt security provides its final payment) or durations (measure of interest rate sensitivity) of the securities in which it may invest. Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. A portion of the Fund's fixed-income securities may be rated below investment grade. Investing in emerging markets intensifies this risk, because lower quality fixed-income securities are more volatile in price.

• **High Yield Securities ("Junk Bonds").** The Fund's investments in high yield securities expose it to a substantial degree of credit risk. Investing in emerging markets intensifies risk, because high yield securities may be more volatile in price in certain environments. High yield securities may be issued by companies that are restructuring, are smaller and less creditworthy or are more highly indebted than other companies, and therefore they may have more difficulty making scheduled payments of principal and interest. High yield securities are subject to greater risk of loss of income and principal than higher rated securities and may be considered speculative. High yield securities may experience reduced liquidity, and sudden and substantial decreases in price. An economic downturn affecting an issuer of high yield securities may result in an increased incidence of default. In the event of a default, the Fund may incur additional expenses to seek recovery.

• **Mortgage-Backed Securities.** Mortgage-backed securities entail prepayment risk, which generally increases during a period of falling interest rates. Rising interest rates tend to discourage refinancings, with the result that the average life and volatility of

**3**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Global Strategist Portfolio (Con't)

mortgage-backed securities will increase and market price will decrease. Rates of prepayment, faster or slower than expected by the Adviser, could reduce the Fund's yield, increase the volatility of the Fund and/or cause a decline in NAV. Mortgage-backed securities are also subject to extension risk, which is the risk that rising interest rates could cause mortgages or other obligations underlying the securities to be prepaid more slowly than expected, thereby lengthening the duration of such securities, increasing their sensitivity to interest rate changes and causing their prices to decline. Certain mortgage-backed securities may be more volatile and less liquid than other traditional types of debt securities. In addition, mortgage-backed securities are subject to credit risk. The Fund may invest in non-agency mortgage-backed securities offered by non-governmental issuers, such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers. Non-agency mortgage-backed securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-backed securities that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying non-agency mortgage-backed securities may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored mortgage-backed securities and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of a mortgage-backed security and could result in losses to the Fund. The risk of such defaults is generally higher in the case of mortgage pools that include subprime mortgages. Furthermore, mortgage-backed securities may be subject to risks associated with the assets underlying those securities, such as a decline in value. Investments in mortgage-backed securities may give rise to a form of leverage (indebtedness) and may cause the Fund's portfolio turnover rate to appear higher. Leverage may cause the Fund to be more volatile than if the Fund had not been leveraged. The risks associated with mortgage-backed securities typically become elevated during periods of distressed economic, market, health and labor conditions. In particular, increased levels of unemployment, delays and delinquencies in payments of mortgage and rent obligations, and uncertainty regarding the effects and extent of government intervention with respect to mortgage payments and other economic matters may adversely affect the Fund's investments in mortgage-backed securities.<br>

• **REITs.** Investing in REITs exposes investors to the risks of owning real estate directly, as well as to risks that relate specifically to the way in which REITs are organized and operated. Operating REITs requires specialized management skills and the Fund indirectly bears management expenses along with the direct expenses of the Fund. REITs are also subject to certain provisions under federal tax law and the failure of a company to qualify as a REIT could have adverse consequences for the Fund.

• **Foreign and Emerging Market Securities.** Investments in foreign markets entail special risks such as currency, political (including geopolitical) , economic and market risks. There also may be greater market volatility, less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and custody costs, decreased market liquidity and less government and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The risks of investing in emerging market countries are greater than the risks associated with investments in foreign developed countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. Certain emerging market or developing countries are among the largest debtors to commercial banks and foreign governments. The issuer or governmental authority that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or pay interest when due in accordance with the terms of such obligations. In addition, foreign governments may default on their debt securities, which may require holders of such securities to participate in debt rescheduling or additional lending to defaulting governments. Moreover, there is no bankruptcy proceeding by which defaulted sovereign debt may be collected in whole or in part. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging market countries. In addition, the Fund's investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged, the value of those investments will fluctuate with U.S. dollar exchange rates. To the extent hedged by the use of foreign currency forward exchange contracts, the precise matching of the foreign currency forward exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. There is additional risk that such

**4**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Global Strategist Portfolio (Con't)

transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken and that foreign currency forward exchange contracts create exposure to currencies in which the Fund's securities are not denominated. The use of foreign currency forward exchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. Economic sanctions and other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities, negatively impact the value or liquidity of the Fund's investments, significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices, or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies.<br>

• **U.S. Government Securities.** Different types of U.S. government securities are subject to different levels of credit risk, including the risk of default, depending on the nature of the particular government support for that security. For example, a U.S. government- sponsored entity, such as Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, although chartered or sponsored by an Act of Congress, may issue securities that are neither insured nor guaranteed by the U.S. Treasury and, therefore, are not backed by the full faith and credit of the United States. With respect to U.S. government securities that are not backed by the full faith and credit of the United States, there is the risk that the U.S. Government will not provide financial support to such U.S. government agencies, instrumentalities or sponsored enterprises if it is not obligated to do so by law.

• **Liquidity.** The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. Liquidity risk may be magnified in a market where credit spread and interest rate volatility is rising and where investor redemptions from fixed-income mutual funds may be higher than normal. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

• **Derivatives.** Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument, including market risk, and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates , risks that the transactions may not be liquid , risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks . Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Investments in currency derivatives may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. Foreign currency forward exchange contracts and currency futures and options contracts create exposure to currencies in which the Fund's securities are not denominated.

• **LIBOR Discontinuance or Unavailability Risk.** The London InterBank Offered Rate ("LIBOR") is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. The Financial Conduct Authority (the "FCA"), which is the regulatory authority that oversees financial services firms , financial markets in the U.K. and the administrator of LIBOR, announced that, after the end of 2021, one-week and two-month U.S. Dollar LIBOR and all non-U.S. Dollar LIBOR settings have either ended or are no longer representative of the underlying market they seek to measure. The FCA also announced that the most commonly used U.S. dollar LIBOR settings may continue to be provided on a representative basis until mid-2023 . However, in connection with supervisory guidance from regulators, some regulated entities may no longer enter into most new LIBOR-based contracts . As a result of the foregoing , LIBOR may no longer be available or no longer deemed an appropriate reference rate upon which to determine the interest rate on or impacting certain loans, notes, derivatives and other instruments or investments held by the Fund .

• **Investment Company Securities.** Subject to the limitations set forth in the Investment Company Act of 1940, as amended (the "1940 Act"), or as otherwise permitted by the SEC, the Fund may acquire shares in other investment companies, including foreign investment companies and ETFs, which may be managed by the Adviser or its affiliates. The market value of the shares of other investment companies may differ from the NAV of the Fund. The shares of closed-end investment companies frequently trade at a discount to their NAV. As a shareholder in an investment company, the Fund would bear its ratable share of that entity's expenses, including its investment advisory and administration fees. At the same time, the Fund would continue to pay its own advisory and administration fees and other expenses. As a result, the Fund and its shareholders, in effect, will be absorbing duplicate levels of fees with respect to investments in other investment companies.

• **Subsidiary Risk.** The Subsidiary is not registered under the 1940 Act and is not subject to all the investor protections of the 1940 Act. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of the Fund and/or the Subsidiary to operate as described herein and could adversely affect the Fund. By investing in the Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary's investments.

**5**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Global Strategist Portfolio (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• **Tax Risk.** The Fund may seek to gain exposure to the commodity markets through investments in the Subsidiary. Historically, the Internal Revenue Service ("IRS") has issued private letter rulings in which the IRS specifically concluded that income and gains from investments in commodity index-linked structured notes (the "Notes Rulings") or a wholly-owned foreign subsidiary that invests in commodity-linked instruments are "qualifying income" for purposes of compliance with Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Fund has not received such a private letter ruling, and is not able to rely on private letter rulings issued to other taxpayers. The IRS recently issued a revenue procedure, which states that the IRS will not in the future issue private letter rulings that would require a determination of whether an asset (such as a commodity index-linked note) is a "security" under the 1940 Act. In connection with issuing such revenue procedure, the IRS has revoked the Notes Rulings. The IRS also recently issued final regulations that would generally treat the Fund's income inclusion with respect to the Subsidiary as qualifying income either if (A) there is a distribution out of the earnings and profits of the Subsidiary that are attributable to such income inclusion or (B) such inclusion is derived with respect to the Fund's business of investing in stock, securities, or currencies. The Fund intends to treat its income from the Subsidiary as qualifying income. No assurances can be provided that the IRS would not be able to successfully assert that the Fund's income from such investments was not "qualifying income," in which case the Fund would fail to qualify as a regulated investment company under Subchapter M of the Code if over 10% of its gross income was derived from these investments. If the Fund failed to qualify as a regulated investment company, it would be subject to federal and state income tax on all of its taxable income at regular corporate tax rates with no deduction for any distributions paid to shareholders, which would significantly adversely affect the returns to, and could cause substantial losses for, Fund shareholders. The Cayman Islands does not currently impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax on the Subsidiary. If Cayman Islands law changes such that the Subsidiary must pay Cayman Islands taxes, Fund shareholders would likely suffer decreased investment returns.

• **China Risk.** Investments in securities of Chinese issuers involve risks associated with investments in foreign markets as well as special considerations not typically associated with investments in the U.S. securities markets. For example, the Chinese government has historically exercised substantial control over virtually every sector of the Chinese economy through administrative regulation and/or state ownership and actions of the Chinese central and local government authorities continue to have a substantial effect on economic conditions in China. In addition, the Chinese government has taken actions that influenced the prices at which certain goods may be sold, encouraged companies to invest or concentrate in particular industries, induced mergers between companies in certain industries and induced private companies to publicly offer their securities. Investments in China involve risk of a total loss due to government action or inaction. Additionally, the Chinese economy is export-driven and highly reliant on trade. Adverse changes to the economic conditions of its primary trading partners, such as the United States, Japan and South Korea, would adversely impact the Chinese economy and the Fund's investments. Moreover, a slowdown in other significant economies of the world, such as the United States, the European Union and certain Asian countries, may adversely affect economic growth in China. An economic downturn in China would adversely impact the Fund's investments. In addition, certain securities are, or may in the future, become restricted, and the Fund may be forced to sell such restricted securities and incur a loss as a result.

*Risks of Investing through Bond Connect.* The Fund may invest in fixed-income instruments listed and traded through the Bond Connect program ("Bond Connect"). Trading through Bond Connect is subject to a number of restrictions that may affect the Fund's investments and returns. Moreover, fixed-income instruments purchased through Bond Connect generally may not be sold, purchased or otherwise transferred other than through Bond Connect in accordance with applicable rules. The Bond Connect program is a relatively new program and may be subject to further interpretation and guidance. There can be no assurance as to the program's continued existence or whether future developments regarding the program may restrict or adversely affect the Fund's investments or returns.<br>

• **Market and Geopolitical Risk.** The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These events may be sudden and unexpected, and could adversely affect the liquidity of the Fund's investments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters, epidemics and pandemics, terrorism, conflicts , social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions) adversely interrupt the global economy and financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments , adversely affect and increase the volatility of the Fund's share price and exacerbate pre-existing risks to the Fund.

• **Portfolio Turnover.** Consistent with its investment policies, the Fund will purchase and sell securities without regard to the effect on portfolio turnover. Higher portfolio turnover will cause the Fund to incur additional transaction costs.

• **Active Management Risk.** In pursuing the Fund's investment objective, the Adviser has considerable leeway in deciding which investments to buy, hold or sell on a day-to-day basis, and which trading strategies to use. For example, the Adviser, in its

**6**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Global Strategist Portfolio (Con't)

discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

Shares of the Fund are not bank deposits and are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

**Performance Information**

The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Class I shares' performance from year-to-year and by showing how the Fund's average annual returns for the past one, five and 10 year periods and since inception compare with those of broad measures of market performance, as well as an index that represents a group of similar mutual funds, over time. The performance of the other classes, which is shown in the table below, will differ because the classes have different ongoing fees. The Fund's returns in the table include the maximum applicable sales charge for Class A and Class C and assume you sold your shares at the end of each period (unless otherwise noted). The Fund's past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available online at www.morganstanley.com/im or by calling toll-free 1-800-869-6397.

**Annual Total Returns—Calendar Years**

![image](pr15626img003.jpg)

---

| | | |
|:---|:---|:---|
| **High Quarter** | 06/30/20 | 13.92% |
| **Low Quarter** | 03/31/20 | -17.50% |

---

**Average Annual Total Returns**

(for the calendar periods ended December 31, 2022)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Past**<br>**One Year** | **Past**<br>**Five Years** | **Past**<br>**Ten Years** | **Since Inception** |
| **Class I** (commenced operations on 12/31/92) | **Class I** (commenced operations on 12/31/92) | **Class I** (commenced operations on 12/31/92) | **Class I** (commenced operations on 12/31/92) | **Class I** (commenced operations on 12/31/92) |
| Return Before Taxes | -16.71% | 2.23% | 4.42% | 6.57% |
| Return After Taxes on Distributions<sup>1</sup>  | -16.83% | 0.77% | 3.01% | 4.85% |
| Return After Taxes on Distributions and Sale of Fund Shares | -9.80% | 1.39% | 3.13% | 4.74% |
| **Class A** (commenced operations on 11/1/96) | **Class A** (commenced operations on 11/1/96) | **Class A** (commenced operations on 11/1/96) | **Class A** (commenced operations on 11/1/96) | **Class A** (commenced operations on 11/1/96) |
| Return Before Taxes | -21.36% | 0.83% | 3.53% | 5.30% |
| **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) | **Class L** (commenced operations on 4/27/12) |
| Return Before Taxes | -17.40% | 1.40% | 3.56% | 3.95% |
| **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) | **Class C** (commenced operations on 4/30/15) |
| Return Before Taxes | -18.45% | 1.11% | N/A | 1.98% |
| **Class R6** (commenced operations on 5/29/15) | **Class R6** (commenced operations on 5/29/15) | **Class R6** (commenced operations on 5/29/15) | **Class R6** (commenced operations on 5/29/15) | **Class R6** (commenced operations on 5/29/15) |
| Return Before Taxes | -16.70% | 2.26% | N/A | 3.34% |
| MSCI All Country World Index (reflects no deduction for fees, expenses or taxes)<sup>2</sup>  | -18.36% | 5.23% | 7.98% | 7.45%<sup>3</sup> |
| Customized MSIM Global Allocation Index (reflects no deduction for fees, expenses or taxes)<sup>4</sup>  | -17.33% | 2.71% | 4.45% | N/A |
| Lipper Flexible Portfolio Funds Index (reflects no deduction for taxes)<sup>5</sup>  | -15.19% | 4.55% | 6.15% | 6.58%<sup>3</sup> |

---

**7**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Global Strategist Portfolio (Con't)

1 These returns do not reflect any tax consequences from a sale of your shares at the end of each period.

---

| | |
|:---|:---|
| 2 | The MSCI All Country World Index (ACWI) is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Returns, including periods prior to January 1, 2001, are calculated using the return data of the MSCI All Country World Index (gross dividends) through December 31, 2000 and the return data of the MSCI All Country World Index (net dividends) after December 31, 2000. It is not possible to invest directly in an index. |

---

3 Since Inception reflects the inception date of Class I.

---

| | |
|:---|:---|
| 4 | The Customized MSIM Global Allocation Index is a performance linked benchmark comprised of 60% MSCI All Country World Index and 40% Bloomberg Global Aggregate Index for periods after May 31, 2017. Prior to May 31, 2017, the Customized MSIM Global Allocation Index consisted of 60% MSCI All Country World Index (benchmark that measures the equity market performance of developed and emerging markets), 30% Bloomberg Global Aggregate Index (benchmark that provides a broad based measure of the global investment grade fixed-rate debt markets), 5% S&P GSCI Light Energy Index (benchmark for investment performance in the energy commodity market) and 5% ICE BofA U.S. Dollar 1-Month LIBID Average Index (benchmark that tracks the performance of a basket of synthetic assets paying LIBID to a stated maturity). The Customized MSIM Global Allocation Index was added as the Fund benchmark on October 2, 2013 and is provided for comparative purposes only. It is not possible to invest directly in an index. |

---

5 The Lipper Flexible Portfolio Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Flexible Portfolio Funds classification. There are currently 30 funds represented in this index.

The after-tax returns shown in the table above are calculated using the historical highest individual federal marginal income tax rates during the period shown and do not reflect the impact of state and local taxes. After-tax returns for the Fund's other classes will vary from Class I shares' returns. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns may be higher than before-tax returns due to foreign tax credits and/or an assumed benefit from capital losses that would have been realized had Fund shares been sold at the end of the relevant periods, as applicable.

**Fund Management**

**Adviser.** Morgan Stanley Investment Management Inc.

**Sub-Adviser.** Morgan Stanley Investment Management Limited.

**Portfolio Managers.** The Fund is managed by members of the Global Multi-Asset team. Information about the members jointly and primarily responsible for the day-to-day management of the Fund is shown below:

---

| | | |
|:---|:---|:---|
| **Name** | **Title with Adviser** | **Date Began**<br>**Managing Fund** |
| Cyril Moullé-Berteaux | Managing Director | August 2011 |
| Mark A. Bavoso | Managing Director | January 2011 |
| Sergei Parmenov | Managing Director of Morgan Stanley Investment Management (Australia) Pty Limited ("MSIM Australia") | January 2020 |

---

In rendering investment advisory services to the Fund, the Adviser uses the portfolio management, research and other resources of MSIM Australia, a foreign (non-U.S.) affiliate of Morgan Stanley Investment Management Inc. that is not registered under the Investment Advisers Act of 1940, as amended, and may provide services to the Fund through this "participating affiliate" arrangement, as that term is used in relief granted by the staff of the SEC allowing U.S. registered investment advisers to use portfolio management or research resources of advisory affiliates subject to the regulatory supervision of the registered investment adviser.

**Purchase and Sale of Fund Shares**

*The Trust has suspended offering Class L shares of the Fund for sale to all investors. The Class L shareholders of the Fund do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders may invest in additional Class L shares through reinvestment of dividends and distributions.*

The minimum initial investment generally is $1 million for Class I shares and $1,000 for each of Class A and Class C shares of the Fund. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and in each case subject to the discretion of the Adviser. The minimum initial investment may be waived for certain investments. For more information, please refer to the section of the Prospectus entitled "Shareholder Information—Minimum Investment Amounts."

**8**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Summary**

Global Strategist Portfolio (Con't)

Shares of the Fund may be purchased or sold on any day the New York Stock Exchange ("NYSE") is open for business directly from the Fund by mail (c/o SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), P.O. Box 219804, Kansas City, MO 64121-9804), by telephone (1-800-869-6397) or by contacting an authorized third-party, such as a broker-dealer or other financial intermediary that has entered into a selling agreement with the Fund's "Distributor," Morgan Stanley Distribution, Inc. (each, a "Financial Intermediary"). In addition, you can sell Fund shares at any time by enrolling in a systematic withdrawal plan. If you sell Class A or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. For more information, please refer to the sections of the Prospectus entitled "Shareholder Information—How To Purchase Fund Shares" and "—How To Redeem Fund Shares."

**Tax Information**

The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase shares of the Fund through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Fund shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

**9**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Details of the Fund**

Global Strategist Portfolio

**Investment Objective**

The Global Strategist Portfolio seeks above-average total return over a market cycle of three to five years.

**Approach**

The Adviser and/or Sub-Adviser seek to achieve the Fund's investment objective by investing primarily in a blend of equity and fixed-income securities of U.S. and non-U.S. issuers. Equity securities may include common and preferred stocks, depositary receipts, convertible securities, equity-linked securities, REITs, rights and warrants to purchase equity securities and limited partnership interests. Fixed-income securities may include mortgage-related or mortgage-backed securities, floating rate securities, inflation-linked fixed-income securities, securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, securities issued or guaranteed by non-U.S. governments, their agencies or instrumentalities, corporate bonds and notes issued by U.S. and non-U.S. entities.

The Fund may invest a portion of its assets in below investment grade fixed-income securities (commonly referred to as "junk bonds"). The mortgage-backed securities in which the Fund may invest include mortgage pass-through securities that represent a participation interest in a pool of mortgage loans originated by U.S. governmental or private lenders such as banks. The Fund may also invest up to 10% of its total assets in other investment companies, including ETFs. The securities in which the Fund may invest may be denominated in U.S. dollars or in currencies other than U.S. dollars.

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 may invest in illiquid securities, including restricted securities that are illiquid. The Fund may invest an unlimited amount in restricted securities that are considered by the Adviser and/or Sub-Adviser to be liquid and otherwise meet the Fund's investment policies.

The Fund may, but it is not required to, use derivatives and other similar instruments for a variety of purposes, including hedging, risk management, Fund management or to earn income. Derivatives are financial instruments whose value is based on the value of an underlying asset, interest rate, index or financial instrument. The Fund's use of derivatives may involve the purchase and sale of derivative instruments such as futures, options, swaps and structured investments (including commodity-linked notes), and other similar instruments and techniques. The Fund may also utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities. Derivative instruments used by the Fund will be counted toward the Fund's exposure to the types of securities listed above to the extent they have economic characteristics similar to such securities.

The Fund may, consistent with its principal investment strategies, invest up to 25% of its total assets in the Subsidiary. The Subsidiary may invest, directly or indirectly through the use of derivatives, in securities, commodities, commodity-related instruments and other investments, primarily futures, swaps and notes. The Subsidiary is advised by the Adviser.

Investments in the Subsidiary are intended to provide the Fund with exposure to commodities markets within the limitations of the federal tax requirements that apply to the Fund. The Subsidiary primarily obtains its commodity exposure by investing in commodity-linked derivative instruments, which may include, but are not limited to, total return swaps, commodity (U.S. or foreign) futures and commodity-linked notes. The Subsidiary may also invest in other instruments, including fixed-income securities, either as investments or to serve as margin or collateral for its swap positions, and foreign currency transactions (including forward contracts).

**Process**

The Adviser and/or Sub-Adviser will utilize a top-down investment approach that focuses on asset class, sector, region, country and currency and thematic allocations. The Fund's allocations will be based upon the Adviser's and/or Sub-Adviser's evaluations and analyses, taking into account results of its fundamental market research and recommendations generated by the Adviser's and/or Sub-Adviser's quantitative models. The Adviser's and/or Sub-Adviser's research process focuses on the following factors across asset classes: 1) valuation (both relative and absolute), 2) dynamics, including earnings revisions, interest rate policy and inflation expectations and 3) technicals, such as investor flows and sentiment. The Fund may invest in any country, including developing or emerging market countries. The Fund's investments may be U.S. and non-U.S. dollar denominated. In determining whether to sell a security, the Adviser and/or Sub-Adviser consider a number of factors, including changes in capital appreciation potential, or the overall assessment of asset class, sector, region, country, and currency and thematic allocation shifts.

In determining whether to sell a security, the Adviser and/or Sub-Adviser consider a number of factors, including changes in capital appreciation potential, or the overall assessment of asset class, sector, region, country, and currency and thematic allocation shifts. Thematic allocation shifts refers to allocating the Fund's assets between different thematic baskets of securities. A thematic basket of securities encompasses a specific investment idea that the Adviser and/or Sub-Adviser believe will play out within the current global macro environment. Screening processes based on factors adhering to the investment themes are utilized to select securities for inclusion in each thematic basket.

**10**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Details of the Fund**

Global Strategist Portfolio (Con't)

Derivative instruments used by the Fund will be counted toward the Fund's exposure to the types of securities listed above to the extent they have economic characteristics similar to such securities.

**11**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks

&nbsp;&nbsp;&nbsp; *This section discusses additional information relating to the Fund's investment strategies, other types of investments that the Fund may make and related risk factors. The Fund's investment practices and limitations are also described in more detail in the Statement of Additional Information ("SAI"), which is incorporated by reference and legally is a part of this Prospectus. For details on how to obtain a copy of the SAI and other reports and information, see the back cover of this Prospectus.*<br>

Economies and financial markets worldwide have recently experienced periods of increased volatility, uncertainty, distress, government spending, inflation and disruption to consumer demand, economic output and supply chains. To the extent these conditions continue, the risks associated with an investment in the Fund, including those described below, could be heightened and the Fund's investments (and thus a shareholder's investment in the Fund) may be particularly susceptible to sudden and substantial losses, reduced yield or income or other adverse developments. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time.

*References to the Adviser, when used in connection with its activities as investment adviser, include the Sub-Adviser acting under its supervision.*

**Equity Securities**

Equity securities may include common and preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase common stocks, depositary receipts, shares of investment companies, limited partnership interests and other specialty securities having equity features. Many factors affect the value of equity securities, including earnings, earnings forecasts, corporate events and factors impacting the issuer's industry and the market generally. The Fund may invest in equity securities that are publicly traded on securities exchanges or over-the-counter ("OTC") or in equity securities that are not publicly traded. Securities that are not publicly traded may be more difficult to value or sell and their value may fluctuate more dramatically than other securities. The prices of convertible securities are affected by changes similar to those of equity and fixed-income securities.

A depositary receipt is generally issued by a bank or financial institution and represents the common stock or other equity securities of a foreign company. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts, or to pass through to them any voting rights with respect to the deposited securities.

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

**Market and Geopolitical Risk**

The value of your investment in the Fund is based on the values of the Fund's investments, which may change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. Price movements, sometimes called volatility, may be greater or less depending on the types of securities the Fund owns and the markets in which the securities trade. Volatility and disruption in financial markets and economies may be sudden and unexpected, expose the Fund to greater risk, including risks associated with reduced market liquidity and fair valuation, and adversely affect the Fund's operations. For example, the Adviser potentially will be prevented from executing investment decisions at an advantageous time or price as a result of any domestic or global market disruptions and reduced market liquidity may impact the Fund's ability to sell securities to meet redemptions.

The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the

**12**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

world, natural disasters, health emergencies, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. Inflation rates may change frequently and significantly because of various factors, including unexpected shifts in the domestic or global economy and changes in monetary or economic policies (or expectations that these policies may change). Changes in expected inflation rates may adversely affect market and economic conditions, the Fund's investments and an investment in the Fund. Other financial, economic and other global market and social developments or disruptions may result in similar adverse circumstances, and it is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). In general, the securities or other instruments that the Adviser believes represent an attractive investment opportunity or in which the Fund seeks to invest may be unavailable entirely or in the specific quantities sought by the Fund. As a result, the Fund may need to obtain the desired exposure through a less advantageous investment, forgo the investment at the time or seek to replicate the desired exposure through a derivative transaction or investment in another investment vehicle. Any such event(s) could have a significant adverse impact on the value and risk profile of the Fund's portfolio. There is a risk that you may lose money by investing in the Fund.

Social, political, economic and other conditions and events, such as war, natural disasters, health emergencies (e.g., the novel coronavirus outbreak, epidemics and other pandemics), terrorism, conflicts, social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and the Adviser's investment advisory activities and services of other service providers, which in turn could adversely affect the Fund's investments and other operations.

Global events may negatively impact broad segments of businesses and populations, cause a significant negative impact on the performance of the Fund's investments and exacerbate pre-existing political, social and economic risks to the Fund. The Fund's operations may be interrupted as a result, which may contribute to the negative impact on investment performance. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions that affect the instruments in which the Fund invests, or the issuers of such instruments, in ways that could have a significant negative impact on the Fund's investment performance.

**Fixed-Income Securities**

Fixed-income securities are securities that pay a fixed or a variable rate of interest until a stated maturity date. Fixed-income securities include U.S. government securities, securities issued by federal or federally sponsored agencies and instrumentalities, corporate bonds and notes, asset-backed securities, mortgage securities, securities rated below investment grade (commonly referred to as "junk bonds" or "high yield/high risk securities"), municipal bonds, loan participations and assignments, zero coupon bonds, convertible securities, Eurobonds, Brady Bonds, Yankee Bonds, repurchase agreements, commercial paper and cash equivalents.

Fixed-income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity (i.e., interest rate risk), market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). Securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Lower rated fixed-income securities have greater volatility because there is less certainty that principal and interest payments will be made as scheduled. The Fund may be subject to liquidity risk, which may result from the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed-income securities. Fixed-income securities may be called (i.e., redeemed by the issuer) prior to final maturity. If a callable security is called, the Fund may have to reinvest the proceeds at a lower rate of interest.

**Duration**

The average duration of a portfolio of fixed-income securities represents its exposure to changing interest rates. For example, when the level of interest rates increases by 1%, a fixed-income security having a positive duration of four years generally will decrease in value by 4%; when the level of interest rates decreases by 1%, the value of that same security generally will increase by 4%. A portfolio with a lower average duration generally will experience less price volatility in response to changes in interest rates than a portfolio with a higher average duration.

**High Yield Securities**

Fixed-income securities that are not investment grade are commonly referred to as "junk bonds" or high yield, high risk securities. These securities offer a higher yield than other higher rated securities, but they carry a greater degree of risk. High yield securities are subject to greater risk of loss of income and principal than higher rated securities and may be considered speculative by the major credit rating agencies. High yield securities may be issued by companies that are restructuring, are smaller and less creditworthy or are more highly indebted than other companies. This means that they may have more difficulty making scheduled payments of principal

**13**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

and interest. Changes in the value of high yield securities are influenced more by changes in the financial and business position of the issuing company than by changes in interest rates when compared to investment grade securities.

In recent years, there has been a broad trend of weaker or less restrictive covenant protections in the high yield market. Among other things, under such weaker or less restrictive covenants, borrowers might be able to exercise more flexibility with respect to certain activities than borrowers who are subject to stronger or more protective covenants. For example, borrowers might be able to incur more debt, including secured debt, return more capital to shareholders, remove or reduce assets that are designated as collateral securing high yield securities, increase the claims against assets that are permitted against collateral securing high yield securities or otherwise manage their business in ways that could impact creditors negatively. In addition, certain privately held borrowers might be permitted to file less frequent, less detailed or less timely financial reporting or other information, which could negatively impact the value of the high yield securities issued by such borrowers. Each of these factors might negatively impact the high yield securities held by the Fund.

**Mortgage-Backed Securities**

Mortgage securities are fixed-income securities representing an interest in a pool of underlying mortgage loans. They are sensitive to changes in interest rates, but may respond to these changes differently from other fixed-income securities due to the possibility of prepayment of the underlying mortgage loans. As a result, it may not be possible to determine in advance the actual maturity date or average life of a mortgage security. Rising interest rates tend to discourage refinancings, with the result that the average life and volatility of the security will increase and its market price will decrease. When interest rates fall, however, mortgage securities may not gain as much in market value because additional mortgage prepayments must be reinvested at lower interest rates. Prepayment risk may make it difficult to calculate the average maturity of a portfolio of mortgage securities and, therefore, to assess the volatility risk of that portfolio.

The Fund may invest in mortgage securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities. These securities are either direct obligations of the U.S. Government or the issuing agency or instrumentality has the right to borrow from the U.S. Treasury to meet its obligations although it is not legally required to extend credit to the agency or instrumentality. Certain of these mortgage securities purchased by the Fund, such as those issued by the Government National Mortgage Association and the Federal Housing Administration, are backed by the full faith and credit of the United States. Other of these mortgage securities purchased by the Fund, such as those issued by the Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac"), are not backed by the full faith and credit of the United States and there is a risk that the U.S. Government will not provide financial support to these agencies if it is not obligated to do so by law. The maximum potential liability of the issuers of some of the mortgage securities held by the Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.

Non-agency mortgage-backed securities are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, mortgage-related securities held in the Fund's portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans. Non-agency mortgage-backed securities include securities that reflect an interest in, and are secured by, mortgage loans on commercial real property. Many of the risks of investing in CMBS reflect the risks of investing in

**14**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants.

The risks associated with mortgage-backed securities are elevated in distressed economic, market, health and labor conditions, notably, increased levels of unemployment, delays and delinquencies in payments of mortgage and rent obligations, and uncertainty regarding the effects and extent of government intervention with respect to mortgage payments and other economic matters.

Delinquencies, defaults and losses on residential mortgage loans may increase substantially over certain periods, which may affect the performance of the mortgage-backed securities in which the Fund may invest. Mortgage loans backing non-agency mortgage-backed securities are more sensitive to economic factors that could affect the ability of borrowers to pay their obligations under the mortgage loans backing these securities. In addition, housing prices and appraisal values in many states and localities over certain periods have declined or stopped appreciating. A sustained decline or an extended flattening of those values may result in additional increases in delinquencies and losses on mortgage-backed securities generally (including the mortgaged-backed securities that the Fund may invest in as described above). Adverse changes in market conditions and regulatory climate may reduce the cash flow which the Fund, to the extent it invests in mortgage-backed securities or other asset-backed securities, receives from such securities and increase the incidence and severity of credit events and losses in respect of such securities. In the event that interest rate spreads for mortgage-backed securities and other asset-backed securities widen following the purchase of such assets by the Fund, the market value of such securities is likely to decline and, in the case of a substantial spread widening, could decline by a substantial amount. Furthermore, adverse changes in market conditions may result in reduced liquidity in the market for mortgage-backed securities and other asset-backed securities (including the mortgage-backed securities and other asset-backed securities in which the Fund may invest) and an unwillingness by banks, financial institutions and investors to extend credit to servicers, originators and other participants in the market for mortgage-backed and other asset-backed securities. As a result, the liquidity and/or the market value of any mortgage-backed or asset-backed securities that are owned by the Fund may experience declines after they are purchased by the Fund.

There can be no assurance that a security purchased on a when-issued basis will be issued or that a security purchased or sold on a delayed delivery basis or through a forward commitment will be delivered. Also, the value of securities in these transactions on the delivery date may be more or less than the price paid by the Fund to purchase the securities. The Fund will lose money if the value of the security in such a transaction declines below the purchase price and will not benefit if the value of the security appreciates above the sale price during the commitment period.

**REITs**

Investing in REITs exposes investors to the risks of owning real estate directly, as well as to risks that relate specifically to the way in which REITs are organized and operated. REITs generally invest directly in real estate, in mortgages or in some combination of the two. Operating REITs require specialized management skills and the Fund indirectly bears management expenses along with the direct expenses of the Fund. Individual REITs may own a limited number of properties and may concentrate in a particular region or property type. REITs may also be subject to heavy cash flow dependency, default by borrowers and self-liquidation. REITs also must satisfy specific requirements of the Code in order to qualify for tax-free pass-through income. The failure of a company to qualify as a REIT could have adverse consequences for the Fund, including significantly reducing the return to the Fund on its investment in such company. In addition, REITs, like mutual funds, have expenses, including management and administration fees, that are paid by their shareholders. As a result, shareholders will directly bear the expenses of their investment in the Fund and indirectly bear the expenses of the Fund's investments in REITs.

**Foreign Securities**

Foreign issuers generally are subject to different accounting, auditing and financial reporting standards than U.S. issuers. There may be less information available to the public about foreign issuers. Securities of foreign issuers can be less liquid and experience greater price movements. In addition, the prices of such securities may be susceptible to influence by large traders, due to the limited size of many foreign securities markets. Moreover, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Also, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. In some foreign countries, there is also the risk of government expropriation, excessive taxation, political or social instability, the imposition of currency controls or diplomatic developments that could affect the Fund's investment. There also can be difficulty obtaining and enforcing judgments against issuers in foreign countries. Foreign stock exchanges, broker-dealers and listed issuers may be subject to less government regulation and oversight. The cost of investing in foreign securities, including brokerage commissions and custodial expenses, can be higher than the cost of investing in domestic securities.

Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. International trade barriers or economic sanctions against foreign countries, organizations, companies, entities and/or individuals may adversely affect the Fund's foreign holdings or exposures. Investments in foreign markets may also be adversely affected by less stringent

**15**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

investor protections and disclosure standards, and governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. Governmental actions can have a significant effect on the economic conditions in foreign countries, which also may adversely affect the value and liquidity of the Fund's investments. Foreign investment in the securities markets of certain foreign countries is restricted or controlled to varying degrees. For example, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Moreover, if a deterioration occurs in a country's balance of payments, the country could impose temporary restrictions on foreign capital remittances. The Fund could also be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investment. Any of these actions could severely affect security prices, which could result in losses to the Fund and increased transaction costs, impair the Fund's ability to purchase or sell foreign securities or transfer the Fund's assets back into the United States, or otherwise adversely affect the Fund's operations. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. Certain foreign investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When the Fund holds illiquid investments, its portfolio may be harder to value.

Economic sanctions or other similar measures may be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. The Fund's investments in foreign securities are subject to economic sanctions and trade laws in the United States and other jurisdictions. These laws and related governmental actions, including counter-sanctions and other retaliatory measures, can, from time to time, prevent or prohibit the Fund from investing in certain foreign securities. In addition, economic sanctions could prohibit the Fund from transacting with particular countries, organizations, companies, entities and/or individuals by banning them from global payment systems that facilitate cross-border payments, restricting their ability to settle securities transactions, and freezing their assets. The imposition of sanctions and other similar measures could, among other things, cause a decline in the value of securities issued by the sanctioned country or companies located in, or economically linked to, the sanctioned country, downgrades in the credit ratings of the sanctioned country or companies located in, or economically linked to, the sanctioned country, devaluation of the sanctioned country's currency, and increased market volatility and disruption in the sanctioned country and throughout the world. Economic sanctions or other similar measures could, among other things, effectively restrict or eliminate the Fund's ability to purchase or sell securities, negatively impact the value or liquidity of the Fund's investments, significantly delay or prevent the settlement of the Fund's securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices, increase the Fund's transaction costs, make the Fund's investments more difficult to value or impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategies. These conditions may be in place for a substantial period of time and enacted with limited advance notice to the Fund.

The Fund may invest in debt obligations known as "sovereign debt," which are obligations of governmental issuers in emerging market or developing countries and industrialized countries. Certain emerging market or developing countries are among the largest debtors to commercial banks and foreign governments. The issuer or governmental authority that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or pay interest when due in accordance with the terms of such obligations. Uncertainty surrounding the level and sustainability of sovereign debt of certain countries has at times increased volatility in the financial markets. In addition, a number of Latin American countries are among the largest debtors of developing countries and have a long history of reliance on foreign debt. Additional factors that may influence the ability or willingness to service debt include, but are not limited to, a country's cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, the relative size of its debt service burden to the economy as a whole and its government's policy towards the International Monetary Fund, the World Bank and other multilateral agencies. A country whose exports are concentrated in a few commodities or whose economy depends on certain strategic imports could be vulnerable to fluctuations in international prices of these commodities or imports. If a foreign sovereign obligor cannot generate sufficient earnings from foreign trade to service its external debt, it may need to depend on continuing loans and aid from foreign governments, commercial banks and multilateral organizations, and inflows of foreign investment. The commitment on the part of these foreign governments, multilateral organizations and others to make such disbursements may be conditioned on the government's implementation of economic reforms and/or economic performance and the timely service of its obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third-parties' commitments to lend funds, which may further impair the foreign sovereign obligor's ability or willingness to timely service its debts. In addition, there is no legal process for collecting on a sovereign debt that a government does not pay or bankruptcy proceeding by which all or part of the sovereign debt that a government entity has not repaid may be collected.

In connection with its investments in foreign securities, the Fund also may enter into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Foreign currency forward exchange contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain

**16**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

or modify exposure to a particular currency. In addition, the Fund may use cross currency hedging or proxy hedging with respect to currencies in which the Fund has or expects to have portfolio or currency exposure. Cross currency and proxy hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies.

**China Risk**

Investments in securities of Chinese issuers involve risks associated with investments in foreign markets as well as special considerations not typically associated with investments in the U.S. securities markets. For example, the Chinese government has historically exercised substantial control over virtually every sector of the Chinese economy through administrative regulation and/or state ownership and actions of the Chinese central and local government authorities continue to have a substantial effect on economic conditions in China. In addition, the Chinese government has taken actions that influenced the prices at which certain goods may be sold, encouraged companies to invest or concentrate in particular industries, induced mergers between companies in certain industries and induced private companies to publicly offer their securities. Investments in China involve risk of a total loss due to government action or inaction. Additionally, the Chinese economy is export-driven and highly reliant on trade. Adverse changes to the economic conditions of its primary trading partners, such as the United States, Japan and South Korea, would adversely impact the Chinese economy and the Fund's investments. Moreover, a slowdown in other significant economies of the world, such as the United States, the European Union and certain Asian countries, may adversely affect economic growth in China. An economic downturn in China would adversely impact the Fund's investments. In addition, certain securities are, or may in the future become restricted, and the Fund may be forced to sell such restricted securities and incur a loss as a result.

The Fund may invest in fixed-income instruments listed and traded through the Bond Connect. Trading through Bond Connect is subject to a number of restrictions that may affect the Fund's investments and returns. Moreover, fixed-income instruments purchased through Bond Connect generally may not be sold, purchased or otherwise transferred other than through Bond Connect in accordance with applicable rules. The Bond Connect program is a relatively new program and may be subject to further interpretation and guidance. There can be no assurance as to the program's continued existence or whether future developments regarding the program may restrict or adversely affect the Fund's investments or returns.

**Foreign Currency**

Investments in foreign securities may be denominated in foreign currencies. The value of foreign currencies may fluctuate relative to the value of the U.S. dollar or other applicable foreign currency. Since the Fund may invest in such non-U.S. dollar-denominated securities, and therefore may convert the value of such securities into U.S. dollars, changes in currency exchange rates can increase or decrease the U.S. dollar value of the Fund's assets. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and the overall economic health of the issuer. Devaluation of a currency by a country's government or banking authority also will have a significant impact on the value of any investments denominated in that currency. The Adviser may use derivatives to reduce this risk. The Adviser may in its discretion choose not to hedge against currency risk. In addition, certain market conditions may make it impossible or uneconomical to hedge against currency risk.

**Emerging Market Securities**

The Fund may invest in emerging market or developing countries, which are countries that major international financial institutions generally consider to be less economically mature than developed nations (such as the United States or most nations in Western Europe). Emerging market or developing countries may be more likely to experience political turmoil or rapid changes in economic conditions than more developed countries, and the financial condition of issuers in emerging market or developing countries may be more precarious than in other countries. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging markets countries. In addition, due to jurisdictional limitations, U.S. authorities (e.g., SEC and the U.S. Department of Justice) may be limited in their ability to enforce regulatory or legal obligations in emerging market countries. In addition, emerging market securities generally are less liquid and subject to wider price and currency fluctuations than securities issued in more developed countries. These characteristics result in greater risk of price volatility in emerging market or developing countries, which may be heightened by currency fluctuations relative to the U.S. dollar.

**Derivatives**

The Fund may, but is not required to, use derivatives and other similar instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivative instruments used by the Fund will be counted towards the Fund's exposure in the types of securities listed herein to the extent they have economic characteristics similar to such securities. A derivative is a financial instrument whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. Derivatives and other similar instruments often have risks similar to those of the underlying asset or instrument and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest

**17**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objective, there is no assurance that the use of derivatives will achieve this result.

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

*Futures.* A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. While the value of a futures contract tends to increase or decrease in tandem with the value of the underlying instrument, differences between the futures market and the market for the underlying asset may result in an imperfect correlation. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures contract.

*Options.* If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument, foreign currency or contract, such as a swap agreement or futures contract, on the underlying instrument or foreign currency at an agreed-upon price typically in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell to the Fund a specific amount of the underlying instrument, swap, foreign currency, or futures contract on the underlying instrument or foreign currency at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

Investments in foreign currency options may substantially change the Fund's exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. There is a risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. The value of a foreign currency option is dependent upon the value of the underlying foreign currency relative to the U.S. dollar or other applicable foreign currency. The price of the option may vary with changes in the value of either or both currencies and has no relationship to the investment merits of a foreign security. Options on foreign currencies are affected by all of those factors that influence foreign exchange rates and foreign investment generally. Unanticipated changes in currency prices may result in losses to the Fund and poorer overall performance for the Fund than if it had not entered into such contracts. Options on foreign currencies are traded primarily in the OTC market, but may also be traded on U.S. and foreign exchanges.

Foreign currency options contracts may be used for hedging purposes or non-hedging purposes in pursuing the Fund's investment objective, such as when the Adviser anticipates that particular non-U.S. currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Fund's investment portfolio. Investing in foreign currencies for purposes of gaining from projected changes in exchange rates, as opposed to only hedging currency risks applicable to the Fund's holdings, further increases the Fund's exposure to foreign securities losses. There is no assurance that the Adviser's use of currency derivatives will benefit the Fund or that they will be, or can be, used at appropriate times.

*Swaps.* The Fund may enter into OTC swap contracts or cleared swap transactions. An OTC swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Typically swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each party. Cleared swap transactions may help reduce counterparty credit risk. In a cleared swap, the Fund's ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial

**18**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

institution. OTC swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty. Certain swaps have begun trading on exchanges called swap execution facilities. Exchange trading is expected to increase liquidity of swaps trading. Both OTC and cleared swaps could result in losses if interest rates, foreign currency exchange rates or other factors are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments require the clearing and exchange trading of certain standardized swap transactions. Mandatory exchange-trading and clearing is occurring on a phased-in basis. The Fund may pay fees or incur costs each time it enters into, amends or terminates a swap agreement.

The Fund's use of swaps may include those based on the credit of an underlying security, commonly referred to as "credit default swaps." Where the Fund is the buyer of a credit default swap contract, it would typically be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by a third-party on the debt obligation. If no default occurs, the Fund would have paid to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract. When the Fund is the seller of a credit default swap contract, it typically receives the stream of payments but is obligated to pay an amount equal to the par (or other agreed-upon) value of a referenced debt obligation upon the default or similar event of the issuer of the referenced debt obligation.

*Structured Investments.* The Fund also may invest a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Fund will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Fund is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Fund's illiquidity to the extent that the Fund, at a particular point in time, may be unable to find qualified buyers for these securities.

**LIBOR Discontinuance or Unavailability Risk.**

LIBOR is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. The Financial Conduct Authority (the "FCA"), which is the regulatory authority that oversees financial services firms, financial markets in the U.K. and the administrator of LIBOR, announced that, after the end of 2021, one-week and two-month U.S. Dollar LIBOR and all non-U.S. Dollar LIBOR settings have either ended or are no longer representative of the underlying market they seek to measure. The FCA also announced that the most commonly used U.S. Dollar LIBOR settings may continue to be provided on a representative basis until mid-2023. However, in connection with supervisory guidance from regulators, some regulated entities may no longer enter into most new LIBOR-based contracts. As a result of the foregoing, LIBOR may no longer be available or no longer deemed an appropriate reference rate upon which to determine the interest rate on or impacting certain derivatives and other instruments or investments held by the Fund. In light of this eventuality, public and private sector industry initiatives are currently underway to establish new or alternative reference rates to be used in place of LIBOR. There is no assurance that the composition or characteristics of any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that it will have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability, which may affect the value or liquidity or return on certain of the Fund's investments and result in costs incurred in connection with closing out positions and entering into new trades.

Neither the effect of the LIBOR transition process nor its ultimate success can yet be known. The transition process might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. While some existing LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, there may be significant uncertainty regarding the effectiveness of any such alternative methodologies to replicate LIBOR. Not all existing LIBOR-based instruments may have alternative rate-setting provisions and there remains uncertainty regarding the willingness and ability of issuers to add alternative rate-setting provisions in certain existing instruments. Although state and federal statutes have been enacted to address difficult LIBOR transition issues, the application and effect of these statutes are uncertain. In addition, a liquid market for newly-issued instruments that use a reference rate other than LIBOR is still developing. There may also be challenges for the Fund to enter into hedging transactions against such newly-issued instruments until a market for such hedging transactions develops. All of the aforementioned may adversely affect the Fund's investments (including their volatility, value and liquidity) and, as a result, the performance or NAV.

**Commodities**

The Fund (primarily through the Subsidiary) may invest in instruments linked to the prices of physical commodities. Trading in commodity interests may involve substantial risks and investment exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities, such as stocks and bonds. The commodities markets may fluctuate widely

**19**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

based on a variety of factors, including changes in overall market movements, domestic and foreign political and economic events and policies, including the imposition of tariffs, war, acts of terrorism, changes in domestic or foreign interest rates and/or investor expectations concerning interest rates, domestic and foreign inflation rates and investment and trading activities of mutual funds, hedge funds and commodities funds.

The low margin or premiums normally required in commodity futures trading may provide a large amount of leverage, and a relatively small change in the price of a security or contract can produce a disproportionately large profit or loss. There is no assurance that a liquid secondary market will exist for commodity futures contracts or options purchased or sold, and the Fund may be required to maintain a position until exercise or expiration, which could result in losses. Commodity futures positions may be illiquid because, for example, most U.S. commodity exchanges limit fluctuations in certain futures contract prices during a single day by regulations referred to as "daily price fluctuation limits" or "daily limits." Once the price of a contract for a particular future has increased or decreased by an amount equal to the daily limit, positions in the future can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. Suspensions or disruptions of trading in the commodities markets may adversely affect the value of securities providing exposure to the commodities markets.

**Subsidiary Risk**

By investing in the Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary's investments. The derivatives and other investments held by the Subsidiary are subject to the same risks that apply to similar investments if held directly by the Fund. These risks are described elsewhere in this Prospectus. There can be no assurance that the investment objectives of the Subsidiary will be achieved. The Subsidiary is not registered under the 1940 Act and, unless otherwise noted in this Prospectus, is not subject to all the investor protections of the 1940 Act. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of the Fund and/or the Subsidiary to operate as described herein and could adversely affect the Fund.

**Tax Risk**

The Fund may seek to gain exposure to the commodity markets through investments in the Subsidiary. Historically, the IRS has issued private letter rulings in which the IRS specifically concluded that income and gains from investments in commodity index-linked structured notes (the "Notes Rulings") or a wholly-owned foreign subsidiary that invests in commodity-linked instruments are "qualifying income" for purposes of compliance with Subchapter M of the Code. The Fund has not received such a private letter ruling, and is not able to rely on private letter rulings issued to other taxpayers. The IRS issued a revenue procedure, which states that the IRS will not in the future issue private letter rulings that would require a determination of whether an asset (such as a commodity index-linked note) is a "security" under the 1940 Act. In connection with issuing such revenue procedure, the IRS has revoked the Notes Rulings. The IRS also issued final regulations that would generally treat the Fund's income inclusion with respect to the Subsidiary as qualifying income either if (A) there is a distribution out of the earnings and profits of the Subsidiary that are attributable to such income inclusion or (B) such inclusion is derived with respect to the Fund's business of investing in stock, securities, or currencies. The Fund intends to treat its income from the Subsidiary as qualifying income. No assurances can be provided that the IRS would not be able to successfully assert that the Fund's income from such investments was not "qualifying income," in which case the Fund would fail to qualify as a regulated investment company under Subchapter M of the Code if over 10% of its gross income was derived from these investments. If the Fund failed to qualify as a regulated investment company, it would be subject to federal and state income tax on all of its taxable income at regular corporate tax rates with no deduction for any distributions paid to shareholders, which would significantly adversely affect the returns to, and could cause substantial losses for, Fund shareholders. The Cayman Islands does not currently impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax on the Subsidiary. If Cayman Islands law changes such that the Subsidiary must pay Cayman Islands taxes, Fund shareholders would likely suffer decreased investment returns.

**U.S. Government Securities**

Different types of U.S. government securities are subject to different levels of credit risk, including the risk of default, depending on the nature of the particular government support for that security. For example, a U.S. government-sponsored entity, such as Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, although chartered or sponsored by an Act of Congress, may issue securities that are neither insured nor guaranteed by the U.S. Treasury and, therefore, are not backed by the full faith and credit of the United States. With respect to U.S. government securities that are not backed by the full faith and credit of the United States, there is the risk that the U.S. Government will not provide financial support to such U.S. government agencies, instrumentalities or sponsored enterprises if it is not obligated to do so by law.

The U.S. government securities that the Fund may purchase include U.S. Treasury bills, notes and bonds, all of which are direct obligations of the U.S. Government. In addition, the Fund may purchase securities issued or guaranteed by agencies and instrumentalities of the U.S. Government which are backed by the full faith and credit of the United States. Among the agencies and instrumentalities issuing these obligations are Government National Mortgage Association and the Federal Housing Administration. The Fund may also purchase securities issued by agencies and instrumentalities which are not backed by the full faith and credit of the United States, but whose issuing agency or instrumentality has the right to borrow, to meet its obligations, from the U.S. Treasury. Among these agencies and instrumentalities are Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Further, the Fund may purchase securities issued by agencies and instrumentalities which are backed solely by the credit of the

**20**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

issuing agency or instrumentality. Among these agencies and instrumentalities is the Federal Farm Credit System. Because these securities are not backed by the full faith and credit of the United States, there is a risk that the U.S. Government will not provide financial support to these agencies if it is not obligated to do so by law. The maximum potential liability of the issuers of some U.S. government securities held by the Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future. The interest from U.S. government securities generally is not subject to state and local taxation.

**Investment Company Securities**

Subject to the limitations set forth in the 1940 Act, or as otherwise permitted by the SEC, the Fund may acquire shares in other investment companies, including foreign investment companies and ETFs, which may be managed by the Adviser or its affiliates. The market value of the shares of other investment companies may differ from the NAV of the Fund. The shares of closed-end investment companies frequently trade at a discount to their NAV. As a shareholder in an investment company, the Fund would bear its ratable share of that entity's expenses, including its investment advisory and administration fees. At the same time, the Fund would continue to pay its own advisory and administration fees and other expenses. As a result, the Fund and its shareholders will directly bear the expenses of their investment in the Fund and indirectly bear the expenses of the Fund's investments in other investment companies.

**When-Issued Securities, Delayed Delivery Securities and Forward Commitments**

The Fund may purchase or sell securities that it is entitled to receive on a when-issued basis. The Fund may also purchase or sell securities on a delayed delivery basis or through a forward commitment (including on a TBA (to be announced) basis). These transactions involve the purchase or sale of securities by the Fund at an established price with payment and delivery taking place in the future. The Fund enters into these transactions to obtain what is considered an advantageous price to the Fund at the time of entering into the transaction. There can be no assurance that a security purchased on a when-issued basis will be issued or that a security purchased or sold on a delayed delivery basis or through a forward commitment will be delivered. Also, the value of securities in these transactions on the delivery date may be more or less than the price paid by the Fund to purchase the securities. The Fund will lose money if the value of the security in such a transaction declines below the purchase price and will not benefit if the value of the security appreciates above the sale price during the commitment period.

**Liquidity**

The Fund may make investments that are illiquid or restricted or that may become illiquid or less liquid in response to overall economic conditions or adverse investor perceptions, and which may entail greater risk than investments in other types of securities. Illiquidity can be caused by, among other things, a drop in overall market trading volume, an inability to find a willing buyer, or legal restrictions on the securities' resale. These investments may be more difficult to value or sell, particularly in times of market turmoil, and there may be little trading in the secondary market available for particular securities. If the Fund is forced to sell an illiquid or restricted security to fund redemptions or for other cash needs, it may be forced to sell the security at a loss or for less than its fair value.

**Large Shareholder Transactions Risk**

The Fund may experience adverse effects when certain shareholders purchase or redeem large amounts of shares of the Fund. Such larger than normal redemptions may cause the Fund to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund's NAV and liquidity. Similarly, large Fund share purchases may adversely affect the Fund's performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would. These transactions may also accelerate the realization of taxable income to shareholders if such sales of investments resulted in gains, and may also increase transaction costs. In addition, a large redemption could result in the Fund's current expenses being allocated over a smaller asset base, leading to an increase in the Fund's expense ratio. Although large shareholder transactions may be more frequent under certain circumstances, the Fund is generally subject to the risk that shareholders can purchase or redeem a significant percentage of Fund shares at any time.

**Temporary Defensive Investments**

When the Adviser believes that changes in market, economic, political or other conditions warrant, the Fund may invest without limit in cash, cash equivalents or other fixed-income securities for temporary defensive purposes that may be inconsistent with the Fund's principal investment strategies. If the Adviser incorrectly predicts the effects of these changes, such defensive investments may adversely affect the Fund's performance and the Fund may not achieve its investment objective.

**Investment Discretion**

In pursuing the Fund's investment objective, the Adviser and/or Sub-Adviser has considerable leeway in deciding which investments it buys, holds or sells on a day-to-day basis, and which trading strategies it uses. For example, the Adviser and/or Sub-Adviser, in its discretion, may determine to use some permitted trading strategies while not using others. The success or failure of such decisions will affect the Fund's performance.

**21**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| Additional Information about the Fund's Investment Strategies and Related Risks

Additional Information About the Fund's Investment Strategies and Related Risks (Con't)

**Portfolio Turnover**

Consistent with its investment policies, the Fund will purchase and sell securities without regard to the effect on portfolio turnover. Higher portfolio turnover (e.g., over 100% per year) will cause the Fund to incur additional transaction costs and may result in taxable gains being passed through to shareholders. The Fund may engage in frequent trading of securities to achieve its investment objective.

**22**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management

Adviser

Morgan Stanley Investment Management Inc., with principal offices at 522 Fifth Avenue, New York, NY 10036, conducts a worldwide portfolio management business and provides a broad range of portfolio management services to customers in the United States and abroad. Morgan Stanley (NYSE: "MS") is the parent of the Adviser, which is the parent of the Distributor. Morgan Stanley is a preeminent global financial services firm engaged in securities trading and brokerage activities, as well as providing investment banking, research and analysis, financing and financial advisory services. As of December 31, 2022, the Adviser, together with its affiliated asset management companies, had approximately $1.3 trillion in assets under management or supervision.

A discussion regarding the basis for the Board of Trustees' approval of the investment advisory and sub-advisory agreements is available in the Fund's Annual Report to Shareholders for the fiscal year ended September 30, 2022.

Sub-Adviser

The Adviser has entered into a Sub-Advisory Agreement with Morgan Stanley Investment Management Limited, located at 25 Cabot Square, Canary Wharf, London, E14 4QA, England. The Sub-Adviser is a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with investment advisory 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 Adviser receives from the Fund.

Advisory Fees

For the fiscal year ended September 30, 2022, the Adviser received a fee for advisory services (net of fee waivers, if applicable) equal to 0.43% of the Fund's average daily net assets. For purposes of calculating the fees for the Fund, the net assets of the Fund include the value of the Fund's interest in the Subsidiary. Pursuant to a management agreement between the Adviser and the Subsidiary (the "Subsidiary Investment Management Agreement"), the Adviser will receive certain fees for managing the Subsidiary's assets and the Adviser will waive or credit such amounts against the fees payable to the Adviser by the Fund. This waiver may not be terminated by the Adviser and will remain in effect for as long as the Adviser's contract with the Subsidiary is in place.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund, if necessary, if such fees would cause the total annual operating expenses of the Fund to exceed 0.74% for Class I, 1.09% for Class A, 1.59% for Class L, 1.84% for Class C and 0.71% for Class R6. In determining the actual amount of fee waiver and/or expense reimbursement for the Fund, if any, the Adviser excludes from total annual operating expenses, acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation). The fee waivers and/or expense reimbursements for the Fund will continue for at least one year from the date of this Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. The Adviser may make additional voluntary fee waivers and/or expense reimbursements. The Adviser may discontinue these voluntary fee waivers and/or expense reimbursements at any time in the future.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement. Under the Subsidiary Investment Management Agreement, the Adviser provides the Subsidiary with the same type of investment advisory services as are provided to the Fund.

The Fund and the Subsidiary have entered into contracts for the provision of custody and audit services with service providers.

The Subsidiary is managed pursuant to compliance policies and procedures that are the same, in all material respects, as the policies and procedures adopted by the Fund. As a result, the Adviser, in managing the Subsidiary's portfolio, is subject to the same investment policies and restrictions that apply to the management of the Fund (although the Subsidiary may invest without limitation in commodity-related instruments) and, in particular, to the requirements relating to portfolio leverage, liquidity, brokerage and the timing and method of valuation of the Subsidiary's portfolio investments and shares of the Subsidiary. Certain of these policies and restrictions are described in detail in the Fund's SAI.

The consolidated financial statements of the Subsidiary are included in the Annual Report and Semi-Annual Report of the Fund provided to shareholders.

The Fund's annual operating expenses may vary throughout the period and from year to year. The Fund's actual expenses may be different than the expenses listed in the Fund's fee and expense table based upon the extent and amount of a fee waiver and/or expense reimbursement.

**23**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Fund Management**

Fund Management (Con't)

Portfolio Management

The Fund is managed by members of the Global Multi-Asset team. The team consists of portfolio managers and analysts.

Current members of the team jointly and primarily responsible for the day-to-day management of the Fund are Mark A. Bavoso, Cyril Moullé-Berteaux and Sergei Parmenov. Mr. Bavoso has been associated with the Adviser in an investment management capacity since 1986. Mr. Moullé-Berteaux has been associated with the Adviser in an investment management capacity since August 2011. Mr. Parmenov has been associated with Morgan Stanley Investment Management (Australia) Pty Limited ("MSIM Australia") in an investment management capacity since 2021. Prior to joining MSIM Australia, Mr. Parmenov was associated with the Adviser in an investment management capacity from 2011 through 2021. Team members collaborate to manage the assets of the Fund.

In rendering investment advisory services to the Fund, the Adviser uses the portfolio management, research and other resources of MSIM Australia, a foreign (non-U.S.) affiliate of Morgan Stanley Investment Management Inc. that is not registered under the Investment Advisers Act of 1940, as amended, and may provide services to the Fund through this "participating affiliate" arrangement, as that term is used in relief granted by the staff of the SEC allowing U.S. registered investment advisers to use portfolio management or research resources of advisory affiliates subject to the regulatory supervision of the registered investment adviser.

**Additional Information**

The Fund's SAI provides additional information about the portfolio managers' compensation structure, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Fund.

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

**24**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information

**Share Class Arrangements**

*The Trust has suspended offering Class L shares of the Fund for sale to all investors. The Class L shareholders of the Fund do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders of the Fund may invest in additional Class L shares through reinvestment of dividends and distributions.*

The Trust currently offers investors Class I, Class A, Class C and Class R6 shares of the Fund. Class I and Class R6 shares are not subject to a sales charge and are not subject to a distribution and/or shareholder service (12b-1) fee. In addition, no sub-accounting or other similar fees, or any finder's fee payments are charged or paid on Class R6 shares. The Class L shares of the Fund are currently closed to all investors except in the limited circumstances set forth in this Prospectus. Class C shares are sold at NAV with no initial sales charge, but are subject to a CDSC of 1.00% on sales made within one year after the last day of the month of purchase. Class I and Class R6 shares generally require investments in minimum amounts that are substantially higher than Class A and Class C shares.

**Minimum Investment Amounts**

The minimum initial investment generally is $1 million for Class I shares and $1,000 for Class A and Class C shares of the Fund. The minimum initial investment amount may be waived by the Adviser for the following categories: (1) 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 advisory programs, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or (iv) certain other investment programs that do not charge an asset-based fee, as outlined in an agreement between the Distributor and such financial institution; (2) sales through a Financial Intermediary that has entered into an agreement with the Distributor to offer Fund shares to self-directed investment brokerage accounts, which may or may not charge a transaction fee; (3) qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions); (4) defined contribution, defined benefit and other employer-sponsored employee benefit plans, whether or not qualified under the Code, where such plans purchase Class A, Class C and/or Class I shares through a plan-level or omnibus account sponsored or serviced by a Financial Intermediary that has entered into an agreement with the Fund, the Distributor and/or the Adviser pursuant to which such Class A, Class C and/or Class I shares are available to such plans; (5) certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or its affiliates for their employees or the Trust's Trustees; (6) 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; (7) current or retired Directors or Trustees of the Morgan Stanley Funds (as defined herein), such persons' spouses, and children under the age of 21, and trust accounts for which any of such persons is a beneficiary; (8) certain other registered open-end investment companies whose shares are distributed by the Distributor; (9) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser; (10) the reinvestment of dividends from Class A, Class C or Class I shares of the Fund in additional shares of the same class of such Fund; or (11) certain other institutional investors based on assets under management or other considerations at the discretion of the Adviser. The Fund no longer accepts direct purchases of Class C shares by accounts for which no broker-dealer or other Financial Intermediary is specified. Any direct purchase received by the Fund's transfer agent for Class C shares for such accounts will automatically be invested in Class A shares of the Fund.

Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Each Financial Intermediary may also have its own rules about minimum initial investment amounts, minimum account balances, share transactions and limits on the number of share transactions you are permitted to make in a given time period. When purchasing shares through a Financial Intermediary, you may not benefit from certain policies and procedures of the Fund as your eligibility may be dependent upon the policies and procedures of your Financial Intermediary, including those regarding reductions of sales charges. Please consult your Financial Intermediary for more information.

Class R6 shares are offered only to eligible investors meeting certain minimum investment requirements. To purchase Class R6 shares, an investor must meet a minimum initial investment of $5 million or be a defined contribution, defined benefit or other employer sponsored employee benefit plan, in each case provided that the plan trades through an intermediary that combines its clients' assets in a single omnibus account, whether or not such plan is qualified under the Code and in each case subject to the discretion of the Adviser. Initial omnibus trades of $5 million or more shall be accepted from certain platforms, including (i) banks and trust companies; (ii) insurance companies; and (iii) registered investment advisory firms. The $5 million minimum initial investment amount may be waived for Fund shares purchased by or through: (1) certain registered open-end investment companies whose shares are distributed by the Distributor; or (2) investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.

If the value of your account falls below the applicable minimum initial investment amount for a class of shares of the Fund as a result of share redemptions or you no longer meet one of the waiver criteria set forth above, your account may be subject to involuntary

**25**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

conversion or involuntary redemption, as applicable. You will be notified prior to any such conversions or redemptions. No CDSC will be imposed on any involuntary conversion or involuntary redemption.

The Adviser, in its sole discretion, may waive a minimum initial investment amount in certain cases.

**Distribution of Fund Shares**

Morgan Stanley Distribution, Inc. is the exclusive distributor of shares of the Fund. The Distributor receives no compensation from the Fund for distributing Class I and Class R6 shares of the Fund. The Trust has adopted a Shareholder Services Plan with respect to the Class A shares of the Fund and a Distribution and Shareholder Services Plan with respect to the Class L and Class C shares of the Fund (the "Plans") pursuant to Rule 12b-1 under the 1940 Act. Under the Plans, the Fund pays the Distributor (i) a shareholder services fee of up to 0.25% of the average daily net assets of each of the Class A shares, Class L shares and Class C shares on an annualized basis and (ii) a distribution fee of up to 0.50% of the average daily net assets of Class L shares on an annualized basis and up to 0.75% of the average daily net assets of Class C shares on an annualized basis. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares. Such fees relate solely to the Class A, Class L and Class C shares and will reduce the net investment income and total return of the Class A, Class L and Class C shares, respectively. Because the fees are paid out of the Fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

The Adviser and/or Distributor may pay compensation to Financial Intermediaries in connection with the sale, distribution, marketing and retention of the Fund's shares and/or shareholder servicing. Such compensation may be significant in amount and the prospect of receiving any such additional compensation may provide affiliated or unaffiliated Financial Intermediaries with an incentive to favor sales of shares of the Fund over other investment options. Any such payments will not change the NAV or the price of the Fund's shares. For more information, please see the Fund's SAI.

**About Net Asset Value**

The NAV of a class of shares of the Fund is determined by dividing the total of the value of the Fund's investments and other assets attributable to the class, less any liabilities attributable to the class, by the total number of outstanding shares of that class of the Fund. In making this calculation, the Fund generally values its portfolio securities and other assets at market price. When no market quotations are readily available for a security or other asset, including circumstances under which the Adviser and/or Sub-Adviser determine that a market quotation is not accurate, fair value for the security or other asset will be determined in good faith using methods approved by the Trust's Board of Trustees.

In addition, with respect to securities that primarily are listed on foreign exchanges, when an event occurs after the close of such exchanges that is likely to have changed the value of the securities (e.g., a percentage change in value of one or more U.S. securities indices in excess of specified thresholds), such securities will be valued at their fair value, as determined under procedures approved by the Trust's Board of Trustees. Securities also may be fair valued in the event of a significant development affecting a country or region or an issuer-specific development that is likely to have changed the value of the security. In these cases, the Fund's NAV will reflect certain portfolio securities' fair value rather than their market price. To the extent the Fund invests in open-end management companies (other than ETFs) that are registered under the 1940 Act, the Fund's NAV is calculated based in relevant part upon the NAV of such funds. The prospectuses for such funds explain the circumstances under which they will use fair value pricing and its effects.

Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security or other asset is materially different than the value that could be realized upon the sale of that security or other asset. With respect to securities that are primarily listed on foreign exchanges, the values of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. The NAV of the Fund (excluding any applicable sales charges) is based on the value of the Fund's portfolio securities or other assets. Although the assets of each class are invested in the same portfolio of securities or other assets, the NAV of each class will differ because the classes have different class specific expenses.

The Fund relies on various sources to calculate its NAV. The ability of the Fund's provider of administrative services to calculate the NAV per share of the Fund is subject to operational risks associated with processing or human errors, systems or technology failures, cyber attacks and errors caused by third party service providers, data sources, or trading counterparties. Such failures may result in delays in calculating the Fund's NAV and/or the inability to calculate NAV over extended periods. The Fund may be unable to recover any losses associated with such failures. In addition, if the third party service providers and/or data sources upon which the Fund directly or indirectly relies to calculate its NAV or price individual securities are unavailable or otherwise unable to calculate the NAV correctly, it may be necessary for alternative procedures to be utilized to price the securities at the time of determining the Fund's NAV.

The Fund's NAV per share is subject to various investment and other risks. Please refer to the "Additional Information About the Fund's Investment Strategies and Related Risks" and "The Fund's Investments and Strategies" sections of the Prospectus and SAI, respectively, for more information regarding risks associated with an investment in the Fund.

**26**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

**Pricing of Fund Shares**

You may buy or sell (redeem) shares of the Fund at the NAV next determined for the class after receipt of your order in good order, plus any applicable sales charge. The Trust determines the NAV for the Fund as of the close of the NYSE (normally 4:00 p.m. Eastern time) on each day that the NYSE is open for business (the "Pricing Time"). Shares generally will not be priced on days that the NYSE is closed. If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the Fund reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate its NAV as of, the normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. The Fund may elect to remain open and price its shares on days when the NYSE is closed but the primary securities markets on which the Fund's securities trade remain open. Trading of securities that are primarily listed on foreign exchanges may take place on weekends and other days when the Fund does not price its shares. Therefore, to the extent, if any, that the Fund invests in securities primarily listed on foreign exchanges, the value of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares.

The Fund may invest up to 25% of its total assets in shares of the Subsidiary. The Subsidiary offers to redeem all or a portion of its shares at its current NAV every regular business day. The value of shares of the Subsidiary fluctuates with the value of the Subsidiary's portfolio investments. The Subsidiary prices its portfolio investments pursuant to the same pricing and valuation methodologies and procedures used by the Fund, which require, among other things, that each of the Subsidiary's portfolio investments be marked-to-market (that is, the value on the Subsidiary's books changes) each business day to reflect changes in the market value of each investment.

**Portfolio Holdings**

A description of the Trust's policies and procedures with respect to the disclosure of the Fund's portfolio securities is available in the Trust's SAI.

**How To Purchase Fund Shares**

You may purchase shares of the Fund on each day that the Fund is open for business by contacting your Financial Intermediary or directly from the Fund.

*Purchasing Shares Through a Financial Intermediary*

You may open a new account and purchase shares of the Fund through a Financial Intermediary. The Financial Intermediary will assist you with the procedures to invest in shares of the Fund. Investors purchasing or selling shares of the Fund through a Financial Intermediary, including Morgan Stanley Wealth Management, may be charged transaction-based or other fees by the Financial Intermediary for its services. If you are purchasing shares of the Fund through a Financial Intermediary, please consult your Financial Intermediary for more information regarding any such fees and for purchase instructions.

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

The availability of sales charge waivers and discounts may depend on whether you purchase Fund shares directly from the Fund (or the Distributor) or a Financial Intermediary. More information regarding sales charge discounts and waivers is summarized below. The Fund's sales charge waivers (and discounts) disclosed in this Prospectus are available for qualifying purchases made directly from the Fund (or the Distributor) and are generally available through Financial Intermediaries. The sales charge waivers (and discounts) available through certain other Financial Intermediaries are set forth in Appendix A to this Prospectus (Intermediary-Specific Sales Charge Waivers and Discounts), which may differ from those available for purchases made directly from the Fund (or the Distributor). Please contact your Financial Intermediary regarding applicable sales charge waivers (and discounts) and for information regarding the Financial Intermediary's related policies and procedures.

With respect to sales through Financial Intermediaries, no offers or sales of Fund shares may be made in any foreign jurisdiction, except with the consent of the Distributor.

*Purchasing Shares Directly From the Fund*

Initial Purchase

You may open a new account, subject to acceptance by the Fund, and purchase shares of the Fund by completing and signing a New Account Application provided by SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), the Fund's transfer agent, or Eaton Vance Management, the Fund's co-transfer agent, which you can obtain by calling Morgan Stanley Shareholder Services at 1-800-869-6397 and mailing it to Morgan Stanley Institutional Fund Trust, c/o SS&C Global Investor and Distribution Solutions, Inc., P.O. Box 219804, Kansas City, MO 64121-9804.

**27**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

After submitting a completed New Account Application to SS&C GIDS, you may wire Federal Funds (monies credited by a Federal Reserve Bank) to State Street Bank and Trust Company (the "Custodian"). You should instruct your bank to send a Federal Funds wire in a specified amount to the Custodian using the following wire instructions:

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111-2101

ABA #011000028

DDA #00575373

Attn: Morgan Stanley Institutional Fund Trust

Subscription Account

Ref: (Fund Name, Account Number, Account Name)

The Fund no longer accepts direct purchases of Class C shares by accounts for which no broker-dealer or other Financial Intermediary is specified (i.e., such purchasers are not eligible investors for Class C shares). Any direct purchase received by the Fund's transfer agent for Class C shares for such accounts will automatically be invested in Class A shares of the Fund. In addition, Class C shares held in an account for which no broker-dealer or other Financial Intermediary is specified and which are not subject to a CDSC will periodically be converted to Class A shares of the Fund.

Additional Investments

You may purchase additional shares of the Fund for your account at any time by contacting your Financial Intermediary or by contacting the Fund directly. For additional 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, signed by the account owner(s), to assure proper crediting to your account. After mailing a "letter of instruction," you may wire Federal Funds by following the instructions under "Initial Purchase."

**Sales Charges Applicable to Purchases of Class A Shares**

Class A shares are subject to a sales charge equal to a maximum of 5.25% calculated as a percentage of the offering price on a single transaction as shown in the table below. For Class A shares sold by the Distributor, the Distributor will receive the sales charge imposed on purchases of Class A shares (or any CDSC paid on redemption) and will retain the full amount of such sales charge. As shown below, the sales charge is reduced for purchases of $50,000 and over.

---

| | | | |
|:---|:---|:---|:---|
|  | **Front-End Sales Charge** | **Front-End Sales Charge** |  |
| **Amount of Single Transaction** | **Percentage of Public Offering Price** | **Approximate Percentage of Net** **Amount Invested** | **Dealer Commission as a** **Percentage of Public Offering** **Price** |
| Less than $50,000 | 5.25% | 5.54% | 4.75% |
| $50,000 but less than $100,000 | 4.50% | 4.71% | 4.00% |
| $100,000 but less than $250,000 | 3.50% | 3.63% | 3.00% |
| $250,000 but less than $500,000 | 2.50% | 2.56% | 2.00% |
| $500,000 but less than $1 million | 2.00% | 2.04% | 1.50% |
| $1 million and over\* | 0.00% | 0.00% | 0.00% |

---

\* The Distributor may pay a commission of up to 1.00% to a Financial Intermediary for purchase amount of $1 million or more.

You may benefit from a reduced sales charge schedule (i.e., breakpoint discount) for purchases of Class A shares of the Fund by combining, in a single transaction, your purchase with purchases of Class A shares of the Fund by the following related accounts ("Related Accounts"):

• A single account (including an individual, a joint account, a trust or fiduciary account).

• 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).

• An UGMA/UTMA (Uniform Gifts to Minors Act/Uniform Transfers to Minors Act) account.

• An individual retirement account ("IRA").

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

Investments of $1 million or more are not subject to an initial sales charge, but are generally subject to a CDSC of 1.00% on sales made within 12 months after purchase. See "—How to Redeem Fund Shares" below for more information about how the CDSC is assessed. The CDSC is assessed on an amount equal to the lesser of the then market value of the shares or the historical cost of the

**28**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

shares (which is the amount actually paid for the shares at the time of original purchase) being redeemed. Accordingly, no sales charge is imposed on increases in NAV above the initial purchase price. In determining whether a CDSC applies to a redemption, it is assumed that the shares being redeemed first are any shares in the shareholder's account that are not subject to a CDSC, followed by shares held the longest in the shareholder's account.

In addition to investments of $1 million or more, purchases of Class A shares are not subject to a front-end sales charge if your account qualifies under one of the following categories:

• 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 advisory programs, (ii) asset allocation programs, (iii) other programs in which the client pays an asset-based fee for advice or for executing transactions in Fund shares or for otherwise participating in the program or (iv) certain other investment programs that do not charge an asset- based fee, as outlined in an agreement between the Distributor and such financial institution.

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

• Qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions).

• 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 account sponsored or serviced by a Financial Intermediary that has an agreement with the Fund, the Distributor and/or the Adviser pursuant to which Class A shares are available to such plans without an initial sales charge.

• Certain retirement and deferred compensation programs established by Morgan Stanley Investment Management or its affiliates for their employees or the Trust's Trustees.

• 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.

• 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.

• Certain other registered open-end investment companies, whose shares are distributed by the Distributor.

• Investments made in connection with certain mergers and/or reorganizations as approved by the Adviser.

• The reinvestment of dividends in additional Fund shares.

• The reinvestment of dividends from Class A shares of the Fund in additional Class A shares of the Fund.

• Current employees of financial intermediaries or their affiliates that have executed a selling agreement with the Distributor, such persons' spouses, children under the age of 21, and trust accounts for which any such person is a beneficiary, as permitted by internal policies of their employer.

• Investment and institutional clients of the Adviser and its affiliates.

• Direct purchases of shares by accounts where no Financial Intermediary is specified.

Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Please consult your Financial Intermediary for more information. For specific information with respect to sales charge waivers and discounts available through a specific Financial Intermediary, please refer to Appendix A attached to this Prospectus.

*Combined Purchase Privilege*

You will have the benefit of a reduced sales charge by combining your purchase of Class A shares of the Fund in a single transaction with your purchase of Class A shares of any other Morgan Stanley Multi-Class Fund (as defined herein) for any Related Account except for purchases of shares of Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income or Ultra-Short Municipal Income Portfolios.

*Right of Accumulation*

Your sales charge may be reduced if you invest $50,000 or more in a single transaction, as calculated below:

(a) the NAV of Class A shares of the Fund being purchased plus the total of the NAV of any Class A, Class L and Class C shares of the Fund held in Related Accounts as of the transaction date,

(b) plus the total of the NAV of Class A, Class L and Class C shares of any other Morgan Stanley Multi-Class Fund excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios (including shares of Morgan Stanley Money Market Funds (as defined herein) that you acquired in a prior exchange of Class A, Class

**29**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

L or Class C shares of the Fund or Class A, Class L or Class C shares of another Morgan Stanley Multi-Class Fund, excluding Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios) held in Related Accounts as of the transaction date.

*Notification*

You must notify your Financial Intermediary (or the Trust's transfer agent, if you purchase shares of the Fund directly through the Trust) at the time a purchase order is placed that the purchase qualifies for a reduced sales charge under any of the privileges discussed above. The reduced sales charge will not be granted if: (i) notification is not furnished at the time of the order; or (ii) a review of the records of your Financial Intermediary or the Trust's transfer agent, SS&C GIDS, or Eaton Vance Management, the Fund's co-transfer agent, does not confirm your represented holdings. Certain waivers may not be available depending on the policies at certain Financial Intermediaries. Please consult your Financial Intermediary 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, it may be necessary at the time of purchase for you to inform your Financial Intermediary (or the Trust's transfer agent, if you purchase shares of the Fund directly through the Trust) of the existence of any Related Accounts in which there are holdings eligible to be aggregated to meet the sales load breakpoint and/or right of accumulation threshold. In order to verify your eligibility, you may be required to provide account statements and/or confirmations regarding your purchases and/or holdings of any Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund (including shares of Morgan Stanley Money Market Funds that you acquired in an exchange from Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund except Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios, if applicable) held in all Related Accounts at your Financial Intermediary, in order to determine whether you have met the 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 you enter into a written "Letter of Intent." A Letter of Intent provides for the purchase of Class A shares of the Fund and Class A shares of other Morgan Stanley Multi-Class Funds, except Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios, within a 13-month period. The initial purchase of Class A shares of the Fund under a Letter of Intent must be at least 5% of the stated investment goal. The Letter of Intent does not preclude the Fund (or any other Morgan Stanley Multi-Class Fund) from discontinuing sales of its shares. To determine the applicable sales charge reduction, you may also include (1) the cost of Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund that were previously purchased at a price including a front-end sales charge during the 90-day period prior to the Distributor receiving the Letter of Intent and (2) the historical cost of shares of any Morgan Stanley Money Market Fund that you acquired in an exchange from Class A shares of the Fund or any other Morgan Stanley Multi-Class Fund purchased during that period at a price including a front-end sales charge. You may also combine purchases and exchanges by any Related Accounts during such 90-day period.

You should retain any records necessary to substantiate historical costs because the Fund, SS&C GIDS and your Financial Intermediary may not maintain this information. You can obtain a Letter of Intent by contacting your Financial Intermediary or by calling toll-free 1-800-869-6397. If you do not achieve the stated investment goal within the 13-month period, you are required to pay the difference between the sales charges otherwise applicable and sales charges actually paid, which may be deducted from your investment. Shares acquired through reinvestment of distributions are not aggregated to achieve the stated investment goal.

Class A shares also are offered at net asset value to investment and institutional clients of the Adviser and its affiliates and direct purchases of shares by accounts where no Financial Intermediary is specified.

**Conversion Features**

A shareholder currently holding Class A shares of the Fund in a fee-based advisory program ("Advisory Program") account, or currently holding Class A shares in a brokerage account but wishing to transfer into an Advisory Program account, may convert such shares to Class I shares of the Fund within the Advisory Program at any time. In addition, a shareholder holding Class C or Class L shares of the Fund through a brokerage account or an Advisory Program account may convert such shares to either Class A or Class I shares of the Fund within an Advisory Program at any time. Such conversions will be on the basis of the relative NAVs, without requiring any investment minimum to be met and without the imposition of any redemption fee or other charge. If a CDSC is applicable to such Class A or Class C shares, then the conversion may not occur until after the shareholder has held the shares for an 18-month or 12-month period, respectively, except that a CDSC applicable to Class A and Class C shares converted to Class I shares through Traditional IRAs, Roth IRAs, Rollover IRAs, Inherited IRAs, SEP IRAs, SIMPLE IRAs, BASIC Plans, Educational Savings Accounts and Medical Savings Accounts on the Merrill Lynch platform will be waived. With respect to Class A shares, Merrill Lynch will remit to the Distributor the full amount of the CDSC otherwise payable upon sale of such shares. With respect to Class C shares, Merrill Lynch will remit the portion of the payment to be made to the Distributor in an amount equal to the CDSC multiplied by the number of months remaining on the CDSC period divided by the maximum number of months of the CDSC period.

**30**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

In addition, a shareholder holding a class of shares of the Fund in a Merrill Lynch Advisory Program account may have such shares converted by Merrill Lynch to an eligible class of shares of the Fund for a Merrill Lynch brokerage account upon the transfer of the shares of the Fund from a Merrill Lynch Advisory Program account to a brokerage account with Merrill Lynch. Such conversions will be on the basis of the relative NAVs and without the imposition of any redemption fee or other charge. The fees and expenses of the new class may be higher than those of the previously held class.

After eight years, Class C shares of the Fund generally will convert automatically to Class A shares of the Fund with no initial sales charge, provided that the Fund or the Financial Intermediary through which a shareholder purchased or holds Class C shares has records verifying that the Class C shares have been held for at least eight years. The automatic conversion of Class C shares to Class A shares will not apply to shares held through group retirement plan recordkeeping platforms of certain Financial Intermediaries who hold such shares in an omnibus account and do not track participant level share lot aging to facilitate such a conversion. The eight-year period runs from the last day of the month in which the shares were purchased or, in the case of Class C shares acquired through an exchange, from the last day of the month in which the original Class C shares were purchased; the shares will convert to Class A shares based on their relative NAVs in the month following the eight-year period. At the same time, an equal proportion of Class C shares acquired through automatically reinvested distributions will convert to Class A shares on the same basis.

Furthermore, the Adviser may in its sole discretion permit a conversion of one share class to another share class of the same Fund in certain other circumstances, provided that the Fund's eligibility requirements are met, and subject to the shareholder's consent. Such conversions will be on the basis of the relative NAVs and without the imposition of any redemption fee or other charge.

A conversion of shares of one class directly for shares of another class of the same Fund normally should not be taxable for federal income tax purposes.

Please ask your financial advisor if you are eligible for converting a class of shares pursuant to these conversion features. A conversion feature's availability will be subject to the applicable classes being offered on a Financial Intermediary's platform. Shareholders should carefully review information in this Prospectus regarding share class features, including conversions and exchanges, or contact their financial advisor for more information. You should talk to your tax advisor before making a conversion.

In addition, Class C shares held in an account for which no broker-dealer or other Financial Intermediary is specified and which are not subject to a CDSC will periodically be converted to Class A shares of the Fund.

**General**

Shares of the Fund may, in the Fund's discretion, be purchased with investment securities (in lieu of or, in conjunction with, cash) acceptable to the Fund. The securities would be accepted by the Fund at their market value in return for Fund shares of equal value, taking into account any applicable sales charge.

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

When you buy Fund shares, the shares (plus any applicable sales charge) will be purchased at the next share price calculated after we receive your purchase order in good order. Purchase orders not received in good order prior to Pricing Time will be executed at the NAV next determined after the purchase order is received in good order. Certain institutional investors and financial institutions have entered into arrangements with the Fund, the Adviser and/or the Distributor pursuant to which they may place orders prior to the Pricing Time, but make payment in Federal Funds for those shares up to three days after the purchase order is placed, depending on the arrangement. We reserve the right to reject any order for the purchase of Fund shares for any reason.

The Trust may suspend the offering of shares, or any class of shares, of the Fund or reject any purchase orders when we think it is in the best interest of the Fund.

Certain patterns of past exchanges and/or purchase or sale transactions involving the Fund may result in the Fund rejecting, limiting or prohibiting, at its sole discretion and without prior notice, additional purchases and/or exchanges and may result in a shareholder's account being closed. Determinations in this regard may be made based on the frequency or dollar amount of previous exchanges or purchase or sale transactions. For more information, please refer to the section of this Prospectus entitled "Frequent Purchases and Redemptions of Shares."

**31**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

**How To Redeem Fund Shares**

You may process a redemption request by contacting your Financial Intermediary. Otherwise, you may redeem shares of the Fund by mail or, if authorized, by telephone, at no charge other than as described below. The value of shares redeemed may be more or less than the purchase price, depending on the NAV at the time of redemption. Shares of the Fund will be redeemed at the NAV next determined after we receive your redemption request in good order and will be reduced by the amount of any applicable CDSC.

*Redemptions by Letter*

Requests should be addressed to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804.

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

(a) A letter of instruction, if required, or a stock assignment specifying the account name, the account number, the name of the Fund and the number of shares or dollar amount to be redeemed, signed by all registered owners of the shares in the exact names in which the shares are registered, and whether you wish to receive the redemption proceeds by check or by wire to the bank account we have on file for you;

(b) Any required signature guarantees if you are requesting payment to anyone other than the registered owner(s) or that payment be sent to any address other than the address of the registered owner(s) or pre-designated bank account; and

(c) Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianship, corporations, pension and profit sharing plans and other organizations.

*Redemptions by Telephone*

You automatically have telephone redemption and exchange privileges unless you indicate otherwise by checking the applicable box on the New Account Application or calling Morgan Stanley Shareholder Services to opt out of such privileges. You may request a redemption of shares of the Fund by calling the Morgan Stanley Shareholder Services at 1-800-869-6397 and requesting that the redemption proceeds be mailed or wired to you. You cannot redeem shares of the Fund by telephone if you hold share certificates for those shares. For your protection when calling the Fund, we will employ reasonable procedures to confirm that instructions communicated over the telephone are genuine. These procedures may include requiring various forms of personal identification (such as name, mailing address, social security number or other tax identification number), tape-recording telephone communications and providing written confirmation of instructions communicated by telephone. If reasonable procedures are employed, neither Morgan Stanley, SS&C GIDS nor the Fund will be liable for following telephone instructions that it reasonably believes to be genuine. Telephone redemptions and exchanges may not be available if you cannot reach Morgan Stanley Shareholder Services by telephone, whether because all telephone lines are busy or for any other reason; in such case, a shareholder would have to use the Fund's other redemption and exchange procedures described in this section. Telephone instructions will be accepted if received by Morgan Stanley Shareholder Services between 9:00 a.m. and 4:00 p.m. Eastern time on any day the NYSE is open for business. During periods of drastic economic or market changes, it is possible that the telephone privileges may be difficult to implement, although this has not been the case with the Fund in the past. To opt out of telephone privileges, please contact the Fund at 1-800-869-6397.

*Systematic Withdrawal Plan*

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's balance (provided the amount is at least $25), on a monthly, quarterly, semi-annual or annual basis, from any fund with a balance of at least $1,000. Each time you add a fund to the plan, you must meet the plan requirements.

Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under certain circumstances. See the Class A and Class C waiver categories listed below.

To sign up for the systematic withdrawal plan, contact your Morgan Stanley Financial Advisor or call toll-free 1-800-869-6397. You may terminate or suspend your plan at any time. Please remember that withdrawals from the plan are sales of shares, not Fund "distributions," and ultimately may exhaust your account balance. The Trust may terminate or revise the plan at any time.

*CDSC Waivers on Class A and Class C Shares*

The CDSC on Class A and Class C shares will be waived in connection with sales of Class A and Class C shares for which no commission or transaction fee was paid by the Distributor or Financial Intermediary at the time of purchase of such shares. In addition, a CDSC, if otherwise applicable, will be waived in the case of:

• 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 the shares are: (i) registered either in your individual name or in the names of you and your spouse as joint tenants with right of survivorship; (ii) registered in the name of a trust of which (a) you are the settlor and that is revocable by you (i.e., a "living trust") or (b) you and your spouse are the settlors and that is revocable by you or your

**32**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

spouse (i.e., a "joint living trust"); or (iii) held in a qualified corporate or self-employed retirement plan, IRA or 403(b) Custodial Account; provided in each case that the sale is requested within one year after your death or initial determination of disability.

• Sales in connection with the following retirement plan "distributions": (i) lump-sum or other distributions from a qualified 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 59½); (ii) required minimum distributions and certain other distributions (such as those following attainment of age 59½) from an IRA or 403(b) Custodial Account; or (iii) a tax-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).

• Sales of shares in connection with the systematic withdrawal plan of up to 12% annually of the value of the Fund from which plan sales are made. The percentage is determined on the date you establish the systematic withdrawal plan and based on the next calculated share price. You may have this CDSC waiver applied in amounts up to 1% per month, 3% per quarter, 6% semi- annually or 12% annually. Shares with no CDSC will be sold first, followed by those with the lowest CDSC. As such, the waiver benefit will be reduced by the amount of your shares that are not subject to a CDSC. If you suspend your participation in the plan, you may later resume plan payments without requiring 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 are eligible for a CDSC waiver, please contact your Financial Intermediary or call toll-free 1-800-869-6397.

*Redemption Proceeds*

The Fund typically expects to pay redemption proceeds to you within two business days following receipt of your redemption request for those payments made to your brokerage account held with a Financial Intermediary. For redemption proceeds that are paid directly to you by the Fund, the Fund typically expects to pay redemption proceeds by check or by wire to you within one business day, following receipt of your redemption request; however, in all cases, it may take up to seven calendar days to pay redemption proceeds.

The Fund typically expects to meet redemption requests by using a combination of sales of securities held by the Fund and/or holdings of cash and cash equivalents. On a less regular basis, the Fund also reserves the right to use borrowings or interfund lending to meet redemption requests, and the Fund may use these methods during both normal and stressed market conditions.

If we determine that it is in the best interest of the Trust or the Fund not to pay redemption proceeds in cash, we may distribute to you securities held by the Fund. If requested, we will pay a portion of your redemption(s) in cash (during any 90 day period) up to the lesser of $250,000 or 1% of the net assets of the Fund at the beginning of such period. If the Fund redeems your shares in-kind, you will bear any market risks associated with the securities paid as redemption proceeds. Such in-kind securities may be illiquid and difficult or impossible for a shareholder to sell at a time and at a price that a shareholder would like. Redemptions paid in such securities generally will give rise to income, gain or loss for income tax purposes in the same manner as redemptions paid in cash. In addition, you may incur brokerage costs and a further gain or loss for income tax purposes when you ultimately sell the securities.

*Reinstatement Privilege*

If you redeem shares, you may reinvest at net asset value all or any portion of the redemption proceeds in the same account and in the same class of shares of the Fund you redeemed from or another Morgan Stanley Multi-Class Fund, provided that the reinvestment occurs within 90 days of the redemption, the privilege has not been used more than once in the prior 12 months, the redeemed shares were subject to a front-end sales charge or CDSC and that you are otherwise eligible to invest in that class. Under these circumstances your account will be credited with any CDSC paid in connection with the redemption. Any CDSC period applicable to the shares you acquire upon reinvestment will run from the date of your original share purchase. For requests for reinvestment sent to the Fund's transfer agent, the request must be in writing. At the time of a reinvestment, you or your Financial Intermediary must notify the Fund or the transfer agent that you are reinvesting redemption proceeds in accordance with this privilege. If you reinvest, your purchase will be at the next determined net asset value following receipt of your request.

**Exchange Privilege**

You may exchange shares of any class of the Fund for the same class of shares of any mutual fund (excluding money market funds) sponsored and advised by the Adviser (each, a "Morgan Stanley Multi-Class Fund"), if available, without the imposition of an exchange fee. Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund even though Class L shares are closed to investors. In addition, you may exchange shares of any class of the Fund for shares of Morgan Stanley California Tax-Free Daily Income Trust, Morgan Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. Government Money Market Trust (each, a "Morgan Stanley Money Market Fund" and, together with the Morgan Stanley Multi-Class Funds, the "Morgan Stanley Funds"), if available, without the imposition of an exchange fee. Because purchases of Class A shares of Morgan Stanley Institutional Fund Trust Ultra-Short Income and Ultra-Short Municipal Income Portfolios are not subject to a sales charge, and purchases of Class A shares of Morgan Stanley Institutional Fund Trust Short Duration Income Portfolio are subject to a reduced sales charge, you may be subject to the payment of a sales charge by your Financial Intermediary, at time of exchange into

**33**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

Class A shares of a Morgan Stanley Fund, based on the amount that you would have owed if you directly purchased Class A shares of that Morgan Stanley Fund (less any sales charge previously paid in connection with shares exchanged for such shares of Morgan Stanley Institutional Fund Trust Short Duration Income, Ultra-Short Income or Ultra-Short Municipal Income Portfolios, as applicable). Class L shares of the Fund that are exchanged for shares of a Morgan Stanley Money Market Fund 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). Exchanges are effected based on the respective NAVs of the applicable Morgan Stanley Fund (subject to any applicable redemption fee) and in accordance with the eligibility requirements of such Fund. To obtain a prospectus for another Morgan Stanley Fund, contact your Financial Intermediary or call Morgan Stanley Shareholder Services at 1-800-869-6397. Prospectuses are also available on our Internet site at www.morganstanley.com/im. If you purchased Fund shares through a Financial Intermediary, certain Morgan Stanley Funds may be unavailable for exchange. Contact your Financial Intermediary for more information regarding the exchange privilege and to determine which Morgan Stanley Funds are available for exchange.

The current prospectus for each Morgan Stanley Fund describes its investment objective(s), policies, investment minimums and applicable sales charges, and should be read before investing. Since exchanges are available only into continuously offered Morgan Stanley Funds, exchanges are generally not available into Morgan Stanley Funds or classes of Morgan Stanley Funds that are not currently being offered for purchase.

You can process your exchange by contacting your Financial Intermediary. You may also send exchange requests to the Trust's transfer agent, SS&C GIDS, or Eaton Vance Management, the Fund's co-transfer agent, by mail to Morgan Stanley Institutional Fund Trust, c/o SS&C GIDS, P.O. Box 219804, Kansas City, MO 64121-9804 or by calling 1-800-869-6397.

There are special considerations when you exchange Class A and Class C shares of the Fund that are subject to a CDSC. When determining the length of time you held the Class A or Class C shares, any period (starting at the end of the month) during which you held such shares will be counted. In addition, any period (starting at the end of the month) during which you held (i) Class A or Class C shares of other funds of the Trust; (ii) Class A or Class C shares of a Morgan Stanley Multi-Class Fund; or (iii) shares of a Morgan Stanley Money Market Fund, any of which you acquired in an exchange from such Class A or Class C shares of the Fund, will also be counted; however, if you sell shares of (a) such other fund of the Trust; (b) the Morgan Stanley Multi-Class Fund; or (c) the Morgan Stanley Money Market Fund, before the expiration of the CDSC "holding period," you will be charged the CDSC applicable to such shares.

You will be subject to the same minimum initial investment and account size as an initial purchase. Your exchange price will be the price calculated at the next Pricing Time after the Morgan Stanley Fund receives your exchange order. The Morgan Stanley Fund, in its sole discretion, may waive the minimum initial investment amount in certain cases. For direct accounts, the check writing privilege is not available for Morgan Stanley Money Market Fund shares you acquire in an exchange from a non-money market fund. If you are investing through a financial advisor, check with your advisor regarding the availability of check writing privileges. The Fund may terminate or revise the exchange privilege upon required notice or in certain cases without notice. The Fund reserves the right to reject an exchange order for any reason.

If you exchange shares of 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 Fund shares and the exchange into the other fund is considered a purchase. As a result, you may realize a capital gain or loss. You should review the "Taxes" section and consult your own tax professional about the tax consequences of an exchange.

**Frequent Purchases and Redemptions of Shares**

Frequent purchases and redemptions of shares by Fund shareholders are referred to as "market-timing" or "short-term trading" and may present risks for other shareholders of the Fund, which may include, among other things, diluting the value of the Fund's shares held by long-term shareholders, interfering with the efficient management of the Fund, increasing brokerage and administrative costs, incurring unwanted taxable gains and forcing the Fund to hold excess levels of cash.

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

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

**34**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

The Trust discourages and does not accommodate frequent purchases and redemptions of Fund shares by Fund shareholders and the Trust's Board of Trustees has adopted policies and procedures with respect to such frequent purchases and redemptions.

The Trust's policies with respect to purchases, redemptions and exchanges of Fund shares are described in the "Shareholder Information—How To Purchase Fund Shares," "Shareholder Information—Sales Charges Applicable to Purchases of Class A Shares," "Shareholder Information—General," "Shareholder Information—How To Redeem Fund Shares" and "Shareholder Information—Exchange Privilege" sections of this Prospectus. Except as described in each of these sections, and with respect to trades that occur through omnibus accounts at Financial Intermediaries, as described below, the Trust's policies regarding frequent trading of Fund shares are applied uniformly to all shareholders. With respect to trades that occur through omnibus accounts at Financial Intermediaries, such as investment advisers, broker-dealers, transfer agents and third-party administrators, the Trust (i) has requested assurance that such Financial Intermediaries currently selling Fund shares have in place internal policies and procedures reasonably designed to address market-timing concerns and has instructed such Financial Intermediaries to notify the Fund immediately if they are unable to comply with such policies and procedures and (ii) requires all prospective Financial Intermediaries to agree to cooperate in enforcing the Trust's policies (or, upon prior written approval only, a Financial Intermediary's own policies) with respect to frequent purchases, redemptions and exchanges of Fund shares.

With respect to trades that occur through omnibus accounts at Financial Intermediaries, to some extent, the Trust relies on the Financial Intermediary to monitor frequent short-term trading within the Fund by the Financial Intermediary's customers. However, the Fund has entered into agreements with Financial Intermediaries whereby Financial Intermediaries are required to provide certain customer identification and transaction information upon the Fund's request. The Fund may use this information to help identify and prevent market-timing activity in the Fund. There can be no assurance that the Fund will be able to identify or prevent all market-timing activities.

**Taxes**

As with any investment, you should consider how your Fund investment will be taxed. The tax information in this Prospectus is provided as general information. You should consult your own tax professional about the tax consequences of 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, you need to be aware of the possible tax consequences when the Fund makes distributions and when you sell shares, including an exchange to another Morgan Stanley Fund.

*Taxation of Distributions.* Your distributions normally are subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares. A distribution also may be subject to local income tax. Any income dividend distributions and any short-term capital gain distributions are taxable to you as ordinary income. Any long-term capital gain distributions are taxable as long-term capital gains, no matter how long you have owned shares in the Fund.

If certain holding period requirements are met with respect to your shares, a portion of the income dividends you receive may be taxed at the same rates 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, such income will not be considered long-term capital gains for other federal income tax purposes. For example, you will not be permitted to offset income dividends with capital losses. Short term capital gain distributions will continue to be taxed as ordinary income taxes.

If certain holding period requirements are met, corporate shareholders may be entitled to a dividends-received deduction for the portion of dividends they receive which are attributable to dividends received by such portfolios from U.S. corporations.

If you buy shares of the Fund before a distribution, you may be subject to tax on the entire amount of the taxable distribution you receive. Distributions are taxable to you even if they are paid from income or gain earned by the Fund before your investment (and thus were included in the price you paid for your Fund shares).

Investment income received by the Fund from sources within foreign countries may be subject to foreign income taxes.

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

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

The Fund (or its administrative agent) is required to report to the IRS and furnish to Fund shareholders the cost basis information for sale transactions of shares purchased on or after January 1, 2012. Shareholders may elect to have one of several cost basis methods applied to their account when calculating the cost basis of shares sold, including average cost, FIFO ("first-in, first-out") or some

**35**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

other specific identification method. Unless you instruct otherwise, the Fund will use average cost as its default cost basis method, and will treat sales as first coming from shares purchased prior to January 1, 2012. If average cost is used for the first sale of Fund shares covered by these new rules, the shareholder may only use an alternative cost basis method for shares purchased prospectively. Fund shareholders should consult with their tax advisors to determine the best cost basis method for their tax situation.

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

When you open your account, you should provide your social security or tax identification number on your investment application. By providing this information, you will avoid being subject to federal backup withholding at the applicable rate on taxable distributions and redemption proceeds. Any withheld amount would be sent to the IRS as an advance payment of your taxes due on your income for such year.

One of the requirements for favorable tax treatment as a regulated investment company under the Code is that the Fund derive at least 90% of its gross income from certain qualifying sources of income.

The Fund may seek to gain exposure to the commodity markets through investments in the Subsidiary or commodity index-linked structured notes. Historically, the IRS has issued private letter rulings in which the IRS specifically concluded that income and gains from investments in commodity index-linked structured notes (the "Notes Rulings") or a wholly-owned foreign subsidiary that invests in commodity-linked instruments are "qualifying income" for purposes of compliance with Subchapter M of the Code. The Fund has not received such a private letter ruling, and is not able to rely on private letter rulings issued to other taxpayers. The IRS recently issued a revenue procedure, which states that the IRS will not in the future issue private letter rulings that would require a determination of whether an asset (such as a commodity index-linked note) is a "security" under the 1940 Act. In connection with issuing such revenue procedure, the IRS has revoked the Notes Rulings. The IRS also recently issued final regulations that would generally treat the Fund's income inclusion with respect to the Subsidiary as qualifying income either if (A) there is a distribution out of the earnings and profits of the Subsidiary that are attributable to such income inclusion or (B) such inclusion is derived with respect to the Fund's business of investing in stock, securities, or currencies. The Fund intends to treat its income from the Subsidiary as qualifying income. No assurances can be provided that the IRS would not be able to successfully assert that the Fund's income from such investments was not "qualifying income," in which case the Fund would fail to qualify as a regulated investment company under Subchapter M of the Code if over 10% of its gross income was derived from these investments. If the Fund failed to qualify as a regulated investment company, it would be subject to federal and state income tax on all of its taxable income at regular corporate tax rates with no deduction for any distributions paid to shareholders, which would significantly adversely affect the returns to, and could cause substantial losses for, Fund shareholders.

Shareholders who are not citizens or residents of the United States and certain foreign entities will generally be subject to withholding of U.S. tax of 30% on distributions made by 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 made to certain non-U.S. entities that fail to comply (or be 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 provide additional information to the Fund to enable the Fund to determine whether withholding is required.

Because each investor's tax circumstances are unique and the tax laws may change, you should consult your tax advisor about your investment.

**Dividends and Distributions**

The Fund's policy is to distribute to shareholders substantially all of its net investment income, if any, in the form of an annual dividend and to distribute net realized capital gains, if any, at least annually.

The Fund automatically reinvests all dividends and distributions in additional shares. However, you may elect to receive distributions in cash by giving written notice to the Fund or your Financial Intermediary or by checking the appropriate box in the Distribution Option section on the New Account Application.

For accounts held directly with the Fund's transfer agent for which the shareholder has elected to receive distributions via check, any distribution (dividend or capital gain) under $10.00 is automatically reinvested in additional shares regardless of your elected distribution option.

**Potential Conflicts of Interest**

As a diversified global financial services firm, Morgan Stanley, the parent company of the Adviser, engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and

**36**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley's interests or the interests of its clients may conflict with the interests of the Fund. Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with any new or successor funds, programs, accounts or businesses, the ''Affiliated Investment Accounts'') with a wide variety of investment objectives that in some instances may overlap or conflict with the Fund's investment objectives and present conflicts of interest. In addition, Morgan Stanley may also from time to time create new or successor Affiliated Investment Accounts that may compete with the Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and, in fact, they may not be. Conflicts of interest not described below may also exist.

For more information about conflicts of interest, see the section entitled "Potential Conflicts of Interest" in the SAI.

*Material Nonpublic Information.* It is expected that confidential or material nonpublic information regarding an investment or potential investment opportunity may become available to the Adviser. If such information becomes available, the Adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. Morgan Stanley has established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley. In limited circumstances, however, including for purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, personnel, including personnel of the investment adviser, on one side of an information barrier may have access to information and personnel on the other side of the information barrier through "wall crossings." The Adviser faces conflicts of interest in determining whether to engage in such wall crossings. Information obtained in connection with such wall crossings may limit or restrict the ability of the Adviser to engage in or otherwise effect transactions on behalf of the Fund (including purchasing or selling securities that the Adviser may otherwise have purchased or sold for the Fund in the absence of a wall crossing).

*Investments by Morgan Stanley and its Affiliated Investment Accounts.* In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the Adviser and the Investment team, may have obligations to other clients or investors in Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of the Fund or its shareholders. The Fund's investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a result, the members of an Investment team may face conflicts in the allocation of investment opportunities among the Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the Adviser. Certain Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts. To seek to reduce potential conflicts of interest and to attempt to allocate such investment opportunities in a fair and equitable manner, the Adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the Adviser, including the Fund, fair access to investment opportunities consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the Adviser.

*Payments to Broker-Dealers and Other Financial Intermediaries.* The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of the Fund, to certain Financial Intermediaries (which may include affiliates of the Adviser and Distributor), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Fund and/or shareholder servicing. The prospect of receiving, or the receipt of, additional compensation, as described above, by Financial Intermediaries may provide such Financial Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Fund over other investment options with respect to which these Financial Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Fund or the amount that the Fund receives to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any disclosures provided by Financial Intermediaries as to their compensation. In addition, in certain circumstances, the Adviser restricts, limits or reduces the amount of the Fund's investment, or restricts the type of governance or voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.

*Morgan Stanley Trading and Principal Investing Activities.* Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for the Fund's holdings, although these activities could have an adverse impact on the value of one or more of the Fund's investments, or could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and potentially adverse to, that of the Fund.

**37**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Shareholder Information**

Shareholder Information (Con't)

*Morgan Stanley's Investment Banking and Other Commercial Activities.* Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment funds that may compete with the Fund and with respect to investments that the Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve an action of a different timing or nature than the action taken, by the Fund. Morgan Stanley may give advice and provide recommendations to persons competing with the Fund and/or any of the Fund's investments that are contrary to the Fund's best interests and/or the best interests of any of its investments. Morgan Stanley's activities on behalf of its clients (such as engagements as an underwriter or placement agent) may restrict or otherwise limit investment opportunities that may otherwise be available to the Fund.

Morgan Stanley may be engaged to act as a financial advisor to a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in connection with such transactions. Morgan Stanley's compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, the Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to a merger or an acquisition.

**38**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

Consolidated Financial Highlights

The consolidated financial highlights tables that follow are intended to help you understand the financial performance of the Class I, Class A, Class L, Class C and Class R6 shares of the Fund for the past five years. Certain information reflects financial results for a single Fund share. The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).

The ratio of expenses to average net assets listed in the tables below for each class of shares of the Fund are based on the average net assets of the Fund for each of the periods listed in the tables. To the extent that the Fund's average net assets decrease over the Fund's next fiscal year, such expense ratios can be expected to increase, potentially significantly, because certain fixed costs will be spread over a smaller amount of assets.

The information below has been derived from the consolidated financial statements audited by Ernst & Young LLP, the Fund's independent registered public accounting firm. Ernst & Young LLP's report, along with the Fund's consolidated financial statements, are incorporated by reference into the Fund's SAI. The Annual Report to Shareholders (which includes the Fund's consolidated financial statements) and SAI are available at no cost from the Trust at the toll-free number noted on the back cover to this Prospectus.

**39**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Global Strategist Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class I** | **Class I** | **Class I** | **Class I** | **Class I** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $18.74<br>| $16.08<br>| $15.45<br>| $17.05<br>| $17.48<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.19<br>| 0.16<br>| 0.17<br>| 0.27<br>| 0.33<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (3.94)<br>| 2.73<br>| 0.74<br>| 0.17<br>| 0.35<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (3.75)<br>| 2.89<br>| 0.91<br>| 0.44<br>| 0.68<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.12)<br>| (0.22)<br>| (0.03)<br>| (0.58)<br>| (0.21)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (1.29)<br>| (0.01)<br>| (0.25)<br>| (1.46)<br>| (0.90)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (1.41)<br>| (0.23)<br>| (0.28)<br>| (2.04)<br>| (1.11)<br>|
| **Net Asset Value, End of Period** | $13.58<br>| $18.74<br>| $16.08<br>| $15.45<br>| $17.05<br>|
| **Total Return<sup>(2)</sup>**  | (21.73)%<br>| 18.10<br> %<br>| 5.93<br> %<br>| 3.74<br> %<br>| 3.94<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $17886<br>| $26745<br>| $34031<br>| $57532<br>| $62998<br>|
| Ratio of Expenses Before Expense Limitation | 0.83<br> %<br>| 0.76<br> %<br>| 0.84<br> %<br>| 0.84<br> %<br>| 0.85<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.72<br> %<br> <sup>(3)</sup> <br>| 0.73<br> %<br> <sup>(3)</sup> <br>| 0.72<br> %<br> <sup>(3)</sup> <br>| 0.72<br> %<br> <sup>(3)</sup> <br>| 0.73<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 0.73<br> %<br> <sup>(3)</sup> <br>| N/A<br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income | 1.13<br> %<br> <sup>(3)</sup> <br>| 0.90<br> %<br> <sup>(3)</sup> <br>| 1.14<br> %<br> <sup>(3)</sup> <br>| 1.80<br> %<br> <sup>(3)</sup> <br>| 1.95<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 93<br> %<br>| 115<br> %<br>| 109<br> %<br>| 117<br> %<br>| 132<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

**40**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Global Strategist Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class A** | **Class A** | **Class A** | **Class A** | **Class A** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $18.53<br>| $15.91<br>| $15.30<br>| $16.90<br>| $17.32<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.14<br>| 0.12<br>| 0.13<br>| 0.23<br>| 0.28<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (3.90)<br>| 2.68<br>| 0.73<br>| 0.15<br>| 0.35<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (3.76)<br>| 2.80<br>| 0.86<br>| 0.38<br>| 0.63<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.07)<br>| (0.17)<br>| —<br>| (0.52)<br>| (0.15)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (1.29)<br>| (0.01)<br>| (0.25)<br>| (1.46)<br>| (0.90)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (1.36)<br>| (0.18)<br>| (0.25)<br>| (1.98)<br>| (1.05)<br>|
| **Net Asset Value, End of Period** | $13.41<br>| $18.53<br>| $15.91<br>| $15.30<br>| $16.90<br>|
| **Total Return<sup>(2)</sup>**  | (21.99)%<br>| 17.72<br> %<br>| 5.65<br> %<br>| 3.38<br> %<br>| 3.68<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $134814<br>| $188317<br>| $170643<br>| $197271<br>| $221707<br>|
| Ratio of Expenses Before Expense Limitation | 1.05<br> %<br>| 1.02<br> %<br>| 1.08<br> %<br>| 1.09<br> %<br>| 1.09<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.04<br> %<br> <sup>(3)</sup> <br>| 1.01<br> %<br> <sup>(3)</sup> <br>| 1.02<br> %<br> <sup>(3)</sup> <br>| 1.03<br> %<br> <sup>(3)</sup> <br>| 1.03<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 1.01<br> %<br> <sup>(3)</sup> <br>| N/A<br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income | 0.84<br> %<br> <sup>(3)</sup> <br>| 0.67<br> %<br> <sup>(3)</sup> <br>| 0.87<br> %<br> <sup>(3)</sup> <br>| 1.49<br> %<br> <sup>(3)</sup> <br>| 1.66<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 93<br> %<br>| 115<br> %<br>| 109<br> %<br>| 117<br> %<br>| 132<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

**41**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Global Strategist Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class L** | **Class L** | **Class L** | **Class L** | **Class L** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $18.24<br>| $15.67<br>| $15.15<br>| $16.73<br>| $17.15<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(1)</sup>  | 0.05<br>| 0.03<br>| 0.05<br>| 0.15<br>| 0.19<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (3.83)<br>| 2.64<br>| 0.72<br>| 0.16<br>| 0.34<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (3.78)<br>| 2.67<br>| 0.77<br>| 0.31<br>| 0.53<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | —<br>| (0.09)<br>| —<br>| (0.43)<br>| (0.05)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (1.29)<br>| (0.01)<br>| (0.25)<br>| (1.46)<br>| (0.90)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (1.29)<br>| (0.10)<br>| (0.25)<br>| (1.89)<br>| (0.95)<br>|
| **Net Asset Value, End of Period** | $13.17<br>| $18.24<br>| $15.67<br>| $15.15<br>| $16.73<br>|
| **Total Return<sup>(2)</sup>**  | (22.33)%<br>| 17.09<br> %<br>| 5.10<br> %<br>| 2.87<br> %<br>| 3.13<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $9674<br>| $13359<br>| $12773<br>| $13356<br>| $17665<br>|
| Ratio of Expenses Before Expense Limitation | 1.56<br> %<br>| 1.53<br> %<br>| 1.60<br> %<br>| 1.58<br> %<br>| 1.58<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.55<br> %<br> <sup>(3)</sup> <br>| 1.52<br> %<br> <sup>(3)</sup> <br>| 1.54<br> %<br> <sup>(3)</sup> <br>| 1.53<br> %<br> <sup>(3)</sup> <br>| 1.52<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 1.52<br> %<br> <sup>(3)</sup> <br>| N/A<br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income | 0.34<br> %<br> <sup>(3)</sup> <br>| 0.16<br> %<br> <sup>(3)</sup> <br>| 0.36<br> %<br> <sup>(3)</sup> <br>| 0.97<br> %<br> <sup>(3)</sup> <br>| 1.12<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 93<br> %<br>| 115<br> %<br>| 109<br> %<br>| 117<br> %<br>| 132<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

**42**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Global Strategist Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class C** | **Class C** | **Class C** | **Class C** | **Class C** |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $18.02<br>| $15.49<br>| $15.02<br>| $16.65<br>| $17.08<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income (Loss)<sup>(1)</sup>  | 0.02<br>| (0.02)<br>| 0.01<br>| 0.11<br>| 0.21<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (3.79)<br>| 2.61<br>| 0.71<br>| 0.15<br>| 0.27<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (3.77)<br>| 2.59<br>| 0.72<br>| 0.26<br>| 0.48<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | —<br>| (0.05)<br>| —<br>| (0.43)<br>| (0.01)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (1.29)<br>| (0.01)<br>| (0.25)<br>| (1.46)<br>| (0.90)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (1.29)<br>| (0.06)<br>| (0.25)<br>| (1.89)<br>| (0.91)<br>|
| **Net Asset Value, End of Period** | $12.96<br>| $18.02<br>| $15.49<br>| $15.02<br>| $16.65<br>|
| **Total Return<sup>(2)</sup>**  | (22.62)%<br>| 16.79<br> %<br>| 4.81<br> %<br>| 2.55<br> %<br>| 2.83<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $1771<br>| $2236<br>| $1435<br>| $1906<br>| $1885<br>|
| Ratio of Expenses Before Expense Limitation | 1.92<br> %<br>| 1.90<br> %<br>| 1.98<br> %<br>| 1.93<br> %<br>| 1.99<br> %<br>|
| Ratio of Expenses After Expense Limitation | 1.82<br> %<br> <sup>(3)</sup> <br>| 1.83<br> %<br> <sup>(3)</sup> <br>| 1.82<br> %<br> <sup>(3)</sup> <br>| 1.82<br> %<br> <sup>(3)</sup> <br>| 1.83<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 1.83<br> %<br> <sup>(3)</sup> <br>| N/A<br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income (Loss) | 0.11<br> %<br> <sup>(3)</sup> <br>| (0.11)%<br> <sup>(3)</sup> <br>| 0.07<br> %<br> <sup>(3)</sup> <br>| 0.73<br> %<br> <sup>(3)</sup> <br>| 1.28<br> %<br> <sup>(3)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 93<br> %<br>| 115<br> %<br>| 109<br> %<br>| 117<br> %<br>| 132<br> %<br>|

---

(1) Per share amount is based on average shares outstanding.

(2) Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

**43**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Institutional Fund Trust Prospectus \| **Consolidated Financial Highlights**

**Global Strategist Portfolio**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  | **Class R6<sup>(1)</sup>**  |
| | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** | **Year Ended September 30,** |
| <br>**Selected Per Share Data and Ratios** | **2022** | **2021** | **2020** | **2019** | **2018** |
| **Net Asset Value, Beginning of Period** | $18.75<br>| $16.10<br>| $15.46<br>| $17.06<br>| $17.49<br>|
| **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** | **Income (Loss) from Investment Operations:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income<sup>(2)</sup>  | 0.20<br>| 0.20<br>| 0.19<br>| 0.27<br>| 0.37<br>|
| &nbsp;&nbsp;&nbsp; Net Realized and Unrealized Gain (Loss)  | (3.94)<br>| 2.69<br>| 0.74<br>| 0.17<br>| 0.31<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total from Investment Operations  | (3.74)<br>| 2.89<br>| 0.93<br>| 0.44<br>| 0.68<br>|
| **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** | **Distributions from and/or in Excess of:** |
| &nbsp;&nbsp;&nbsp; Net Investment Income  | (0.13)<br>| (0.23)<br>| (0.04)<br>| (0.58)<br>| (0.21)<br>|
| &nbsp;&nbsp;&nbsp; Net Realized Gain  | (1.29)<br>| (0.01)<br>| (0.25)<br>| (1.46)<br>| (0.90)<br>|
| &nbsp;&nbsp;&nbsp;&nbsp; Total Distributions  | (1.42)<br>| (0.24)<br>| (0.29)<br>| (2.04)<br>| (1.11)<br>|
| **Net Asset Value, End of Period** | $13.59<br>| $18.75<br>| $16.10<br>| $15.46<br>| $17.06<br>|
| **Total Return<sup>(3)</sup>**  | (21.67)%<br>| 18.07<br> %<br>| 6.02<br> %<br>| 3.77<br> %<br>| 3.98<br> %<br>|
| **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** | **Ratios to Average Net Assets and Supplemental Data:** |
| Net Assets, End of Period (Thousands) | $246919<br>| $307783<br>| $159238<br>| $151242<br>| $166<br>|
| Ratio of Expenses Before Expense Limitation | 0.71<br> %<br>| N/A<br>| 0.75<br> %<br>| 0.75<br> %<br>| 1.95<br> %<br>|
| Ratio of Expenses After Expense Limitation | 0.69<br> %<br> <sup>(4)</sup> <br>| 0.68<br> %<br> <sup>(4)</sup> <br>| 0.69<br> %<br> <sup>(4)</sup> <br>| 0.69<br> %<br> <sup>(4)</sup> <br>| 0.70<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Expenses After Expense Limitation Excluding <br>Interest Expenses  | N/A<br>| 0.68<br> %<br> <sup>(4)</sup> <br>| N/A<br>| N/A<br>| N/A<br>|
| Ratio of Net Investment Income | 1.22<br> %<br> <sup>(4)</sup> <br>| 1.06<br> %<br> <sup>(4)</sup> <br>| 1.21<br> %<br> <sup>(4)</sup> <br>| 1.76<br> %<br> <sup>(4)</sup> <br>| 2.13<br> %<br> <sup>(4)</sup> <br>|
| Ratio of Rebate from Morgan Stanley Affiliates | 0.02<br> %<br>| 0.01<br> %<br>| 0.02<br> %<br>| 0.02<br> %<br>| 0.01<br> %<br>|
| Portfolio Turnover Rate | 93<br> %<br>| 115<br> %<br>| 109<br> %<br>| 117<br> %<br>| 132<br> %<br>|

---

(1) Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2) Per share amount is based on average shares outstanding.

(3) Calculated based on the net asset value as of the last business day of the period.

(4) The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

**44**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Prospectus \| **Appendix**

Appendix A

**Intermediary-Specific Sales Charge Waivers and Discounts**

The availability of certain sales charge waivers and discounts will depend on whether you purchase your shares directly from the Fund or through a Financial Intermediary. Financial Intermediaries may have different policies and procedures regarding the availability of front-end sales charge waivers or CDSC waivers, which are discussed below. In all instances, it is the purchaser's responsibility to notify the Fund or the purchaser's Financial Intermediary at the time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts. For waivers and discounts not available through a particular Financial Intermediary, shareholders will have to purchase Fund shares directly from the Fund (or the Distributor) or through another Financial Intermediary to receive these waivers or discounts. A Financial Intermediary's administration and implementation of its particular policies with respect to any variations, waivers and/or discounts is neither supervised nor verified by the Fund, the Adviser or the Distributor. The Fund and the Distributor do not provide investment advice or recommendations or any form of tax or legal advice to existing or potential shareholders with respect to investment transactions involving the Fund.

\*\*\*\*\*

**Merrill Lynch**

Shareholders purchasing Fund shares through a Merrill Lynch platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at Merrill Lynch**

• Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan

• Shares purchased by a 529 Plan (does not include 529 Plan units or 529-specific share classes or equivalents)

• Shares purchased through a Merrill Lynch affiliated investment advisory program

• Shares exchanged due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

• Shares purchased by third party investment advisors on behalf of their advisory clients through Merrill Lynch's platform

• Shares of funds purchased through the Merrill Edge Self-Directed platform (if applicable)

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family)

• Shares exchanged from Class C (i.e. level-load) shares of the same fund pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

• Employees and registered representatives of Merrill Lynch or its affiliates and their family members

• Directors or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus

• Eligible shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). Automated transactions (i.e. systematic purchases and withdrawals) and purchases made after shares are automatically sold to pay Merrill Lynch's account maintenance fees are not eligible for reinstatement

**CDSC Waivers on A and C Shares available at Merrill Lynch**

• Death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code

• Shares sold to pay Merrill Lynch fees but only if the transaction is initiated by Merrill Lynch

• Shares acquired through a right of reinstatement

• Shares held in retirement brokerage accounts, that are exchanged for a lower cost share class due to transfer to certain fee based accounts or platforms (applicable to A and C shares only)

**45**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Shares received through an exchange due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill Lynch's policies relating to sales load discounts and waivers

**Front-end Load Discounts Available at Merrill Lynch: Breakpoints, Rights of Accumulation and Letters of Intent** 

• Breakpoints as described in this Prospectus

• Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts as described in the Fund's prospectus will be automatically calculated based on the aggregated holding of fund family assets held by accounts (including 529 program holdings, where applicable) within the purchaser's household at Merrill Lynch. Eligible fund family assets not held at Merrill Lynch may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent (LOI) which allow for breakpoint discounts based on anticipated purchases within a fund family, through Merrill Lynch, over a 13-month period of time (if applicable)

**Morgan Stanley Wealth Management**

Shareholders purchasing Fund shares through a Morgan Stanley Wealth Management transactional brokerage account will be eligible only for the following front-end sales charge waivers with respect to Class A shares, which may differ from and may be more limited than those disclosed elsewhere in this Prospectus or SAI, except that such shareholders will continue to be eligible for front-end sales charge breakpoint discounts as described in the Prospectus.

**Front-end Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management**

• Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or Keogh plans

• Morgan Stanley employee and employee-related accounts according to Morgan Stanley's account linking rules

• Shares purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund

• Shares purchased through a Morgan Stanley self-directed brokerage account

• Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management's share class conversion program

• Shares purchased from the proceeds of redemptions within the same fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge

**Raymond James & Associates, Inc., Raymond James Financial Services, Inc. and each entity's affiliates ("Raymond James")**

Shareholders purchasing fund shares through a Raymond James platform or account, or through an introducing broker-dealer or independent registered investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at Raymond James**

• Shares purchased in an investment advisory program

• Shares purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions

• Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement)

• A shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James

**CDSC Waivers on Classes A and C shares available at Raymond James**

• Death or disability of the shareholder

**46**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the Fund's Prospectus

• Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James

• Shares acquired through a right of reinstatement

**Front-end load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent**

• Breakpoints as described in this Prospectus

• Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor about such assets

• Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets

**Oppenheimer & Co. Inc. ("OPCO")**

Shareholders purchasing Fund shares through an OPCO platform or account are eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund's prospectus or SAI.

**Front-end Sales Load Waivers on Class A Shares available at OPCO**

• Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan

• Shares purchased by or through a 529 Plan

• Shares purchased through an OPCO affiliated investment advisory program

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Restatement).

• A shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO

• Employees and registered representatives of OPCO or its affiliates and their family members

• Directors or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus

**CDSC Waivers on A and C Shares available at OPCO**

• Death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's prospectus

• Return of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the prospectus

• Shares sold to pay OPCO fees but only if the transaction is initiated by OPCO

• Shares acquired through a right of reinstatement

**47**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Front-end load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent**

• Breakpoints as described in this prospectus

• Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

**Janney**

If you purchase Fund shares through a Janney Montgomery Scott LLC ("Janney") brokerage account, you are eligible for the following load waivers (front-end sales charge waivers and CDSC, or back-end sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Prospectus or SAI.

**Front-end Sales Charge Waivers on Class A shares available at Janney**

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family)

• Shares purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e., right of reinstatement)

• Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or Keogh plans

• Shares acquired through a right of reinstatement

• Class C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Janney's policies and procedures

**CDSC Waivers on Class A and C shares available at Janney**

• Shares sold upon the death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Shares purchased in connection with a return of excess contributions from an IRA account

• Shares sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching age 70½ as described in the Fund's Prospectus

• Shares sold to pay Janney fees but only if the transaction is initiated by Janney

• Shares acquired through a right of reinstatement

• Shares exchanged into the same share class of a different fund

**Front-end Sales Charge\* Discounts available at Janney: Breakpoints, Rights of Accumulation and/or Letters of Intent**

• Breakpoints as described in this Prospectus

• Rights of Accumulation (ROA), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Janney. Eligible fund family assets not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets

\*Also referred to as an "initial sales charge."

**48**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Stifel, Nicolaus & Company, Incorporated ("Stifel")**

Effective July 1, 2020, shareholders purchasing Fund shares through a Stifel platform or account or who own shares for which Stifel or an affiliate is the broker-dealer of record are eligible for the following additional sales charge waiver.

**Front-end Sales Load Waiver on Class A Shares at Stifel**

• Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Stifel's policies and procedures. All other sales charge waivers and reductions described elsewhere in the Fund's Prospectus or SAI still apply.

**Robert W. Baird & Co. ("Baird")**

Shareholders purchasing fund shares through a Baird platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.

**Front-End Sales Charge Waivers on A-shares Available at Baird**

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund

• Shares purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird

• Shares purchased using the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same accounts, and (3) redeemed shares were subject to a front-end or deferred sales charge (known as rights of reinstatement)

• A shareholder in the Funds C Shares will have their share converted at net asset value to A shares of the same fund if the shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird

• Employer-sponsored retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, SIMPLE IRAs or SAR-SEPs

**CDSC Waivers on A and C shares Available at Baird**

• Shares sold due to death or disability of the shareholder

• Shares sold as part of a systematic withdrawal plan as described in the Fund's Prospectus

• Shares bought due to returns of excess contributions from an IRA Account

• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable Internal Revenue Service regulations as described in the Fund's prospectus

• Shares sold to pay Baird fees but only if the transaction is initiated by Baird

• Shares acquired through a right of reinstatement

**Front-End Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of Accumulations**

• Breakpoints as described in this prospectus

• Rights of accumulations which entitles shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser's household at Baird. Eligible fund family assets not held at Baird may be included in the rights of accumulations calculation only if the shareholder notifies his or her financial advisor about such assets

• Letters of Intent (LOI) allow for breakpoint discounts based on anticipated purchases within a fund family, through Baird, over a 13-month period of time

**Ameriprise Financial**

The following information applies to Class A share purchases if you have an account with or otherwise purchase Fund shares through Ameriprise Financial:

**49**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

• Effective January 15, 2021, shareholders purchasing Fund shares through an Ameriprise Financial retail brokerage account are eligible for the following front-end sales charge waivers, which may differ from those disclosed elsewhere in this Prospectus or in the SAI.

• Employer-sponsored retirement plans (e.g., 401(k) plans 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not any other fund within the same fund family).

• Shares exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent that this Prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following a shorter holding period, that waiver will apply.

• Employees and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.

• Shares purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor's spouse, advisor's lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor's lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse of a covered family member who is a lineal descendant.

• Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e. Rights of Reinstatement).

**Edward D. Jones & Co., L.P. ("Edward Jones")**

Effective on or after April 29, 2022, the following information supersedes prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones (also referred to as "shareholders") purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible only for the following sales charge discounts (also referred to as "breakpoints") and waivers, which can differ from discounts and waivers described elsewhere in the mutual fund prospectus or statement of additional information or through another broker-dealer. In all instances, it is the shareholder's responsibility to inform Edward Jones at the time of purchase of any relationship, holdings of Fund shares, or other facts qualifying the purchaser for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they have questions regarding their eligibility for these discounts and waivers.

**Breakpoints**

• Breakpoint pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.

**Rights of Accumulation ("ROA")**

• The applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market funds and any assets held in group retirement plans) of Fund shares held by the shareholder or in an account grouped by Edward Jones with other accounts for the purpose of providing certain pricing considerations ("pricing groups"). If grouping assets as a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for shares purchased with a sales charge.

• The employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.

• ROA is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).

**Letter of Intent ("LOI")**

• Through a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period from the date Edward Jones receives the LOI. The LOI is determined by calculating the higher of cost or market value of qualifying holdings at LOI initiation in combination with the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint discounts. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies to the total amount. The inclusion of eligible fund family assets in the LOI calculation is dependent on the shareholder notifying Edward Jones of such assets at the

**50**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

time of calculation. Purchases made before the LOI is received by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if LOI is not met.

• If the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.

**Sales Charge Waivers**

Sales charges are waived for the following shareholders and in the following situations:

• Associates of Edward Jones and its affiliates and their family members who are in the same pricing group (as determined by Edward Jones under its policies and procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.

• Shares purchased in an Edward Jones fee-based program.

• Shares purchased through reinvestment of capital gains distributions and dividend reinvestment.

• Shares purchased from the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are from the sale of shares within 60 days of the purchase, and 2) the sale and purchase are made in the same share class and the same account or the purchase is made in an individual retirement account with proceeds from liquidations in a nonretirement account.

• Shares exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable sales charge as disclosed in the prospectus.

• Exchanges from Class C shares to Class A shares of the same fund, generally, in the 84th month following the anniversary of the purchase date or earlier at the discretion of Edward Jones.

**Contingent Deferred Sales Charge ("CDSC") Waivers**

If the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder is responsible to pay the CDSC except in the following conditions:

• The death or disability of the shareholder.

• Systematic withdrawals with up to 10% per year of the account value.

• Return of excess contributions from an Individual Retirement Account (IRA).

• Shares sold as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the shareholder reaches qualified age based on applicable IRS regulations.

• Shares sold to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.

• Shares exchanged in an Edward Jones fee-based program.

• Shares acquired through NAV reinstatement.

• Shares redeemed at the discretion of Edward Jones for Minimums Balances, as described below.

**Other Important Information Regarding Transactions Through Edward Jones**

**Minimum Purchase Amounts**

• Initial purchase minimum: $250

• Subsequent purchase minimum: none

**Minimum Balances**

• Edward Jones has the right to redeem at its discretion fund holdings with a balance of $250 or less. The following are examples of accounts that are not included in this policy:

○ A fee-based account held on an Edward Jones platform

○ A 529 account held on an Edward Jones platform

○ An account with an active systematic investment plan or LOI

**51**

------

[Back To **Table of Contents**](#TOC_15626)

Morgan Stanley Prospectus \| **Appendix**

Appendix A (Con't)

**Exchanging Share Classes**

• At any time it deems necessary, Edward Jones has the authority to exchange at NAV a shareholder's holdings in a fund to Class A shares of the same fund.

**52**

------

[Back To **Table of Contents**](#TOC_15626)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15626)

Where to Find Additional Information

In addition to this Prospectus, the Fund has an SAI, dated January 27, 2023 (as may be supplemented from time to time), which contains additional, more detailed information about the Trust and the Fund. The SAI is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus.

The Trust publishes Annual and Semi-Annual Reports ("Shareholder Reports") that contain additional information about the Fund's investments. In the Fund's Annual Report to Shareholders, you will find a discussion of the market conditions and the investment strategies that significantly affected the Fund's performance during the last fiscal year. For additional Trust information, including information regarding the investments comprising the Fund, please call the toll-free number below.

You may obtain the SAI and Shareholder Reports without charge by contacting the Trust at the toll-free number below or on our Internet site at: www.morganstanley.com/im. If you purchased shares through a Financial Intermediary, you may also obtain these documents, without charge, by contacting your Financial Intermediary.

Shareholder Reports and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.

Morgan Stanley Institutional Fund Trust

c/o SS&C GIDS

P.O. Box 219804

Kansas City, MO 64121-9804

For Shareholder Inquiries,

call toll-free 1-800-869-6397

Prices and Investment Results are available at www.morganstanley.com/im.

The Trust's 1940 Act registration number is 811-03980.© 2023 Morgan Stanley

IFTGLBSTRATPRO 01/23

------

![image](sa15545img001.jpg)

**MORGAN STANLEY INSTITUTIONAL FUND TRUST**

522 Fifth Ave.

New York, NY 10036

**Statement of Additional Information**

January 27, 2023

Morgan Stanley Institutional Fund Trust (the "Trust") is a mutual fund consisting of nine portfolios offering a variety of investment alternatives, all of which are included in this Statement of Additional Information ("SAI") (each, a "Fund" and collectively the "Funds"). Some or all of the Funds offer the following shares: Class I, Class A, Class L, Class C, Class IR, Class R6, Institutional Class and Class W. Following is a list of the nine Funds included in this SAI:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** | **Share Class and Ticker Symbol** |
|  | **I** | **A** | **L<sup>1</sup>**  | **C** | **IR** | **R6** | **Institutional** | **W** |
| **U.S. EQUITY FUND:** | **U.S. EQUITY FUND:** | **U.S. EQUITY FUND:** | **U.S. EQUITY FUND:** | **U.S. EQUITY FUND:** | **U.S. EQUITY FUND:** | **U.S. EQUITY FUND:** | **U.S. EQUITY FUND:** | **U.S. EQUITY FUND:** |
| Discovery Portfolio | MPEGX | MACGX | MSKLX | MSMFX |  | MMCGX |  |  |
| Dynamic Value Portfolio | MAAQX | MAAUX |  | MAAOX |  | MAADX |  |  |
| **FIXED INCOME FUNDS:** | **FIXED INCOME FUNDS:** | **FIXED INCOME FUNDS:** | **FIXED INCOME FUNDS:** | **FIXED INCOME FUNDS:** | **FIXED INCOME FUNDS:** | **FIXED INCOME FUNDS:** | **FIXED INCOME FUNDS:** | **FIXED INCOME FUNDS:** |
| Core Plus Fixed Income Portfolio | MPFIX | MFXAX | MSIOX | MSCKX |  | MPLRX |  |  |
| Corporate Bond Portfolio | MPFDX | MIGAX | MGILX | MSBOX |  |  |  |  |
| High Yield Portfolio | MSYIX | MSYPX | MSYLX | MSHDX | MRHYX | MSHYX |  | MSYWX |
| Short Duration Income Portfolio | MPLDX | MLDAX | MSJLX | MSLDX |  | MSDSX |  |  |
| Ultra-Short Income Portfolio |  | MUAIX |  |  | MULSX |  | MUIIX |  |
| Ultra-Short Municipal Income Portfolio |  | MUAMX |  |  | MULMX |  | MUIMX |  |
| **ASSET ALLOCATION FUND:** | **ASSET ALLOCATION FUND:** | **ASSET ALLOCATION FUND:** | **ASSET ALLOCATION FUND:** | **ASSET ALLOCATION FUND:** | **ASSET ALLOCATION FUND:** | **ASSET ALLOCATION FUND:** | **ASSET ALLOCATION FUND:** | **ASSET ALLOCATION FUND:** |
| Global Strategist Portfolio | MPBAX | MBAAX | MSDLX | MSSOX |  | MGPOX |  |  |

---

---

| | |
|:---|:---|
| 1 | The Trust has suspended offering Class L shares of each Fund to all investors. Existing Class L shareholders may invest through reinvestment of dividends and distributions. Class L shares of the Dynamic Value Portfolio, Ultra-Short Income Portfolio and Ultra-Short Municipal Income Portfolio are not being offered at this time. You do not currently have the option of purchasing Class L shares. |

---

This SAI is not a prospectus but should be read in conjunction with the Funds' Prospectuses, each dated January 27, 2023, as may be supplemented from time to time. To obtain any of these Prospectuses, please call Shareholder Services at the number indicated below.

[The Funds' most recent Annual Reports to Shareholders are separate documents supplied with this SAI and include the Funds' audited financial statements, including notes thereto, and the reports of the Funds' independent registered public accounting firm, which are incorporated by reference into this SAI.](https://www.sec.gov/Archives/edgar/data/741375/000110465922124864/tm2227756d1_ncsr.htm)

Each Fund is "diversified" and, as such, each Fund's investments are required to meet certain diversification requirements under federal securities laws.

SHAREHOLDER SERVICES: 1-800-869-6397

OR, WITH RESPECT TO INSTITUTIONAL LIQUIDITY CLIENTS, 1-888-378-1630

PRICES AND INVESTMENT RESULTS: WWW.MORGANSTANLEY.COM/IM

------

**Table of Contents**

---

| | |
|:---|:---|
| [**The Funds' Investments and Strategies**](#ref_chapter_2_15545)  | 1 |
| [**Investments and Risks**](#ref_chapter_2-sect1_2_15545)  | 5 |
| [**Investment Limitations**](#ref_chapter_2-sect1_3_15545)  | 47 |
| [**Disclosure of Portfolio Holdings**](#ref_chapter_2-sect1_4_15545)  | 49 |
| [**Purchase and Redemption of Shares**](#ref_chapter_2-sect1_5_15545)  | 51 |
| [**Account Policies and Features**](#ref_chapter_2-sect1_6_15545)  | 52 |
| [**Management of the Trust**](#ref_chapter_2-sect1_7_15545)  | 54 |
| [**Compensation**](#ref_chapter_2-sect1_8_15545)  | 64 |
| [**Investment Advisory and Other Services**](#ref_chapter_2-sect1_9_15545)  | 65 |
| [**Principal Underwriter**](#ref_chapter_2-sect1_10_15545)  | 68 |
| [**Fund Administration**](#ref_chapter_2-sect1_11_15545)  | 68 |
| [**Distribution and Shareholder Services Plans**](#ref_chapter_2-sect1_12_15545)  | 72 |
| [**Brokerage Practices**](#ref_chapter_2-sect1_13_15545)  | 76 |
| [**General Information**](#ref_chapter_2-sect1_14_15545)  | 81 |
| [**Taxes**](#ref_chapter_2-sect1_15_15545)  | 83 |
| [**Control Persons and Principal Holders of Securities**](#ref_chapter_2-sect1_16_15545)  | 90 |
| [**Performance Information**](#ref_chapter_2-sect1_17_15545)  | 94 |
| [**Potential Conflicts of Interest**](#ref_chapter_2-sect1_18_15545)  | 100 |
| [**Financial Statements**](#ref_chapter_2-sect1_19_15545)  | 106 |
| [**Appendix A -- Morgan Stanley Investment Management Proxy Voting Policy and Procedures**](#ref_chapter_3_15545)  | A-1 |
| [**Appendix B -- Description of Ratings**](#ref_chapter_4_15545)  | B-1 |

---

------

**THE FUNDS' INVESTMENTS AND STRATEGIES**

This SAI provides additional information about the investment policies and operations of the Trust and the Funds. The following tables summarize the permissible strategies and investments for each Fund. These tables should be read in conjunction with the investment summaries for each Fund contained in the applicable Prospectus in order to provide a more complete description of such Fund's investment policies. The tables exclude investments that Funds may make solely for temporary defensive purposes. More details about each investment and related risks are provided in the discussion following the tables.

---

| | | | |
|:---|:---|:---|:---|
| **U.S. EQUITY AND ASSET ALLOCATION FUNDS** | **U.S. EQUITY AND ASSET ALLOCATION FUNDS** | **U.S. EQUITY AND ASSET ALLOCATION FUNDS** | **U.S. EQUITY AND ASSET ALLOCATION FUNDS** |
|  | **Discovery Portfolio** | **Dynamic Value** **Portfolio** | **Global Strategist** **Portfolio** |
| **Investments:** | **Investments:** | **Investments:** | **Investments:** |
| Agencies | x | x | x |
| Asset-Backed Securities |  |  | x |
| Bitcoin Exposure | x |  | x |
| Bitcoin Cash Settled Futures | x |  | x |
| GBTC | x |  |  |
| Borrowing |  | x |  |
| Brady Bonds |  |  | x |
| Cash Equivalents | x | x | x |
| Chinese Fixed-Income Investments |  |  | x |
| Combined Transactions |  | x |  |
| Commercial Paper | x |  | x |
| Commodity-Linked Investments |  |  | x |
| Common Stock | x | x | x |
| Contracts for Difference | x | x |  |
| Convertible Securities | x |  | x |
| Corporates | x |  | x |
| Currency Forwards | x | x | x |
| Custodial Receipts |  |  |  |
| Depositary Receipts | x | x | x |
| Derivatives | x |  | x |
| Emerging Market Securities | x |  | x |
| Equity Securities | x |  | x |
| Eurodollar and Yankee Dollar Obligations | x |  | x |
| Exchange-Listed Equities via Stock Connect Program |  |  | x |
| Exchange-Traded Funds |  | x |  |
| Fixed-Income Securities | x |  | x |
| Floaters |  |  | x |
| Foreign Currency Transactions | x | x | x |
| Foreign Securities | x | x | x |
| Funding Agreements |  |  |  |
| Futures Contracts | x | x | x |
| High Yield Securities |  |  | x |
| Illiquid Investments | x | x |  |
| Inverse Floaters |  |  | x |
| Investment Company Securities | x | x | x |
| Investment Funds |  | x | x |
| Investment Grade Securities | x | x | x |
| IPOs | x | x |  |
| Limited Partnership and Limited Liability Company Interests | x | x | x |
| Loan-Related Investments |  |  | x |
| Loans of Portfolio Securities | x | x | x |
| Money Market Instruments |  | x |  |

---

**1**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | |
|:---|:---|:---|:---|
| **U.S. EQUITY AND ASSET ALLOCATION FUNDS** | **U.S. EQUITY AND ASSET ALLOCATION FUNDS** | **U.S. EQUITY AND ASSET ALLOCATION FUNDS** | **U.S. EQUITY AND ASSET ALLOCATION FUNDS** |
|  | **Discovery Portfolio** | **Dynamic Value** **Portfolio** | **Global Strategist** **Portfolio** |
| Mortgage-Related Securities |  | x | x |
| Municipals |  |  | x |
| Non-Publicly Traded Securities, Private Placements and Restricted Securities | x |  | x |
| Options | x | x | x |
| Preferred Stocks | x | x | x |
| Private Investments in Public Equity | x |  | x |
| Promissory Notes |  |  |  |
| Real Estate Investing | x | x | x |
| -REITs |  | x |  |
| -Foreign Real Estate Companies |  | x |  |
| -Specialized Ownership Vehicles |  | x |  |
| Repurchase Agreements | x | x | x |
| Reverse Repurchase Agreements | x |  | x |
| Rights | x | x | x |
| Short Sales | x |  | x |
| Special Purpose Acquisition Company | x |  |  |
| Structured Investments | x | x | x |
| Swaps | x | x | x |
| Temporary Defensive Investments |  | x |  |
| U.S. Government Securities | x | x | x |
| Warrants | x | x | x |
| When-Issued and Delayed Delivery Securities | x |  | x |
| When-Issued and Delayed Delivery Securities and Forward Commitments |  | x |  |
| When, As and If Issued Securities | x | x | x |
| Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities | x | x | x |

---

**2**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** |
|  | **Core Plus**<br>**Fixed Income**<br>**Portfolio** | **Corporate Bond**<br>**Portfolio** | **High Yield**<br>**Portfolio** | **Short Duration**<br>**Income Portfolio** | **Ultra-Short**<br>**Income Portfolio** | **Ultra-Short Municipal Income Portfolio** |
| **Investments:** | **Investments:** | **Investments:** | **Investments:** | **Investments:** | **Investments:** | **Investments:** |
| Agencies | x | x | x | x | x | x |
| Asset-Backed Securities | x | x | x | x | x | x |
| Bitcoin Futures |  |  |  |  |  |  |
| Borrowing | x | x | x | x | x | x |
| Brady Bonds | x | x | x | x |  |  |
| Cash Equivalents | x | x | x | x | x | x |
| Chinese Fixed-Income Investments |  |  |  |  |  |  |
| Commercial Paper | x | x | x | x | x | x |
| Commodity-Linked Investments |  |  |  |  |  |  |
| Common Stock |  |  | x |  |  |  |
| Contracts for Difference |  |  |  |  |  |  |
| Convertible Securities | x | x | x | x |  |  |
| Corporates | x | x | x | x | x | x |
| Currency Forwards | x |  | x | x |  |  |
| Custodial Receipts |  |  |  |  | x |  |
| Depositary Receipts | x | x | x | x |  |  |
| Derivatives | x | x | x | x |  |  |
| Emerging Market Securities | x | x | x | x |  |  |
| Exchange-Listed Equities via Stock Connect Program |  |  |  |  |  |  |
| Equity Securities |  |  | x |  |  |  |
| Eurodollar and Yankee Dollar Obligations | x | x | x | x | x |  |
| Fixed-Income Securities | x | x | x | x | x | x |
| Floaters | x | x | x | x | x | x |
| Floating and Variable Rate Obligations |  |  |  |  |  | x |
| Foreign Currency Transactions | x | x | x |  |  |  |
| Foreign Securities | x | x | x | x | x |  |
| Funding Agreements |  |  |  |  | x | x |
| Futures Contracts | x | x | x | x |  |  |
| High Yield Securities | x | x | x |  |  |  |
| Illiquid Investments | x | x | x | x | x | x |
| Inverse Floaters | x | x | x |  |  |  |
| Investment Company Securities | x | x | x | x | x | x |
| Investment Funds |  |  | x |  |  |  |
| Investment Grade Securities | x | x | x | x | x | x |
| Limited Partnership and Limited Liability Company Interests |  |  |  |  |  |  |
| Loan-Related Investments | x |  | x |  |  |  |
| Loans of Portfolio Securities | x | x | x | x | x |  |
| Mortgage-Related Securities | x | x | x | x |  |  |
| Municipals | x | x | x | x | x | x |
| Non-Publicly Traded Securities, Private Placements and Restricted Securities | x | x | x | x | x | x |
| Options | x | x | x | x |  |  |
| Preferred Stocks | x | x | x | x |  |  |
| Private Investments in Public Equity |  |  |  |  |  |  |
| Promissory Notes |  |  |  |  | x |  |
| Real Estate Investing |  |  | x |  |  |  |

---

**3**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** | **FIXED INCOME FUNDS** |
|  | **Core Plus**<br>**Fixed Income**<br>**Portfolio** | **Corporate Bond**<br>**Portfolio** | **High Yield**<br>**Portfolio** | **Short Duration**<br>**Income Portfolio** | **Ultra-Short**<br>**Income Portfolio** | **Ultra-Short Municipal Income Portfolio** |
| Repurchase Agreements | x | x | x | x | x | x |
| Reverse Repurchase Agreements | x | x | x | x | x | x |
| Rights | x |  | x |  |  |  |
| Short Sales | x | x | x | x |  |  |
| Special Purpose Acquisition Company |  |  | x |  |  |  |
| Structured Investments | x | x | x | x |  |  |
| Swaps | x | x | x | x |  |  |
| Tender Option Bonds |  |  |  |  |  | x |
| U.S. Government Securities | x | x | x | x | x | x |
| Variable Rate Master Demand Notes |  |  |  |  |  | x |
| Warrants |  |  | x |  |  |  |
| When-Issued and Delayed Delivery Securities and Forward Commitments | x | x | x | x | x | x |
| When, As and If Issued Securities | x | x | x | x | x | x |
| Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities | x | x | x | x | x | x |

---

**4**

------

[Back To **Table of Contents**](#TOC_15545)

**INVESTMENTS AND RISKS**

*Morgan Stanley Investment Management Inc. is the adviser (the "Adviser") to each Fund. Morgan Stanley Investment Management Limited is the investment sub-adviser (the "Sub-Adviser") to the Global Strategist Portfolio. References to the Adviser, when used in connection with its activities as investment adviser, include the Sub-Adviser acting under its supervision.*

**Agencies.** Agencies refer to fixed-income securities issued or guaranteed by federal agencies and U.S. government sponsored instrumentalities. They may or may not be backed by the full faith and credit of the United States. If they are not backed by the full faith and credit of the United States, the investor must look principally to the agency or instrumentality issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitment. Agencies that are backed by the full faith and credit of the United States include the Export-Import Bank, Farmers Home Administration, Federal Financing Bank and others. Certain debt issued by Resolution Funding Corporation has both its principal and interest backed by the full faith and credit of the U.S. Treasury in that its principal is backed by U.S. Treasury zero coupon issues, while the U.S. Treasury is explicitly required to advance funds sufficient to pay interest on it, if needed. Certain agencies and instrumentalities, such as the Government National Mortgage Association ("Ginnie Mae"), are, in effect, backed by the full faith and credit of the United States through provisions in their charters that they may make "indefinite and unlimited" drawings on the Treasury if needed to service their debt. Debt from certain other agencies and instrumentalities, including the Federal Home Loan Banks, the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), are not guaranteed by the United States, but those institutions are protected by the discretionary authority of the U.S. Treasury to purchase certain amounts of their securities to assist them in meeting their debt obligations. Finally, other agencies and instrumentalities, such as the Farm Credit System, are federally chartered institutions under U.S. Government supervision, but their debt securities are backed only by the creditworthiness of those institutions, not the U.S. Government. Some of the U.S. government agencies that issue or guarantee securities include the Export-Import Bank of the United States, Farmers Home Administration, Federal Housing Administration, Maritime Administration, Small Business Administration and the Tennessee Valley Authority ("TVA").

An instrumentality of the U.S. Government is a government agency organized under federal charter with government supervision. Instrumentalities issuing or guaranteeing securities include, among others, Federal Home Loan Banks, the Federal Land Bank, Central Bank for Cooperatives, Federal Intermediate Credit Banks and Fannie Mae.

**Asset-Backed Securities.** Certain Funds may invest in asset-backed securities. Asset-backed securities utilize the securitization techniques used to develop MBS. These techniques are also applied to a broad range of other assets. Various types of assets, primarily automobile and credit card receivables and home equity loans, are being securitized in pass-through structures similar to the mortgage pass-through structures. These types of securities are known as asset-backed securities. A Fund may invest in any type of asset-backed security. Asset-backed securities have risk characteristics similar to MBS. Like MBS, they generally decrease in value as a result of interest rate increases, but may benefit less than other fixed-income securities from declining interest rates, principally because of prepayments. Also, as in the case of MBS, prepayments generally increase during a period of declining interest rates although other factors, such as changes in credit use and payment patterns, may also influence prepayment rates. Asset-backed securities also involve the risk that various federal and state consumer laws and other legal, regulatory and economic factors may result in the collateral backing the securities being insufficient to support payment on the securities.

**Borrowing.** Each Fund is permitted to borrow money from banks in accordance with the Investment Company Act of 1940, as amended (the "1940 Act"), or the rules and regulations promulgated by the SEC thereunder. Currently, the 1940 Act permits a fund to borrow money from banks in an amount up to 33⅓% of its total assets (including the amount borrowed) less its liabilities (not including any borrowings but including the fair market value at the time of computation of any other senior securities then outstanding). A Fund may also borrow an additional 5% of its total assets without regard to the foregoing limitation for temporary purposes such as clearance of portfolio transactions. The Funds will only borrow when the Adviser believes that such borrowings will benefit the Fund after taking into account considerations such as interest income and possible gains or losses upon liquidation. The Funds will maintain asset coverage in accordance with the 1940 Act.

Borrowing by the Funds creates an opportunity for increased net income but, at the same time, creates special risks. For example, leveraging may exaggerate changes in and increase the volatility of the net asset value per share ("NAV") of a Fund. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of a Fund's portfolio securities. The use of leverage also may cause a Fund to liquidate portfolio positions when it may not be advantageous to do so in order to satisfy its obligations or to maintain asset coverage.

In general, a Fund may not issue any class of senior security, except that the Funds may (i) borrow from banks, provided that immediately following any such borrowing there is an asset coverage of at least 300% for all Fund borrowings and in the event such asset coverage falls below 300% the Fund will within three days or such longer period as the SEC may prescribe by rules and regulations, reduce the amount of its borrowings to an extent that the asset coverage of such borrowings shall be at least 300%, and (ii) engage in trading practices that involve the issuance of a senior security, including but not limited to options, futures, forward

**5**

------

[Back To **Table of Contents**](#TOC_15545)

contracts and reverse repurchase agreements, in applicable SEC requirements. The borrowings subject to these limits include borrowings through reverse repurchase agreements and similar financing transactions unless a Fund has elected to treat all such transactions as derivatives transactions under applicable SEC requirements.

**Brady Bonds.** Brady Bonds are fixed-income securities that are created through the exchange of existing commercial bank loans to foreign entities for new obligations in connection with debt restructuring under a plan introduced by Nicholas F. Brady when he was the U.S. Secretary of the Treasury. They may be collateralized or uncollateralized and issued in various currencies (although most are U.S. dollar-denominated) and they are actively traded in the over-the-counter ("OTC") secondary market. A Fund will invest in Brady Bonds only if they are consistent with the Fund's quality specifications. Dollar-denominated, collateralized Brady Bonds may be fixed-rate par bonds or floating rate discount bonds. Interest payments on Brady Bonds generally are collateralized by cash or securities in an amount that, in the case of fixed-rate bonds, is equal to at least one year of rolling interest payments or, in the case of floating rate bonds, initially is equal to at least one year's rolling interest payments based on the applicable interest rate at that time and is adjusted at regular intervals thereafter. Certain Brady Bonds are entitled to "value recovery payments" in certain circumstances, which in effect constitute supplemental interest payments but generally are not collateralized.

Brady Bonds are often viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at maturity (these uncollateralized amounts constitute the "residual risk"). In the event of a default with respect to collateralized Brady Bonds as a result of which the payment obligations of the issuer are accelerated, the U.S. Treasury zero coupon obligations held as collateral for the payment of principal will not be distributed to investors, nor will such obligations be sold and the proceeds distributed. The collateral will be held by the collateral agent to the scheduled maturity of the defaulted Brady Bonds, which will continue to be outstanding, at which time the face amount of the collateral will equal the principal payments due on the Brady Bonds in the normal course. However, Brady Bonds should be viewed as speculative in light of the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds.

**Cash Equivalents.** Cash equivalents are short-term fixed-income securities comprising:

■ Time deposits, certificates of deposit (including marketable variable rate certificates of deposit) and bankers' acceptances issued by a commercial bank or savings and loan association. Time deposits are non-negotiable deposits maintained in a banking institution for a specified period of time at a stated interest rate. Certificates of deposit are negotiable short-term obligations issued by commercial banks or savings and loan associations against funds deposited in the issuing institution. Variable rate certificates of deposit are certificates of deposit on which the interest rate is periodically adjusted prior to their stated maturity based upon a specified market rate. A bankers' acceptance is a time draft drawn on a commercial bank by a borrower, usually in connection with an international commercial transaction (to finance the import, export, transfer or storage of goods);

■ Obligations of U.S. banks, foreign branches of U.S. banks (Eurodollars) and U.S. branches of foreign banks (Yankee dollars). Eurodollar and Yankee dollar investments will involve some of the same risks of investing in international securities that are discussed in various foreign investing sections of this SAI;

■ Any security issued by a commercial bank if (i) the bank has total assets of at least $1 billion, or the equivalent in other currencies or, in the case of domestic banks which do not have total assets of at least $1 billion, the aggregate investment made in any one such bank is limited to $250,000 principal amount per certificate and the principal amount of such investment is insured in full by the Federal Deposit Insurance Corporation ("FDIC"), (ii) in the case of U.S. banks, it is a member of the FDIC and (iii) in the case of foreign branches of U.S. banks, the security is deemed by the Adviser to be of an investment quality comparable with other debt securities which the Fund may purchase;

■ Commercial paper rated at time of purchase by one or more nationally recognized statistical rating organizations ("NRSROs") in one of their two highest categories (e.g., A-l or A-2 by S&P Global Ratings Group, a division of S&P Global Inc. ("S&P"), Prime 1 or Prime 2 by Moody's Investors Service, Inc. ("Moody's") or F1 or F2 by Fitch Ratings, Inc. ("Fitch")) or, if unrated, determined to be of comparable quality by the Adviser;

■ Short-term corporate obligations rated high-grade at the time of purchase by an NRSRO (e.g., A or better by Moody's, S&P or Fitch);

■ U.S. government obligations, including bills, notes, bonds and other debt securities issued by the U.S. Treasury. These are direct obligations of the U.S. Government and differ mainly in interest rates, maturities and dates of issue;

■ Government agency securities issued or guaranteed by U.S. government sponsored instrumentalities and Federal agencies. These include securities issued by the Federal Home Loan Banks, Federal Land Bank, Farmers Home Administration, Farm Credit Banks, Federal Intermediate Credit Bank, Fannie Mae, Federal Financing Bank, the TVA and others; and

■ Repurchase agreements collateralized by the securities listed above.

**Chinese Fixed-Income Investments.** A Fund may invest in Chinese fixed-income securities traded in the China Interbank Bond Market ("CIBM") through the Bond Connect program ("Bond Connect"), which allows non-Chinese-domiciled investors (such as a Fund) to purchase certain fixed-income investments available in China's interbank bond market. Bond Connect utilizes the trading infrastructure of both Hong Kong and China. Bond Connect therefore is not available when there are trading holidays in Hong Kong. As a result, prices of securities purchased through Bond Connect may fluctuate at times when a Fund is unable to add to or

**6**

------

[Back To **Table of Contents**](#TOC_15545)

exit its position. Securities offered via Bond Connect may lose their eligibility for trading through the program at any time, in which case they may be sold but could no longer be purchased through Bond Connect. Because Bond Connect is relatively new, its effects on the Chinese interbank bond are uncertain. In addition, the trading, settlement and information technology systems required for non-Chinese investors in Bond Connect are relatively new and continuing to evolve. In the event that the relevant systems do not function properly, trading via Bond Connect could be disrupted, adversely affecting the ability of a Fund to acquire or dispose of securities through Bond Connect in a timely manner, which in turn could adversely impact the Fund's performance.

Bond Connect is subject to regulation by both Hong Kong and China. There can be no assurance that further regulations will not affect the availability of securities in the program, the frequency of redemptions or other limitations. In China, Bond Connect securities are held on behalf of ultimate investors (such as a Fund) by the Hong Kong Monetary Authority Central Money Markets Unit via accounts maintained with China's two clearinghouses for fixed-income securities. While Chinese regulators have affirmed that the ultimate investors hold a beneficial interest in Bond Connect securities, the law surrounding such rights continues to develop, and the mechanisms that beneficial owners may use to enforce their rights are untested and therefore pose uncertain risks, with legal and regulatory risks potentially having retroactive effect. Further, courts in China have limited experience in applying the concept of beneficial ownership, and the law surrounding beneficial ownership will continue to evolve as they do so. There is accordingly a risk that, as the law is tested and developed, a Fund's ability to enforce its ownership rights may be negatively impacted, which could expose the Fund to the risk of loss on such investments. A Fund may not be able to participate in corporate actions affecting Bond Connect securities due to time constraints or for other operational reasons, and payments of distributions could be delayed. Market volatility and potential lack of liquidity due to low trading volume of certain bonds may result in prices of those bonds fluctuating significantly; in addition, the bid-ask spreads of the prices of such securities may be large, and a Fund may therefore incur significant costs and suffer losses when selling such investments. More generally, bonds traded in CIBM may be difficult or impossible to sell, which could further impact a Fund's ability to acquire or dispose of such securities at their expected prices. Bond Connect trades are settled in Renminbi ("RMB"), the Chinese currency, and investors must have timely access to a reliable supply of RMB in Hong Kong, which cannot be guaranteed. Moreover, securities purchased through Bond Connect generally may not be sold, purchased or otherwise transferred other than through Bond Connect in accordance with applicable rules. Finally, uncertainties in the Chinese tax rules governing taxation of income and gains from investments via Bond Connect could result in unexpected tax liabilities for a Fund. The withholding tax treatment of dividends and capital gains payable to overseas investors currently is unsettled.

Under the prevailing applicable Bond Connect regulations, a Fund participates in Bond Connect through an offshore custody agent, registration agent or other third parties (as the case may be), who would be responsible for making the relevant filings and account opening with the relevant authorities. A Fund is therefore subject to the risk of default or errors on the part of such agents.

**Commercial Paper.** Commercial paper refers to short-term fixed-income securities with maturities ranging from 1 to 397 days. They are primarily issued by corporations needing to finance large amounts of receivables, but may be issued by banks and other borrowers. Commercial paper is issued either directly or through broker-dealers, and may be discounted or interest bearing. Commercial paper is unsecured. Virtually all commercial paper is rated by Moody's, Fitch or S&P.

Commercial paper rated A-1 by S&P has the following characteristics: (1) liquidity ratios are adequate to meet cash requirements; (2) long-term senior debt is rated "A" or better; (3) the issuer has access to at least two additional channels of borrowing; (4) basic earnings and cash flow have an upward trend with allowance made for unusual circumstances; (5) typically, the issuer's industry is well established and the issuer has a strong position within the industry; and (6) the reliability and quality of management are unquestioned. Relative strength or weakness of the above factors determines whether the issuer's commercial paper is A-1, A-2 or A-3.

The rating Prime-1 is the highest commercial paper rating assigned by Moody's. Among the factors considered by Moody's in assigning ratings are the following: (1) evaluation of the management of the issuer; (2) economic evaluation of the issuer's industry or industries and the appraisal of speculative-type risks which may be inherent in certain areas; (3) evaluation of the issuer's products in relation to competition and customer acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over a period of ten years; (7) financial strength of a parent company and the relationships that exist with the issuer; and (8) recognition by the management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations.

With respect to Fitch, a short-term issuer or obligation rating is based in all cases on the short-term vulnerability to default of the rated entity and relates to the capacity to meet financial obligations in accordance with the documentation governing the relevant obligation. Short-term deposit ratings may be adjusted for loss severity. Short-term ratings are assigned to obligations whose initial maturity is viewed as "short term" based on market convention. Typically, this means up to 13 months for corporate, sovereign, and structured obligations and up to 36 months for obligations in U.S. public finance markets. An F1 rating indicates the strongest intrinsic capacity for timely payment of financial commitments whereas an F2 rating indicates good intrinsic capacity for timely payment of financial commitments.

**7**

------

[Back To **Table of Contents**](#TOC_15545)

The Ultra-Short Municipal Income Portfolio may invest in tax-exempt commercial paper. Tax-exempt commercial paper is a short-term obligation with a stated maturity of 397 days or less. It is issued by state and local governments or their agencies to finance seasonal working capital needs or as short-term financing in anticipation of longer term financing. While tax-exempt commercial paper is intended to be repaid from general revenues or refinanced, it frequently is backed by a letter of credit, lending arrangement, note repurchase agreement or other credit facility agreement offered by a bank or financial institution.

**Commodity-Linked Investments.** The Global Strategist Portfolio may seek to provide exposure to the investment returns of real assets that trade in the commodity markets through investments in commodity-linked derivative securities, such as structured notes, and other similar investments (including commodity exchange-traded funds ("ETFs")) which are designed to provide this exposure without direct investment in physical commodities or commodities futures contracts. The Global Strategist Portfolio may also seek to provide exposure to the investment returns of real assets that trade in the commodity markets through investments in the Fund's wholly-owned subsidiary (the "Global Strategist Subsidiary"). Real assets are assets such as oil, gas, industrial and precious metals, livestock, and agricultural or meat products, or certain other tangible items, as compared to stocks or bonds, which are intangible financial instruments. In choosing investments, the Adviser seeks to provide exposure to various commodities and commodity sectors. The value of commodity-linked derivative securities held by a Global Strategist Portfolio and/or the Global Strategist Subsidiary may be affected by a variety of factors, including, but not limited to, overall market movements and other factors affecting the value of particular industries or commodities, such as weather, disease, embargoes, acts of war or terrorism, or political and regulatory developments.

The prices of commodity-linked derivative securities may move in different directions than investments in traditional equity and debt securities when the value of those traditional securities is declining due to adverse economic conditions. As an example, during periods of rising inflation, debt securities have historically tended to decline in value due to the general increase in prevailing interest rates. Conversely, during those same periods of rising inflation, the prices of certain commodities, such as oil and metals, have historically tended to increase. Of course, there cannot be any guarantee that these investments will perform in that manner in the future, and at certain times the price movements of commodity-linked instruments have been parallel to those of debt or equity securities. Commodities have historically tended to increase and decrease in value during different parts of the business cycle than financial assets. Nevertheless, at various times, commodities prices may move in tandem with the prices of financial assets and thus may not provide overall portfolio diversification benefits. Under favorable economic conditions, the Global Strategist Portfolio's investments may underperform an investment in traditional securities. Over the long term, the returns on the Global Strategist Portfolio's investments are expected to exhibit low or negative correlation with stocks and bonds.

**Common Stocks.** Common stocks are equity securities representing an ownership interest in a corporation, entitling the stockholder to voting rights and receipt of dividends paid based on proportionate ownership.

**Contracts for Difference.** Certain Funds may purchase contracts for difference ("CFDs"). A CFD is a privately negotiated contract between two parties, buyer and seller, stipulating that the seller will pay to or receive from the buyer the difference between the nominal value of the underlying instrument at the opening of the contract and that instrument's value at the end of the contract. The underlying instrument may be a single security, stock basket or index. A CFD can be set up to take either a short or long position on the underlying instrument. The buyer and seller are typically both required to post margin, which is adjusted daily. The buyer will also pay to the seller a financing rate on the notional amount of the capital employed by the seller less the margin deposit. A CFD is usually terminated at the buyer's initiative. The seller of the CFD will simply match the exposure of the underlying instrument in the open market and the parties will exchange whatever payment is due.

As is the case with owning any financial instrument, there is the risk of loss associated with buying a CFD. For example, if a Fund buys a long CFD and the underlying security is worth less at the end of the contract, the Fund would be required to make a payment to the seller and would suffer a loss. Also, there may be liquidity risk if the underlying instrument is illiquid because the liquidity of a CFD is based on the liquidity of the underlying instrument. A further risk is that adverse movements in the underlying security will require the buyer to post additional margin. CFDs also carry counterparty risk, i.e., the risk that the counterparty to the CFD transaction may be unable or unwilling to make payments or to otherwise honor its financial obligations under the terms of the contract. If the counterparty were to do so, the value of the contract, and of a Fund's shares, may be reduced. A Fund will not enter into a CFD transaction that is inconsistent with its investment objective, policies and strategies.

**Convertible Securities.** A convertible security is a bond, debenture, note, preferred stock, right, warrant or other security that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities generally have characteristics similar to both debt and equity securities. The value of convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Convertible securities ordinarily provide a stream of income with generally higher yields than those of common stock of the same or similar issuers. Convertible securities generally rank senior to common stock in a corporation's capital structure but are usually subordinated to comparable nonconvertible fixed-income securities

**8**

------

[Back To **Table of Contents**](#TOC_15545)

in such capital structure. Convertible securities generally do not participate directly in any dividend increases or decreases of the underlying securities although the market prices of convertible securities may be affected by any dividend changes or other changes in the underlying securities. Certain of the convertible securities in which a Fund may invest are rated below investment grade or are unrated. The prices of such securities are likely to be more sensitive to adverse economic changes than higher-rated securities, resulting in increased volatility of market prices of these securities during periods of economic uncertainty, or adverse individual corporate developments. In addition, during an economic downturn or substantial period of rising interest rates, lower rated issuers may experience financial stress.

**Corporates.** Corporates are fixed-income securities issued by private businesses. Holders, as creditors, have a prior legal claim over holders of equity securities of the issuer as to both income and assets for the principal and interest due to the holder.

**Currency Forwards.** A foreign currency forward exchange contract is a negotiated agreement between two parties to exchange specified amounts of two or more currencies at a specified future time at a specified rate. The rate specified by the foreign currency forward exchange contract can be higher or lower than the spot rate between the currencies that are the subject of the contract. A Fund may also invest in non-deliverable foreign currency forward exchange contracts ("NDFs"). NDFs are similar to other foreign currency forward exchange contracts, but do not require or permit physical delivery of currency upon settlement. Instead, settlement is made in cash based on the difference between the contracted exchange rate and the spot foreign exchange rate at settlement. Currency futures are similar to foreign currency forward exchange contracts, except that they are traded on an exchange and standardized as to contract size and delivery date. Most currency futures call for payment or delivery in U.S. dollars. Unanticipated changes in currency prices may result in losses to a Fund and poorer overall performance for a Fund than if it had not entered into foreign currency forward exchange contracts. The typical use of a foreign currency forward exchange contract is to "lock in" the price of a security in U.S. dollars or some other foreign currency, which a Fund is holding in its portfolio. By entering into a foreign currency forward exchange contract for the purchase or sale, for a fixed amount of dollars or other currency, of the amount of foreign currency involved in the underlying security transactions, a Fund may be able to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar or other currency which is being used for the security purchase and the foreign currency in which the security is denominated during the period between the date on which the security is purchased or sold and the date on which payment is made or received. The Adviser also may from time to time utilize foreign currency forward exchange contracts for other purposes. For example, they may be used to hedge a foreign security held in the portfolio against a decline in value of the applicable foreign currency. They also may be used to lock in the current exchange rate of the currency in which those securities anticipated to be purchased are denominated. At times, a Fund may enter into "cross-currency" hedging transactions involving currencies other than those in which securities are held or proposed to be purchased are denominated.

A Fund will not enter into foreign currency forward exchange contracts or maintain a net exposure to these contracts where the consummation of the contracts would obligate a Fund to deliver an amount of foreign currency in excess of the value of a Fund's portfolio securities.

A Fund may be limited in its ability to enter into hedging transactions involving foreign currency forward exchange contracts by Internal Revenue Code of 1986, as amended (the "Code"), requirements relating to qualification as a regulated investment company ("RIC").

Foreign currency forward exchange contracts may limit gains on portfolio securities that could otherwise be realized had they not been utilized and could result in losses. The contracts also may increase a Fund's volatility and may involve a significant amount of risk relative to the investment of cash.

**Custodial Receipts.** Certain Funds may invest in custodial receipts representing interests in U.S. government securities, municipal obligations or other debt instruments held by a custodian or trustee. Custodial receipts evidence ownership of future interest payments, principal payments or both on notes or bonds issued or guaranteed as to principal or interest by the U.S. Government, its agencies, instrumentalities, political subdivisions or authorities, by a state or local governmental body or authority, or by other types of issuers. For certain securities law purposes, custodial receipts are not considered obligations of the underlying issuers. In addition, if for tax purposes a Fund is not considered to be the owner of the underlying securities held in the custodial account, the Fund may suffer adverse tax consequences. As a holder of custodial receipts, a Fund will bear its proportionate share of the fees and expenses charged to the custodial account.

**Depositary Receipts.** Depositary receipts represent an ownership interest in securities of foreign companies (an "underlying issuer") that are deposited with a depositary. Depositary receipts are not necessarily denominated in the same currency as the underlying securities. Depositary receipts include American depositary receipts ("ADRs"), global depositary receipts ("GDRs") and other types of depositary receipts (which, together with ADRs and GDRs, are hereinafter collectively referred to as "Depositary Receipts"). ADRs are dollar-denominated Depositary Receipts typically issued by a U.S. financial institution and evidence an ownership interest in a security or pool of securities issued by a foreign issuer. ADRs are listed and traded in the United States. ADRs also include American depositary shares. GDRs and other types of Depositary Receipts are typically issued by foreign banks or trust companies, although they also may be issued by U.S. financial institutions, and evidence ownership interests in a security or pool of securities issued by

**9**

------

[Back To **Table of Contents**](#TOC_15545)

either a foreign or a U.S. corporation. Generally, Depositary Receipts in registered form are designed for use in the U.S. securities market and Depositary Receipts in bearer form are designed for use in securities markets outside the United States.

Depositary Receipts may be "sponsored" or "unsponsored." Sponsored Depositary Receipts are established jointly by a depositary and the underlying issuer, whereas unsponsored Depositary Receipts may be established by a depositary without participation by the underlying issuer. Holders of unsponsored Depositary Receipts generally bear all the costs associated with establishing unsponsored Depositary Receipts. In addition, the issuers of the securities underlying unsponsored Depositary Receipts are not obligated to disclose material information in the United States and, therefore, there may be less information available regarding such issuers and there may not be a correlation between such information and the market value of the Depositary Receipts. For purposes of a Fund's investment policies, a Fund's investments in Depositary Receipts will be deemed to be an investment in the underlying securities, except that ADRs may be deemed to be issued by a U.S. issuer.

**Derivatives.** Certain Funds may, but are not required to, use various derivatives and other similar instruments as described below. Derivatives may be used for a variety of purposes including hedging, risk management, portfolio management or to earn income. Any or all of the investment techniques described herein may be used at any time and there is no particular strategy that dictates the use of one technique rather than another, as the use of any derivative by a Fund is a function of numerous variables, including market conditions. A Fund complies with applicable regulatory requirements when using derivatives. Although the Adviser seeks to use derivatives to further a Fund's investment objective, no assurance can be given that the use of derivatives will achieve this result.

*General Risks of Derivatives.* Derivatives utilized by a Fund may involve the purchase and sale of derivative instruments. A derivative is a financial instrument the value of which depends upon (or derives from) the value of another asset, security, interest rate, index or financial instrument. Derivatives may relate to a wide variety of underlying instruments, including equity and debt securities, indices, interest rates, currencies and other assets. Certain derivative instruments that a Fund may use and the risks of those instruments are described in further detail below. A Fund may in the future also utilize derivatives techniques, instruments and strategies that may be newly developed or permitted as a result of regulatory changes, consistent with a Fund's investment objective and policies. Such newly developed techniques, instruments and strategies may involve risks different than or in addition to those described herein. No assurance can be given that any derivatives strategy employed by a Fund will be successful.

The risks associated with the use of derivatives are different from, and possibly greater than, the risks associated with investing directly in the instruments underlying such derivatives. Derivatives are highly specialized instruments that require investment techniques and risk analyses different from other portfolio investments. The use of derivative instruments requires an understanding not only of the underlying instrument but also of the derivative itself. Certain risk factors generally applicable to derivative transactions are described below.

■ Derivatives are subject to the risk that the market value of the derivative itself or the market value of underlying instruments will change in a way adverse to a Fund's interests. A Fund bears the risk that the Adviser may incorrectly forecast future market trends and other financial or economic factors or the value of the underlying security, index, interest rate or currency when establishing a derivatives position for a Fund.

■ Derivatives may be subject to pricing risk, which exists when a derivative becomes extraordinarily expensive (or inexpensive) relative to historical prices or corresponding instruments. Under such market conditions, it may not be economically feasible to initiate a transaction or liquidate a position at an advantageous time or price.

■ Many derivatives are complex and often valued subjectively. Improper valuations can result in increased payment requirements to counterparties or a loss of value to a Fund. Many derivatives may also involve operational and legal risks.

■ Using derivatives as a hedge against a portfolio investment subjects a Fund to the risk that the derivative will have imperfect correlation with the portfolio investment, which could result in a Fund incurring substantial losses. This correlation risk may be greater in the case of derivatives based on an index or other basket of securities, as the portfolio securities being hedged may not duplicate the components of the underlying index or the basket may not be of exactly the same type of obligation as those underlying the derivative. The use of derivatives for "cross hedging" purposes (using a derivative based on one instrument as a hedge on a different instrument) may also involve greater correlation risks.

■ While using derivatives for hedging purposes can reduce a Fund's risk of loss, it may also limit a Fund's opportunity for gains or result in losses by offsetting or limiting a Fund's ability to participate in favorable price movements in portfolio investments.

■ Derivatives transactions for non-hedging purposes involve greater risks and may result in losses which would not be offset by increases in the value of portfolio securities or declines in the cost of securities to be acquired. In the event that a Fund enters into a derivatives transaction as an alternative to purchasing or selling the underlying instrument or in order to obtain desired exposure to an index or market, a Fund will be exposed to the same risks as are incurred in purchasing or selling the underlying instruments directly as well as the additional risks associated with derivatives transactions.

■ The use of certain derivatives transactions, including OTC derivatives, involves the risk of loss resulting from the insolvency or bankruptcy of the counterparty to the contract or the failure by the counterparty to make required payments or otherwise comply with the terms of the contract. In the event of default by a counterparty, a Fund may have contractual remedies pursuant to the agreements related to the transaction.

■ Liquidity risk exists when a particular derivative is difficult to purchase or sell. If a derivative transaction is particularly large or if

**10**

------

[Back To **Table of Contents**](#TOC_15545)

the relevant market is illiquid, a Fund may be unable to initiate a transaction or liquidate a position at an advantageous time or price.

■ While some derivatives are cleared through a regulated, central clearinghouse, many derivatives transactions are not entered into or traded on exchanges or in markets regulated by the U.S. Commodity Futures Trading Commission ("CFTC") or the SEC. Instead, in some cases, certain types of bilateral OTC derivatives are entered into directly by a Fund and a counterparty and may be traded only through financial institutions acting as market makers. OTC derivatives transactions can only be entered into with a willing counterparty that is approved by the Adviser in accordance with guidelines established by the Board. Where no such counterparty is available, a Fund will be unable to enter into a desired OTC transaction. There also may be greater risk that no liquid secondary market in the trading of OTC derivatives will exist, in which case a Fund may be required to hold such instruments until exercise, expiration or maturity. Many of the protections afforded to participants in the cleared derivatives markets are not available to participants in bilateral OTC derivatives transactions. Bilateral OTC derivatives transactions are not subject to the guarantee of a clearinghouse and, as a result, a Fund would bear greater risk of default by the counterparties to such transactions.

■ A Fund may be required to make physical delivery of portfolio securities underlying a derivative in order to close out or to meet margin and payment requirements and a derivatives position or to sell portfolio securities at a time or price at which it may be disadvantageous to do so in order to obtain cash to close out or to maintain a derivatives position.

■ As a result of the structure of certain derivatives, adverse changes in, among other things, interest rates, volatility or the value of the underlying instrument can result in losses substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment.

■ Certain derivatives may be classified as illiquid and therefore subject to a Fund's limitation on investments in illiquid investments .

■ Derivatives transactions conducted outside the United States may not be conducted in the same manner as those entered into on U.S. exchanges, and may be subject to different margin, exercise, settlement or expiration procedures. Brokerage commissions, clearing costs and other transaction costs may be higher on foreign exchanges. Many of the risks of OTC derivatives transactions are also applicable to derivatives transactions conducted outside the United States. Derivatives transactions conducted outside the United States are subject to the risk of governmental action affecting the trading in, or the prices of, foreign securities, currencies and other instruments. The value of such positions could be adversely affected by foreign political and economic factors; lesser availability of data on which to make trading decisions; delays on a Fund's ability to act upon economic events occurring in foreign markets; and less liquidity than U.S. markets.

■ Currency derivatives are subject to additional risks. Currency derivatives transactions may be negatively affected by government exchange controls, blockages and manipulation. Currency exchange rates may be influenced by factors extrinsic to a country's economy. There is no systematic reporting of last sale information with respect to underlying foreign currencies. As a result, the available information on which trading in currency derivatives will be based may not be as complete as comparable data for other transactions. Events could occur in the foreign currency market which will not be reflected in currency derivatives until the following day, making it more difficult for a Fund to respond to such events in a timely manner.

*Regulatory Matters.* Regulatory developments affecting the exchange-traded and OTC derivatives markets may impair a Fund's ability to manage or hedge its investment portfolio through the use of derivatives. In particular, in October 2020, the SEC adopted a final rule related to the use of derivatives, short sales, reverse repurchase agreements and certain other transactions by registered investment companies that rescinded and withdrew the guidance of the SEC and its staff regarding asset segregation and cover transactions previously applicable to the Funds' derivatives and other transactions. These requirements may limit the ability of a Fund to use derivatives and reverse repurchase agreements and similar financing transactions as part of its investment strategies. The rule requires Funds to trade derivatives and other transactions that create future payment or delivery obligations (except reverse repurchase agreements and similar financing transactions) subject to a value-at-risk ("VaR") leverage limit, certain derivatives risk management program and reporting requirements. Generally, these requirements apply unless a Fund qualifies as a "limited derivatives user." Under the rule, when a Fund trades reverse repurchase agreements or similar financing transactions, including certain tender option bonds, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the Fund's asset coverage ratio or treat all such transactions as derivatives transactions. Reverse repurchase agreements or similar financing transactions aggregated with other indebtedness do not need to be included in the calculation of whether a Fund is a limited derivatives user, but for funds subject to the VaR testing, reverse repurchase agreements and similar financing transactions must be included for purposes of such testing whether treated as derivatives transactions or not. The SEC also provided guidance in connection with the rule regarding use of securities lending collateral that may limit the Funds' securities lending activities. These requirements may increase the cost of a Fund's investments and cost of doing business, which could adversely affect investors.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and the rules promulgated thereunder may limit the ability of a Fund to enter into one or more exchange-traded or OTC derivatives transactions.

A Fund's use of derivatives may also be limited by the requirements of the Code for qualification as a RIC for U.S. federal income tax purposes.

**11**

------

[Back To **Table of Contents**](#TOC_15545)

The Adviser is subject to registration and regulation as a "commodity pool operator" ("CPO") under the Commodity Exchange Act, as amended ("CEA"), with respect to its service as investment adviser to the Global Strategist Portfolio. As a result, the Trust, on behalf of the Global Strategist Portfolio, will be required to operate in compliance with applicable CFTC requirements, including registration, disclosure, reporting and other operational requirements under the CEA and related CFTC regulations. Compliance with these additional requirements may increase Trust expenses. The Adviser and the Global Strategist Portfolio are exempt from certain CFTC recordkeeping, reporting and disclosure requirements under CFTC Rule 4.7 with respect to the Global Strategist Subsidiary.

The Adviser, with respect to each Fund except for the Global Strategist Portfolio, has filed a notice of eligibility with the National Futures Association ("NFA") claiming an exclusion from the definition of the term CPO pursuant to CFTC Regulation 4.5, as promulgated under the CEA, with respect to each Fund's operations. In addition, the Adviser will operate the Bitcoin Subsidiary (as defined below) in reliance on an exemption from registration as a CPO under CFTC Regulation 4.13(a)(3). Therefore, neither these Funds nor the Adviser (with respect to these Funds and the Bitcoin Subsidiary), is subject to registration or regulation as a commodity pool or CPO under the CEA. If any of these Funds (or the Adviser with respect to such Fund) becomes subject to these requirements, as well as related NFA rules, the Fund may incur additional compliance and other expenses.

With respect to investments in swap transactions, commodity futures, commodity options or certain other commodity interests used for purposes other than bona fide hedging purposes, an investment company must meet one of the following tests under the CFTC regulations in order for its investment adviser to claim an exemption from being considered a CPO. First, the aggregate initial margin and premiums required to establish an investment company's positions in such investments may not exceed five percent (5%) of the liquidation value of the investment company's portfolio (after accounting for unrealized profits and unrealized losses on any such investments). Alternatively, the aggregate net notional value of such instruments, determined at the time of the most recent position established, may not exceed one hundred percent (100%) of the liquidation value of the investment company's portfolio (after accounting for unrealized profits and unrealized losses on any such positions). In addition to meeting one of the foregoing trading limitations, the investment company may not market itself as a commodity pool or otherwise as a vehicle for trading in the commodity futures, commodity options or swaps and derivatives markets.

Regulations recently adopted by federal banking regulators under the Dodd-Frank Act require that certain qualified financial contracts ("QFCs") with counterparties that are part of U.S. or foreign global systemically important banking organizations be amended to include contractual restrictions on close-out and cross-default rights. QFCs include, but are not limited to, securities contracts, commodities contracts, forward contracts, repurchase agreements, securities lending agreements and swaps agreements, as well as related master agreements, security agreements, credit enhancements, and reimbursement obligations. If a covered counterparty of a Fund or certain of the covered counterparty's affiliates were to become subject to certain insolvency proceedings, a Fund may be temporarily unable to exercise certain default rights, and the QFC may be transferred to another entity. In addition, under the rule, a Fund is permitted to invest in a security on a when-issued or forward-settling basis, or with a non-standard settlement cycle, and the transaction will be deemed not to involve a senior security under the 1940 Act, provided that (i) the Fund intends to physically settle the transaction and (ii) the transaction will settle within 35 days of its trade date (the "Delayed-Settlement Securities Provision"). A Fund may otherwise engage in such transactions that do not meet the conditions of the Delayed-Settlement Securities Provision so long as the Fund treats any such transaction as a "derivatives transaction" for purposes of compliance with the rule. Furthermore, under the rule, a Fund will be permitted to enter into an unfunded commitment agreement, and such unfunded commitment agreement will not be subject to the asset coverage requirements under the 1940 Act, if the Fund reasonably believes, at the time it enters into such agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all such agreements as they come due. These requirements may impact a Fund's credit and counterparty risks.

*Combined Transactions.* Combined transactions involve entering into multiple derivatives transactions (such as multiple options transactions, including purchasing and writing options in combination with each other; multiple futures transactions; and combinations of options, futures, forward and swap transactions) instead of a single derivatives transaction in order to customize the risk and return characteristics of the overall position. Combined transactions typically contain elements of risk that are present in each of the component transactions. A Fund may enter into a combined transaction instead of a single derivatives transaction when, in the opinion of the Adviser, it is in the best interest of the Fund to do so. Because combined transactions involve multiple transactions, they may result in higher transaction costs and may be more difficult to close out.

**Emerging Market Securities.** Certain Funds may invest in emerging market securities. An emerging market security is a security issued by an emerging market foreign government or private issuer. An emerging market foreign government or private issuer has one or more of the following characteristics: (i) its principal securities trading market is in an emerging market or developing country; (ii) alone or on a consolidated basis it derives 50% or more of its annual revenue or profits from goods produced, sales made or services performed in an emerging market or developing country or has at least 50% of its assets, core business operations and/or employees in an emerging market or developing country; or (iii) it is organized under the laws of, or has a principal office in, an emerging market or developing country. Based on these criteria it is possible for a security to be considered issued by an issuer in more than one country. Therefore, it is possible for the securities of any issuer that has one or more of these characteristics in

**12**

------

[Back To **Table of Contents**](#TOC_15545)

connection with any emerging market or developing country to be considered an emerging market security when held in one Fund, but not considered an emerging market security when held in another Fund if it has one or more of these characteristics in connection with a developed country.

Emerging market describes any country that is generally considered to be an emerging or developing country by major organizations in the international financial community or by a Fund's benchmark index.

The economies of individual emerging market or developing countries may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation or deflation, currency depreciation, capital reinvestment, resource self-sufficiency and balance of payments position. Further, the economies of developing countries generally are heavily dependent upon international trade and, accordingly, have been, and may continue to be, adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures. These economies also have been, and may continue to be, adversely affected by economic conditions in the countries with which they trade.

Prior governmental approval for foreign investments may be required under certain circumstances in some emerging market or developing countries, and the extent of foreign investment in certain fixed-income securities and domestic companies may be subject to limitation in other emerging market or developing countries. Foreign ownership limitations also may be imposed by the charters of individual companies in emerging market or developing countries to prevent, among other concerns, violation of foreign investment limitations. Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some emerging countries. A Fund could be adversely affected by delays in, or a refusal to grant, any required governmental registration or approval for such repatriation. Any investment subject to such repatriation controls will be considered illiquid if it appears reasonably likely that this process will take more than seven days.

Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information related to an investment may not be available or reliable. In addition, a Fund is limited in its ability to exercise its legal rights or enforce a counterparty's legal obligations in certain jurisdictions outside of the United States, in particular, in emerging markets countries.

Investment in emerging market or developing countries may entail purchasing securities issued by or on behalf of entities that are insolvent, bankrupt, in default or otherwise engaged in an attempt to reorganize or reschedule their obligations and in entities that have little or no proven credit rating or credit history. In any such case, the issuer's poor or deteriorating financial condition may increase the likelihood that a Fund will experience losses or diminution in available gains due to bankruptcy, insolvency or fraud. Emerging market or developing countries also pose the risk of nationalization, expropriation or confiscatory taxation, political changes, government regulation, social instability or diplomatic developments (including war) that could adversely affect the economies of such countries or the value of a Fund's investments in those countries. In addition, it may be difficult to obtain and enforce a judgment in a court outside the United States.

A Fund may also be exposed to an extra degree of custodial and/or market risk, especially where the securities purchased are not traded on an official exchange or where ownership records regarding the securities are maintained by an unregulated entity (or even the issuer itself).

**Equity Securities.** Equity securities generally represent an ownership interest in an issuer, or may be convertible into or represent a right to acquire an ownership interest in an issuer. While there are many types of equity securities, prices of all equity securities will fluctuate. Economic, political and other events may affect the prices of broad equity markets. For example, changes in inflation or consumer demand may affect the prices of equity securities generally in the United States. Similar events also may affect the prices of particular equity securities. For example, news about the success or failure of a new product may affect the price of a particular issuer's equity securities.

**Eurodollar and Yankee Dollar Obligations.** Certain Funds may invest in Eurodollar and Yankee dollar obligations. Eurodollar and Yankee dollar obligations are fixed-income securities that include time deposits, which are non-negotiable deposits maintained in a bank for a specified period of time at a stated interest rate. The Eurodollar obligations may include bonds issued and denominated in euros. Eurodollar obligations may be issued by government and corporate issuers in Europe. Yankee dollar obligations, which include time deposits and certificates of deposit, are U.S. dollar-denominated obligations issued in the U.S. capital markets by foreign banks. Eurodollar bank obligations, which include time deposits and certificates of deposit, are U.S. dollar-denominated obligations issued outside the U.S. capital markets by foreign branches of U.S. banks and by foreign banks. The Funds may consider Yankee dollar obligations to be domestic securities for purposes of their investment policies.

Eurodollar and Yankee dollar obligations are subject to the same risks as domestic issues, notably credit risk, market risk and liquidity risk. However, Eurodollar (and to a limited extent, Yankee dollar) obligations are also subject to certain sovereign risks. One such risk is the possibility that a sovereign country might prevent capital from flowing across its borders. Other risks include adverse political and economic developments; the extent and quality of government regulations of financial markets and institutions; the imposition of foreign withholding taxes; and the expropriation or nationalization of foreign issuers.

**13**

------

[Back To **Table of Contents**](#TOC_15545)

**Exchange-Listed Equities via Stock Connect Program.** The Shanghai-Hong Kong Stock Connect program and the Shenzhen-Hong Kong Stock Connect programs ("Stock Connect") allow non-Chinese investors (such as a Fund) to purchase certain listed equities via brokers in Hong Kong. Although Stock Connect allows non-Chinese investors to trade Chinese equities without a license, purchases of securities through Stock Connect are subject to daily market-wide quota limitations, which may prevent a Fund from purchasing Stock Connect securities when it is otherwise advantageous to do so. An investor cannot purchase and sell the same security on the same trading day, which may restrict a Fund's ability to invest in China A-shares through Stock Connect and to enter into or exit trades where it is advantageous to do so on the same trading day. Because Stock Connect trades are routed through Hong Kong brokers and the Hong Kong Stock Exchange, Stock Connect is affected by trading holidays in either China or Hong Kong, and there are trading days in China when Stock Connect investors will not be able to trade. As a result, prices of securities purchased through Stock Connect may fluctuate at times when a Fund is unable to add to or exit its position. Only certain China A-shares are eligible to be accessed through Stock Connect. Such securities may lose their eligibility at any time, in which case they could be sold but could no longer be purchased through Stock Connect. Because Stock Connect is relatively new, its effects on the market for trading China A-shares are uncertain. In addition, the trading, settlement and IT systems required to operate Stock Connect are relatively new and continuing to evolve. In the event that the relevant systems do not function properly, trading through Stock Connect could be disrupted.

Stock Connect is subject to regulation by both Hong Kong and China. There can be no assurance that further regulations will not affect the availability of securities in the program, the frequency of redemptions or other limitations. For defaults by Hong Kong brokers occurring on or after January 1, 2020, the Hong Kong Investor Compensation Fund will cover losses incurred by investors with a cap of HK$500,000 per investor for securities traded on a stock market operated by the Shanghai Stock Exchange and/or Shenzhen Stock Exchange and in respect of which an order for sale or purchase is permitted to be routed through the northbound link of the Stock Connect. In China, Stock Connect securities are held on behalf of ultimate investors (such as a Fund) by the Hong Kong Securities Clearing Company Limited ("HKSCC") as nominee. While Chinese regulators have affirmed that the ultimate investors hold a beneficial interest in Stock Connect securities, the law surrounding such rights is in its early stages and the mechanisms that beneficial owners may use to enforce their rights are untested and therefore pose uncertain risks. Further, courts in China have limited experience in applying the concept of beneficial ownership and the law surrounding beneficial ownership will continue to evolve as they do so. Accordingly, there is a risk that as the law is tested and developed, a Fund's ability to enforce its ownership rights may be negatively impacted. A Fund may not be able to participate in corporate actions affecting Stock Connect securities due to time constraints or for other operational reasons. A Fund will not be able to attend shareholders' meetings. Stock Connect trades are settled in RMB, the Chinese currency, and investors must have timely access to a reliable supply of RMB in Hong Kong, which cannot be guaranteed.

Stock Connect trades are either subject to certain pre-trade requirements or must be placed in special segregated accounts that allow brokers to comply with these pre-trade requirements by confirming that the selling shareholder has sufficient Stock Connect securities to complete the sale. If a Fund does not utilize a special segregated account, the Fund will not be able to sell the shares on any trading day where it fails to comply with the pre-trade checks. In addition, these pre-trade requirements may, as a practical matter, limit the number of brokers that a Fund may use to execute trades. While a Fund may use special segregated accounts in lieu of the pre-trade check, some market participants have yet to fully implement IT systems necessary to complete trades involving securities in such accounts in a timely manner. Market practice with respect to special segregated accounts is continuing to evolve. Investments via Stock Connect are subject to regulation by Chinese authorities. Chinese law may require aggregation of a Fund's holdings of Stock Connect securities with securities of other clients of the Adviser for purposes of disclosing positions held in the market, acquiescing to trading halts that may be imposed until regulatory filings are completed or complying with China's short-term trading rules.

**Fixed-Income Securities.** Fixed-income securities generally represent an issuer's obligation to repay to the investor (or lender) the amount borrowed plus interest over a specified time period. A typical fixed-income security specifies a fixed date when the amount borrowed (principal) is due in full, known as the maturity date, and specifies dates when periodic interest (coupon) payments will be made over the life of the security.

Fixed-income securities come in many varieties and may differ in the way that interest is calculated, the amount and frequency of payments, the type of collateral, if any, and the presence of special features (e.g., conversion rights). Prices of fixed-income securities fluctuate and, in particular, are subject to several key risks including, but not limited to, interest rate risk, credit risk, prepayment risk and spread risk.

Interest rate risk arises due to general changes in the level of market rates after the purchase of a fixed-income security. Generally, the values of fixed-income securities vary inversely with changes in interest rates. During periods of falling interest rates, the values of most outstanding fixed-income securities generally rise and during periods of rising interest rates, the values of most fixed-income securities generally decline. The Funds may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations

**14**

------

[Back To **Table of Contents**](#TOC_15545)

(i.e., prepayment risk) and extended durations (i.e., extension risk). Certain Funds are not limited as to the maturities (when a debt security provides its final payment) or duration (measure of interest rate sensitivity) of the securities in which it may invest. While fixed-income securities with longer final maturities often have higher yields than those with shorter maturities, they usually possess greater price sensitivity to changes in interest rates and other factors. Traditionally, the remaining term to maturity has been used as a barometer of a fixed-income security's sensitivity to interest rate changes. This measure, however, considers only the time until the final principal payment and takes no account of the pattern or amount of principal or interest payments prior to maturity. Duration combines consideration of yield, coupon, interest and principal payments, final maturity and call (prepayment) features. Duration measures the likely percentage change in a fixed-income security's price for a small parallel shift in the general level of interest rates; it is also an estimate of the weighted average life of the remaining cash flows of a fixed-income security. In almost all cases, the duration of a fixed-income security is shorter than its term to maturity.

Credit risk represents the possibility that an issuer may be unable to meet scheduled interest and principal payment obligations. It is most often associated with corporate bonds, although it can be present in other fixed-income securities as well. Credit ratings and quantitative models attempt to measure the degree of credit risk in fixed-income securities, and provide insight as to whether prevailing yield spreads afford sufficient compensation for such risk. Other things being equal, fixed-income securities with high degrees of credit risk should trade in the market at lower prices (and higher yields) than fixed-income securities with low degrees of credit risk.

Prepayment risk, also known as call risk, arises due to the issuer's ability to prepay all or most of the fixed-income security prior to the stated final maturity date. Prepayments generally rise in response to a decline in interest rates as debtors take advantage of the opportunity to refinance their obligations. This risk is often associated with mortgage securities where the underlying mortgage loans can be refinanced, although it can also be present in corporate or other types of bonds with call provisions. When a prepayment occurs, a Fund may be forced to reinvest in lower yielding fixed-income securities. Quantitative models are designed to help assess the degree of prepayment risk, and provide insight as to whether prevailing yield spreads afford sufficient compensation for such risk.

Spread risk is the potential for the value of a Fund's assets to fall due to the widening of spreads. Fixed-income securities generally compensate for greater credit risk by paying interest at a higher rate. The difference (or "spread") between the yield of a security and the yield of a benchmark, such as a U.S. Treasury security with a comparable maturity, measures the additional interest paid for credit risk. As the spread on a security widens (or increases), the price (or value) of the security falls. Spread widening may occur, among other reasons, as a result of market concerns over the stability of the market, excess supply, general credit concerns in other markets, security- or market-specific credit concerns or general reductions in risk tolerance.

While assets in fixed-income markets have grown rapidly in recent years, the capacity for traditional dealer counterparties to engage in fixed-income trading has not kept pace and in some cases has decreased. For example, primary dealer inventories of corporate bonds, which provide a core indication of the ability of financial intermediaries to "make markets," are at or near historic lows in relation to market size. This reduction in market-making capacity may be a persistent change, to the extent it is resulting from broader structural changes, such as fewer proprietary trading desks at broker-dealers and increased regulatory capital requirements. Because market makers provide stability to a market through their intermediary services, the significant reduction in dealer inventories could potentially lead to decreased liquidity and increased volatility in the fixed-income markets. Such issues may be exacerbated during periods of economic uncertainty.

Economic, political and other events also may affect the prices of broad fixed-income markets, although the risks associated with such events are transmitted to the market via changes in the prevailing levels of interest rates, credit risk, prepayment risk or spread risk. From time to time, uncertainty regarding the status of negotiations in the U.S. government to increase the statutory debt ceiling could impact the creditworthiness of the United States and could impact the liquidity of the U.S. Government securities markets and ultimately the Funds.

Certain of the Funds' investments are subject to inflation risk, which is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money (i.e., as inflation increases, the values of the Fund's assets can decline). Inflation rates may change frequently and significantly as a result of various factors, including unexpected shifts in the domestic or global economy and changes in economic policies, and a Fund's investments may not keep pace with inflation, which may result in losses to Fund shareholders. This risk is greater for fixed-income instruments with longer maturities.

**Floaters.** Floaters are fixed-income securities with a rate of interest that varies with changes in specified market rates or indices, such as the prime rate, or at specified intervals. Certain floating or variable rate obligations may carry a demand feature that permits the holder to tender them back to the issuer of the underlying instrument, or to a third party, at par value prior to maturity. When the demand feature of certain floating or variable rate obligations represents an obligation of a foreign entity, the demand feature will be subject to certain risks discussed under "Foreign Securities."

**Floating and Variable Rate Obligations.** Certain Funds may purchase floating and variable rate obligations, including floating and variable rate municipal obligations and preferred shares of closed-end funds. The value of these obligations is generally more stable than that of a fixed rate obligation in response to changes in interest rate levels. Subject to the conditions for using amortized cost

**15**

------

[Back To **Table of Contents**](#TOC_15545)

valuation under the 1940 Act, a Fund may consider the maturity of a variable or floating rate obligation to be shorter than its ultimate stated maturity if the obligation is issued or guaranteed by U.S. government agencies, authorities, instrumentalities or sponsored enterprises or by the U.S. Treasury, if the obligation has a remaining maturity of 397 calendar days or less, or if the obligation has a demand feature that permits the Fund to receive payment at any time or at specified intervals not exceeding 397 calendar days. The issuers or financial intermediaries providing demand features may support their ability to purchase the obligations by obtaining credit with liquidity supports. These may include lines of credit, which are conditional commitments to lend, and letters of credit, which will ordinarily be irrevocable, both of which may be issued by domestic banks or foreign banks which have a branch, agency or subsidiary in the United States. A Fund may purchase variable or floating rate obligations from the issuers or may purchase certificates of participation, a type of floating or variable rate obligation, which are interests in a pool of debt obligations held by a bank or other financial institution.

**Foreign Currency Transactions.** The U.S. dollar value of the assets of the Funds, to the extent they invest in securities denominated in foreign currencies, may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations, and the Funds may incur costs in connection with conversions between various currencies. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and the overall economic health of the issuer. Devaluation of a currency by a country's government or banking authority also will have a significant impact on the value of any investments denominated in that currency. The Funds may conduct their foreign currency exchange transactions on a spot (i.e., cash) basis at the then-prevailing spot rate in the foreign currency exchange market. The Funds also may manage their foreign currency transactions by entering into foreign currency forward exchange contracts to purchase or sell foreign currencies or by using other instruments and techniques described under "Derivatives."

Under normal circumstances, consideration of the prospect for changes in the values of currency will be incorporated into the long-term investment decisions made with regard to overall diversification strategies. However, the Adviser believes that it is important to have the flexibility to use such derivative products when it determines that it is in the best interests of a Fund. It may not be practicable to hedge foreign currency risk in all markets, particularly emerging markets.

*Foreign Currency Warrants.* Certain Funds may invest in foreign currency warrants, which entitle the holder to receive from the issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars) which is calculated pursuant to a predetermined formula and based on the exchange rate between a specified foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their issuance and expire as of a specified date and time.

Foreign currency warrants have been issued in connection with U.S. dollar-denominated debt offerings by major corporate issuers in an attempt to reduce the foreign currency exchange risk which, from the point of view of prospective purchasers of the securities, is inherent in the international fixed-income marketplace. Foreign currency warrants may attempt to reduce the foreign exchange risk assumed by purchasers of a security by, for example, providing for a supplemental payment in the event that the U.S. dollar depreciates against the value of a major foreign currency such as the Japanese Yen. The formula used to determine the amount payable upon exercise of a foreign currency warrant may make the warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction (e.g., unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which the warrant is linked or indexed). Foreign currency warrants are severable from the debt obligations with which they may be offered, and may be listed on exchanges.

Foreign currency warrants may be exercisable only in certain minimum amounts, and an investor wishing to exercise warrants who possesses less than the minimum number required for exercise may be required either to sell the warrants or to purchase additional warrants, thereby incurring additional transaction costs. In the case of any exercise of warrants, there may be a delay between the time a holder of warrants gives instructions to exercise and the time the exchange rate relating to exercise is determined, during which time the exchange rate could change significantly, thereby affecting both the market and cash settlement values of the warrants being exercised. The expiration date of the warrants may be accelerated if the warrants should be delisted from an exchange or if their trading should be suspended permanently, which would result in the loss of any remaining "time value" of the warrants (i.e., the difference between the current market value and the exercise value of the warrants), and, in the case where the warrants were "out-of-the-money," in a total loss of the purchase price of the warrants.

Foreign currency warrants are generally unsecured obligations of their issuers and are not standardized foreign currency options issued by the Options Clearing Corporation ("OCC"). Unlike foreign currency options issued by the OCC, the terms of foreign exchange warrants generally will not be amended in the event of governmental or regulatory actions affecting exchange rates or in the event of the imposition of other regulatory controls affecting the international currency markets. The initial public offering price of foreign currency warrants is generally considerably in excess of the price that a commercial user of foreign currencies might pay in the interbank market for a comparable option involving significantly larger amounts of foreign currencies. Foreign currency warrants are subject to complex political or economic factors.

*Principal Exchange Rate Linked Securities.* Principal exchange rate linked securities are debt obligations the principal of which is payable at maturity in an amount that may vary based on the exchange rate between the U.S. dollar and a particular foreign currency

**16**

------

[Back To **Table of Contents**](#TOC_15545)

at or about that time. The return on "standard" principal exchange rate linked securities is enhanced if the foreign currency to which the security is linked appreciates against the U.S. dollar, and is adversely affected by increases in the foreign exchange value of the U.S. dollar; "reverse" principal exchange rate linked securities are like the "standard" securities, except that their return is enhanced by increases in the value of the U.S. dollar and adversely impacted by increases in the value of foreign currency. Interest payments on the securities are generally made in U.S. dollars at rates that reflect the degree of foreign currency risk assumed or given up by the purchaser of the notes (i.e., at relatively higher interest rates if the purchaser has assumed some foreign currency risk).

*Performance indexed paper.* Performance indexed paper is U.S. dollar-denominated commercial paper the yield of which is linked to certain foreign exchange rate movements. The yield to the investor will be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed minimum rate of return that is below, and a potential maximum rate of return that is above, market yields on U.S. dollar-denominated commercial paper, with both the minimum and maximum rates of return on the investment corresponding to the minimum and maximum values of the spot exchange rate two business days prior to maturity.

**Foreign Securities.** Investing in foreign securities involves certain special considerations which are not typically associated with investments in the securities of U.S. issuers. Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards and may have policies that are not comparable to those of domestic issuers. As a result, there may be less information available about foreign issuers than about domestic issuers. Securities of some foreign issuers may be less liquid and more volatile than securities of comparable domestic issuers. There is generally less stringent investor protections and disclosure standards, and less government supervision and regulation of stock exchanges, brokers and listed issuers than in the United States. In addition, with respect to certain foreign countries, there is a possibility of expropriation or confiscatory taxation, political and social instability, or diplomatic developments which could affect U.S. investments in those countries. The costs of investing in foreign countries frequently are higher than the costs of investing in the United States. Although the Adviser endeavors to achieve the most favorable execution costs in portfolio transactions, fixed commissions on many foreign stock exchanges are generally higher than negotiated commissions on U.S. exchanges. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. For instance, if one or more countries leave the European Union ("EU") or the EU dissolves, the world's securities markets likely will be significantly disrupted.

Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by a Fund, particularly during periods of market turmoil. When a Fund holds illiquid investments, its portfolio may be harder to value.

Investments in securities of foreign issuers may be denominated in foreign currencies. Accordingly, the value of a Fund's assets, as measured in U.S. dollars, may be affected favorably or unfavorably by changes in currency exchange rates and in exchange control regulations. A Fund may incur costs in connection with conversions between various currencies.

Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/or individuals, changes in international trading patterns, trade barriers, and other protectionist or retaliatory measures. International trade barriers or economic sanctions against foreign countries, organizations, companies, entities and/or individuals, may adversely affect a Fund's foreign holdings or exposures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets, or the imposition of punitive taxes. Governmental actions can have a significant effect on the economic conditions in foreign countries, which also may adversely affect the value and liquidity of a Fund's investments. For example, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Any of these actions could severely affect security prices, impair a Fund's ability to purchase or sell foreign securities or transfer a Fund's assets back into the U.S., or otherwise adversely affect a Fund's operations. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by a Fund, particularly during periods of market turmoil. Certain foreign investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When a Fund holds illiquid investments, its portfolio may be harder to value.

**17**

------

[Back To **Table of Contents**](#TOC_15545)

Certain foreign governments may levy withholding or other taxes on dividend and interest income. Although in some countries a portion of these taxes may be recoverable, the non-recovered portion of foreign withholding taxes will reduce the income received from investments in such countries. The Funds may be able to pass through to their shareholders a credit for U.S. tax purposes with respect to any such foreign taxes.

Unless otherwise noted in the Prospectus, the Adviser may consider an issuer to be from a particular country (including the United States) or geographic region if: (i) its principal securities trading market is in that country or geographic region; (ii) alone or on a consolidated basis it derives 50% or more of its annual revenue or profits from goods produced, sales made or services performed in that country or geographic region or has at least 50% of its assets, core business operations and/or employees in that country or geographic region; or (iii) it is organized under the laws of, or has a principal office in, that country or geographic region. By applying these tests, it is possible that a particular issuer could be deemed to be from more than one country or geographic region.

Foreign securities may include, without limitation, foreign equity securities, which are equity securities of a non-U.S. issuer, foreign government fixed-income securities, which are fixed-income securities issued by a government other than the U.S. Government or government-related issuer in a country other than the United States, and foreign corporate fixed-income securities, which are fixed-income securities issued by a private issuer in a country other than the United States.

Investments in foreign companies and countries are subject to economic sanction and trade laws in the United States and other jurisdictions. These laws and related governmental actions may, from time to time, prohibit a Fund from investing in certain countries and in certain companies. Investments in certain countries and companies may be, and have in the past been, restricted as a result of the imposition of economic sanctions. In addition, economic sanction laws in the United States and other jurisdictions may prohibit a Fund from transacting with a particular country or countries, organizations, companies, entities and/or individuals. These types of sanctions may significantly restrict or completely prohibit investment activities in certain jurisdictions.

Economic sanctions and other similar governmental actions could, among other things, effectively restrict or eliminate a Fund's ability to purchase or sell securities or groups of securities, and thus may make the Fund's investments in such securities less liquid or more difficult to value. In addition, as a result of economic sanctions, the Fund may be forced to sell or otherwise dispose of investments at inopportune times or prices, which could result in losses to the Fund and increased transaction costs. These conditions may be in place for a substantial period of time and enacted with limited advance notice to the Fund.

In addition, such economic sanctions or other government restrictions may negatively impact the value or liquidity of a Fund's investments, and could impair the Fund's ability to meet its investment objective or invest in accordance with its investment strategy because the Fund may, for example, be prohibited from investing in securities issued by companies subject to such restrictions and the Fund could be required to freeze or divest its existing investments that the Adviser would otherwise consider to be attractive.

The risks posed by economic sanctions against a particular foreign country, its nationals or industries or businesses within the country may be heightened to the extent a Fund invests significantly in the affected country or region or in issuers from the affected country that depend on global markets.

*Referendum on the UK's EU Membership.* In an advisory referendum held in June 2016, the United Kingdom ("UK") electorate voted to leave the EU, an event widely referred to as "Brexit." On January 31, 2020, the UK officially withdrew from the EU and the UK entered a transition period which ended on December 31, 2020. On December 30, 2020, the EU and UK signed the EU-UK Trade and Cooperation Agreement ("TCA"), an agreement on the terms governing certain aspects of the EU's and the UK's relationship following the end of the transition period. Notwithstanding the TCA, following the transition period, there is likely to be considerable uncertainty as to the UK's post-transition framework.

The impact on the UK and the EU and the broader global economy is still unknown but could be significant and could result in increased volatility and illiquidity and potentially lower economic growth. Brexit may have a negative impact on the economy and currency of the UK and the EU as a result of anticipated, perceived or actual changes to the UK's economic and political relations with the EU. The impact of Brexit, and its ultimate implementation, on the economic, political and regulatory environment of the UK and the EU could have global ramifications.

The Funds may make investments in the UK, other EU members and in non-EU countries that are directly or indirectly affected by the exit of the UK from the EU. Adverse legal, regulatory or economic conditions affecting the economies of the countries in which the Funds conduct their business (including making investments) and any corresponding deterioration in global macro-economic conditions could have a material adverse effect on a Fund's investment returns. Potential consequences to which the Funds may be exposed, directly or indirectly, as a result of the UK referendum vote include, but are not limited to, market dislocations, economic and financial instability in the UK and in other EU members, increased volatility and reduced liquidity in financial markets, reduced availability of capital, an adverse effect on investor and market sentiment, Sterling and Euro destabilization, reduced deal flow in a Fund's target markets, increased counterparty risk and regulatory, legal and compliance uncertainties. Any of the foregoing or similar risks could have a material adverse effect on the operations, financial condition or investment returns of a Fund and/or the Adviser in general. The effects on the UK, European and global economies of the exit of the UK (and/or other EU members during the term of

**18**

------

[Back To **Table of Contents**](#TOC_15545)

**Funding Agreements.** A funding agreement is a contract between an issuer and a purchaser that obligates the issuer to pay a guaranteed rate of interest on a principal sum deposited by the purchaser. Funding agreements will also guarantee the return of principal and may guarantee a stream of payments over time. A funding agreement has a fixed maturity and may have either a fixed, variable or floating interest rate that is based on an index and guaranteed for a fixed time period. The secondary market, if any, for these funding agreements is limited; thus, such investments purchased by the Funds may be treated as illiquid.

**Futures Contracts.** A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time (the "settlement date"). Futures contracts may be based on, among other things, a specified equity security (securities futures), a specified debt security or reference rate (interest rate futures), the value of a specified securities index (index futures) or the value of a foreign currency (currency futures). While the value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument, differences between the futures market and the market for the underlying asset may result in an imperfect correlation. The buyer of a futures contract agrees to purchase the underlying instrument on the settlement date and is said to be "long" the contract. The seller of a futures contract agrees to sell the underlying instrument on the settlement date and is said to be "short" the contract. Futures contracts call for settlement only on the expiration date and cannot be "exercised" at any other time during their term.

Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date (such as in the case of futures based on a specified debt security) or by payment of a cash settlement amount on the settlement date (such as in the case of futures contracts relating to broad-based securities indices). In the case of cash-settled futures contracts, the settlement amount is equal to the difference between the reference instrument's price on the last trading day of the contract and the reference instrument's price at the time the contract was entered into. Most futures contracts, particularly futures contracts requiring physical delivery, are not held until the settlement date, but instead are offset before the settlement date through the establishment of an opposite and equal futures position (buying a contract that had been sold, or selling a contract that had been purchased). All futures transactions are effected through a clearinghouse associated with the exchange on which the futures are traded.

The buyer and seller of a futures contract are not required to deliver or pay for the underlying commodity unless the contract is held until the settlement date. However, both the buyer and seller are required to deposit "initial margin" with a futures commission merchant ("FCM") when the futures contract is entered into. Initial margin deposits are typically calculated as a percentage of the contract's market value. If the value of either party's position declines, the party will be required to make additional "variation margin" payments to settle the change in value on a daily basis. The process is known as "marking-to-market." Upon the closing of a futures position through the establishment of an offsetting position, a final determination of variation margin will be made and additional cash will be paid by or released to a Fund.

*Additional Risks of Futures Transactions.* The risks associated with futures contract transactions are different from, and possibly greater than, the risks associated with investing directly in the underlying instruments. Futures are highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of futures requires an understanding not only of the underlying instrument but also of the futures contract itself. Futures may be subject to the risk factors generally applicable to derivatives transactions described herein, and may also be subject to certain additional risk factors, including:

■ The risk of loss in buying and selling futures contracts can be substantial. Small price movements in the commodity, security, index, currency or instrument underlying a futures position may result in immediate and substantial loss (or gain) to a Fund.

■ Buying and selling futures contracts may result in losses in excess of the amount invested in the position in the form of initial margin. In the event of adverse price movements in the underlying commodity, security, index, currency or instrument, a Fund would be required to make daily cash payments to maintain its required margin. A Fund may be required to sell portfolio securities, or make or take delivery of the underlying securities in order to meet daily margin requirements at a time when it may be disadvantageous to do so. A Fund could lose margin payments deposited with an FCM if the FCM breaches its agreement with a Fund, becomes insolvent or declares bankruptcy.

■ Most exchanges limit the amount of fluctuation permitted in futures contract prices during any single trading day. Once the daily limit has been reached in a particular futures contract, no trades may be made on that day at prices beyond that limit. If futures contract prices were to move to the daily limit for several trading days with little or no trading, a Fund could be prevented from prompt liquidation of a futures position and subject to substantial losses. The daily limit governs only price movements during a single trading day and therefore does not limit a Fund's potential losses.

■ Index futures based upon a narrower index of securities may present greater risks than futures based on broad market indices, as narrower indices are more susceptible to rapid and extreme fluctuations as a result of changes in value of a small number of securities.

**19**

------

[Back To **Table of Contents**](#TOC_15545)

**High Yield Securities.** High yield securities are generally considered to include fixed-income securities rated below the four highest rating categories at the time of purchase (e.g., Ba through C by Moody's, or BB through D by S&P or Fitch) and unrated fixed-income securities considered by the Adviser to be of equivalent quality. High yield securities are not considered investment grade and are commonly referred to as "junk bonds" or high yield, high risk securities. Investment grade securities that a Fund holds may be downgraded to below investment grade by the rating agencies. If a Fund holds a security that is downgraded, the Fund may choose to retain the security.

While high yield securities offer higher yields, they also normally carry a high degree of credit risk and are considered speculative by the major credit rating agencies. High yield securities may be issued as a consequence of corporate restructuring or similar events. High yield securities are often issued by smaller, less creditworthy issuers, or by highly leveraged (indebted) issuers, that are generally less able than more established or less leveraged issuers to make scheduled payments of interest and principal. In comparison to investment grade securities, the price movement of these securities is influenced less by changes in interest rates and more by the financial and business position of the issuer. The values of high yield securities are more volatile and may react with greater sensitivity to market changes.

High yield securities are frequently ranked junior to claims by other creditors. If the issuer cannot meet its obligations, the senior obligations are generally paid off before the junior obligations, which will potentially limit a Fund's ability to fully recover principal or to receive interest payments when senior securities are in default. Thus, investors in high yield securities have a lower degree of protection with respect to principal and interest payments then do investors in higher rated securities. In addition, lower-rated securities frequently have call or redemption features that would permit an issuer to repurchase the security from a Fund. If a call were exercised by the issuer during a period of declining interest rates, a Fund likely would have to replace such called security with a lower yielding security, thus decreasing the net investment income to the Fund and any dividends to investors.

The secondary market for high yield securities is concentrated in relatively few market makers and is dominated by institutional investors, including mutual funds, insurance companies and other financial institutions. Accordingly, the secondary market for such securities is not as liquid as, and is more volatile than, the secondary market for higher-rated securities. Because high yield securities are less liquid, judgment may play a greater role in valuing certain of a Fund's securities than is the case with securities trading in a more liquid market. Also, future legislation may have a possible negative impact on the market for high yield, high risk securities.

The credit rating of a high yield security does not necessarily address its market value risk. Ratings and market value may change from time to time, positively or negatively, to reflect new developments regarding the issuer.

The high yield securities markets may react strongly to adverse news about an issuer or the economy, or to the perception or expectation of adverse news, whether or not it is based on fundamental analysis. Additionally, prices for high yield securities may be affected by legislative and regulatory developments. These developments could adversely affect a Fund's NAV and investment practices, the secondary market for high yield securities, the financial condition of issuers of these securities and the value and liquidity of outstanding high yield securities, especially in a thinly traded market.

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

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

Inverse floating rate investments tend to underperform the market for fixed-rate bonds in a rising interest rate environment, but tend to outperform the market for fixed-rate bonds when interest rates decline or remain relatively stable. Inverse floating rate investments have varying degrees of liquidity.

**Investment Company Securities.** Investment company securities are equity securities and include securities of other open-end, closed-end and unregistered investment companies, including foreign investment companies, hedge funds and ETFs. A Fund may, to the extent noted in the Fund's non-fundamental limitations, invest in investment company securities as may be permitted by (i) the 1940 Act; (ii) the rules and regulations promulgated by the SEC under the 1940 Act; or (iii) an exemption or other relief applicable to the Fund from provisions of the 1940 Act. The 1940 Act generally prohibits an investment company from acquiring more than 3% of the outstanding voting shares of an investment company and limits such investments to no more than 5% of a Fund's total assets in any one investment company and no more than 10% in any combination of investment companies. The 1940 Act also prohibits a Fund from acquiring in the aggregate more than 10% of the outstanding voting shares of any registered closed-end

**20**

------

[Back To **Table of Contents**](#TOC_15545)

investment company. A Fund may invest in investment company securities of investment companies managed by the Adviser or its affiliates to the extent permitted under the 1940 Act or as otherwise authorized by the SEC. To the extent a Fund invests a portion of its assets in investment company securities, those assets will be subject to the risks of the purchased investment company's portfolio securities, and a shareholder in the Fund will bear not only their proportionate share of the expenses of the Fund, but also, indirectly the expenses of the purchased investment company.

*Money Market Funds.* To the extent permitted by applicable law, a Fund may invest all or some of its short term cash investments in any money market fund advised or managed by the Adviser or its affiliates. In connection with any such investments, a Fund, to the extent permitted by the 1940 Act, will pay its share of all expenses (other than advisory and administrative fees) of a money market fund in which it invests, which may result in the Fund bearing some additional expenses. The rules governing money market funds: (1) permit (and, under certain circumstances, require) certain money market funds to impose a "liquidity fee" (up to 2%), or a "redemption gate" that temporarily restricts redemptions from a money market fund, if weekly liquidity levels fall below the required regulatory threshold, and (2) require "institutional money market funds" to operate with a floating NAV per share rounded to a minimum of the fourth decimal place in the case of a fund with a $1.0000 share price or an equivalent or more precise level of accuracy for money market funds with a different share price (e.g., $10.000 per share, or $100.00 per share). These may affect the investment strategies, performance and operating expenses of money market funds. "Government money market funds," as defined under Rule 2a-7 of the 1940 Act, are exempt from these requirements, though such funds may choose to opt-in to the implementation of liquidity fees and redemption gates.

*Exchange-Traded Funds.* The Funds may invest in ETFs. Investments in ETFs are subject to a variety of risks, including risks of a direct investment in the underlying securities that the ETF holds. For example, the general level of stock prices may decline, thereby adversely affecting the value of the underlying investments of the ETF and, consequently, the value of the ETF. In addition, the market value of the ETF shares may differ from their NAV because the supply and demand in the market for ETF shares at any point is not always identical to the supply and demand in the market for the underlying securities. Also, ETFs that track particular indices typically will be unable to match the performance of the index exactly due to, among other things, the ETF's operating expenses and transaction costs. ETFs typically incur fees that are separate from those fees incurred directly by the Funds. Therefore, as a shareholder in an ETF (as with other investment companies), a Fund would bear its ratable share of that entity's expenses. At the same time, the Fund would continue to pay its own investment management fees and other expenses. As a result, a Fund and its shareholders, in effect, will be absorbing duplicate levels of fees with respect to investments in ETFs. Further, certain of the ETFs in which a Fund may invest are leveraged. Leveraged ETFs seek to deliver multiples of the performance of the index or other benchmark they track and use derivatives in an effort to amplify the returns of the underlying index or benchmark. While leveraged ETFs may offer the potential for greater return, the potential for loss and the speed at which losses can be realized also are greater. Most leveraged ETFs "reset" daily, meaning they are designed to achieve their stated objectives on a daily basis. Leveraged ETFs can deviate substantially from the performance of their underlying benchmark over longer periods of time, particularly in volatile periods. The more a Fund invests in such leveraged ETFs, the more this leverage will magnify any losses on those investments. Furthermore, disruptions in the markets for the securities underlying ETFs purchased or sold by the Fund could result in losses on the Fund's investment in ETFs.

**Illiquid Investments.** In accordance with Rule 22e-4 (the "Liquidity Rule") under the 1940 Act, each Fund may invest up to 15% of its net assets in "illiquid investments" that are assets. For these purposes, "illiquid investments" are investments that a Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. For each Fund, each portfolio investment must be classified at least monthly into one of four liquidity categories (illiquid, as discussed above, as well as highly liquid, moderately liquid and less liquid), which are defined pursuant to the Liquidity Rule and classified in accordance with the Fund's written liquidity risk management program by the program administrator designated by the Trust's Board of Trustees. Such classification is to be made using information obtained after reasonable inquiry and taking into account relevant market, trading and investment-specific considerations. In making such classifications, a Fund determines whether trading varying portions of a position in a particular portfolio investment or asset class, in sizes that the Fund would reasonably anticipate trading, is reasonably expected to significantly affect its liquidity. If so, this determination is taken into account when classifying the liquidity of that investment. The Funds may be assisted in classification determinations by one or more third-party service providers. Assets classified according to this process as "illiquid investments" are those subject to the 15% limit on illiquid investments.

In the event that changes in the portfolio or other external events cause a Fund to exceed this limit, the Fund must take steps to bring its illiquid investments that are assets to or below the applicable limit of its net assets within a reasonable period of time. This requirement would not force a Fund to liquidate any portfolio investment.

In addition to the limitation set forth above with respect to illiquid investments, the Ultra-Short Income Portfolio and the Ultra-Short Municipal Income Portfolio will not invest more than 10% of such Fund's net assets in illiquid securities, in accordance with the policy described below in Investment Limitations–Non-Fundamental Limitations.

**21**

------

[Back To **Table of Contents**](#TOC_15545)

**Investment Funds.** Some emerging market countries have laws and regulations that currently preclude direct investment or make it undesirable to invest directly in the securities of their companies. However, indirect investment in the securities of companies listed and traded on the stock exchanges in these countries is permitted by certain emerging market countries through investment funds that have been specifically authorized. A Fund may invest in these investment funds subject to the provisions of the 1940 Act, as applicable, and other applicable laws. The Funds will invest in such investment funds only where appropriate given that the Fund's shareholders will bear indirectly the layer of expenses of the underlying investment funds in addition to their proportionate share of the expenses of the Fund.

**Investment Grade Securities.** Investment grade securities are fixed-income securities rated by one or more of the rating agencies in one of the four highest rating categories at the time of purchase (e.g., AAA, AA, A or BBB by S&P or Fitch or Aaa, Aa, A or Baa by Moody's) or determined to be of equivalent quality by the Adviser. Securities rated BBB or Baa represent the lowest of four levels of investment grade securities and are regarded as borderline between sound obligations and those in which speculative elements predominate. A Fund is permitted to hold investment grade securities or "high grade" securities, and may hold unrated securities if the Adviser considers the risks involved in owning that security to be equivalent to the risks involved in holding an investment grade security. Ratings assigned to fixed-income securities represent only the opinion of the rating agency assigning the rating and are not dispositive of the credit risk associated with the purchase of a particular fixed-income security. Moreover, market risk also will affect the prices of even the highest rated fixed-income securities so that their prices may rise or fall even if the issuer's capacity to repay its obligations remains unchanged.

**IPOs.** Certain Funds may purchase equity securities issued as part of, or a short period after, a company's initial public offering ("IPO"), and may at times dispose of those securities shortly after their acquisition. A Fund's purchase of securities issued in IPOs exposes it to the risks associated with companies that have little operating history as public companies, as well as to the risks inherent in those sectors of the market where these issuers operate. The market for IPO issuers has been volatile, and share prices of newly-public companies have fluctuated significantly over short periods of time.

**LIBOR Discontinuance or Unavailability Risk.** A Fund's investments, payment obligations and financing terms may be based on floating rates, such as the London Interbank Offered Rates (collectively, "LIBOR"), Euro Interbank Offered Rate and other similar types of reference rates (each, a "Reference Rate"). These Reference Rates are generally intended to represent the rate at which contributing banks may obtain short-term borrowings from each other within certain financial markets. On July 27, 2017, the Chief Executive of the UK Financial Conduct Authority ("FCA"), which regulates LIBOR, announced that the FCA will no longer persuade nor require banks to submit rates for the calculation of LIBOR and certain other Reference Rates after 2021. Such announcement indicates that the continuation of LIBOR and other Reference Rates on the current basis cannot and will not be guaranteed after the end of 2021. On March 5, 2021, the FCA announced that LIBOR will either cease to be provided by any administrator, or no longer be representative for many LIBOR settings after December 31, 2021, and for the most widely used tenors of U.S. dollar LIBOR after June 30, 2023. In addition, in connection with supervisory guidance from regulators, many regulated entities have ceased to enter into new LIBOR-based contracts after January 1, 2022. These announcements and developments and any additional regulatory or market changes may have an adverse impact on a Fund or its investments.

Regulators and market participants are currently engaged in identifying successor Reference Rates ("Alternative Reference Rates"). Additionally, it is expected that market participants will focus on the transition mechanisms by which the Reference Rates in existing contracts or instruments may be amended, whether through marketwide protocols, fallback contractual provisions, bespoke negotiations or amendments or otherwise. Nonetheless, the termination of certain Reference Rates presents risks to a Fund. At this time, it is not possible to completely identify or predict the effect of any such changes, any establishment of Alternative Reference Rates or any other reforms to Reference Rates that may be enacted in the UK or elsewhere. The elimination of a Reference Rate or any other changes or reforms to the determination or supervision of Reference Rates could have an adverse impact on the market for or value of any securities or payments linked to those Reference Rates and other financial obligations held by a Fund or on its overall financial condition or results of operations. To identify a successor rate for US dollar LIBOR, the Alternative Reference Rates Committee ("ARRC"), a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, was formed. The ARRC has identified Secured Overnight Financing Rate ("SOFR") as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by the U.S. Treasury securities, and is based on directly observable U.S. Treasury backed repurchase transactions. On December 6, 2021, the ARRC released a statement selecting and recommending forms of SOFR, along with associated spread adjustments and conforming changes, to replace references to 1-week and 2-month US dollar LIBOR. It is expected that a substantial portion of future floating rate investments will be linked to SOFR. At this time, it is not possible to predict the effect of the transition to SOFR.

The transition process might lead to increased volatility and illiquidity in markets that currently rely on Reference Rates to determine interest rates. It could also lead to a reduction in the value of some Reference Rate-based investments held by a Fund and reduce the effectiveness of new hedges placed against existing Reference Rate-based instruments. While market participants are endeavoring to minimize the economic impact of the transition from Reference Rates to Alternative Reference Rates, the transition away from LIBOR and certain other Reference Rates could, among other negative consequences:

**22**

------

[Back To **Table of Contents**](#TOC_15545)

■ Adversely impact the pricing, liquidity, value of, return on and trading for a broad array of financial products, including any Reference Rate-linked securities, loans and derivatives in which a Fund may invest;

■ Require extensive negotiations of and/or amendments to agreements and other documentation governing Reference Rate-linked investments products;

■ Lead to disputes, litigation or other actions with counterparties or portfolio companies regarding the interpretation and enforceability of "fallback" provisions that provide for an alternative reference rate in the event of Reference Rate unavailability; or

■ Cause a Fund to incur additional costs in relation to any of the above factors.

The risks associated with the above factors, including decreased liquidity, are heightened with respect to investments in Reference Rate-based products that do not include a fallback provision that addresses how interest rates will be determined if LIBOR and certain other Reference Rates stop being published. Even with some Reference Rate-based instruments that may contemplate a scenario where Reference Rates are no longer available by providing for an alternative rate-setting methodology and/or increased costs for certain Reference Rate-related instruments or financing transactions, there may be significant uncertainty regarding the effectiveness of any such alternative methodologies, resulting in prolonged adverse market conditions for a Fund. In many cases, in the event that an instrument falls back to an Alternative Reference Rate, the Alternative Reference Rate would not perform the same as the Reference Rate being replaced would have and may not include adjustments to such rates that are reflective of current economic circumstances or differences between such rate and LIBOR. Since the usefulness of LIBOR and certain other Reference Rates as benchmarks could deteriorate during the transition period, these effects could occur prior to June 2023 for those Reference Rates which are expected to be discontinued at that time. There also remains uncertainty and risk regarding the willingness and ability of issuers to include enhanced provisions in new and existing contracts or instruments. In addition, when a Reference Rate is discontinued, the Alternative Reference Rate may be lower than market expectations, which could have an adverse impact on the value of preferred and debt securities with floating or fixed-to-floating rate coupons. Various pieces of legislation, including recent federal legislation and laws enacted by the states of New York and Alabama, may affect the transition of LIBOR-based instruments as well by permitting trustees and calculation agents to transition instruments with no LIBOR transition language to an Alternative Reference Rate provided for in such legislation. Such pieces of legislation also include safe harbors from liability, which may limit the recourse a Fund may have if the Alternative Reference Rate does not fully compensate the Fund for the transition of an instrument from LIBOR. It is uncertain what impact any such legislation may have. In addition, any Alternative Reference Rate and any pricing adjustments imposed by a regulator or counterparties or otherwise may adversely affect a Fund's performance or NAV.

**Limited Partnership and Limited Liability Company Interests.** A limited partnership interest entitles a Fund to participate in the investment return of the partnership's assets as defined by the agreement among the partners. As a limited partner, a Fund generally is not permitted to participate in the management of the partnership. However, unlike a general partner whose liability is not limited, a limited partner's liability generally is limited to the amount of its commitment to the partnership. A Fund may invest in limited liability company interests to the same extent it invests in limited partnership interests. Limited liability company interests have similar characteristics as limited partnership interests.

**Loan-Related Investments.** Loan-related investments may include, without limitation, bank loans, direct lending and loan participations and assignments. In addition to risks generally associated with debt investments, loan-related investments are subject to other risks. Loans in which a Fund may invest may not be rated by a rating agency, will not be registered with the SEC or any state securities commission and will not be listed on any national securities exchange. Investors in loans, such as a Fund, may not be entitled to rely on the anti-fraud protections of the federal securities laws, although they may be entitled to certain contractual remedies. The amount of public information available with respect to loans will generally be less extensive than that available for registered or exchange-listed securities. In evaluating the creditworthiness of borrowers, the Adviser will consider, and may rely in part on, analyses performed by others.

The market for loan obligations may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. Because transactions in many loans are subject to extended trade settlement periods, a Fund may not receive the proceeds from the sale of a loan for a period after the sale. As a result, sale proceeds related to the sale of loans may not be available to make additional investments or to meet a Fund's redemption obligations for a period after the sale of the loans, and, as a result, the Fund may have to sell other investments or engage in borrowing transactions, such as borrowing from its credit facility, if necessary to raise cash to meet its obligations. In addition, a Fund may not be able to readily dispose of its loans at prices that approximate those at which the Fund could sell such loans if they were more widely-traded and, as a result of such illiquidity, a Fund may have to hold additional cash or sell other investments or engage in borrowing transactions, such as borrowing from its credit facility, if necessary to raise cash to meet its obligations, including redemption obligations. To the extent a readily available market ceases to exist for a particular investment, such investment would be treated as illiquid for purposes of a Fund's limitations on illiquid investments.

Loans are subject to the risk of non-payment of scheduled interest or principal. Such non-payment would result in a reduction of income to a Fund, a reduction in the value of the investment and a potential decrease in the Fund's NAV. There can be no assurance that the liquidation of any collateral securing a loan would satisfy a borrower's obligation in the event of non-payment of scheduled

**23**

------

[Back To **Table of Contents**](#TOC_15545)

interest or principal payments, or that such collateral could be readily liquidated. In the event of bankruptcy of a borrower, a Fund could experience delays or limitations with respect to its ability to realize the benefits of the collateral securing a loan. The collateral securing a loan may lose all or substantially all of its value in the event of the bankruptcy of a borrower. Some loans are subject to the risk that a court, pursuant to fraudulent conveyance or other similar laws, could subordinate such loans to presently existing or future indebtedness of the borrower or take other action detrimental to the holders of loans including, in certain circumstances, invalidating such loans or causing interest previously paid to be refunded to the borrower. If interest were required to be refunded, it could negatively affect a Fund's performance.

*Direct Lending*. When a Fund acts as a direct lender, it may participate in structuring the loan. Under these circumstances, it will have a direct contractual relationship with the borrower, may enforce compliance by the borrower with the terms of the loan agreement and may have rights with respect to any funds acquired by other lenders through set-off. Lenders also have full voting and consent rights under the applicable loan agreement. Action subject to lender vote or consent generally requires the vote or consent of the holders of some specified percentage of the outstanding principal amount of the loan. Certain decisions, such as reducing the amount of interest on or principal of a loan, releasing collateral, changing the maturity of a loan or a change in control of the borrower, frequently require the unanimous vote or consent of all lenders affected.

*Loan Participations and Assignments.* Loan participations are interests in loans or other direct debt instruments relating to amounts owed by a corporate, governmental or other borrower to another party. These loans may represent amounts owed to lenders or lending syndicates, to suppliers of goods or services (trade claims or other receivables), or to other parties ("Lenders") and may be fixed-rate or floating rate. These loans also may be arranged through private negotiations between an issuer of sovereign debt obligations and Lenders.

A Fund's investments in loans may be in the form of a participation in loans ("Participations") and assignments of all or a portion of loans ("Assignments") from third parties. In the case of a Participation, a Fund will have the right to receive payments of principal, interest and any fees to which it is entitled only from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In the event of an insolvency of the Lender selling a Participation, a Fund may be treated as a general creditor of the Lender and may not benefit from any set-off between the Lender and the borrower. Certain Participations may be structured in a manner designed to avoid purchasers of Participations being subject to the credit risk of the Lender with respect to the Participation. Even under such a structure, in the event of a Lender's insolvency, the Lender's servicing of the Participation may be delayed and the assignability of the Participation may be impaired. A Fund will acquire Participations only if the Lender interpositioned between a Fund and the borrower is determined by the Adviser to be creditworthy.

When a Fund purchases Assignments from Lenders it will acquire direct rights against the borrower on the loan. However, because Assignments are arranged through private negotiations between potential assignees and potential assignors, the rights and obligations acquired by a Fund as the purchaser of an Assignment may differ from, and be more limited than, those held by the assigning Lender. Because there is no liquid market for Participations and Assignments, it is likely that such securities could be sold only to a limited number of institutional investors. The lack of a liquid secondary market may have an adverse impact on the value of such securities and a Fund's ability to dispose of particular Assignments or Participations when necessary to meet a Fund's liquidity needs or in response to a specific economic event, such as a deterioration in the creditworthiness of the borrower. The lack of a liquid secondary market for Participations and Assignments also may make it more difficult for a Fund to assign a value to these securities for purposes of valuing a Fund's securities and calculating its NAV.

Participations and Assignments involve a risk of loss in case of default or insolvency of the borrower. In addition, they may offer less legal protection to a Fund in the event of fraud or misrepresentation and may involve a risk of insolvency of the Lender. Certain Participations and Assignments may also include standby financing commitments that obligate the investing Fund to supply additional cash to the borrower on demand. Participations involving emerging market country issuers may relate to loans as to which there has been or currently exists an event of default or other failure to make payment when due, and may represent amounts owed to Lenders that are themselves subject to political and economic risks, including the risk of currency devaluation, expropriation, or failure. Such Participations and Assignments present additional risk of default or loss.

Bank loans generally are negotiated between a borrower and several financial institutional lenders represented by one or more lenders acting as agent of all the lenders. The agent is responsible for negotiating the loan agreement that establishes the terms and conditions of the loan and the rights of the borrower and the lenders, monitoring any collateral, and collecting principal and interest on the loan. By investing in a loan, a Fund becomes a member of a syndicate of lenders. Investments in bank loans entail those risks described above, such as liquidity risk and risk of default.

Some of the loans in which a Fund may invest or obtain exposure to may be "covenant lite" loans. Certain financial institutions may define "covenant lite" loans differently. Covenant lite loans or securities, which have varied terms and conditions, may contain fewer or no restrictive covenants compared to other loans that might enable an investor to proactively enforce financial covenants or prevent undesired actions by the borrower. As a result, a Fund may experience relatively greater difficulty or delays in enforcing its

**24**

------

[Back To **Table of Contents**](#TOC_15545)

rights on its holdings of certain covenant lite loans and debt securities than its holdings of loans or securities with more traditional financial covenants, which may result in losses to the Fund.

**Loans of Portfolio Securities.** Each Fund may lend its portfolio securities to brokers, dealers, banks and other institutional investors. By lending its portfolio securities, a Fund attempts to increase its net investment income through the receipt of interest on the cash collateral with respect to the loan or fees received from the borrower in connection with the loan. Any gain or loss in the market price of the securities loaned that might occur during the term of the loan would be for the account of the Fund. Each Fund employs an agent to implement the securities lending program and the agent receives a fee from the Funds for its services. A Fund will not lend more than 33⅓% of the value of its total assets.

Each Fund may lend its portfolio securities so long as the terms, structure and the aggregate amount of such loans are not inconsistent with the 1940 Act or the rules and regulations or interpretations of the SEC thereunder, which currently require that (i) the borrower pledge and maintain with the Fund collateral consisting of liquid, unencumbered assets having a value not less than 100% of the value of the securities loaned; (ii) the borrower adds to such collateral whenever the price of the securities loaned rises (i.e., the borrower "marks-to-market" on a daily basis); (iii) the loan be made subject to termination by the Fund at any time; and (iv) the Fund receives a reasonable return on the loan (which may include the Fund investing any cash collateral in interest bearing short-term investments), any distributions on the loaned securities and any increase in their market value. In addition, voting rights may pass with the loaned securities, but a Fund will retain the right to call any security in anticipation of a vote that the Adviser deems material to the security on loan.

Loans of securities involve a risk that the borrower may fail to return the securities or may fail to maintain the proper amount of collateral, which may result in a loss of money by a Fund. There may be risks of delay and costs involved in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially. These delays and costs could be greater for foreign securities. However, loans will be made only to borrowers deemed by the Adviser to be creditworthy and when, in the judgment of the Adviser, the income that can be earned from such securities loans justifies the attendant risk. All relevant facts and circumstances, including the creditworthiness of the broker, dealer, bank or institution, will be considered in making decisions with respect to the lending of securities, subject to review by the Trust's Board of Trustees. Each Fund also bears the risk that the reinvestment of collateral will result in a principal loss. Finally, there is the risk that the price of the securities will increase while they are on loan and the collateral will not be adequate to cover their value.

**Mortgage-Related Securities.** Mortgage-related securities are securities that, directly or indirectly, represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage-related securities include collateralized mortgage obligations and MBS issued or guaranteed by agencies or instrumentalities of the U.S. Government or by private sector entities.

*Mortgage-Backed Securities.* With MBS, many mortgagees' obligations to make monthly payments to their lending institution are pooled together and the risk of the mortgagees' payment obligations is passed through to investors. The pools are assembled by various governmental, government-related and private organizations. A Fund may invest in securities issued or guaranteed by Ginnie Mae, Freddie Mac or Fannie Mae, private issuers and other government agencies. MBS issued by non-agency issuers, whether or not such securities are subject to guarantees, may entail greater risk, since private issuers may not be able to meet their obligations under the policies. If there is no guarantee provided by the issuer, a Fund will purchase only MBS that, at the time of purchase, are rated investment grade by one or more NRSROs or, if unrated, are deemed by the Adviser to be of comparable quality.

MBS are issued or guaranteed by private sector originators of or investors in mortgage loans and structured similarly to governmental pass-through securities. Because private pass-throughs typically lack a guarantee by an entity having the credit status of a governmental agency or instrumentality, however, they are generally structured with one or more of the types of credit enhancement described below. Fannie Mae and Freddie Mac obligations are not backed by the full faith and credit of the U.S. Government as Ginnie Mae certificates are. Freddie Mac securities are supported by Freddie Mac's right to borrow from the U.S. Treasury. Each of Ginnie Mae, Fannie Mae and Freddie Mac guarantees timely distributions of interest to certificate holders. Each of Ginnie Mae and Fannie Mae also guarantees timely distributions of scheduled principal. Although Freddie Mac has in the past guaranteed only the ultimate collection of principal of the underlying mortgage loan, Freddie Mac now issues MBS (Freddie Mac Gold PCS) that also guarantee timely payment of monthly principal reductions. Resolution Funding Corporation obligations are backed, as to principal payments, by zero coupon U.S. Treasury bonds and, as to interest payments, ultimately by the U.S. Treasury.

There are two methods of trading MBS. A specified pool transaction is a trade in which the pool number of the security to be delivered on the settlement date is known at the time the trade is made. This is in contrast with the typical MBS transaction, called a to-be-announced ("TBA") transaction, in which the type of MBS to be delivered is specified at the time of trade but the actual pool numbers of the securities that will be delivered are not known at the time of the trade. The pool numbers of the pools to be delivered at settlement are announced shortly before settlement takes place. The terms of the TBA trade may be made more specific if desired. Generally, agency pass-through MBS are traded on a TBA basis. Investments in TBAs may give rise to a form of leverage and may cause a Fund's portfolio turnover rate to appear higher. Leverage may cause a Fund to be more volatile than if the Fund had not been leveraged.

**25**

------

[Back To **Table of Contents**](#TOC_15545)

Like fixed-income securities in general, MBS will generally decline in price when interest rates rise. Rising interest rates also tend to discourage refinancings of home mortgages, with the result that the average life of MBS held by a Fund may be lengthened. As average life extends, price volatility generally increases. This extension of average life causes the market price of the MBS to decrease further when interest rates rise than if their average lives were fixed. However, when interest rates fall, mortgages may not enjoy as large a gain in market value due to prepayment risk because additional mortgage prepayments must be reinvested at lower interest rates. Faster prepayment will shorten the average life and slower prepayments will lengthen it. However, it is possible to determine what the range of the average life movement could be and to calculate the effect that it will have on the price of the MBS. In selecting MBS, the Adviser looks for those that offer a higher yield to compensate for any variation in average maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, a Fund may fail to fully recoup its initial investment in these securities, even if the security is in one of the highest rating categories. A Fund may invest, without limit, in MBS issued by private issuers when the Adviser deems that the quality of the investment, the quality of the issuer, and market conditions warrant such investments. A Fund will purchase securities issued by private issuers that are rated investment grade at the time of purchase by Moody's, Fitch or S&P or are deemed by the Adviser to be of comparable investment quality.

*Fannie Mae Certificates.* Fannie Mae is a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act of 1938. Each Fannie Mae certificate represents a pro rata interest in one or more pools of mortgage loans insured by the Federal Housing Administration under the National Housing Act of 1934, as amended (the "Housing Act"), or Title V of the Housing Act of 1949 ("FHA Loans"), or guaranteed by the Department of Veteran Affairs under the Servicemen's Readjustment Act of 1944, as amended ("VA Loans"), or conventional mortgage loans (i.e., mortgage loans that are not insured or guaranteed by any governmental agency) of the following types: (i) fixed rate level payment mortgage loans; (ii) fixed rate growing equity mortgage loans; (iii) fixed rate graduated payment mortgage loans; (iv) variable rate California mortgage loans; (v) other adjustable rate mortgage loans; and (vi) fixed rate and adjustable mortgage loans secured by multi-family projects.

*Freddie Mac Certificates.* Freddie Mac is a corporate instrumentality of the United States created pursuant to the Emergency Home Finance Act of 1970, as amended (the "FHLMC Act"). Freddie Mac certificates represent a pro rata interest in a group of mortgage loans (a "Freddie Mac Certificate group") purchased by Freddie Mac. The mortgage loans underlying the Freddie Mac Certificates consist of fixed rate or adjustable rate mortgage loans with original terms to maturity of between ten and thirty years, substantially all of which are secured by first liens on one-to-four-family residential properties or multi-family projects. Each mortgage loan must meet the applicable standards set forth in the FHLMC Act. A Freddie Mac Certificate group may include whole loans, participation interests in whole loans and undivided interests in whole loans and participations comprising another Freddie Mac Certificate group.

*Ginnie Mae Certificates.* Ginnie Mae is a wholly-owned corporate instrumentality of the United States within the Department of Housing and Urban Development. The Housing Act authorizes Ginnie Mae to guarantee the timely payment of the principal and interest on certificates that are based on and backed by a pool of FHA Loans, VA Loans or by pools of other eligible mortgage loans. The Housing Act provides that the full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guaranty. In order to meet its obligations under such guaranty, Ginnie Mae is authorized to borrow from the U.S. Treasury with no limitations as to amount.

Each Ginnie Mae certificate represents a pro rata interest in one or more of the following types of mortgage loans: (i) fixed rate level payment mortgage loans; (ii) fixed rate graduated payment mortgage loans; (iii) fixed rate growing equity mortgage loans; (iv) fixed rate mortgage loans secured by manufactured (mobile) homes; (v) mortgage loans on multi-family residential properties under construction; (vi) mortgage loans on completed multi-family projects; (vii) fixed rate mortgage loans as to which escrowed funds are used to reduce the borrower's monthly payments during the early years of the mortgage loans ("buydown" mortgage loans); (viii) mortgage loans that provide for adjustments in payments based on periodic changes in interest rates or in other payment terms of the mortgage loans; and (ix) mortgage-backed serial notes. All of these mortgage loans will be FHA Loans or VA loans and, except as otherwise specified above, will be fully-amortizing loans secured by first liens on one-to-four-family housing units.

**Collateralized Mortgage Obligations.** Certain Funds may invest in collateralized mortgage obligations ("CMOs"), which are MBS that are collateralized by mortgage loans or mortgage pass-through securities, and multi-class pass-through securities, which are equity interests in a trust composed of mortgage loans or other MBS. Unless the context indicates otherwise, the discussion of CMOs below also applies to multi-class pass-through securities.

CMOs may be issued by governmental or government-related entities or by private entities, such as banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market traders. CMOs are issued in multiple classes, often referred to as "tranches," with each tranche having a specific fixed or floating coupon rate and stated maturity or final distribution date. Under the traditional CMO structure, the cash flows generated by the mortgages or mortgage pass-through securities in the collateral pool are used to first pay interest and then pay principal to the holders of the CMOs. Subject to the various provisions of individual CMO issues, the cash flow generated by the underlying collateral (to the extent it exceeds the amount required to pay the stated interest) is used to retire the bonds.

**26**

------

[Back To **Table of Contents**](#TOC_15545)

The principal and interest on the underlying collateral may be allocated among the several tranches of a CMO in innumerable ways, including "interest only" and "inverse interest only" tranches. In a common CMO structure, the tranches are retired sequentially in the order of their respective stated maturities or final distribution dates (as opposed to the pro-rata return of principal found in traditional pass-through obligations). The fastest-pay tranches would initially receive all principal payments. When those tranches are retired, the next tranches in the sequence receive all of the principal payments until they are retired. The sequential retirement of bond groups continues until the last tranche is retired. Accordingly, the CMO structure allows the issuer to use cash flows of long maturity, monthly-pay collateral to formulate securities with short, intermediate, and long final maturities and expected average lives and risk characteristics.

The primary risk of CMOs is the uncertainty of the timing of cash flows that results from the rate of prepayments on the underlying mortgages serving as collateral and from the structure of the particular CMO transaction (that is, the priority of the individual tranches). An increase or decrease in prepayment rates (resulting from a decrease or increase in mortgage interest rates) may cause the CMOs to be retired substantially earlier than their stated maturities or final distribution dates and will affect the yield and price of CMOs. In addition, if the collateral securing CMOs or any third-party guarantees are insufficient to make payments, a Fund could sustain a loss. The prices of certain CMOs, depending on their structure and the rate of prepayments, can be volatile. Some CMOs may also not be as liquid as other types of mortgage-backed securities. As a result, it may be difficult or impossible to sell the securities at an advantageous time or price.

Privately issued CMOs are arrangements in which the underlying mortgages are held by the issuer, which then issues debt collateralized by the underlying mortgage assets. Such securities may be backed by mortgage insurance, letters of credit, or other credit enhancing features. Although payment of the principal of, and interest on, the underlying collateral securing privately issued CMOs may be guaranteed by the U.S. Government or its agencies and instrumentalities, these CMOs represent obligations solely of the private issuer and are not insured or guaranteed by the U.S. Government, its agencies and instrumentalities or any other person or entity. Privately issued CMOs are subject to prepayment risk due to the possibility that prepayments on the underlying assets will alter the cash flow. Yields on privately issued CMOs have been historically higher than the yields on CMOs backed by mortgages guaranteed by U.S. government agencies and instrumentalities. The risk of loss due to default on privately issued CMOs, however, is historically higher since the U.S. Government has not guaranteed them.

New types of CMO tranches have evolved. These include floating rate CMOs, planned amortization classes, accrual bonds and CMO residuals. These newer structures affect the amount and timing of principal and interest received by each tranche from the underlying collateral. For example, an inverse interest-only class CMO entitles holders to receive no payments of principal and to receive interest at a rate that will vary inversely with a specified index or a multiple thereof. Under certain of these newer structures, given classes of CMOs have priority over others with respect to the receipt of prepayments on the mortgages. Therefore, depending on the type of CMOs in which a Fund invests, the investment may be subject to a greater or lesser risk of prepayment than other types of MBS.

CMOs may include real estate mortgage investment conduits ("REMICs"). REMICs, which were authorized under the Tax Reform Act of 1986, are private entities formed for the purpose of holding a fixed pool of mortgages secured by an interest in real property. A REMIC is a CMO that qualifies for special tax treatment under the Code, and invests in certain mortgages principally secured by interests in real property.

A Fund may invest in, among others, parallel pay CMOs and planned amortization class CMOs ("PAC Bonds"). Parallel pay CMOs are structured to provide payments of principal on each payment date to more than one tranche. These simultaneous payments are taken into account in calculating the stated maturity date or final distribution date of each tranche which, as with other CMO structures, must be retired by its stated maturity date or final distribution date but may be retired earlier. PAC Bonds are a form of parallel pay CMO, with the required principal payment on such securities having the highest priority after interest has been paid to all classes. PAC Bonds generally require payments of a specified amount of principal on each payment date.

**Stripped Mortgage-Backed Securities.** Certain Funds may invest in stripped mortgage-backed securities ("SMBS"). An SMBS is a derivative multi-class mortgage-backed security. SMBS usually are structured with two classes that receive different proportions of the interest and principal distribution on a pool of mortgage assets. In the most extreme case, one class will receive all of the interest (the interest-only or "IO" class), while the other class will receive all of the principal (the principal-only or "PO" class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on such security's yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, a Fund may fail to fully recoup its initial investment in these securities. Conversely, if the underlying mortgage assets experience less than anticipated prepayments of principal, the yield of POs could be materially adversely affected. The market values of IOs and POs are subject to greater risk of fluctuation in response to changes in market rates of interest than many other types of mortgage-backed securities. To the extent a Fund invests in IOs and POs, it may increase the risk of fluctuations in the NAV of a Fund.

**27**

------

[Back To **Table of Contents**](#TOC_15545)

*Credit Enhancement.* Mortgage-related securities are often backed by a pool of assets representing the obligations of a number of parties. To lessen the effect of failure by obligors on underlying assets to make payments, these securities may have various types of credit support. Credit support falls into two primary categories: (i) liquidity protection, and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection generally refers to the provision of advances, typically by the entity administering the pool of assets, to ensure that the pass-through of payments due on the underlying pool occurs in a timely fashion. Protection against losses resulting from ultimate default enhances the likelihood of ultimate payment of the obligations on at least a portion of the assets in the pool. Such protection may be provided through guarantees, insurance policies or letters of credit obtained by the issuer or sponsor from third-parties (referred to herein as "third-party credit support"), through various means of structuring the transaction or through a combination of such approaches.

The ratings of mortgage-related securities for which third-party credit enhancement provides liquidity protection or protection against losses from default are generally dependent upon the continued creditworthiness of the provider of the credit enhancement. The ratings of such securities could decline in the event of deterioration in the creditworthiness of the credit enhancement provider even in cases where the delinquency and loss experience on the underlying pool of assets is better than expected.

Examples of credit support arising out of the structure of the transaction include "senior-subordinated securities" (multiple class securities with one or more classes subordinate to other classes as to the payment of principal and interest thereon, with defaults on the underlying assets being borne first by the holders of the most subordinated class), creation of "reserve funds" (where cash or investments, sometimes funded from a portion of the payments on the underlying assets, are held in reserve against future losses) and "over-collateralization" (where the scheduled payments on, or the principal amount of, the underlying assets exceed those required to make payment of the securities and pay any servicing or other fees). The degree of credit support provided for each security is generally based on historical information with respect to the level of credit risk associated with the underlying assets. Delinquency or loss in excess of that which is anticipated could adversely affect the return on an investment in such a security.

**Commercial Mortgage-Backed Securities.** Commercial mortgage-backed securities ("CMBS") are generally multi-class or pass-through securities issued by special purpose entities that represent an undivided interest in a portfolio of mortgage loans backed by commercial properties, including, but not limited to, industrial and warehouse properties, office buildings, retail space and shopping malls, hotels, healthcare facilities, multifamily properties and cooperative apartments. Private lenders, such as banks or insurance companies, originate these loans and then sell the loans directly into a CMBS trust or other entity. The commercial mortgage loans that underlie CMBS are generally not amortizing or not fully amortizing. That is, at their maturity date, repayment of the remaining principal balance or "balloon" is due and is repaid through the attainment of an additional loan or sale of this property. An extension of the final payment on commercial mortgages will increase the average life of the CMBS, generally resulting in a lower yield for discount bonds and a higher yield for premium bonds.

CMBS are subject to credit risk and prepayment risk. Although prepayment risk is present, it is of a lesser degree in the CMBS than in the residential mortgage market; commercial real estate property loans often contain provisions which substantially reduce the likelihood that such securities will be prepaid (e.g., significant prepayment penalties on loans and, in some cases, prohibition on principal payments for several years following origination).

**Municipals.** Municipal securities include debt obligations of states, territories or possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, the income on which is exempt from federal income tax at the time of issuance, in the opinion of bond counsel or other counsel to the issuers of such securities. Municipals include both municipal bonds (those securities with maturities of five years or more) and municipal notes (those with maturities of less than five years). Municipal bonds are issued for a wide variety of reasons: to construct public facilities, such as airports, highways, bridges, schools, hospitals, mass transportation, streets, water and sewer works; to obtain funds for operating expenses; to refund outstanding municipal obligations; and to loan funds to various public institutions and facilities. Certain industrial development bonds are also considered municipal bonds if their interest is exempt from federal income tax. Industrial development bonds are issued by, or on behalf of, public authorities to obtain funds for various privately-operated manufacturing facilities, housing, sports arenas, convention centers, airports, mass transportation systems and water, gas or sewage works. Industrial development bonds are ordinarily dependent on the credit quality of a private user, not the public issuer. Private activity bonds are another type of municipal security.

The two principal classifications of municipal bonds are "general obligation" and "revenue" or "special tax" bonds. General obligation bonds are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. Thus, these bonds may be vulnerable to limits on a government's power or ability to raise revenue or increase taxes and its ability to maintain a fiscally sound budget. The timely payments may also be influenced by any unfunded pension liabilities or other post-employee benefit plan liabilities. These bonds may also depend on legislative appropriation and/or funding or other support from other governmental bodies in order to make payments. Revenue or special tax bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other tax, but not from general tax revenues. As a result, these bonds historically have been subject to a greater risk of default than general obligation bonds because investors can look only to the revenue generated by the project or other revenue source backing the project, rather than to the general taxing authority of the state or local government issuer of the obligations.

**28**

------

[Back To **Table of Contents**](#TOC_15545)

Industrial revenue bonds in most cases are revenue bonds and generally do not have the pledge of the credit of the issuer. The payment of the principal and interest on such industrial revenue bonds is dependent solely on the ability of the user of the facilities financed by the bonds to meet its financial obligations and the pledge, if any, of real and personal property so financed as security for such payment. Short-term municipal obligations issued by states, cities, municipalities or municipal agencies, include tax anticipation notes, revenue anticipation notes, bond anticipation notes, construction loan notes and short-term discount notes.

Private activity bonds may be used by municipalities to finance the development of industrial facilities for use by private enterprise. Principal and interest payments are to be made by the private enterprise benefitting from the development, which means that the holder of the bond is exposed to the risk that the private issuer may default on the bond. The credit and quality of private activity bonds and industrial development bonds are usually related to the credit of the corporate user of the facilities. Payment of interest on and repayment of principal of such bonds is the responsibility of the corporate user (and/or any guarantor).

Municipal notes are issued to meet the short-term funding requirements of local, regional and state governments. Municipal notes include bond anticipation notes, revenue anticipation notes and tax and revenue anticipation notes. These are short-term debt obligations issued by state and local governments to aid cash flows while waiting for taxes or revenue to be collected, at which time the debt is retired. Other types of municipal notes in which a Fund may invest are construction loan notes, short-term discount notes, tax-exempt commercial paper, demand notes and similar instruments.

Municipal bonds generally include debt obligations issued by states and their political subdivisions, and duly constituted authorities and corporations, to obtain funds to construct, repair or improve various public facilities such as airports, bridges, highways, hospitals, housing, schools, streets and water and sewer works. Municipal bonds may also be issued to refinance outstanding obligations as well as to obtain funds for general operating expenses and for loans to other public institutions and facilities. In addition, municipal bonds may include obligations of municipal housing authorities and single-family mortgage revenue bonds. Weaknesses in federal housing subsidy programs and their administration may result in a decrease of subsidies available for payment of principal and interest on housing authority bonds. Economic developments, including fluctuations in interest rates and increasing construction and operating costs, may also adversely impact revenues of housing authorities. In the case of some housing authorities, inability to obtain additional financing could also reduce revenues available to pay existing obligations. Single-family mortgage revenue bonds are subject to extraordinary mandatory redemption at par in whole or in part from the proceeds derived from prepayments of underlying mortgage loans and also from the unused proceeds of the issue within a stated period which may be within a year from the date of issue.

Note obligations with demand or put options may have a stated maturity in excess of one year, but permit any holder to demand payment of principal plus accrued interest upon a specified number of days' notice. Frequently, such obligations are secured by letters of credit or other credit support arrangements provided by banks. The issuer of such notes normally has a corresponding right, after a given period, to repay at its discretion the outstanding principal of the note plus accrued interest upon a specific number of days' notice to the bondholders. The interest rate on a demand note may be based upon a known lending rate, such as the prime lending rate, and be adjusted when such rate changes, or the interest rate on a demand note may be a market rate that is adjusted at specified intervals. Each note purchased by the Funds will meet the quality criteria set out in the Prospectus for the Funds.

The yields of municipal bonds depend on, among other things, general money market conditions, conditions in the municipal bond market, the size of a particular offering, the maturity of the obligation, and the rating of the issue. The ratings of Moody's and S&P represent their opinions of the quality of the municipal bonds rated by them. It should be emphasized that such ratings are general and are not absolute standards of quality. Consequently, municipal bonds with the same maturity, coupon and rating may have different yields, while municipal bonds of the same maturity and coupon, but with different ratings, may have the same yield. It will be the responsibility of the Adviser and/or Sub-Adviser to appraise independently the fundamental quality of the bonds held by the Funds.

Municipal bonds are sometimes purchased on a "when-issued" or "delayed-delivery" basis, which means the Fund has committed to purchase certain specified securities at an agreed-upon price when they are issued. The period between commitment date and issuance date can be a month or more. It is possible that the securities will never be issued and the commitment canceled.

From time to time proposals have been introduced before Congress to restrict or eliminate the federal income tax exemption for interest on municipal bonds. Similar proposals may be introduced in the future.

Similarly, from time to time proposals have been introduced before state and local legislatures to restrict or eliminate the state and local income tax exemption for interest on municipal bonds. Similar proposals may be introduced in the future.

The Funds may also purchase bonds the income on which is subject to the alternative minimum tax ("AMT bonds"). AMT bonds are tax-exempt private activity bonds issued after August 7, 1986, the proceeds of which are directed, at least in part, to private, for-profit organizations. While the income from AMT bonds is exempt from regular federal income tax, it is a tax preference item in the calculation of the alternative minimum tax. The alternative minimum tax is a special separate tax that applies to some taxpayers who have certain adjustments to income or tax preference items.

**29**

------

[Back To **Table of Contents**](#TOC_15545)

An issuer of municipal securities may file for bankruptcy or otherwise seek to reorganize its debts by extending debt maturities, reducing the amount of principal or interest, refinancing the debt or taking other measures, in each case which may significantly affect the rights of creditors and the value of the municipal securities and the value of a Fund's investments in such municipal securities. In addition, changes to bankruptcy laws may adversely impact a Fund's investments in municipal securities, including creditor rights, if the issuer seeks bankruptcy protection.

Build America Bonds are taxable municipal securities on which the issuer receives federal support of the interest paid. Assuming certain specified conditions are satisfied, issuers of Build America Bonds may either (i) receive reimbursement from the U.S. Treasury with respect to a portion of its interest payments on the bonds ("direct pay" Build America Bonds) or (ii) provide tax credits to investors in the bonds ("tax credit" Build America Bonds). Unlike most other municipal securities, interest received on Build America Bonds is subject to federal and state income tax. Issuance of Build America Bonds ceased on December 31, 2010. The number of Build America Bonds available in the market is limited, which may negatively affect the value of the Build America Bonds.

The Trust may hold municipal private placements. These securities are sold through private negotiations, usually to institutions or mutual funds, and generally have resale restrictions. Their yields are usually higher than comparable public securities to compensate the investor for their limited marketability.

**Lease Obligations.** Included within the revenue bonds category in which a Fund may invest are participations in lease obligations or installment purchase contracts (hereinafter collectively called "lease obligations") of municipalities. State and local governments, agencies or authorities issue lease obligations to acquire equipment and facilities. Lease obligations may have risks not normally associated with general obligation or other revenue bonds. Leases, and installment purchase or conditional sale contracts (which may provide for title to the leased asset to pass eventually to the issuer), have developed as a means for governmental issuers to acquire property and equipment without the necessity of complying with the constitutional and statutory requirements generally applicable for the issuance of debt. Certain lease obligations contain "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the appropriate legislative body on an annual or other periodic basis. Consequently, continued lease payments on those lease obligations containing "non-appropriation" clauses are dependent on future legislative actions. If such legislative actions do not occur, the holders of the lease obligation may experience difficulty in exercising their rights, including disposition of the property.

In addition, lease obligations do not have the depth of marketability associated with more conventional municipal obligations, and, as a result, certain of such lease obligations may be considered illiquid securities. The Adviser, pursuant to procedures adopted by the Trustees, will make a determination as to the liquidity of each lease obligation purchased by the Funds. If a lease obligation is determined to be "liquid," the security will not be included within the category "illiquid securities."

**Non-Publicly Traded Securities, Private Placements and Restricted Securities.** The Funds may invest in securities that are neither listed on a stock exchange nor traded OTC, including privately placed and restricted securities. Such unlisted securities may involve a higher degree of business and financial risk that can result in substantial losses. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Fund or less than what may be considered the fair value of such securities. Furthermore, companies whose securities are not publicly traded may not be subject to the disclosure and other investor protection requirements which might be applicable if their securities were publicly traded. The illiquidity of the market, as well as the lack of publicly available information regarding these securities, may also adversely affect the ability of the Funds to arrive at a fair value for certain securities at certain times and could make it difficult for the Funds to sell certain securities. If such securities are required to be registered under the securities laws of one or more jurisdictions before being sold, a Fund may be required to bear the expenses of registration.

The Funds may purchase equity securities, in a private placement, that are issued by issuers who have outstanding, publicly-traded equity securities of the same class ("private investments in public equity" or "PIPEs"). Shares in PIPEs generally are not registered with the SEC until after a certain time period from the date the private sale is completed. This restricted period can last many months. Until the public registration process is completed, PIPEs are restricted as to resale and the Funds cannot freely trade the securities. Generally, such restrictions cause the PIPEs to be illiquid during this time. PIPEs may contain provisions that the issuer will pay specified financial penalties to the holder if the issuer does not publicly register the restricted equity securities within a specified period of time, but there is no assurance that the restricted equity securities will be publicly registered, or that the registration will remain in effect.

**Options.** An option is a contract that gives the holder of the option the right, but not the obligation, to buy from (in the case of a call option) or sell to (in the case of a put option) the buyer or seller, as applicable, of the option (the "option writer") the underlying instrument at a specified fixed price (the "exercise price") on or prior to a specified date for American options or only at expiration for European options (the "expiration date"). The buyer of the option pays to the option writer the option premium, which is the purchase price of the option.

**30**

------

[Back To **Table of Contents**](#TOC_15545)

Exchange-traded options are issued by a regulated intermediary such as the OCC, which guarantees the performance of the obligations of the parties to such options. OTC options are purchased from or sold to counterparties through direct bilateral agreements between a Fund and its counterparties. Certain options, such as options on individual securities, are settled through physical delivery of the underlying security, whereas other options, such as index options, may be settled in cash in an amount based on the difference between the value of the underlying instrument and the strike price, which is then multiplied by a specified multiplier.

*Writing Options.* Certain Funds may write call and put options. As the writer of a call option, a Fund receives the premium from the purchaser of the option and has the obligation, upon exercise of the option, to deliver the underlying security upon payment of the exercise price. If the option expires without being exercised a Fund is not required to deliver the underlying security and retains the premium received.

Certain Funds may only write call options that are "covered." A call option on a security is covered if (a) a Fund owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, such amount is maintained by a Fund in earmarked or segregated cash or liquid assets) upon conversion or exchange of other securities held by a Fund; or (b) a Fund has purchased a call on the underlying security, the exercise price of which is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written, provided the difference is maintained by a Fund in earmarked or segregated cash or liquid assets.

Selling call options involves the risk that a Fund may be required to sell the underlying security at a disadvantageous price, below the market price of such security, at the time the option is exercised. As the writer of a covered call option, a Fund forgoes, during the option's life, the opportunity to profit from increases in the market value of the underlying security covering the option above the sum of the premium and the exercise price but retains the risk of loss should the price of the underlying security decline.

Certain Funds may write put options. As the writer of a put option, a Fund receives the premium from the purchaser of the option and has the obligation, upon exercise of the option, to pay the exercise price and receive delivery of the underlying security. If the option expires without being exercised, a Fund is not required to receive the underlying security in exchange for the exercise price and retains the option premium.

A Fund may only write put options that are "covered." A put option on a security is covered if (a) a Fund earmarks or segregates cash or liquid assets equal to the exercise price; or (b) a Fund has purchased a put on the same security as the put written, the exercise price of which is (i) equal to or greater than the exercise price of the put written, or (ii) less than the exercise price of the put written, provided the difference is maintained by a Fund in earmarked or segregated cash or liquid assets.

Selling put options involves the risk that a Fund may be required to buy the underlying security at a disadvantageous price, above the market price of such security, at the time the option is exercised. While a Fund's potential gain in writing a covered put option is limited to the premium received plus the interest earned on the liquid assets covering the put option, a Fund's risk of loss is equal to the entire value of the underlying security, offset only by the amount of the premium received.

A Fund may close out an options position that it has written through a closing purchase transaction. A Fund could execute a closing purchase transaction with respect to a written call option by purchasing a call option on the same underlying security that has the same exercise price and expiration date as the call option written by a Fund. A Fund could execute a closing purchase transaction with respect to a put option written by purchasing a put option on the same underlying security and having the same exercise price and expiration date as the put option written by a Fund. A closing purchase transaction may or may not result in a profit to a Fund. A Fund can close out its position as an option writer only if a liquid market exists for options on the same underlying security that have the same exercise price and expiration date as the option written by a Fund. There is no assurance that such a market will exist with respect to any particular option.

The writer of an American option generally has no control over the time when the option is exercised and the option writer is required to deliver or acquire the underlying security. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option. Thus, the use of options may require a Fund to buy or sell portfolio securities at inopportune times or for prices other than the current market values of such securities, which may limit the amount of appreciation a Fund can realize on an investment, or may cause a Fund to hold a security that it might otherwise sell.

*Purchasing Options.* Certain Funds may purchase call and put options. As the buyer of a call option, a Fund pays the premium to the option writer and has the right to purchase the underlying security from the option writer at the exercise price. If the market price of the underlying security rises above the exercise price, a Fund could exercise the option and acquire the underlying security at a below-market price, which could result in a gain to a Fund, minus the premium paid. As the buyer of a put option, a Fund pays the premium to the option writer and has the right to sell the underlying security to the option writer at the exercise price. If the market price of the underlying security declines below the exercise price, a Fund could exercise the option and sell the underlying security at an above-market price, which could result in a gain to a Fund, minus the premium paid. A Fund may buy call and put options whether or not it holds the underlying securities.

**31**

------

[Back To **Table of Contents**](#TOC_15545)

As a buyer of a call or put option, a Fund may sell put or call options that it has purchased at any time prior to such option's expiration date through a closing sale transaction. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security in relation to the exercise price of the option, the volatility of the underlying security, the underlying security's dividend policy, and the time remaining until the expiration date. A closing sale transaction may or may not result in a profit to a Fund. A Fund's ability to initiate a closing sale transaction is dependent upon the liquidity of the options market and there is no assurance that such a market will exist with respect to any particular option. If a Fund does not exercise or sell an option prior to its expiration date, the option expires and becomes worthless.

*OTC Options.* Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of OTC options generally are established through negotiation between the parties to the options contract. This type of arrangement allows the purchaser and writer greater flexibility to tailor the option to their needs. OTC options are available for a greater variety of securities or baskets of securities, and in a wider range of expiration dates and exercise prices, than exchange-traded options. However, unlike exchange-traded options, which are issued and guaranteed by a regulated intermediary, such as the OCC, OTC options are entered into directly with the counterparty. Unless the counterparties provide for it, there is no central clearing or guaranty function for an OTC option. Therefore, OTC options are subject to the risk of default or non-performance by the counterparty. Accordingly, the Adviser must assess the creditworthiness of the counterparty to determine the likelihood that the terms of the option will be satisfied. There can be no assurance that a continuous liquid secondary market will exist for any particular OTC option at any specific time. As a result, a Fund may be unable to enter into closing sale transactions with respect to OTC options.

*Index Options.* Call and put options on indices operate similarly to options on securities. Rather than the right to buy or sell a single security at a specified price, options on an index give the holder the right to receive, upon exercise of the option, an amount of cash determined by reference to the difference between the value of the underlying index and the strike price. The underlying index may be a broad-based index or a narrower market index. Unlike many options on securities, all settlements are in cash. The settlement amount, which the writer of an index option must pay to the holder of the option upon exercise, is generally equal to the difference between the strike price of the option and the value of the underlying index, multiplied by a specified multiplier. The multiplier determines the size of the investment position the option represents. Gain or loss to a Fund on index options transactions will depend, in part, on price movements of the underlying index generally or in a particular segment of the index rather than price movements of individual components of the index. As with other options, a Fund may close out its position in index options through closing purchase transactions and closing sale transactions provided that a liquid secondary market exists for such options.

Index options written by a Fund will generally be covered in a manner similar to the covering of other types of options, by holding an offsetting financial position and/or earmarking or segregating cash or liquid assets. A Fund may cover call options written on an index by owning securities or other assets whose price changes, in the opinion of the Adviser, are expected to correlate to those of the underlying index.

*Foreign Currency Options.* Options on foreign currencies operate similarly to options on securities. Rather than the right to buy or sell a single security at a specified price, options on foreign currencies give the holder the right to buy or sell foreign currency for a fixed amount in U.S. dollars or other base currencies. Options on foreign currencies are traded primarily in the OTC market, but may also be traded on U.S. and foreign exchanges. The value of a foreign currency option is dependent upon the value of the underlying foreign currency relative to the U.S. dollar or other base currency. The price of the option may vary with changes, among other things, in the value of either or both currencies and has no relationship to the investment merits of a foreign security. Options on foreign currencies are affected by all of those factors that influence foreign exchange rates and foreign investment generally. As with other options, a Fund may close out its position in foreign currency options through closing purchase transactions and closing sale transactions provided that a liquid market exists for such options.

Foreign currency options written by a Fund will generally be covered in a manner similar to the covering of other types of options, by holding an offsetting financial position and/or earmarking or segregating cash or liquid assets.

*Options on Futures Contracts.* Options on futures contracts are similar to options on securities except that options on futures contracts give the purchasers the right, in return for the premium paid, to assume a position in a futures contract (a long position in the case of a call option and a short position in the case of a put option) at a specified exercise price at any time prior to the expiration of the option. Upon exercise of the option, the parties will be subject to all of the risks associated with futures transactions and subject to margin requirements. As the writer of options on futures contracts, a Fund would also be subject to initial and variation margin requirements on the option position.

Options on futures contracts written by a Fund will generally be covered in a manner similar to the covering of other types of options, by holding an offsetting financial position and/or earmarking or segregating cash or liquid assets. A Fund may cover an option on a futures contract by purchasing or selling the underlying futures contract. In such instances the exercise of the option will serve to close out a Fund's futures position.

**32**

------

[Back To **Table of Contents**](#TOC_15545)

*Additional Risks of Options Transactions.* The risks associated with options transactions are different from, and possibly greater than, the risks associated with investing directly in the underlying instruments. Options are highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of options requires an understanding not only of the underlying instrument but also of the option itself. Options may be subject to the risk factors generally applicable to derivatives transactions described herein, and may also be subject to certain additional risk factors, including:

■ The exercise of options written or purchased by a Fund could cause a Fund to sell portfolio securities, thus increasing a Fund's portfolio turnover.

■ A Fund pays brokerage commissions each time it writes or purchases an option or buys or sells an underlying security in connection with the exercise of an option. Such brokerage commissions could be higher relative to the commissions for direct purchases of sales of the underlying securities.

■ A Fund's options transactions may be subject to limitations on options positions established by the SEC, the CFTC or the exchanges on which such options are traded.

■ The hours of trading for exchange-listed options may not coincide with the hours during which the underlying securities are traded. To the extent that the options markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying securities that cannot be reflected in the options markets.

■ Index options based upon a narrow index of securities or other assets may present greater risks than options based on broad market indices, as narrower indices are more susceptible to rapid and extreme fluctuations as a result of changes in the values of a smaller number of securities or other assets.

■ A Fund is subject to the risk of market movements between the time that an option is exercised and the time of performance thereunder, which could increase the extent of any losses suffered by a Fund in connection with options transactions.

**Preferred Stocks.** Preferred stocks are securities that evidence ownership in a corporation and pay a fixed or variable stream of dividends. Preferred stocks have a preference over common stocks in the event of the liquidation of an issuer and usually do not carry voting rights. Preferred stocks have many of the characteristics of both equity securities and fixed-income securities.

**Promissory Notes.** Promissory notes are generally debt obligations of the issuing entity and are subject to the risks of investing in corporate debt.

**Real Estate Investing.** Investments in securities of issuers engaged in the real estate industry entail special risks and considerations. In particular, securities of such issuers may be subject to risks associated with the direct ownership of real estate. These risks include the cyclical nature of real estate values, risks related to general and local economic conditions, overbuilding and increased competition, increases in property taxes and operating expenses, demographic trends and variations in rental income, changes in zoning laws, casualty or condemnation losses, environmental risks, regulatory limitations on rents, changes in neighborhood values, changes in the appeal of properties to tenants, increases in interest rates and other real estate capital market influences. Generally, increases in interest rates will increase the costs of obtaining financing, which could directly and indirectly decrease the value of a Fund's investments.

*Real Estate Investment Trusts and Foreign Real Estate Companies .* Certain Funds may invest in real estate investment trusts ("REITs") and/or foreign real estate companies, which are similar to entities organized and operated as REITs in the United States. REITs and foreign real estate companies pool investors' funds for investment primarily in real estate properties or real estate-related loans. REITs and foreign real estate companies generally derive their income from rents on the underlying properties or interest on the underlying loans, and their value is impacted by changes in the value of the underlying property or changes in interest rates affecting the underlying loans owned by the REITs and/or foreign real estate companies. REITs and foreign real estate companies are more susceptible to risks associated with the ownership of real estate and the real estate industry in general. These risks can include fluctuations in the value of underlying properties; defaults by borrowers or tenants; market saturation; changes in general and local economic conditions; decreases in market rates for rents; increases in competition, property taxes, capital expenditures or operating expenses; and other economic, political or regulatory occurrences affecting the real estate industry. In addition, REITs and foreign real estate companies depend upon specialized management skills, may not be diversified (which may increase the volatility of a REIT's and/or foreign real estate company's value), may have less trading volume and may be subject to more abrupt or erratic price movements than the overall securities market. Foreign real estate companies may be subject to laws, rules and regulations governing those entities and their failure to comply with those laws, rules and regulations could negatively impact the performance of those entities. Operating REITs and foreign real estate companies requires specialized management skills and a Fund indirectly bears REIT and foreign real estate company management expenses along with the direct expenses of the Fund. REITs are generally not taxed on income distributed to shareholders provided they comply with several requirements of the Code. REITs are subject to the risk of failing to qualify for tax-free pass-through income under the Code.

*Specialized Ownership Vehicles.* Specialized ownership vehicles pool investors' funds for investment primarily in income-producing real estate or real estate-related loans or interests. Such specialized ownership vehicles in which the Funds may invest include property unit trusts, foreign real estate companies, REITs and other similar specialized investment vehicles. Investments in such specialized ownership vehicles may have favorable or unfavorable legal, regulatory or tax implications for a Fund and, to the extent such vehicles

**33**

------

[Back To **Table of Contents**](#TOC_15545)

are structured similarly to investment funds, a shareholder in the Fund will bear not only their proportionate share of the expenses of the Fund, but also, indirectly the expenses of the specialized ownership vehicle.

**Regulatory and Legal Risk.** U.S. and non-U.S. governmental agencies and other regulators regularly implement additional regulations and legislators pass new laws that affect the investments held by a Fund, the strategies used by a Fund or the level of regulation or taxation applying to a Fund (such as regulations related to investments in derivatives and other transactions). These regulations and laws impact the investment strategies, performance, costs and operations of a Fund or taxation of shareholders.

**Repurchase Agreements.** Repurchase agreements are transactions in which a Fund purchases a security or basket of securities and simultaneously commits to resell that security or basket to the seller (a bank, broker or dealer) at a mutually agreed-upon date and price. The resale price reflects the purchase price plus an agreed-upon market rate of interest which is unrelated to the coupon rate or date of maturity of the purchased security. The term of these agreements usually ranges from overnight to one week, and never exceeds one year. Repurchase agreements with a term of over seven days are considered illiquid.

In these transactions, a Fund receives securities that have a market value at least equal to the purchase price (including accrued interest) of the repurchase agreement, and this value is maintained during the term of the agreement. These securities are held by State Street Bank and Trust Company (the "Custodian") or an approved third-party for the benefit of the Fund until repurchased. Repurchase agreements permit a Fund to remain fully invested while retaining overnight flexibility to pursue investments of a longer-term nature. If the seller defaults and the value of the repurchased securities declines, a Fund might incur a loss. If bankruptcy proceedings are commenced with respect to the seller, a Fund's realization upon the collateral may be delayed.

While repurchase agreements involve certain risks not associated with direct investments in debt securities, each Fund follows procedures approved by the Trustees that are designed to minimize such risks. These procedures include effecting repurchase transactions only with large, well-capitalized and well-established financial institutions whose financial condition will be continually monitored by the Adviser. In addition, as described above, the value of the collateral underlying the repurchase agreement will be at least equal to the repurchase price, including any accrued interest earned on the repurchase agreement. In the event of a default or bankruptcy by a selling financial institution, the Funds will seek to liquidate such collateral. However, the exercising of the Fund's right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Fund could suffer a loss. Repurchase agreements involving obligations other than U.S. government securities may be subject to special risks. Repurchase agreements secured by obligations that are not eligible for direct investment under a Fund's investment objectives and restrictions may require the Fund to promptly dispose of such collateral if the seller or guarantor becomes insolvent.

A Fund may enter into repurchase agreements on a forward commitment basis. To the extent a Fund does so and the counterparty to the trade fails to effectuate the trade at the scheduled time, a Fund may be forced to deploy its capital in a repurchase agreement with a less favorable rate of return than it otherwise may have achieved or may be unable to enter into a repurchase agreement at all at the desired time.

**Reverse Repurchase Agreements.** Under a reverse repurchase agreement, a Fund sells a security and promises to repurchase that security at an agreed-upon future date and price. The price paid to repurchase the security reflects interest accrued during the term of the agreement. Reverse repurchase agreements may be entered into for, among other things, obtaining leverage, facilitating short-term liquidity or when the Adviser expects that the interest income to be earned from the investment of the transaction proceeds will be greater than the related interest expense. Please see "Derivatives Agreements -- Regulatory Matters." Reverse repurchase agreements may be viewed as a speculative form of borrowing called leveraging. Furthermore, reverse repurchase agreements involve the risks that (i) the interest income earned in the investment of the proceeds will be less than the interest expense, (ii) the market value of the securities retained in lieu of sale by a Fund may decline below the price of the securities the Fund has sold but is obligated to repurchase, (iii) the market value of the securities sold will decline below the price at which the Fund is required to repurchase them and (iv) the securities will not be returned to the Fund.

In addition, the use of leverage may cause a Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations. Leverage, including borrowing, may cause a Fund to be more volatile than if the Fund had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of a Fund's portfolio securities. All forms of borrowing (including reverse repurchase agreements) are limited in the aggregate and may not exceed 33⅓% of the Fund's total assets, except as permitted by law.

**Rights.** Rights represent the right, but not the obligation, for a fixed period of time to purchase additional shares of an issuer's common stock at the time of a new issuance, usually at a price below the initial offering price of the common stock and before the common stock is offered to the general public. Rights are usually freely transferable. The risk of investing in a right is that the right may expire prior to the market value of the common stock exceeding the price fixed by the right.

**34**

------

[Back To **Table of Contents**](#TOC_15545)

**Sector Risk.** Each Fund may, from time to time, invest more heavily in companies in a particular economic sector or sectors. Economic or regulatory changes adversely affecting such sectors may have more of an impact on a Fund's performance than if the Fund held a broader range of investments.

**Short Sales.** A short sale is a transaction in which a Fund sells securities that it owns or has the right to acquire at no added cost (i.e., "against the box") or does not own (but has borrowed) in anticipation of a decline in the market price of the securities. To deliver the securities to the buyer, a Fund arranges through a broker to borrow the securities and, in so doing, the Fund becomes obligated to replace the securities borrowed at their market price at the time of replacement. When selling short, a Fund intends to replace the securities at a lower price and therefore, profit from the difference between the cost to replace the securities and the proceeds received from the sale of the securities. When a Fund makes a short sale, the proceeds it receives from the sale will be held on behalf of a broker until the Fund replaces the borrowed securities. A Fund may have to pay a premium to borrow the securities and must pay any dividends or interest payable on the securities until they are replaced.

A Fund's obligation to replace the securities borrowed in connection with a short sale will be secured by collateral deposited with the broker that consists of cash or other liquid securities. Short sales by a Fund involve certain risks and special considerations. If the Adviser incorrectly predicts that the price of the borrowed security will decline, a Fund will have to replace the securities with securities with a greater value than the amount received from the sale. As a result, losses from short sales differ from losses that could be incurred from a purchase of a security, because losses from short sales may be unlimited, whereas losses from purchases can equal only the total amount invested. Please see "Derivatives Agreements -- Regulatory Matters".

**Special Purpose Acquisition Companies.** A Fund may invest in stock, warrants, rights and other securities of special purpose acquisition companies ("SPAC"), which typically are publicly traded companies that raise investment capital for the purpose of acquiring or merging with an existing company that is identified subsequent to the SPAC's initial public offering ("IPO"), or similar special purpose entities. Typically, the acquisition target is an existing privately held company that wants to trade publicly, which it accomplishes through a combination with a SPAC rather than by conducting a traditional IPO. SPACs and similar entities are blank check companies and do not have any operating history or ongoing business other than seeking acquisitions. The long term value of a SPAC's securities is particularly dependent on the ability of the SPAC's management to identify a merger target and complete an attractive acquisition. Some SPACs pursue acquisitions only within certain sectors, industries or regions, which may increase the time horizon for an acquisition as well as other risks associated with these investments, including price volatility. Conversely, other SPACs may invest without such limitations, in which case the SPAC's management may have limited experience or knowledge of the market sector, industry or region in which the transaction is contemplated. In addition, certain securities issued by a SPAC, particularly in private placements conducted by the SPAC after its IPO, may be classified as illiquid and/or be subject to restrictions on resale, which restrictions may be imposed for at least a year or possibly a more extended time, and may potentially be traded only in the over-the-counter market.

Until an acquisition or merger is completed, a SPAC generally invests its assets, less a portion retained to cover expenses, in U.S. government securities, money market securities and cash and does not typically pay dividends in respect of its common stock. To the extent a SPAC is invested in these securities or cash, the SPAC may not perform similar to other equity securities and this may impact the Fund's ability to meet its investment objective. SPAC shareholders may not approve any proposed acquisition or merger, or an acquisition or merger, once effected, may prove unsuccessful. If an acquisition or merger that meets the requirements of the SPAC is not completed within a pre-established period of time (typically, two years), the funds invested in the SPAC plus any interest paid on such funds while held in trust (less any permitted expenses and any losses experienced by the SPAC) are returned to its shareholders unless the shareholders approve alternative options. As a result, a Fund may be subject to opportunity costs to the extent that alternative investments would have produced higher returns. Any warrants or other rights with respect to a SPAC held by a Fund may expire worthless or may be repurchased or retired by the SPAC at an unfavorable price.

In connection with a proposed acquisition, a SPAC may raise additional funds in order to fund the acquisition, post-acquisition working capital, redemptions or some combination of those purposes. This additional fundraising may be in the form of a private placement of a class of equity securities or debt. The debt could be secured by the assets of the SPAC or the operating company existing after the acquisition or it could be unsecured. The debt may also be investment grade debt or below investment grade debt.

A Fund may invest in stock, warrants, rights and other securities of SPACs or similar special purpose entities in a private placement transaction or as part of a public offering. If the Fund purchases securities in the SPAC's IPO, typically it will receive publicly-traded securities called "units" that include one share of common stock and one right or warrant (or partial right or warrant) conveying the right to purchase additional shares of common stock. At a specified time, the rights and warrants may be separated from the common stock at the election of the holder, after which each security typically is freely tradeable. An investment in the IPO securities of a SPAC may be diluted by additional, later offerings of securities by the SPAC or by other investors exercising existing rights to purchase securities of the SPAC. If the Fund invests in equity securities issued in a private placement after the IPO, those shares will not be publicly tradable unless and until there is a registration statement filed by the SPAC and approved by the SEC or if an exemption from registration is available, which exemptions typically become available at least a year after the date of the business

**35**

------

[Back To **Table of Contents**](#TOC_15545)

combination. Equity investments in the SPAC made in connection with a proposed business combination will be diluted by the acquisition itself and further fundraising by the ongoing operating business.

If there is no market for the shares of the SPAC or only a thinly traded market for shares or interests in the SPAC develops, a Fund may not be able to sell its interest in a SPAC or it may only sell its interest at a price below what the Fund believes is the SPAC interest's value. If not subject to a restriction on resale, a Fund may sell its investments in a SPAC at any time, including before, at or after the time of an acquisition or merger. Generally, SPACs provide the opportunity for common shareholders who hold publicly traded shares to have some or all of their shares redeemed by the SPAC at or around the time of a proposed acquisition or merger. However, there is often a limit to the number of shares that can be redeemed in connection with a business combination. If a Fund holds shares of publicly traded SPAC stock, this means that a Fund may not be able to redeem those shares prior to an acquisition and may have to hold those shares until after the completion of the acquisition. If a Fund purchases shares in a private placement, those shares will not be redeemable in connection with a transaction. In addition, a Fund may elect not to participate in a proposed SPAC transaction or may be required to divest its interests in the SPAC due to regulatory or other considerations.

An investment in a SPAC is subject to the risks that any proposed acquisition or merger may not obtain the requisite approval of SPAC shareholders, may require governmental or other approvals that it fails to obtain or that an acquisition or merger, once effected, may prove unsuccessful and lose value. In addition, among other conflicts of interest, the economic interests of the management, directors, officers and related parties of a SPAC can differ from the economic interests of public shareholders, which may lead to conflicts as they evaluate, negotiate and recommend business combination transactions to shareholders. This risk may become more acute as the deadline for the completion of a business combination nears or in the event that attractive acquisition or merger targets become scarce.

An investment in a SPAC is subject to the risks that any proposed acquisition or merger may not obtain the requisite approval of SPAC shareholders, may require governmental or other approvals that it fails to obtain or that an acquisition or merger, once effected, may prove unsuccessful and lose value. In addition, among other conflicts of interest, the economic interests of the management, directors, officers and related parties of a SPAC can differ from the economic interests of public shareholders, which may lead to conflicts as they evaluate, negotiate and recommend business combination transactions to shareholders. For example, because the sponsor, directors and officers of a SPAC may directly or indirectly own interests in a SPAC, the sponsor, directors and officers may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate a business combination. SPAC sponsors generally purchase equity in the SPAC at more favorable terms than investors in the IPO or subsequent investors on the open market. As a result, although most of the SPAC's capital has been provided by IPO investors, the sponsors and potentially other initial investors will benefit more than investors from the SPAC's completion of an initial business combination and may have an incentive to complete a transaction on terms that may be less favorable to other investors. This risk may become more acute as the deadline for the completion of a business combination nears or in the event that attractive acquisition or merger targets become scarce. In addition, the requirement that a SPAC complete a business combination within a prescribed time frame may give potential target businesses leverage over the SPAC in negotiating a business combination and may limit the time the SPAC has in which to conduct due diligence on potential business combination targets, which could undermine the SPAC's ability to complete a business combination on terms that would produce value for its shareholders. An investment in a SPAC is also subject to the risk that a significant portion of the funds raised by the SPAC may be expended during the search for a target acquisition or merger. The value of investments in SPACs may be highly volatile and may depreciate over time.

In addition, investments in SPACs may be subject to the same risks as investing in any initial public offering, including the risks associated with companies that have little operating history as public companies, including unseasoned trading, small number of shares available for trading and limited information about the issuer. In addition, the market for IPO issuers may be volatile, and share prices of newly-public companies have fluctuated significantly over short periods of time. Although some IPOs may produce high returns, such returns are not typical and may not be sustainable. Certain investments in SPACs are privately placed securities and are also subject to the risks of such securities.

Debt associated with a SPAC, whether issued by the SPAC, by a subsidiary or acquired issuer, is subject to the same types of risks as exist in other types of fixed income investing, including credit risk, default risk and the potential for a restructuring, work-out or bankruptcy.

**Structured Investments.** Certain Funds may invest in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market, for which the amount of principal repayment and/or interest payments is based on the change in value of such underlying security, currency, commodity or market, including, among others, currency exchange rates, interest rates, referenced bonds and stock indices or other financial references. Structured investments may come in various forms, including notes, warrants and options to purchase securities, and may be listed and traded on an exchange or otherwise traded in the OTC market.

The Funds will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to such security, currency, commodity or market is limited or inefficient from a tax, cost or regulatory

**36**

------

[Back To **Table of Contents**](#TOC_15545)

standpoint. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the holders are relying on the creditworthiness of such issuer or counterparty and have no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing a Fund's illiquidity to the extent that the Fund, at a particular point in time, may be unable to find qualified buyers for these investments.

A structured investment may be linked either positively or negatively to an underlying security, currency, commodity, index or market and a change in interest rates, principal amount, volatility, currency values or other factors, depending on the structured investment's design, may result in a gain or loss that is a multiple of the movement of such interest rates, principal amount, volatility, currency values or other factors. Application of a multiplier is comparable to the use of financial leverage, a speculative technique. Leverage magnifies the potential for gain and the risk of loss. As a result, a relatively small decline in the value of the referenced factor could result in a relatively large loss in the value of a structured investment.

Other types of structured investments include interests in entities organized and operated for the purpose of restructuring the investment characteristics of underlying investment interests or securities. This type of securitization or restructuring usually involves the deposit or purchase of an underlying security by a U.S. or foreign entity, such as a corporation or trust of specified instruments, and the issuance by that entity of one or more classes of securities backed by, or representing an interest in, the underlying instruments. The cash flow or rate of return on the underlying investments may be apportioned among the newly issued securities to create different investment characteristics, such as varying maturities, credit quality, payment priorities and interest rate provisions. Structured investments that are subordinated, for example, in payment priority often offer higher returns, but may result in increased risks compared to other investments.

**Swaps.** An OTC swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). A Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. Many swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to the risk of default or non-performance by the counterparty. Accordingly, the Adviser must assess the creditworthiness of the counterparty to determine the likelihood that the terms of the swap will be satisfied.

Swap agreements allow for a wide variety of transactions. For example, fixed-rate payments may be exchanged for floating rate payments, U.S. dollar-denominated payments may be exchanged for payments denominated in foreign currencies, and payments tied to the price of one security, index, reference rate, currency or other instrument may be exchanged for payments tied to the price of a different security, index, reference rate, currency or other instrument. Swap contracts are typically individually negotiated and structured to provide exposure to a variety of particular types of investments or market factors. Swap contracts can take many different forms and are known by a variety of names. To the extent consistent with a Fund's investment objective and policies, a Fund is not limited to any particular form or variety of swap contract. A Fund may utilize swaps to increase or decrease its exposure to the underlying instrument, reference rate, foreign currency, market index or other asset. Certain Funds may also enter into related derivative instruments including caps, floors and collars.

The Dodd-Frank Act and related regulatory developments require the eventual clearing and exchange-trading of many standardized OTC derivative instruments that the CFTC and SEC defined as "swaps" and "security based swaps," respectively. Mandatory exchange-trading and clearing is occurring on a phased-in basis based on the type of market participant and CFTC approval of contracts for central clearing and exchange-trading. In a cleared swap, a Fund's ultimate counterparty is a central clearinghouse rather than a brokerage firm, bank or other financial institution. A Fund initially will enter into cleared swaps through an executing broker. Such transactions will then be submitted for clearing and, if cleared, will be held at regulated FCMs that are members of the clearinghouse that serves as the central counterparty. When a Fund enters into a cleared swap, it must deliver to the central counterparty (via an FCM) an amount referred to as "initial margin." Initial margin requirements are determined by the central counterparty, but an FCM may require additional initial margin above the amount required by the central counterparty. During the term of the swap agreement, a "variation margin" amount may also be required to be paid by a Fund or may be received by a Fund in accordance with margin controls set for such accounts, depending upon changes in the price of the underlying reference asset subject to the swap agreement. At the conclusion of the term of the swap agreement, if a Fund has a loss equal to or greater than the margin amount, the margin amount is paid to the FCM along with any loss that is greater than such margin amount. If a Fund has a loss of less than the margin amount, the excess margin is returned to the Fund. If a Fund has a gain, the full margin amount and the amount of the gain is paid to the Fund.

Central clearing is designed to reduce counterparty credit risk compared to uncleared swaps because central clearing interposes the central clearinghouse as the counterparty to each participant's swap, but it does not eliminate those risks completely. There is also a risk of loss by a Fund of the initial and variation margin deposits in the event of bankruptcy of the FCM with which the Fund has an

**37**

------

[Back To **Table of Contents**](#TOC_15545)

open position in a swap contract. The assets of a Fund may not be fully protected in the event of the bankruptcy of the FCM or central counterparty because the Fund might be limited to recovering only a pro rata share of all available funds and margin segregated on behalf of an FCM's or central counterparty's customers or clearing members. If the FCM does not provide accurate reporting, a Fund is also subject to the risk that the FCM could use the Fund's assets, which are held in an omnibus account with assets belonging to the FCM's other customers, to satisfy its own financial obligations or the payment obligations of another customer to the central counterparty.

As a result of recent regulatory developments, certain standardized swaps are currently subject to mandatory central clearing and some of these cleared swaps must be traded on an exchange or swap execution facility ("SEF"). An SEF is an electronic trading platform in which multiple market participants can execute swap transactions by accepting bids and offers made by multiple other participants on the platform. Transactions executed on an SEF may increase market transparency and liquidity but may cause a Fund to incur increased expenses to execute swaps. Central clearing should decrease counterparty risk and increase liquidity compared to bilateral swaps because central clearing interposes the central clearinghouse as the counterparty to each participant's swap. However, central clearing does not eliminate counterparty risk or liquidity risk entirely. In addition, depending on the size of a Fund and other factors, the margin required under the rules of a clearinghouse and by a clearing member may be in excess of the collateral required to be posted by a Fund to support its obligations under a similar bilateral swap. However, the CFTC and other applicable regulators have adopted rules imposing certain margin requirements, including minimums, on uncleared swaps which may result in a Fund and its counterparties posting higher margin amounts for uncleared swaps. Requiring margin on uncleared swaps may reduce, but not eliminate, counterparty credit risk.

In addition, with respect to cleared swaps, a Fund may not be able to obtain as favorable terms as it would be able to negotiate for an uncleared swap. In addition, an FCM may unilaterally impose position limits or additional margin requirements for certain types of swaps in which a Fund may invest. Central counterparties and FCMs generally can require termination of existing cleared swap transactions at any time, and can also require increases in margin above the margin that is required at the initiation of the swap agreement. Margin requirements for cleared swaps vary on a number of factors, and the margin required under the rules of the clearinghouse and FCM may be in excess of the collateral required to be posted by a Fund to support its obligations under a similar uncleared swap. However, as noted above, regulators have adopted rules imposing certain margin requirements, including minimums, on uncleared swaps, which may result in a Fund and its counterparties posting higher margin amounts for uncleared swaps. Requiring margin on uncleared swaps may reduce, but not eliminate, counterparty credit risk.

A Fund is also subject to the risk that, after entering into a cleared swap with an executing broker, no FCM or central counterparty is willing or able to clear the transaction. In such an event, the central counterparty would void the trade. Before a Fund can enter into a new trade, market conditions may become less favorable to the Fund.

The Adviser will continue to monitor developments regarding trading and execution of cleared swaps on exchanges, particularly to the extent regulatory changes affect a Fund's ability to enter into swap agreements and the costs and risks associated with such investments.

*Interest Rate Swaps, Caps, Floors and Collars.* Interest rate swaps consist of an agreement between two parties to exchange their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed-rate payments). Interest rate swaps are generally entered into on a net basis. Interest rate swaps do not involve the delivery of securities, other underlying assets, or principal. Accordingly, the risk of market loss with respect to interest rate and total rate of return swaps is typically limited to the net amount of interest payments that a Fund is contractually obligated to make.

Certain Funds may also buy or sell interest rate caps, floors and collars. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified interest rate index exceeds a predetermined level, to receive payments of interest on a specified notional amount from the party selling the interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified interest rate falls below a predetermined level, to receive payments of interest on a specified notional amount from the party selling the interest rate floor. A collar is a combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates. Caps, floors and collars may be less liquid than other types of derivatives.

*Total Return Swaps.* Total return swaps are contracts in which one party agrees to make periodic payments to another party based on the change in market value of the assets underlying the contract, which may include, but not be limited to, a specified security, basket of securities or securities indices during the specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets. Total return swaps may be used to obtain long or short exposure to a security or market without owning or taking physical custody of such security or investing directly in such market. Total return swaps may effectively add leverage to a Fund's portfolio because, in addition to its total net assets, a Fund would be subject to investment exposure on the notional amount of the swap.

Total return swaps are subject to the risk that a counterparty will default on its payment obligations to a Fund thereunder, and conversely, that a Fund will not be able to meet its obligation to the counterparty. Generally, a Fund will enter into total return

**38**

------

[Back To **Table of Contents**](#TOC_15545)

swaps on a net basis (i.e., the two payment streams are netted against one another with a Fund receiving or paying, as the case may be, only the net amount of the two payments).

*Index Swaps.* An index swap consists of an agreement between two parties in which a party typically exchanges a cash flow based on a notional amount of a reference index for a cash flow based on a different index or on another specified instrument or reference rate. Index swaps are generally entered into on a net basis.

*Inflation Swaps.* Inflation swap agreements are contracts in which one party typically agrees to pay the cumulative percentage increase in a price index, such as the Consumer Price Index, over the term of the swap (with some lag on the referenced inflation index), and the other party pays a compounded fixed rate. Inflation swap agreements may be used to protect the NAV of a Fund against an unexpected change in the rate of inflation measured by an inflation index. The value of inflation swap agreements is expected to change in response to changes in real interest rates. Real interest rates are tied to the relationship between nominal interest rates and the rate of inflation.

*Currency Swaps.* A currency swap consists of an agreement between two parties to exchange cash flows on a notional amount of two or more currencies based on the relative value differential among them, such as exchanging a right to receive a payment in foreign currency for the right to receive U.S. dollars. Currency swap agreements may be entered into on a net basis or may involve the delivery of the entire principal value of one designated currency in exchange for the entire principal value of another designated currency. In such cases, the entire principal value of a currency swap is subject to the risk that the counterparty will default on its contractual delivery obligations.

*Credit Default Swaps.* A credit default swap consists of an agreement between two parties in which the "buyer" typically agrees to pay to the "seller" a periodic stream of payments over the term of the contract and the seller agrees to pay the buyer the par (or other agreed-upon) value of a referenced debt obligation upon the occurrence of a credit event with respect to the issuer of that referenced debt obligation. Generally, a credit event means bankruptcy, failure to pay, obligation acceleration or modified restructuring. A Fund may be either the buyer or seller in a credit default swap. Where a Fund is the buyer of a credit default swap contract, it would typically be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by the issuer of the debt obligation. If no default occurs, a Fund would have paid to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract. The use of credit default swaps could result in losses to a Fund if the Adviser fails to correctly evaluate the creditworthiness of the issuer of the referenced debt obligation.

*Swaptions.* An option on a swap agreement, also called a "swaption," is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for a premium. A receiver swaption gives the owner the right to receive the return of a specified asset, reference rate, or index. A payer swaption gives the owner the right to pay the return of a specified asset, reference rate, or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the counterparties.

*General Risks of Swaps.* The risks associated with swap transactions are different from, and possibly greater than, the risks associated with investing directly in the underlying instruments. Swaps are highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of swaps requires an understanding not only of the underlying instrument but also of the swap contract itself. Swap transactions may be subject to the risk factors generally applicable to derivatives transactions described above, and may also be subject to certain additional risk factors, including:

■ OTC swap agreements are not traded on exchanges and may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell.

■ In addition to the risk of default by the counterparty, if the creditworthiness of a counterparty to a swap agreement declines, the value of the swap agreement would be likely to decline, potentially resulting in losses.

■ The swaps market is subject to extensive regulation under the Dodd-Frank Act and certain CFTC and SEC rules promulgated thereunder. It is possible that further developments in the swaps market, including new and additional governmental regulation, could result in higher Fund costs and expenses and could adversely affect a Fund's ability to utilize swaps, terminate existing swap agreements or realize amounts to be received under such agreements.

*Municipal Interest Rate Swap Transactions*. In order to hedge the value of a Fund against interest rate fluctuations or to enhance a Fund's income, a Fund may enter into interest rate swap transactions such as Municipal Market Data AAA Cash Curve swaps ("MMD Swaps") or Securities Industry and Financial Markets Association Municipal Swap Index swaps ("SIFMA Swaps"). To the extent that a Fund enters into these transactions, the Fund expects to do so primarily to preserve a return or spread on a particular investment or portion of its portfolio or to protect against any increase in the price of securities the Fund anticipates purchasing at a later date. A Fund intends to use these transactions primarily as a hedge rather than as a speculative investment. However, a Fund also may invest in MMD Swaps and SIFMA Swaps to enhance income or gain or to increase the Fund's yield, for example, during periods of steep interest rate yield curves (i.e., wide differences between short term and long term interest rates).

**39**

------

[Back To **Table of Contents**](#TOC_15545)

A Fund may purchase and sell SIFMA Swaps in the SIFMA swap market. In a SIFMA Swap, a Fund exchanges with another party their respective commitments to pay or receive interest (e.g., an exchange of fixed rate payments for floating rate payments linked to the SIFMA Municipal Swap Index). Because the underlying index is a tax-exempt index, SIFMA Swaps may reduce cross-market risks incurred by a Fund and increase a Fund's ability to hedge effectively. SIFMA Swaps are typically quoted for the entire yield curve, beginning with a seven day floating rate index out to 30 years. The duration of a SIFMA Swap is approximately equal to the duration of a fixed-rate Municipal Bond with the same attributes as the swap (e.g., coupon, maturity, call feature).

A Fund may also purchase and sell MMD Swaps, also known as MMD rate locks. An MMD Swap permits a Fund to lock in a specified municipal interest rate for a portion of its portfolio to preserve a return on a particular investment or a portion of its portfolio as a duration management technique or to protect against any increase in the price of securities to be purchased at a later date. By using an MMD Swap, a Fund can create a synthetic long or short position, allowing the Fund to select the most attractive part of the yield curve. An MMD Swap is a contract between a Fund and an MMD Swap provider pursuant to which the parties agree to make payments to each other on a notional amount, contingent upon whether the Municipal Market Data AAA General Obligation Scale is above or below a specified level on the expiration date of the contract. For example, if a Fund buys an MMD Swap and the Municipal Market Data AAA General Obligation Scale is below the specified level on the expiration date, the counterparty to the contract will make a payment to the Fund equal to the specified level minus the actual level, multiplied by the notional amount of the contract. If the Municipal Market Data AAA General Obligation Scale is above the specified level on the expiration date, a Fund will make a payment to the counterparty equal to the actual level minus the specified level, multiplied by the notional amount of the contract.

In connection with investments in SIFMA and MMD Swaps, there is a risk that municipal yields will move in the opposite direction than anticipated by a Fund, which would cause the Fund to make payments to its counterparty in the transaction that could adversely affect the Fund's performance. A Fund has no obligation to enter into SIFMA or MMD Swaps and may not do so. The net amount of the excess, if any, of a Fund's obligations over its entitlements with respect to each interest rate swap will be accrued on a daily basis and a number of liquid assets that have an aggregate NAV at least equal to the accrued excess will be maintained in a segregated account by the Fund.

**Temporary Defensive Investments.** When the Adviser believes that changes in market, economic, political or other conditions make it advisable, a Fund may invest up to 100% of its assets in cash, cash equivalents and other fixed-income securities for temporary defensive purposes that may be inconsistent with the Fund's investment strategies. These temporary investments may consist of obligations of the U.S. or foreign governments, their agencies and instrumentalities; money market instruments; and instruments issued by international development agencies.

**U.S. Government Securities.** U.S. government securities refer to a variety of fixed-income securities issued or guaranteed by the U.S. Government and its various instrumentalities and agencies. The U.S. government securities that certain Funds may purchase include U.S. Treasury bills, notes and bonds, all of which are direct obligations of the U.S. Government. In addition, certain Funds may purchase securities issued by agencies and instrumentalities of the U.S. Government that are backed by the full faith and credit of the United States. Among the agencies and instrumentalities issuing these obligations are Ginnie Mae and the Federal Housing Administration. Certain Funds may also purchase securities issued by agencies and instrumentalities that are not backed by the full faith and credit of the United States, but whose issuing agency or instrumentality has the right to borrow, to meet its obligations, from the U.S. Treasury. Among these agencies and instrumentalities are Fannie Mae, Freddie Mac and the Federal Home Loan

**40**

------

[Back To **Table of Contents**](#TOC_15545)

Banks. Further, certain Funds may purchase securities issued by agencies and instrumentalities that are backed solely by the credit of the issuing agency or instrumentality. Among these agencies and instrumentalities is the Federal Farm Credit System.

**Variable Rate Master Demand Notes.** These are obligations that permit a Fund to invest fluctuating amounts, at varying rates of interest, pursuant to direct arrangements between the Fund, as lender, and the borrower. These obligations permit daily changes in the amounts borrowed. Because these obligations are direct lending arrangements between the lender and borrower, it is not contemplated that such instruments generally will be traded, and there generally is no established secondary market for these obligations, although they are redeemable at face value, plus accrued interest. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, a Fund's right to redeem is dependent on the ability of the borrower to pay principal and interest on demand.

**Warrants.** Warrants give holders the right, but not the obligation, to buy common stock of an issuer at a given price, usually higher than the market price at the time of issuance, during a specified period. Warrants are usually freely transferable. The risk of investing in a warrant is that the warrant may expire prior to the market value of the common stock exceeding the price fixed by the warrant.

**When-Issued and Delayed Delivery Securities and Forward Commitments.** From time to time, the Funds may purchase securities on a when-issued or delayed delivery basis or may purchase or sell securities on a forward commitment basis. When these transactions are negotiated, the price is fixed at the time of the commitment, but delivery and payment can take place a month or more after the date of commitment. The Funds may sell the securities before the settlement date if it is deemed advisable. The securities so purchased or sold are subject to market fluctuation and no interest or dividends accrue to the purchaser prior to the settlement date.

At the time a Fund makes the commitment to purchase or sell securities on a when-issued, delayed delivery or forward commitment basis, it will record the transaction and thereafter reflect the value, each day, of such security purchased, or if a sale, the proceeds to be received, in determining its NAV. At the time of delivery of the securities, their value may be more or less than the purchase or sale price. An increase in the percentage of a Fund's assets committed to the purchase of securities on a when-issued, delayed delivery or forward commitment basis may increase the volatility of its NAV.

**When, As and If Issued Securities.** A Fund may purchase securities on a "when, as and if issued" basis, under which the issuance of the security depends upon the occurrence of a subsequent event, such as approval of a merger, corporate reorganization or debt restructuring. The commitment for the purchase of any such security will not be recognized in the portfolio of a Fund until the Adviser determines that issuance of the security is probable. At that time, a Fund will record the transaction and, in determining its NAV, will reflect the value of the security daily. At that time, under current SEC and SEC Staff guidance, a Fund will also earmark cash or liquid assets or establish a segregated account on its books in which it will maintain cash, cash equivalents or other liquid portfolio securities equal in value to recognized commitments for such securities.

An increase in the percentage of a Fund's assets committed to the purchase of securities on a "when, as and if issued" basis may increase the volatility of its NAV. A Fund may also sell securities on a "when, as and if issued" basis provided that the issuance of the security will result automatically from the exchange or conversion of a security owned by the Fund at the time of sale.

**Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities.** Zero coupon, pay-in-kind and deferred payment securities are all types of fixed-income securities on which the holder does not receive periodic cash payments of interest or principal. Generally, these securities are subject to greater price volatility and lesser liquidity in the event of adverse market conditions than comparably rated securities paying cash interest at regular intervals. Although a Fund will not receive cash periodic coupon payments on these securities, the Fund may be deemed to have received interest income, or "phantom income" during the life of the obligation. The Fund may have to distribute such phantom income to avoid taxes at the Fund level, although it has not received any cash payment.

*Zero Coupons.* Zero coupons are fixed-income securities that do not make regular interest payments. Instead, zero coupons are sold at a discount from their face value. The difference between a zero coupon's issue or purchase price and its face value represents the imputed interest an investor will earn if the obligation is held until maturity. For tax purposes, a portion of this imputed interest is deemed as income received by zero coupon bondholders each year. Each Fund intends to pass along such interest as a component of the Fund's distributions of net investment income.

Zero coupons may offer investors the opportunity to earn a higher yield than that available on ordinary interest-paying obligations of similar credit quality and maturity. However, zero coupon prices may also exhibit greater price volatility than ordinary fixed-income securities because of the manner in which their principal and interest are returned to the investor.

*Pay-In-Kind Securities.* Pay-in-kind securities are securities that have interest payable by delivery of additional securities. Upon maturity, the holder is entitled to receive the aggregate par value of the securities.

*Deferred Payment Securities.* Deferred payment securities are securities that remain zero coupons until a predetermined date, at which time the stated coupon rate becomes effective and interest becomes payable at regular intervals.

**41**

------

[Back To **Table of Contents**](#TOC_15545)

**Special Risks Related to Cyber Security.** The Trust and its service providers are susceptible to cyber security risks that include, among other things, theft, unauthorized monitoring, release, misuse, loss, destruction or corruption of confidential and highly restricted data; denial of service attacks; unauthorized access to relevant systems; compromises to networks or devices that the Trust and its service providers use to service the Trust's operations; or operational disruption or failures in the physical infrastructure or operating systems that support the Trust and its service providers. Cyber attacks against or security breakdowns of the Trust or its service providers may adversely impact the Trust and its shareholders, potentially resulting in, among other things, financial losses; the inability of Fund shareholders to transact business and a Fund to process transactions; inability to calculate a Fund's NAV; violations of applicable privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement or other compensation costs; and/or additional compliance costs. The Trust may incur additional costs for cyber security risk management and remediation purposes. In addition, cyber security risks may also impact issuers of securities in which a Fund invests, which may cause a Fund's investment in such issuers to lose value. There can be no assurance that the Trust or its service providers will not suffer losses relating to cyber attacks or other information security breaches in the future.

**ESG Investment Risk.** To the extent that a Fund considers environmental, social and governance ("ESG") criteria and application of related analyses when selecting investments, the Fund's performance may be affected depending on whether such investments are in or out of favor and relative to similar funds that do not adhere to such criteria or apply such analyses. A company's ESG practices or the Adviser's assessment of such may change over time. Additionally, a Fund's adherence to its ESG criteria and application of related analyses in connection with identifying and selecting investments may require subjective analysis and may be difficult if data about a particular company is limited. A Fund's consideration of ESG criteria may result in the Fund buying certain securities or forgoing opportunities to buy certain securities. A Fund's investments in certain companies may be susceptible to various factors that may impact their businesses or operations, including the effects of general economic conditions throughout the world, increased competition from other providers of services, unfavorable tax laws or accounting policies and high leverage.

**Market and Geopolitical Risk.** The value of your investment in a Fund is based on the values of a Fund's investments. These values change daily due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. Price movements, sometimes called volatility, may be greater or less depending on the types of securities a Fund owns and the markets in which the securities trade. The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in a Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, pandemics, epidemics, terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. The occurrence of such events may be sudden and unexpected, and it is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects. Any such event(s) could have a significant adverse impact on the value, liquidity and risk profile of a Fund's portfolio, as well as its ability to sell securities to meet redemptions. There is a risk that you may lose money by investing in a Fund.

Social, political, economic and other conditions and events, such as war, natural disasters, health emergencies (e.g., epidemics and pandemics), terrorism, conflicts may occur and could significantly impact issuers, industries, governments and other systems, including the financial markets. As global systems, economies and financial markets are increasingly interconnected, events that once had only local impact are now more likely to have regional or even global effects. Events that occur in one country, region or financial market will, more frequently, adversely impact issuers in other countries, regions or markets. These impacts can be exacerbated by failures of governments and societies to adequately respond to an emerging event or threat. These types of events quickly and significantly impact markets in the U.S. and across the globe leading to extreme market volatility and disruption. The extent and nature of the impact on supply chains or economies and markets from these events is unknown, particularly if a health emergency or other similar event, such as the recent COVID-19 (the "Coronavirus") outbreak, persists for an extended period of time. Social, political, economic and other conditions and events, such as natural disasters, health emergencies (e.g., epidemics and pandemics), terrorism, conflicts, social unrest, recessions, inflation, rapid interest rate changes and supply chain disruption could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and the Adviser's investment advisory activities and services of other service providers, which in turn could adversely affect a Fund's investments and other operations. The value of a Fund's investment may decrease as a result of such events, particularly if these events adversely impact the operations and effectiveness of the Adviser or key service providers or if these events disrupt systems and processes necessary or beneficial to the investment advisory or other activities on behalf a Fund.

Many countries have experienced outbreaks of infectious illnesses in recent decades, including swine flu, avian influenza, SARS and the Coronavirus, and may experience similar outbreaks in the future. For example, the Coronavirus outbreak has resulted in numerous deaths and the imposition of both local and more widespread "work from home" and other quarantine measures, border

**42**

------

[Back To **Table of Contents**](#TOC_15545)

closures and other travel restrictions, causing social unrest and commercial disruption on a global scale and significant volatility in financial markets.

The ongoing spread of the Coronavirus has had, and is expected to continue to have, a material adverse impact on local economies in the affected jurisdictions and also on the global economy, as cross border commercial activity and market sentiment are increasingly impacted by the outbreak and government and other measures seeking to contain its spread. The global impact of the outbreak has been rapidly evolving, and many countries have reacted by instituting quarantines and restrictions on travel. These actions are creating disruption in supply chains, and adversely impacting a number of industries, including but not limited to retail, transportation, hospitality and entertainment. In addition to these developments having adverse consequences for certain companies and other issuers in which a Fund invests and the value of a Fund's investments therein, the operations of the Adviser (including those relating to the Fund) could be impacted adversely, including through quarantine measures and travel restrictions imposed on the Adviser's or service providers' personnel located in affected countries, regions or local areas, or any related health issues of such personnel. Any of the foregoing events could materially and adversely affect the Adviser's ability to source, manage and divest investments on behalf of a Fund and pursue a Fund's investment objectives and strategies. Similar consequences could arise with respect to other infectious diseases. Given the significant economic and financial market disruptions and general uncertainty associated with the Coronavirus pandemic, the valuation and performance of the Fund's investments may be impacted adversely.

In light of current market conditions, until recently interest rates and bond yields in the United States and many other countries were at or near historic lows, and in some cases, such rates and yields are negative. During periods of very low or negative interest rates, a Fund's susceptibility to interest rate risk (i.e., the risks associated with changes in interest rates) may be magnified, its yield and income may be diminished and its performance may be adversely affected (e.g., during periods of very low or negative interest rates, the Fund may be unable to maintain positive returns). These levels of interest rates (or negative interest rates) may magnify the risks associated with rising interest rates. Changing interest rates, including rates that fall below zero, may have unpredictable effects on markets, including market volatility and reduced liquidity, and may adversely affect a Fund's yield, income and performance.

Government and other public debt, including municipal obligations in which a Fund may invest, can be adversely affected by large and sudden changes in local and global economic conditions that result in increased debt levels. Although high levels of government and other public debt do not necessarily indicate or cause economic problems, high levels of debt may create certain systemic risks if sound debt management practices are not implemented. A high debt level may increase market pressures to meet an issuer's funding needs, which may increase borrowing costs and cause a government or public or municipal entity to issue additional debt, thereby increasing the risk of refinancing. A high debt level also raises concerns that the issuer may be unable or unwilling to repay the principal or interest on its debt, which may adversely impact instruments held by a Fund that rely on such payments. Governmental and quasi-governmental responses to certain economic or other conditions may lead to increasing government and other public debt, which heighten these risks. Unsustainable debt levels can lead to declines in the value of currency, and can prevent a government from implementing effective counter-cyclical fiscal policy during economic downturns, can generate or contribute to an economic downturn or cause other adverse economic or market developments, such as increases in inflation or volatility. Increasing government and other public debt may adversely affect issuers, obligors, guarantors or instruments across a variety of asset classes.

**Bitcoin Exposure.** The Discovery Portfolio may have exposure to bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. In addition, the Global Strategist Portfolio may have exposure to bitcoin indirectly through cash settled futures. To the extent either Fund invests in bitcoin futures or the Discovery Portfolio invests in GBTC, it will do so through a wholly-owned subsidiary, which is organized as an exempted company under the laws of the Cayman Islands (the "Bitcoin Subsidiary" and together with either the Discovery Portfolio Subsidiary or Global Strategist Subsidiary, referred to as a "Subsidiary"). Each Fund may at times have no exposure to bitcoin. Although neither Fund directly invests in bitcoin, each Fund's indirect investments in bitcoin are exposed to risks associated with the price of bitcoin, which is subject to numerous factors and risks.

Bitcoin is a digital asset whose ownership and behavior are determined by participants in an online, peer-to-peer network that connects computers that run publicly accessible, or "open source," software that follows the rules and procedures governing the bitcoin network (commonly referred to as the bitcoin protocol). The value of bitcoin, like the value of other cryptocurrencies, is not backed by any government, corporation, or other identified body. The value of bitcoin is determined in part by the supply of (which is limited), and demand for, bitcoin in the markets for exchange that have been organized to facilitate the trading of bitcoin. The further development of the bitcoin network, which is part of a new and rapidly changing industry, is subject to a variety of factors that are difficult to evaluate.

Risks Related to Bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency is an emerging asset class with a limited history. Investments in or exposure to bitcoin are subject to substantial risks, including significant price volatility and fraud and manipulation, which are generally more pronounced in the crypto asset market. In addition, performance and value of indirect investments in bitcoin may differ significantly from the performance or value of bitcoin.

**43**

------

[Back To **Table of Contents**](#TOC_15545)

Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Discovery Portfolio's indirect exposure to such bitcoin) is also susceptible to these risks.

The value of a Fund's indirect investments in bitcoin is subject to significant fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile and subject to sharp declines. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. A Fund's exposure to bitcoin could result in substantial losses to the Fund.

Cryptocurrencies trade on exchanges, which are largely unregulated and, therefore, are more exposed to fraud, market manipulation and failure than established, regulated exchanges for securities and other traditional assets, derivatives, and other currencies. Cryptocurrency exchanges have in the past, and may in the future, fail or otherwise cease operating temporarily or even permanently, resulting in the potential loss of users' cryptocurrency or other market disruptions.

Cryptocurrency exchanges that are regulated typically must comply with minimum net capital, cybersecurity, and anti-money laundering requirements, but are not typically required to protect customers or their markets to the same extent that regulated securities exchanges or futures exchanges are required to do so. Furthermore, many cryptocurrency exchanges lack certain safeguards established by traditional exchanges to enhance the stability of trading on the exchange, such as measures designed to prevent sudden drops in value of items traded on the exchange (i.e., "flash crashes"). As a result, the prices of cryptocurrencies on exchanges may be subject to larger and more frequent sudden declines than assets traded on traditional exchanges. In addition, cryptocurrency exchanges are also subject to the risk of cybersecurity threats and have been breached, resulting in the theft and/or loss of bitcoin and other cryptocurrencies. A cyber or other security breach or a business failure of a cryptocurrency exchange or custodian may affect the price of a particular cryptocurrency or cryptocurrencies generally. A risk also exists with respect to malicious actors or previously unknown vulnerabilities, which may adversely affect the value of bitcoin.

Disruptions at bitcoin exchanges and potential consequences of a bitcoin exchange's failure could adversely affect a Fund's indirect investments in bitcoin. In 2022 and early 2023, several large participants in the cryptocurrency industry, including exchanges, lenders and investment firms, declared bankruptcy, which has resulted in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. These events have also contributed to financial distress among crypto asset market participants and widespread disruption in those markets. The collateral impacts of these types of failures, or of fraud or other adverse developments in the crypto asset markets, is difficult to predict. Extreme volatility in the future, including further declines in the trading prices of the bitcoin, could have a material adverse effect on the value of the Funds' indirect investments in bitcoin. Furthermore, negative perception and/or a lack of stability and standardized regulation in the digital asset economy may reduce confidence in the digital asset economy and may result in greater volatility in the prices of bitcoin and other digital assets, including a depreciation in value. Further, regulation of crypto asset markets is still developing and federal, state or foreign governmental authorities may restrict the development, use or exchange or cryptocurrencies. In addition, events that impact one cryptocurrency may lead to a volatility or a decline in the value or another cryptocurrency, such as bitcoin.

The market for bitcoin (and bitcoin futures) depends on, among other things: the supply and demand for bitcoin (and bitcoin futures); the adoption of bitcoin for commercial uses; the anticipated increase of investments in bitcoin-related investment products by retail and institutional investors; speculative interest in bitcoin, bitcoin futures, and bitcoin-related investment products; regulatory or other restrictions on investors' ability to invest in bitcoin futures; and the potential ability to hedge against the price of bitcoin with bitcoin futures (and vice versa). At times, there has been, and may in the future be, significant disruption to the crypto asset market, which could adversely impact a Fund's indirect investments in bitcoin.

Factors affecting the further development of cryptocurrency include, but are not limited to: continued worldwide growth or possible cessation or reversal in the adoption and use of cryptocurrency and other digital assets; government and quasi-government regulation or restrictions on or regulation of access to and operation of digital asset networks; changes in consumer demographics and public preferences; maintenance and development of open-source software protocol; availability and popularity of other forms or methods of buying and selling goods and services; the use of the networks supporting digital assets, such as those for developing smart contracts and distributed applications; general economic conditions and the regulatory environment relating to digital assets; negative consumer or public perception; and general risks tied to the use of information technologies, including cyber risks. A breach or failure of one cryptocurrency may lead to a loss in confidence in, and thus decreased usage and or value of, other cryptocurrencies.

Bitcoin mining operations consume significant amounts of electricity, which may have a negative environmental impact and give rise to public opinion against allowing, or government regulations restricting, the use of electricity for mining operations. Additionally, miners may be forced to cease operations during an electricity shortage or power outage. Given the energy-intensiveness and electricity costs of mining, miners are restricted in where they can locate mining operations. Any shortage of electricity supply or

**44**

------

[Back To **Table of Contents**](#TOC_15545)

increase in related costs (or if miners otherwise cease expanding processing power) will negatively impact the viability and expected economic return from bitcoin mining, which will affect the availability of bitcoin in the marketplace. Today, many bitcoin mining operations rely on fossil fuels to power their operations. Public perception of the impact of bitcoin mining on climate change may reduce the demand for bitcoin and increase the likelihood of government regulation. Such events could have a negative impact on the price of bitcoin, bitcoin futures, and a Fund's performance. In addition, sales of newly mined bitcoin (and sales of bitcoin by large holders) may impact the price of bitcoin.

Currently, there is relatively limited use of cryptocurrency in the retail and commercial marketplace, which contributes to price volatility. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in the value of cryptocurrencies, either of which could adversely impact a Fund's indirect investment in bitcoin. In addition, to the extent market participants develop a preference for one cryptocurrency over another, the value of the less preferred cryptocurrency would likely be adversely affected.

Cryptocurrency is a new technological innovation with a limited history; it is a highly speculative asset and future U.S. or foreign government or regulatory actions or policies may limit, perhaps to a materially adverse extent, the value of a Fund's indirect investment in bitcoin and the ability to exchange a cryptocurrency or utilize it for payments.

Many significant aspects of the tax treatment of investments in cryptocurrency are uncertain, and a direct or indirect investment in cryptocurrency may produce income that if directly earned by a RIC, like each Fund, would be treated as non-qualifying income for purposes of the income test applicable to RICs. Accordingly, to the extent the Global Strategist Portfolio invests in bitcoin futures or the Discovery Portfolio invests in bitcoin futures or GBTC, it will do so through its Subsidiary.

In 2014, the IRS released a notice (the "Notice") discussing certain aspects of "convertible virtual currency" (that is, digital assets that have an equivalent value in fiat currency or that act as a substitute for fiat currency) for U.S. federal income tax purposes and, in particular, stating that such a digital asset (i) is "property," (ii) is not "currency" for purposes of the rules relating to foreign currency gain or loss and (iii) may be held as a capital asset. In 2019, the IRS released a revenue ruling and a set of "Frequently Asked Questions" (the "Ruling & FAQs") that provide some additional guidance. However, the Notice and the Ruling & FAQs do not address other significant aspects of the U.S. federal income tax treatment of digital assets. Moreover, although the Ruling & FAQs address the treatment of hard forks, there continues to be uncertainty with respect to the income and withholding taxation of incidental rights received through a fork in the blockchain, airdrops offered to bitcoin holders and other similar events, including situations where such rights are disclaimed, as is expected with respect to GBTC's intended treatment of such events.

The taxing authorities of certain states (i) have announced that they will follow the Notice with respect to the treatment of digital assets for state income tax purposes and/or (ii) have issued guidance exempting the purchase and/or sale of digital assets for fiat currency from state sales tax. It is unclear what further guidance on the treatment of digital assets for state tax purposes may be issued in the future.

It is unclear what additional guidance on the treatment of digital assets for U.S. federal, state and local income tax purposes may be issued in the future. Because of the evolving nature of digital assets, it is not possible to predict potential future developments that may arise with respect to digital assets. Any future guidance on the treatment of digital assets for federal, state or local tax purposes could result in adverse tax consequences for investors in each Fund and could have an adverse effect on the value of bitcoin.

*Bitcoin Cash Settled Futures.* The Discovery Portfolio may engage in futures contracts based on bitcoin to obtain long exposure to bitcoin. The Global Strategist Portfolio may engage in futures contracts based on bitcoin to obtain long or short exposure to bitcoin. A long exposure reflects an investment contemplating an increase in the value of the underlying asset whereas a short exposure contemplates a decrease in value of the underlying asset.

The only bitcoin futures in which each Fund may invest are cash settled bitcoin futures traded on futures exchanges registered with the CFTC. The value of bitcoin futures is determined by reference to the CME CF Bitcoin Reference Rate, which provides an indication of the price of bitcoin across certain cash bitcoin exchanges.

Bitcoin futures expose a Fund to all of the risks related to bitcoin discussed above and also expose a Fund to risks related to futures, and specifically risks related to bitcoin futures. The price of bitcoin futures is based on a variety of factors. For example, regulatory changes or actions may alter the nature of an investment in bitcoin futures or restrict the use of bitcoin or the operations of the bitcoin network or exchanges on which bitcoin trades in a manner that adversely affects the price of bitcoin futures, which could adversely impact a Fund and necessitate the payment of large daily variation margin payments to settle a Fund's losses.

The market for bitcoin futures is still developing and a Fund's investment in bitcoin futures may involve illiquidity risk, as bitcoin futures are not as heavily traded as other futures given that the bitcoin futures market is relatively new, which means a Fund may be unable to purchase or sell a futures contract at a desired price or time. In addition, bitcoin futures markets may be more volatile than traditional futures markets and exchanges on which bitcoin futures are traded and their related clearinghouses and a Fund's FCMs generally require the Fund to maintain relatively high levels of initial margin at the clearinghouse and FCM in connection with

**45**

------

[Back To **Table of Contents**](#TOC_15545)

bitcoin futures. Initial margin requirements will increase if a Fund's bitcoin futures investments increase in value. Bitcoin futures are subject to collateral requirements and daily limits that may limit the Fund's ability to achieve the desired exposure.

Exchanges on which bitcoin is traded (which are the source of the price(s) used to determine the cash settlement amount for a Fund's bitcoin futures) have experienced, and may in the future experience, technical and operational issues, making bitcoin prices unavailable at times. In addition, the cash market in bitcoin has been the target of fraud and manipulation, which could affect the pricing of bitcoin futures contracts.

The contractual obligations of a buyer or seller holding a futures contract to expiration may be satisfied by settling in cash as provided by the terms of such contract. However, neither Fund intends to hold bitcoin futures through expiration. Instead, each Fund intends to "roll" futures positions. "Rolling" refers to a process whereby futures contracts nearing expiration are closed out and replaced with new futures contracts with a later expiration date. Accordingly, the Fund is subject to risks related to rolling. In addition, the costs associated with rolling bitcoin futures typically are substantially higher than the costs associated with other futures contracts and may have a significant adverse impact on the performance of a Fund's investments in bitcoin futures.

When the market for certain futures contracts is such that the prices are higher in the more distant delivery months than in the nearer delivery months, the sale during the "rolling process" of the bitcoin futures with closer delivery dates would take place at a price that is lower than the price of the bitcoin futures with more distant delivery dates. This pattern of higher futures prices for longer expiration bitcoin futures is often referred to as "contango." Alternatively, when the market for certain bitcoin futures is such that the prices are higher in the nearer months than in the more distant months, the sale during the rolling process of the more nearby bitcoin futures would take place at a price that is higher than the price of the more distant bitcoin futures. This pattern of higher future prices for shorter expiration bitcoin futures is referred to as "backwardation." There have been extended periods in which contango or backwardation has existed in certain futures markets in general. Such periods could occur in the future for bitcoin futures and may cause significant and sustained losses. Additionally, because of the frequency with which a Fund may roll futures contracts, the impact of contango or backwardation on Fund performance may be greater than it would have been if the Fund rolled futures contracts less frequently.

In addition, bitcoin and bitcoin futures have generally exhibited significant price volatility relative to traditional asset classes. Bitcoin futures may also experience significant price volatility as a result of the market fraud and manipulation noted above.

Futures contracts providing short exposure to bitcoin are also subject to additional risks, including potentially unlimited losses. The Global Strategist Portfolio's short exposure would reflect the portfolio management team's view that the value of the underlying asset will decrease. If the Adviser fails to accurately predict the movement in the value of the underlying asset, the Global Strategist Portfolio may incur a theoretically unlimited loss on short exposures (whereas losses from long exposures can equal only the full value of the underlying asset).

Futures contracts based on bitcoin are also subject to the risks otherwise applicable to derivatives, in particular those described in "Futures Contracts."

*GBTC.* The Discovery Portfolio may obtain investment exposure to bitcoin indirectly through investing in GBTC. The amount of the Discovery Portfolio's investment in GBTC will be subject to certain limits at the time of investment. GBTC's investment objective is for the shares of GBTC to reflect the value of bitcoin held by GBTC, less expenses and other liabilities, and the risks of investing in GBTC are similar to the risks of investing in cryptocurrencies generally. Investments in GBTC expose the Discovery Portfolio to all of the risks related to bitcoin discussed above and also expose the Discovery Portfolio to risks specific to GBTC.

Shares of GBTC have historically traded, and may continue to trade, at a significant discount or premium to NAV. To the extent GBTC trades at a discount to NAV, the value of the Discovery Portfolio's investment in GBTC would typically decrease, even if the value of GBTC's underlying holdings in bitcoin does not decrease. In addition, there is no guarantee that an active trading market for GBTC will exist at any time. The Discovery Portfolio's investment in GBTC will be subject to the operating expenses associated with GBTC. If GBTC incurs expenses in U.S. dollars, GBTC would be required to sell bitcoins to pay these expenses. The sale of GBTC's bitcoins to pay expenses in U.S. dollars at a time of low bitcoin prices could adversely affect the value of the Discovery Portfolio's investment in GBTC. Over time, sales of bitcoin by GBTC to pay expenses will decrease the amount of bitcoin associated with each share of GBTC. In addition, GBTC is susceptible to theft of its bitcoin holdings, which would negatively affect an investment by the Discovery Portfolio in GBTC.

The Discovery Portfolio's investments in GBTC are also subject to the risks associated with private funds generally, including liquidity risk. The securities of such private funds are generally not registered under the 1940 Act, the Securities Act of 1933, as amended, or any federal or state securities laws, and therefore the Discovery Portfolio's investments in GBTC will not benefit from the protections and restrictions of such laws.

GBTC is expected to be treated as a grantor trust for U.S. federal income tax purposes, and therefore an investment by the Bitcoin Subsidiary in GBTC will generally be treated as a direct investment by the Bitcoin Subsidiary in bitcoin for such purposes and will be subject to the tax risks related to investment in bitcoin.

**46**

------

[Back To **Table of Contents**](#TOC_15545)

**Special Risks Related to the Cayman Islands Subsidiary.** The Discovery Portfolio and Global Strategist Portfolio may, consistent with its principal investment strategies, invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands. The Bitcoin Subsidiary may invest in GBTC, cash-settled bitcoin futures and other investments. Investments in the Bitcoin Subsidiary are expected to provide the Discovery Portfolio with exposure to bitcoin within the limitations of Subchapter M of the Code and Internal Revenue Service ("IRS") revenue rulings, as discussed below under "Taxes." The Global Strategist Subsidiary may invest, directly or indirectly through the use of derivatives, in securities, commodities, commodity-related instruments and other investments, primarily futures, swaps and notes. The Global Strategist Subsidiary may also invest in cash-settled bitcoin futures. Investments in the Global Strategist Subsidiary are expected to provide the Global Strategist Portfolio with exposure to bitcoin and the commodity markets within the limitations of Subchapter M of the Code and recent IRS revenue rulings, as discussed below under "Taxes."

Each Subsidiary is a company organized under the laws of the Cayman Islands and is overseen by its own board of directors. Each Fund is the sole shareholder of its respective Subsidiary, and it is not currently expected that shares of any Subsidiary will be sold or offered to other investors. To the extent that a Fund invests in a Subsidiary, the Fund may be subject to the risks associated with such commodity-related instruments, bitcoin and other bitcoin related investments.

While each Subsidiary may be considered similar to an investment company, it is not registered under the 1940 Act and, unless otherwise noted in the Prospectus and this SAI, is not subject to all of the investor protections of the 1940 Act and other U.S. regulations. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of a Fund and/or the Subsidiary to operate as described in the applicable Prospectus and this SAI and could eliminate or severely limit the Fund's ability to invest in the Subsidiary which may adversely affect the Fund and its shareholders.

**INVESTMENT LIMITATIONS**

*Fundamental Limitations.* Each Fund is subject to the following restrictions which are fundamental policies and may not be changed without the approval of the lesser of: (1) at least 67% of the voting securities of the Fund present at a meeting if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy, or (2) more than 50% of the outstanding voting securities of the Fund.

As a matter of fundamental policy, each Fund will not change its objective (unless stated otherwise in a Fund's Prospectus) and will not:

---

| | |
|:---|:---|
| **1** | purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments; provided that this restriction shall not prohibit the Fund from purchasing or selling options, futures contracts and related options thereon, forward contracts, swaps, caps, floors, collars and any other financial instruments or from investing in securities or other instruments backed by physical commodities or as otherwise permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time; |

---

---

| | |
|:---|:---|
| **2** | purchase or sell real estate, although it may purchase and sell securities of companies which deal in real estate, other than real estate limited partnerships, and may purchase and sell marketable securities which are secured by interests in real estate; |

---

---

| | |
|:---|:---|
| **3** | make loans of money or property to any person, except (a) to the extent that securities or interests in which the Fund may invest are considered to be loans, (b) through the loan of portfolio securities, (c) by engaging in repurchase agreements or (d) as may otherwise be permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time; |

---

---

| | |
|:---|:---|
| **4** | invest in a manner inconsistent with its classification as a "diversified company" as provided by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time; |

---

---

| | |
|:---|:---|
| **5** | borrow money, except the Fund may borrow money to the extent permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Trust from the provisions of the 1940 Act, as amended from time to time; |

---

---

| | |
|:---|:---|
| **6** | underwrite the securities of other issuers (except to the extent that the Fund may be deemed to be an underwriter within the meaning of the 1933 Act in connection with the disposition of restricted securities); |

---

---

| | |
|:---|:---|
| **7** | acquire any securities of companies within one industry, if, as a result of such acquisition, more than 25% of the value of the Fund's total assets would be invested in securities of companies within such industry; provided, however that (i) there shall be no limitation on the purchase of obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities (and also, with respect to the Ultra-Short Municipal Income Portfolio, municipal obligations); (ii) utility companies will be divided according to their services, for example, gas, gas transmission, electric and telephone will each be considered a separate industry; (iii) financial service companies will be classified according to the end users of their services, for example, automobile finance, |

---

**47**

------

[Back To **Table of Contents**](#TOC_15545)

bank finance and diversified finance will each be considered a separate industry; and (iv) asset-backed securities will be classified according to the underlying assets securing such securities, except that the Ultra-Short Income Portfolio will invest, under normal circumstances, at least 25% of its assets in securities issued by companies in the financial services industry. Companies in the financial services industry include companies involved in activities such as banking, mortgage, consumer or specialized finance, investment banking, securities brokerage, asset management and custody, insurance, financial investment, real estate and mortgage finance and financial conglomerates. The Ultra-Short Income Portfolio's investments in repurchase agreements will be considered to be investments in the industry of their respective counterparties for purposes of this policy. Although the Ultra-Short Income Portfolio concentrates its investments in the financial services industry, it may invest less than 25% of its assets in this industry as a temporary defensive measure; and

---

| | |
|:---|:---|
| **8** | issue senior securities, except the Fund may issue senior securities to the extent permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time. |

---

In addition, as a matter of fundamental policy, under normal circumstances, the Ultra-Short Municipal Income Portfolio will invest at least 80% of its assets in municipal securities, the income from which is exempt from federal income tax.

*Non-Fundamental Limitations.* Each Fund is also subject to the following restrictions which may be changed by the Board without shareholder approval.

As a matter of non-fundamental policy, no Fund will:

---

| | |
|:---|:---|
| **1** | purchase on margin, except for use of short-term credit as may be necessary for the clearance of purchases and sales of securities, provided that each Fund may make margin deposits in connection with transactions in options, futures, and options on futures; |

---

---

| | |
|:---|:---|
| **2** | pledge, mortgage or hypothecate assets in an amount greater than 50% of its total assets, provided that each Fund may earmark or segregate assets without limit in order to comply with the requirements of Section 18(f) of the 1940 Act and applicable rules, regulations or interpretations of the SEC and its staff; |

---

---

| | |
|:---|:---|
| **3** | with respect to each of the Ultra-Short Income Portfolio and the Ultra-Short Municipal Income Portfolio only, invest more than an aggregate of 10% of the net assets of the Fund, determined at the time of investment, in illiquid securities provided that this limitation shall not apply to any investment in securities that are not registered under the 1933 Act but that can be sold to qualified institutional investors in accordance with Rule 144A under the 1933 Act and are determined to be liquid securities under guidelines or procedures adopted by the Board; |

---

---

| | |
|:---|:---|
| **4** | invest for the purpose of exercising control over management of any company; |

---

---

| | |
|:---|:---|
| **5** | invest its assets in securities of any investment company, except as permitted by the 1940 Act or the rules, regulations, interpretations or orders of the SEC and its staff thereunder; provided that no Fund will invest in other investment companies in reliance on Sections 12(d)(1)(F), 12(d)(1)(G) or 12(d)(1)(J) of the 1940 Act. |

---

The percentage limitations contained in these fundamental and non-fundamental limitations apply at the time of purchase of securities. A later change in percentage resulting from changes in the value of a Fund's assets or in total or net assets of the Fund will not be considered a violation of the restriction and the sale of securities will not be required. The foregoing does not apply to borrowings. Future series of the Trust may adopt different limitations.

Pursuant to an order from the SEC, the Funds may enter into interfund lending arrangements. Interfund loans and borrowings permit each Fund to lend money directly to and borrow from other series of the Trust for temporary purposes. Such loans and borrowings normally extend overnight but may have a maximum duration of seven days. A Fund will borrow through the interfund lending facility only when the costs are lower than the costs of bank loans, and will lend through the facility only when the returns are higher than those available from an investment in repurchase agreements. In addition, a Fund will borrow and lend money through interfund lending arrangements only if, and to the extent that, such practice is consistent with the Fund's investment objective and other investments. Any delay in repayment to a lending Fund could result in a lost investment opportunity or additional borrowing costs.

The investment policies, limitations or practices of the Funds may not apply during periods of unusual or adverse market, economic, political or other conditions. Such market, economic, political or other conditions may include periods of abnormal or heightened market volatility, strained credit and/or liquidity conditions or increased governmental intervention in the markets or industries. During such periods, a Fund may not invest according to its principal investment strategies or in the manner in which its name may suggest, and may be subject to different and/or heightened risks. It is possible that such unusual or adverse conditions may continue for extended periods of time.

For purposes of policies adopted in accordance with Rule 35d-1 under the 1940 Act, the term "assets," as defined in Rule 35d-1 under the 1940 Act, means net assets plus the amount of any borrowings for investment purposes.

**48**

------

[Back To **Table of Contents**](#TOC_15545)

**DISCLOSURE OF PORTFOLIO HOLDINGS**

The Trust's Board of Trustees and the Adviser have adopted policies and procedures regarding disclosure of portfolio holdings (the "Policy"). Pursuant to the Policy, the Adviser may disclose information concerning Trust portfolio holdings only if such disclosure is consistent with the antifraud provisions of the federal securities laws and the Trust's and the Adviser's fiduciary duties to Fund shareholders. In no instance may the Adviser, Sub-Adviser or the Trust receive compensation or any other consideration in connection with the disclosure of information about the portfolio securities of a Fund. Consideration includes any agreement to maintain assets in the Funds or in other investment companies or accounts managed by the Adviser or by any affiliated person of the Adviser. Non-public information concerning portfolio holdings may be divulged to third-parties only when the Trust has a legitimate business purpose for doing so and the recipients of the information are subject to a duty of confidentiality. Under no circumstances shall current or prospective Fund shareholders receive non-public portfolio holdings information, except as described below.

The Trust makes available on its public website the following portfolio holdings information:

■ complete portfolio holdings information monthly, at least 15 calendar days after the end of each month (except with respect to the Discovery, Ultra-Short Income and Ultra-Short Municipal Income Portfolios);

■ complete portfolio holdings information monthly, at least 3 business days after the end of each month (with respect to the Ultra-Short Income and Ultra-Short Municipal Income Portfolios);

■ complete portfolio holdings information quarterly, at least 45 calendar days after the end of each quarter (with respect to the Discovery Portfolio);

■ complete portfolio holdings information weekly, at least 2 business days following the end of the prior week (with respect to the Ultra-Short Income and Ultra-Short Municipal Income Portfolios); and

■ top 10 holdings monthly, at least 15 calendar days after the end of each month (except with respect to the Ultra-Short Income and Ultra-Short Municipal Income Portfolios).

The Trust provides a complete schedule of portfolio holdings for the second and fourth fiscal quarters in its Semi-Annual and Annual Reports, and for the first and third fiscal quarters in its filings with the SEC as an exhibit to Form N-PORT. These portfolio holdings will be available on or about the date of this Statement of Additional Information on the Trust's public website, www.morganstanley.com/im/shareholderreports.

All other portfolio holdings information that has not been disseminated in a manner making it available generally as described above is non-public information for purposes of the Policy.

The Trust may make selective disclosure of non-public portfolio holdings information pursuant to certain exemptions set forth in the Policy. Third-parties eligible for exemptions under the Policy and therefore eligible to receive such disclosures currently include clients/shareholders (such as redeeming shareholders in-kind), fund rating agencies, information exchange subscribers, proxy voting or advisory services, pricing services, consultants and analysts, portfolio analytics providers, transition managers and service providers, provided that the third party expressly agrees to maintain the disclosed information in confidence and not to trade portfolio securities or related derivative securities based on the non-public information. Non-public portfolio holdings information may not be disclosed to a third-party pursuant to an exemption unless and until the third-party recipient has entered into a nondisclosure agreement with the Trust and the arrangement has been reviewed and approved as set forth in the Policy and discussed below. In addition, persons who owe a duty of trust or confidence to the Trust or the Adviser may receive non-public portfolio holdings information without entering into a non-disclosure agreement. Currently, these persons include (i) the Funds' independent registered public accounting firm (as of the Trust's fiscal year end and on an as-needed basis), (ii) counsel to the Funds (on an as-needed basis), (iii) counsel to the Independent Trustees (on an as-needed basis) and (iv) members of the Board of Trustees (on an as-needed basis). Subject to the terms and conditions of any agreement between the Adviser or the Trust and the third-party recipient, if these conditions for disclosure are satisfied, there shall be no restriction on the frequency with which Fund non-public portfolio holdings information is released, and no lag period shall apply (unless otherwise indicated below).

The Adviser and/or Sub-Adviser may provide interest lists to broker-dealers who execute securities transactions for the Funds without entering into a non-disclosure agreement with the broker-dealers, provided that the interest list satisfies all of the following criteria: (1) the interest list must contain only the CUSIP numbers and/or ticker symbols of securities held in all registered management investment companies advised by the Adviser and/or Sub-Adviser or any affiliate of the Adviser or Sub-Adviser (the "Morgan Stanley Funds") on an aggregate, rather than a fund-by-fund basis; (2) the interest list will not disclose portfolio holdings on a fund-by-fund basis; (3) the interest list must not contain information about the number or value of shares owned by a specified Morgan Stanley Fund; (4) the interest list may identify the investment strategy, but not the particular Morgan Stanley Funds, to which the list relates; and (5) the interest list may not identify the portfolio manager or team members responsible for managing the Morgan Stanley Funds.

The Trust may discuss or otherwise disclose performance attribution analyses (i.e., mention the effects of having a particular security in the portfolio(s)) where such discussion is not contemporaneously made public, provided that the particular holding has been disclosed publicly or the information that includes such holding(s) has been made available to shareholders requesting such

**49**

------

[Back To **Table of Contents**](#TOC_15545)

information. Additionally, any discussion of the analyses may not be more current than the date the holding was disclosed publicly or the information that includes such holding(s) has been made available to shareholders requesting such information.

Portfolio holdings information may be provided to broker-dealers, prime brokers, futures commission merchants, or similar providers in connection with each Fund's portfolio trading or operational processing activities; such entities generally need access to such information in the performance of their duties and responsibilities to fund service providers and are subject to a duty of confidentiality, including a duty not to trade on material non-public information, imposed by law or contract. Portfolio holdings information may also be provided to affiliates of Morgan Stanley Investment Management ("MSIM") pursuant to regulatory requirements or for legitimate business purposes, which may include risk management, or may be reported by each Fund's counterparties to certain global trade repositories pursuant to regulatory requirements.

The Adviser, the Sub-Adviser, the Trust and/or certain Funds currently have entered into ongoing arrangements regarding the selective disclosure of complete portfolio holdings information with the following parties:

---

| | | |
|:---|:---|:---|
| **Name** | **Frequency<sup>1</sup>**  | **Lag Time** |
| **Service Providers** |  |  |
| State Street Bank and Trust Company | Daily basis | Daily |
| BlackRock Financial Management Inc.<sup>2</sup>  | Daily basis | <sup>3</sup>  |
| KellyCo Marketing | Monthly basis and Quarterly basis | Varying lag times after the date of the information |
| Commcise Software Limited<sup>4</sup>  | Monthly basis | Approximately three business days |
| Virtu Financial, Inc.<sup>4</sup>  | Monthly basis | Approximately three business days |
| R.R. Donnelley & Sons Company | Monthly basis and Quarterly basis | Varying lag times after the date of the information |
| Toppan Merrill<sup>5</sup>  | Semi-Annual basis | Approximately 15 business days after month end |
| **Fund Rating Agencies** |  |  |
| Refinitiv Lipper | Monthly basis | Approximately six business days after month end |
| **Portfolio Analytics Providers** |  |  |
| Bloomberg Finance, L.P. | Daily basis | Daily |
| FactSet Research Systems, Inc. | Daily basis | Daily |
| BestX Ltd. | Daily basis | Daily |
| Abel Noser Solutions, LLC | Daily basis | Daily |
| MSCI Inc.<sup>4</sup>  | Daily basis | Daily |
| **Clients** |  |  |
| Teacher Retirement System of Texas<sup>6</sup>  | Daily basis | Daily |

---

1 Dissemination of portfolio holdings information to entities listed above may occur less frequently than indicated (or not at all).

2 With respect to the Core Plus Fixed Income, Corporate Bond, Dynamic Value, Global Strategist, High Yield, Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios, only.

3 Information will typically be provided on a real time basis or as soon thereafter as possible.

4 With respect to the Discovery, Dynamic Value and Global Strategist Portfolios, only.

5 With respect to the Discovery Portfolio, only.

6 With respect to the Dynamic Value Portfolio, only.

Further, with respect to the Ultra-Short Income and Ultra-Short Municipal Income Portfolios, certain entities such as municipalities, which may not be authorized to enter into a non-disclosure agreement, may enter into an undertaking to keep any non-public holdings information confidential.

All disclosures of non-public portfolio holdings information made to third-parties pursuant to the exemptions set forth in the Policy must be reviewed and approved by the Adviser, which will also determine from time-to-time whether such third-parties should continue to receive portfolio holdings information.

The Adviser and/or Sub-Adviser shall report quarterly to the Board of Trustees (or a designated committee thereof) at the next regularly scheduled meeting (i) any material information concerning all parties receiving non-public portfolio holdings information pursuant to an exemption; and (ii) any new non-disclosure agreements entered into during the reporting period. Procedures to monitor the use of such non-public portfolio holdings information may include requiring annual certifications that the recipients have utilized such information only pursuant to the terms of the agreement between the recipient and the Adviser and, for those recipients receiving information electronically, acceptance of the information will constitute reaffirmation that the third-party expressly agrees to maintain the disclosed information in confidence and not to trade portfolio securities based on the non-public information.

**50**

------

[Back To **Table of Contents**](#TOC_15545)

**PURCHASE AND REDEMPTION OF SHARES**

*The Trust has suspended offering Class L shares of the Funds to all investors. The Class L shareholders of the Funds do not have the option of purchasing additional Class L shares. However, the existing Class L shareholders of the Funds may invest in additional Class L shares through reinvestment of dividends and distributions.*

Information concerning how Fund shares are offered to the public (and how they are redeemed or exchanged) is provided in the applicable Fund's Prospectus. Each Fund reserves the right in its sole discretion (i) to suspend the offering of its shares; (ii) to reject purchase orders when in the judgment of management such rejection is in the best interest of the Fund; and (iii) to reduce or waive the minimum for initial investments for certain categories of investments.

The NAV of each Fund is calculated on days that the New York Stock Exchange ("NYSE") is open for business (except, with respect to the Ultra-Short Income and Ultra-Short Municipal Income Portfolios, when the following federal holidays are observed: Columbus Day and Veterans Day). NAV is determined as of the close of trading of the NYSE (normally 4:00 p.m. Eastern Time) (for each Fund, the "Pricing Time"). Shares will generally not be priced on days that the NYSE is closed, although Fund shares may be priced on such days if the Securities Industry and Financial Markets Association ("SIFMA") recommends that the bond markets remain open for all or part of the day. On any business day when SIFMA recommends that the bond markets close early, the Fund reserves the right to close at or prior to the SIFMA recommended closing time. If the Fund does so, it will cease granting same day credit for purchase and redemption orders received after the Fund's closing time and credit will be given on the next business day. If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, each Fund reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate its NAV as of, the normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. A Fund may elect to remain open and price its shares on days when the NYSE is closed but the primary securities markets on which the Fund's securities trade remain open.

**Additional Purchase Information.** You may purchase Class I, Class A, Class C, Class IR, Class R6 and/or Institutional Class shares directly from the Funds by Federal Funds wire or by check; however, on days that the NYSE is open but the custodian bank is closed, you may only purchase shares by check (except, with respect to the Ultra-Short Income and Ultra-Short Municipal Income Portfolios, when the following federal holidays are observed: Columbus Day and Veterans Day). Investors may also invest in a Fund by purchasing Class I, Class A, Class C, Class IR, Class R6 and/or Institutional Class shares through certain third-parties, such as brokers, dealers or other financial intermediaries that have entered into a selling agreement with Morgan Stanley Distribution, Inc. (the "Distributor") (each, a "Financial Intermediary"). Some Financial Intermediaries may charge an additional service or transaction fee (see also "Investment Through Financial Intermediaries"). If a purchase is canceled due to nonpayment or because your check does not clear, you will be responsible for any loss the Funds or their agents incur. If you are already a shareholder, the Funds may redeem shares from your account(s) to reimburse the Funds or their agents for any loss. In addition, you may be prohibited or restricted from making future investments in the Funds.

Class W shares of the High Yield Portfolio are available for purchase only at the direction of a wrap account sponsor or the Investment Adviser on behalf of investors that are either (i) eligible wrap accounts sponsored by an adviser or broker-dealer that has entered into an agreement with the Adviser, the Distributor or one of their affiliates to make the Fund available to such wrap accounts or (ii) eligible clients of the Adviser or its affiliates that have entered into a separate investment management or advisory agreement pursuant to which such clients pay an investment management or advisory fee, including investment vehicles that are sponsored, managed, advised or sub-advised by the Adviser or its affiliates. Class W Shares are not subject to a sales charge. Purchase orders must be submitted to the Fund's transfer agent, either directly or through an appropriate clearing agency. The wrap account sponsor or adviser submitting the order must arrange to have federal funds wired to the transfer agent.

*Check.* An account may be opened and you may purchase Class I, Class A, Class C, Class IR, Class R6 and/or Institutional Class shares by completing and signing a New Account Application and mailing it, together with a check payable to "Morgan Stanley Institutional Fund Trust—[Fund name]" to:

Morgan Stanley Institutional Fund Trust

c/o SS&C Global Investor and Distribution Solutions, Inc.

P.O. Box 219804

Kansas City, MO 64121-9804

A purchase of shares by check ordinarily will be credited to your account at the NAV determined on the day of receipt.

*Investment Through Financial Intermediaries.* Certain Financial Intermediaries have made arrangements with the Trust so that an investor may purchase or redeem, as applicable, Class I, Class A, Class L, Class C, Class IR, Class R6 and/or Institutional Class shares at the NAV next determined after the Financial Intermediary receives the share order. In other instances, the Trust has also authorized such Financial Intermediaries to designate other intermediaries to receive purchase and redemption orders on the Trust's

**51**

------

[Back To **Table of Contents**](#TOC_15545)

behalf at the share price next determined after such designees receive the share order. Under these arrangements, the Trust will be deemed to have received a purchase or redemption order when the Financial Intermediary or, if applicable, a Financial Intermediary's authorized designee, receives the share order from an investor.

**Conversion To a New Share Class.** If the value of an account containing shares of a Fund (except for Class W shares of the High Yield Portfolio) falls below the investment minimum for the class of shares held by the account because of shareholder redemption(s) or the failure to meet one of the waiver criteria set forth in the applicable Fund's Prospectus and, if the account value remains below such investment minimum, the shares in such account may, at the Adviser's discretion, convert to another class of shares offered by the Fund, if an account meets the minimum investment amount for such class, and will be subject to the shareholder services fee and other features applicable to such shares. Conversion to another class of shares will result in holding a share class with higher fees. The Trust will not convert to another class of shares based solely upon changes in the market that reduce the NAV of shares. Under current tax law, conversion between share classes is not a taxable event to the shareholder. Shareholders will be notified prior to any such conversion.

**Involuntary Redemption of Shares.** If the value of an account falls below the investment minimum for that class because of shareholder redemption(s) or you no longer meet one of the waiver criteria set forth in the applicable Fund's Prospectus and, if the account value remains below such investment minimum, the shares in such account may be subject to redemption by the Fund. The Fund will not redeem shares based solely upon changes in the market that reduce the NAV of shares. If shares are redeemed, redemption proceeds will be promptly paid to the shareholder. Shareholders will be notified prior to any such redemption.

**Suspension of Redemptions.** The Trust may suspend the right of redemption or postpone the date of payment (i) during any period that the NYSE is closed, or trading on the NYSE is restricted as determined by the SEC, (ii) during any period when an emergency exists as determined by the SEC as a result of which it is not practicable for a Fund to dispose of securities it owns, or fairly to determine the value of its assets, and (iii) for such other periods as the SEC may permit.

**Further Redemption Information.** To protect your account and the Trust from fraud, signature guarantees are required for certain redemptions. Signature guarantees enable the Trust to verify the identity of the person who has authorized a redemption from your account. Signature guarantees are required in connection with: (i) all redemptions, regardless of the amount involved, when the proceeds are to be paid to someone other than the registered owner(s) and/or registered address; and (ii) share transfer requests. An "eligible guarantor institution" may include a bank, a trust company, a credit union or savings and loan association, a member firm of a domestic stock exchange, or a foreign branch of any of the foregoing. Notaries public are not acceptable guarantors. The signature guarantees must appear either: (i) on the written request for redemption; (ii) on a separate instrument for assignment ("stock power") which should specify the total number of shares to be redeemed; or (iii) on all stock certificates tendered for redemption and, if shares held by a Fund are also being redeemed, on the letter or stock power.

**Transactions With Brokers/Dealers.** The Trust has authorized certain brokers to accept on its behalf purchase and redemption orders. Some of these brokers are authorized to designate other intermediaries to accept purchase and redemption orders on a Fund's behalf. For purposes of determining the purchase price of shares, a Fund will be deemed to have received a purchase or redemption order when an authorized broker, or if applicable, a broker's authorized designee, accepts the order. In other words, orders will be priced at the NAV next computed after such orders are accepted by an authorized broker or the broker's authorized designee.

**ACCOUNT POLICIES AND FEATURES**

**Transfer of Shares**

Shareholders may transfer shares of the Funds to another person by written request to Shareholder Services at Morgan Stanley Institutional Fund Trust, c/o SS&C Global Investor and Distribution Solutions, Inc. ("SS&C GIDS"), P.O. Box 219804, Kansas City, MO 64121-9804. If shares are being transferred to a new account, requests for transfer must be accompanied by a completed New Account Application for the receiving party. If shares are being transferred to an existing account, the request should clearly identify the account and number of shares to be transferred and include the signature of all registered owners and all share certificates, if any, which are subject to the transfer. The signature on the letter of request, the share certificate or any stock power must be guaranteed in the same manner as described in the Prospectuses. As in the case of redemptions, the written request must be received in good order before any transfer can be made.

**Valuation of Shares**

NAV of a class is determined by dividing the total market value of each Fund's investments and other assets attributable to that class, less the total market value of all liabilities attributable to that class, by the total number of outstanding shares of the respective class of that Fund. The NAV for each class of shares offered by a Fund may differ due to class-specific expenses paid by each class, including the shareholder servicing fees charged to Class A, Class L, Class C and Institutional Class shares.

In the calculation of a Fund's NAV: (1) an equity portfolio security listed or traded on an exchange is valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given

**52**

------

[Back To **Table of Contents**](#TOC_15545)

day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; and (2) all other equity portfolio securities for which OTC market quotations are readily available are valued at the latest reported sale price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from the relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market. When market quotations are not readily available, including circumstances under which it is determined by the Adviser and/or Sub-Adviser, as applicable, that the closing price, the last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Trust's Board. For valuation purposes, quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE.

Certain of a Fund's securities may be valued using as an input evaluated prices provided by an outside pricing service approved by the Board. Prices obtained from these approved sources are monitored and reviewed by the Adviser's Valuation Committee and if not deemed to represent fair value, may be overridden and valued using procedures adopted by the Board. The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker-dealer market price quotations in determining what it believes is the fair valuation of the portfolio securities valued by such pricing service. Pricing services generally value securities assuming orderly transactions of an institutional round lot size, but a Fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. In certain cases where a valuation is not available from any of the approved pricing services, then a quote from a broker or dealer may be used.

Listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sale price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. If an exchange closing price or bid and asked prices are not available from the exchange, then the quotes from one or more brokers or dealers may be used. Unlisted options and swaps are valued by an outside pricing service approved by the Board or quotes from a broker or dealer. Unlisted options and swaps cleared on a clearinghouse or exchange may be valued using the closing price provided by the clearinghouse or exchange. Futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, then at the last sale price on the exchange.

If the Adviser determines that the valuation received from the outside pricing service or broker or dealer is not reflective of the security's market value, such security is valued at its fair value as determined in good faith under procedures established by and under the general supervision of the Board.

Generally, trading in foreign securities, as well as corporate bonds, U.S. government securities and money market instruments, is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the NAV of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events which may affect the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the NYSE. If events that may affect the value of such securities occur during such period, then these securities may be valued at their fair value as determined in good faith under procedures established by and under the supervision of the Board.

In general, fair value represents a good faith approximation of the current value of an asset and may be used when there is no public market or possibly no market at all for an asset. A security that is fair valued may be valued at a price higher or lower than actual market quotations or the value determined by other funds using their own fair valuation procedures or by other investors. The fair value of an asset may not be the price at which that asset is ultimately sold.

The proceeds received by each Fund from the issue or sale of its shares, and all net investment income, realized and unrealized gain and proceeds thereof, subject only to the rights of creditors, will be specifically allocated to the Fund and constitute the underlying assets of each Fund. The underlying assets of a Fund will be segregated on the books of account, and will be charged with the liabilities in respect of a Fund and with a share of the general liabilities of the Trust. Expenses of the Trust with respect to the Fund and the other series of the Trust are generally allocated in proportion to the NAVs of the respective Fund except where allocations of expenses can otherwise be fairly made.

Each Fund relies on various sources to calculate its NAV. The ability of the Fund to calculate the NAV per share of the Fund is subject to operational risks associated with processing or human errors, systems or technology failures, cyber attacks and errors caused

**53**

------

[Back To **Table of Contents**](#TOC_15545)

by third party service providers, data sources, or trading counterparties. Such failures may result in delays in the calculation of the Fund's NAV and/or the inability to calculate NAV over extended time periods. The Fund may be unable to recover any losses associated with such failures. In addition, if the third-party service providers and/or data sources upon which the Fund directly or indirectly relies to calculate its NAV or price individual securities are unavailable or otherwise unable to calculate the NAV correctly, it may be necessary for alternative procedures to be utilized to price the securities at the time of determining the Fund's NAV.

Although the legal rights of Class I, Class A, Class L, Class C, Class IR, Class R6, Class W and Institutional Class shares will be identical, the different expenses borne by each class will result in different NAVs and dividends for the class. Dividends will differ by approximately the amount of the class specific expenses (distribution, transfer agency and sub transfer agency fees). The NAV of Class A, Class L, Class C and Institutional Class shares will generally be lower than the NAV of Class I, Class IR, Class R6 and Class W shares as a result of the shareholder services fees charged to Class A and Institutional Class shares and the distribution and shareholder services fees charged to Class L and Class C shares and certain other class-specific expenses of Class A, Class C and Class L shares.

**MANAGEMENT OF THE TRUST**

**Trustees and Officers**

The Board of the Trust consists of 11 Trustees. These same individuals also serve as directors or trustees for certain of the funds advised by the Adviser and Morgan Stanley AIP GP LP. None of the Trustees have an affiliation or business connection with the Adviser or any of its affiliated persons or own any stock or other securities issued by the Adviser's parent company, Morgan Stanley. These are the "non-interested" or "Independent" Trustees as defined under the 1940 Act.

**Board Structure and Oversight Function**

The Board's leadership structure features an Independent Trustee serving as Chairperson and the Board Committees described below. The Chairperson participates in the preparation of the agenda for meetings of the Board and the preparation of information to be presented to the Board with respect to matters to be acted upon by the Board. The Chairperson also presides at all meetings of the Board and is involved in discussions regarding matters pertaining to the oversight of the management of the Trust between meetings.

The Board of Trustees operates using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the Trust and Trust shareholders, and to facilitate compliance with legal and regulatory requirements and oversight of the Trust's activities and associated risks. The Board of Trustees has established six standing committees: (1) Audit Committee, (2) Governance Committee, (3) Compliance and Insurance Committee, (4) Equity Investment Committee, (5) Fixed Income, Liquidity and Alternatives Investment Committee and (6) Risk Committee, which are each comprised exclusively of Independent Trustees. Each committee charter governs the scope of the committee's responsibilities with respect to the oversight of the Trust. The responsibilities of each committee, including their oversight responsibilities, are described further under the caption "Independent Trustees and the Committees."

The Funds are subject to a number of risks, including investment, compliance, operational and valuation risk, among others. The Board of Trustees oversees these risks as part of its broader oversight of the Trust's affairs through various Board and committee activities. The Board has adopted, and periodically reviews, policies and procedures designed to address various risks to the Funds. In addition, appropriate personnel, including but not limited to the Trust's Chief Compliance Officer, members of the Trust's administration and accounting teams, representatives from the Trust's independent registered public accounting firm, the Trust's Treasurer, portfolio management personnel, risk management personnel and independent valuation and brokerage evaluation service providers, make regular reports regarding the Trust's activities and related risks to the Board of Trustees and the committees, as appropriate. These reports include, among others, quarterly performance reports, quarterly risk reports and discussions with members of the risk teams relating to each asset class. The Board's committee structure allows separate committees to focus on different aspects of risk and the potential impact of these risks on some or all of the funds in the complex and then report back to the full Board. In between regular meetings, Trust officers also communicate with the Trustees regarding material exceptions and items relevant to the Board's risk oversight function. The Board recognizes that it is not possible to identify all of the risks that may affect the Funds, and that it is not possible to develop processes and controls to eliminate all of the risks that may affect the Funds. Moreover, the Board recognizes that it may be necessary for the Funds to bear certain risks (such as investment risk) to achieve their respective investment objective.

As needed between meetings of the Board, the Board or a specific committee receives and reviews reports relating to the Trust and engages in discussions with appropriate parties relating to the Trust's operations and related risks.

**Trustees**

The Trust seeks as Trustees individuals of distinction and experience in business and finance, government service or academia. In determining that a particular Trustee was and continues to be qualified to serve as Trustee, the Board has considered a variety of

**54**

------

[Back To **Table of Contents**](#TOC_15545)

criteria, none of which, in isolation, was controlling. Based on a review of the experience, qualifications, attributes or skills of each Trustee, including those enumerated in the table below, the Board has determined that each of the Trustees is qualified to serve as a Trustee of the Trust. In addition, the Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes and skills that allow the Board to operate effectively in governing the Trust and protecting the interests of shareholders. Information about the Trust's Governance Committee and Board of Trustees nomination process is provided below under the caption "Independent Trustees and the Committees."

The Trustees of the Trust, their birth years, addresses, positions held, length of time served, their principal business occupations during the past five years and other relevant professional experience, the number of portfolios in the Fund Complex (described below) overseen by each Independent Trustee and other directorships, if any, held by the Trustees, are shown below (as of January 1, 2023). The Fund Complex includes all open-end and closed-end funds (including all of their portfolios) advised by the Adviser and any registered funds that have an adviser that is an affiliate of the Adviser (including, but not limited to, Morgan Stanley AIP GP LP) (the "Morgan Stanley AIP Funds").

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address and** **Birth Year of** **Independent Trustee** | **Position(s) Held** **with Registrant** | **Length of**<br>**Time**<br>**Served** **\*** | **Principal Occupation(s) During** **Past 5 Years and Other Relevant** **Professional Experience** | **Number of Funds**<br>**in Fund Complex** **Overseen by** **Independent** **Trustee** | **Other Directorships Held by** **Independent Trustee During** **Past 5 Years** **\*\*** |
| Frank L. Bowman<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1944 | Trustee | Since August 2006 | President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mérite by the French Government; elected to the National Academy of Engineering (2009). | 79 | Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a member of the CNA Military Advisory Board; Chairman of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019). |

---

**55**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address and** **Birth Year of** **Independent Trustee** | **Position(s) Held** **with Registrant** | **Length of**<br>**Time**<br>**Served** **\*** | **Principal Occupation(s) During** **Past 5 Years and Other Relevant** **Professional Experience** | **Number of Funds**<br>**in Fund Complex** **Overseen by** **Independent** **Trustee** | **Other Directorships Held by** **Independent Trustee During** **Past 5 Years** **\*\*** |
| Frances L. Cashman<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1961 | Trustee | Since February 2022 | Chief Executive Officer, Asset Management Division, Euromoney Institutional Investor PLC (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010). | 80 | Trustee and Investment Committee Member, Georgia Tech Foundation (Since June 2019); Trustee and Chair of Marketing Committee, Loyola Blakefield (Since September 2017); Trustee, MMI Gateway Foundation (since September 2017); Director and Investment Committee Member, Catholic Community Foundation Board (2012–2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017). |
| Kathleen A. Dennis<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1953 | Trustee | Since<br>August<br>2006 | Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006). | 79 | Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations. |
| Nancy C. Everett<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1955 | Trustee | Since<br>January<br>2015 | Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010). | 80 | Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010). |

---

**56**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address and** **Birth Year of** **Independent Trustee** | **Position(s) Held** **with Registrant** | **Length of**<br>**Time**<br>**Served** **\*** | **Principal Occupation(s) During** **Past 5 Years and Other Relevant** **Professional Experience** | **Number of Funds**<br>**in Fund Complex** **Overseen by** **Independent** **Trustee** | **Other Directorships Held by** **Independent Trustee During** **Past 5 Years** **\*\*** |
| Eddie A. Grier<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1955 | Trustee | Since February 2022 | Dean, Santa Clara University Leavey School of Business (since April 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010). | 80 | Director, Witt/Kieffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (since 2012); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019). |
| Jakki L. Haussler<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1957 | Trustee | Since<br>January<br>2015 | Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008). | 80 | Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee; Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Director of Northern Kentucky University Foundation and Member, Investment Committee; Member of Chase College of Law Transactional Law Practice Center Board of Advisors; Director of Best Transport; Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee. |
| Dr. Manuel H. Johnson<br>c/o Johnson Smick<br>International, Inc.<br>220 I Street, NE<br>Suite 200<br>Washington, D.C. 20002<br>Birth Year: 1949 | Trustee | Since<br>July 1991 | Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury. | 79 | Director of NVR, Inc. (home construction). |

---

**57**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address and** **Birth Year of** **Independent Trustee** | **Position(s) Held** **with Registrant** | **Length of**<br>**Time**<br>**Served** **\*** | **Principal Occupation(s) During** **Past 5 Years and Other Relevant** **Professional Experience** | **Number of Funds**<br>**in Fund Complex** **Overseen by** **Independent** **Trustee** | **Other Directorships Held by** **Independent Trustee During** **Past 5 Years** **\*\*** |
| Joseph J. Kearns<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1942 | Trustee | Since<br>August<br>1994 | Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of various Morgan Stanley Funds (since August 1994); CFO of the J. Paul Getty Trust (1982-1999). | 80 | Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing). Prior to December 31, 2013, Director of The Ford Family Foundation. |
| Michael F. Klein<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1958 | Trustee | Since<br>August<br>2006 | Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999). | 79 | Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals). |
| Patricia A. Maleski<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1960 | Trustee | Since<br>January<br>2017 | Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer—Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001). | 80 | Trustee, Nutley Family Service Bureau, Inc. (since January 2022). |

---

**58**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address and** **Birth Year of** **Independent Trustee** | **Position(s) Held** **with Registrant** | **Length of**<br>**Time**<br>**Served** **\*** | **Principal Occupation(s) During** **Past 5 Years and Other Relevant** **Professional Experience** | **Number of Funds**<br>**in Fund Complex** **Overseen by** **Independent** **Trustee** | **Other Directorships Held by** **Independent Trustee During** **Past 5 Years** **\*\*** |
| W. Allen Reed<br>c/o Perkins Coie LLP<br>Counsel to the<br>Independent Trustees<br>1155 Avenue of the Americas<br>22nd Floor<br>New York, NY 10036<br>Birth Year: 1947 | Chair of the Board and Trustee | Chair of the Board since August 2020 and Trustee since August 2006 | Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005). | 79 | Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015). |

---

\* This is the earliest date the Trustee began serving the Morgan Stanley Funds. Each Trustee serves an indefinite term, until his or her successor is elected.

\*\* This includes any directorships at public companies and registered investment companies held by the Trustee at any time during the past five years.

The executive officers of the Trust, their birth years, addresses, positions held, length of time served and their principal business occupations during the past five years are shown below (as of January 1, 2023).

---

| | | | |
|:---|:---|:---|:---|
| **Name, Address and Birth** **Year of Executive Officer** | **Position(s) Held with** **Registrant** | **Length of Time** **Served** **\*** | **Principal Occupation(s) During Past 5 Years** |
| John H. Gernon<br>522 Fifth Avenue<br>New York, NY 10036<br>Birth Year: 1963 | President and Principal Executive Officer | Since September 2013 | President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser. |
| Deidre A. Downes<br>1633 Broadway<br>New York, NY 10019<br>Birth Year: 1977 | Chief Compliance Officer | Since November 2021 | Executive Director of the Adviser (since January 2021) and Chief Compliance officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016 – December 2020). |
| Francis J. Smith<br>522 Fifth Avenue<br>New York, NY 10036<br>Birth Year: 1965 | Treasurer and Principal Financial Officer | Treasurer since July 2003 and Principal Financial Officer since September 2002 | Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002). |
| Mary E. Mullin<br>1633 Broadway<br>New York, NY 10019<br>Birth Year: 1967 | Secretary | Since June 1999 | Managing Director of the Adviser; Secretary of various Morgan Stanley Funds (since June 1999). |
| Michael J. Key<br>522 Fifth Avenue<br>New York, NY 10036<br>Birth Year: 1979 | Vice President | Since June 2017 | Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013). |

---

\* This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.

In addition, the following individuals who are officers of the Adviser or its affiliates serve as assistant secretaries of the Trust: Nicholas Di Lorenzo, Princess Kludjeson, Francesca Mead, Sydney A. Walker and Jill R. Whitelaw.

It is a policy of the Trust's Board that each Trustee shall invest in any combination of the Morgan Stanley Funds that the Trustee determines meets his or her own specific investment objectives, without requiring any specific investment in any particular Fund.

For each Trustee, the dollar range of equity securities beneficially owned by the Trustee in the Trust and in the Family of Investment Companies (Family of Investment Companies includes all of the registered investment companies advised by the Adviser and Morgan Stanley AIP GP LP) for the calendar year ended December 31, 2022 is set forth in the table below.

---

| | | |
|:---|:---|:---|
| **Name of Trustee** | **Dollar Range of Equity Securities**<br>**in the Trust**<br>**(as of December 31, 2022)** | **Aggregate Dollar Range of Equity Securities in All** **Registered Investment Companies Overseen by** **Trustee in Family of Investment Companies (as of** **December 31, 2022)** |
| **Independent:** |  |  |

---

**59**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | |
|:---|:---|:---|
| **Name of Trustee** | **Dollar Range of Equity Securities**<br>**in the Trust**<br>**(as of December 31, 2022)** | **Aggregate Dollar Range of Equity Securities in All** **Registered Investment Companies Overseen by** **Trustee in Family of Investment Companies (as of** **December 31, 2022)** |
| Frank L. Bowman | <sup>1</sup>  | over $100,000 |
| Frances L. Cashman |  |  |
| Kathleen A. Dennis | <sup>1</sup>  | over $100,000 |
| Nancy C. Everett |  | over $100,000 |
| Eddie A. Grier |  |  |
| Jakki L. Haussler | <sup>1</sup>  | over $100,000 |
| Manuel H. Johnson | <sup>1</sup>  | over $100,000 |
| Joseph J. Kearns<sup>2</sup>  | <sup>1</sup>  | over $100,000 |
| Michael F. Klein<sup>2</sup>  | <sup>1</sup>  | over $100,000 |
| Patricia Maleski | <sup>1</sup>  | over $100,000 |
| W. Allen Reed<sup>2</sup>  | <sup>1</sup>  | over $100,000 |

---

---

| | |
|:---|:---|
| 1 | Frank L. Bowman—Discovery Portfolio (over $100,000); Kathleen A. Dennis—Discovery Portfolio (over $100,000); Jakki L. Haussler—High Yield Portfolio (over $100,000); Manuel H. Johnson—Short Duration Income Portfolio (over $100,000); Joseph J. Kearns—Corporate Bond Portfolio (over $100,000), Global Strategist Portfolio (over $100,000) and Ultra-Short Income Portfolio ($10,001-$50,000); Michael F. Klein—High Yield Portfolio (over $100,000); Patricia Maleski—Ultra-Short Income Portfolio ($50,001-$100,000); and W. Allen Reed—Global Strategist Portfolio (over $100,000). |

---

---

| | |
|:---|:---|
| 2 | Includes the total amount of compensation deferred by the Trustee at his election pursuant to a deferred compensation plan. Such deferred compensation is placed in a deferral account and deemed to be invested in one or more of the Morgan Stanley Funds (or portfolio thereof) that are offered as investment options under the plan. |

---

As to each Independent Trustee and his or her immediate family members, no person owned beneficially or of record securities of an investment adviser or principal underwriter of the Trust, or a person (other than a registered investment company) directly or indirectly controlling, controlled by or under common control with an investment adviser or principal underwriter of the Trust.

As of January 1, 2023, the Trustees and officers of the Trust, as a group, owned less than 1% of any Class of the outstanding shares of beneficial interest of each Fund.

**Independent Trustees and the Committees**

Law and regulation establish both general guidelines and specific duties for the Independent Trustees. The Board has six committees: (1) Audit Committee, (2) Governance Committee, (3) Compliance and Insurance Committee, (4) Equity Investment Committee, (5) Fixed Income, Liquidity and Alternatives Investment Committee and (6) Risk Committee.

The Independent Trustees are charged with recommending to the full Board approval of management, advisory and administration contracts, Rule 12b-1 plans and distribution and underwriting agreements; continually reviewing fund performance, checking on the pricing of portfolio securities, brokerage commissions, transfer agent costs and performance and trading among funds in the same complex; and approving fidelity bond and related insurance coverage and allocations, as well as other matters that arise from time to time. The Independent Trustees are required to select and nominate individuals to fill any Independent Trustee vacancy on the board of any fund that has a Rule 12b-1 plan of distribution.

The Board of Trustees has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "1934 Act"). The Audit Committee is charged with recommending to the full Board the engagement or discharge of the Trust's independent registered public accounting firm; directing investigations into matters within the scope of the independent registered public accounting firm's duties, including the power to retain outside specialists; reviewing with the independent registered public accounting firm the audit plan and results of the auditing engagement; approving professional services provided by the independent registered public accounting firm and other accounting firms prior to the performance of the services; reviewing the independence of the independent registered public accounting firm; considering the range of audit and non-audit fees; reviewing the adequacy of the Trust's system of internal controls and reviewing the valuation process. The Trust has adopted a formal, written Audit Committee Charter.

The members of the Audit Committee of the Trust are Nancy C. Everett, Eddie A. Grier, Jakki L. Haussler and Joseph J. Kearns. None of the members of the Trust's Audit Committee is an "interested person," as defined under the 1940 Act, of the Trust (with such disinterested Trustees being "Independent Trustees" or individually, an "Independent Trustee"). Each Independent Trustee is also "independent" from the Trust under the listing standards of the NYSE. The Chairperson of the Audit Committee of the Trust is Jakki L. Haussler.

The Board of Trustees of the Trust also has a Governance Committee. The Governance Committee identifies individuals qualified to serve as Independent Trustees on the Trust's Board and on committees of the Board and recommends such qualified individuals for nomination by the Trust's Independent Trustees as candidates for election as Independent Trustees, advises the Trust's Board with respect to Board composition, procedures and committees, develops and recommends to the Trust's Board a set of corporate governance principles applicable to the Trust, monitors and makes recommendations on corporate governance matters and policies

**60**

------

[Back To **Table of Contents**](#TOC_15545)

and procedures of the Trust's Board of Trustees and any Board committees and oversees periodic evaluations of the Trust's Board and its committees. The members of the Governance Committee of the Trust are Kathleen A. Dennis, Manuel H. Johnson, Michael F. Klein, Patricia A. Maleski and W. Allen Reed, each of whom is an Independent Trustee. In addition, W. Allen Reed (as Chair of the Morgan Stanley Funds) periodically may attend other operating Committee meetings. The Chairperson of the Governance Committee is Kathleen A. Dennis.

The Trust does not have a separate nominating committee. While the Trust's Governance Committee recommends qualified candidates for nominations as Independent Trustees, the Board of Trustees of the Trust believes that the task of nominating prospective Independent Trustees is important enough to require the participation of all current Independent Trustees, rather than a separate committee consisting of only certain Independent Trustees. Accordingly, all the Independent Trustees participate in the selection and nomination of candidates for election as Independent Trustees for the Trust. Persons recommended by the Trust's Governance Committee as candidates for nomination as Independent Trustees shall possess such experience, qualifications, attributes, skills and diversity so as to enhance the Board's ability to manage and direct the affairs and business of the Trust, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties and/or to satisfy any independence requirements imposed by law, regulation or any listing requirements of the NYSE. While the Independent Trustees of the Trust expect to be able to continue to identify from their own resources an ample number of qualified candidates for the Trust's Board as they deem appropriate, they will consider nominations from shareholders to the Board. Nominations from shareholders should be in writing and sent to the Independent Trustees as described below under the caption "Shareholder Communications."

The Board formed the Compliance and Insurance Committee to address insurance coverage and oversee the compliance function for the Trust and the Board. The Compliance and Insurance Committee consists of Frank L. Bowman, Kathleen A. Dennis and Patricia A. Maleski, each of whom is an Independent Trustee. The Chairperson of the Compliance and Insurance Committee is Frank L. Bowman.

The Equity Investment Committee and the Fixed Income, Liquidity and Alternatives Investment Committees oversee the Trust's portfolio investment process and review the performance of the Trust's investments. The Equity Investment Committee and the Fixed Income, Liquidity and Alternatives Investment Committees also recommend to the Board to approve or renew the Trust's Investment Advisory and Administration Agreements. Each Investment Committee focuses on the Trust's primary areas of investment, namely equities, fixed income, liquidity and alternatives. Kathleen A. Dennis, Nancy C. Everett, Eddie A. Grier, Jakki L. Haussler and Michael F. Klein are members of the Equity Investment Committee. The Chairperson of the Equity Investment Committee is Nancy C. Everett. Frank L. Bowman, Frances L. Cashman, Manuel H. Johnson, Joseph J. Kearns and Patricia A. Maleski are members of the Fixed Income, Liquidity and Alternatives Investment Committee. The Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee is Manuel H. Johnson.

The Risk Committee assists the Board in connection with the oversight of the Trust's risks, including investment risks, operational risks and risks posed by the Trust's service providers as well as the effectiveness of the guidelines, policies and processes for monitoring and mitigating such risks. The members of the Risk Committee of the Trust are Frances L. Cashman, Manuel H. Johnson, Michael F. Klein and W. Allen Reed, each of whom is an Independent Trustee. The Chairperson of the Risk Committee is Michael F. Klein.

During the Trust's fiscal year ended September 30, 2022, the Board of Trustees held the following meetings:

---

| | |
|:---|:---|
| **Board of Trustees/Committee** | **Number of Meetings** |
| Board of Trustees | 6 |
| Audit Committee | 4 |
| Governance Committee | 10 |
| Compliance and Insurance Committee | 4 |
| Risk Committee | 5 |
| Equity Investment Committee | 5 |
| Fixed Income, Liquidity and Alternatives Investment Committee | 3 |

---

**Experience, Qualifications and Attributes**

The Board has concluded, based on each Trustee's experience, qualifications and attributes that each Board member should serve as a Trustee. Following is a brief summary of the information that led to and/or supports this conclusion.

Mr. Bowman has experience in a variety of business and financial matters through his prior service as a Director or Trustee for various funds in the Fund Complex, where he serves as Chairperson of the Compliance and Insurance Committee (and formerly served as Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee). Mr. Bowman also serves as a Director of Naval and Nuclear Technologies LLP and Director Emeritus for the Armed Services YMCA, and formerly served as a Director of BP, plc. Mr. Bowman serves as a Chairman of the Fairhaven United Methodist Church. Mr. Bowman is also a member of the National Security Advisory Council of the Center for U.S. Global Engagement, a member of the CNA Military Advisory

**61**

------

[Back To **Table of Contents**](#TOC_15545)

Board and a member of the Dolphin Scholarship Foundation Advisory Board. Mr. Bowman retired as an Admiral in the U.S. Navy after serving over 38 years on active duty including eight years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004). Additionally, Mr. Bowman served as the U.S. Navy's Chief of Naval Personnel (1994-1996) where he was responsible for the planning and programming of all manpower, personnel, training and education resources for the U.S. Navy, and on the Joint Staff as Director of Political Military Affairs (1992-1994). In addition, Mr. Bowman served as President and Chief Executive Officer of the Nuclear Energy Institute. Mr. Bowman has received such distinctions as a knighthood as Honorary Knight Commander of the Most Excellent Order of the British Empire and the Officier de l'Orde National du Mérite from the French Government, and was elected to the National Academy of Engineering (2009). He is President of the consulting firm Strategic Decisions, LLC.

With more than 30 years of experience in the financial services industry, Ms. Cashman possesses valuable insights and expertise regarding governance, marketing, communications, and strategy. Ms. Cashman is Chief Executive Officer of the Asset Management Division of Euromoney Institutional Investor PLC. Prior to that, Ms. Cashman spent over 20 years at Legg Mason & Co., ultimately serving as Executive Vice President and Global Head of Marketing and Communications. She has gained valuable experience as Director of two investment management entities and as a distribution leader reporting to boards of other mutual funds. In addition, Ms. Cashman also serves as Trustee for the Georgia Tech Foundation and the MMI Gateway Foundation. Ms. Cashman also serves as an Advisory Board Member for FLX Distribution.

Ms. Dennis has over 25 years of business experience in the financial services industry and related fields including serving as a Director or Trustee of various other funds in the Fund Complex, where she serves as Chairperson of the Governance Committee. Ms. Dennis possesses a strong understanding of the regulatory framework under which investment companies must operate based on her years of service to this Board and her position as Senior Managing Director of Victory Capital Management.

Ms. Everett has over 35 years of experience in the financial services industry, including roles with both registered investment companies and registered investment advisers. Ms. Everett serves as the Chairperson of the Equity Investment Committee. By serving on the boards of other registered funds, such as GMAM Absolute Return Strategies Fund, LLC and Emerging Markets Growth Fund, Inc., Ms. Everett has acquired significant experience with financial, accounting, investment and regulatory matters. Ms. Everett is also a Chartered Financial Analyst.

During the course of a career spanning more than 40 years in both academia and industry, Mr. Grier has gained substantial experience in management, operations, finance, marketing, and oversight. Mr. Grier is the Dean of Santa Clara University's Leavey School of Business. Prior to that, Mr. Grier was the Dean of the Virginia Commonwealth University School of Business. Before joining academia, Mr. Grier spent 29 years at the Walt Disney Company where he served in various leadership roles, including as President of the Disneyland Resort. Mr. Grier also gained substantial oversight experience serving on the boards of Sonia Senior Living, Inc. (formerly, Capital Senior Living Corporation), NVR, Inc., and Middleburg Trust Company. In addition, Mr. Grier currently serves as a Director of Witt/Kieffer, Inc., Director of NuStar GP, LLC, Director of the Colonial Williamsburg Company, and Regent of University of Massachusetts Global. Mr. Grier is also a Certified Public Accountant.

With more than 30 years of experience in the financial services industry, including her years of entrepreneurial and managerial experience in the development and growth of Opus Capital Group, Ms. Haussler brings a valuable perspective to the Trust's Board, where she serves as the Chairperson of the Audit Committee. Through her role at Opus Capital and her service as a director of several venture capital funds and other boards, Ms. Haussler has gained valuable experience dealing with accounting principles and evaluating financial results of large corporations. She is a certified public accountant (inactive) and a licensed attorney in the State of Ohio (inactive). The Board has determined that Ms. Haussler is an "audit committee financial expert" as defined by the SEC.

In addition to his tenure as a Director or Trustee of various other funds in the Fund Complex, where he currently serves as the Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee and formerly served as Chairperson of the Audit Committee, Dr. Johnson has also served as an officer or a board member of numerous companies for over 20 years. These positions included Co-Chairman and a founder of the Group of Seven Council, Director of NVR, Inc., Director of Evergreen Energy and Director of Greenwich Capital Holdings. He also has served as Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury. In addition, Dr. Johnson also served as Chairman of the Financial Accounting Foundation, which oversees the Financial Accounting Standards Board, for seven years.

Mr. Kearns gained extensive experience regarding accounting through his experience on the Audit Committees of the boards of other funds in the Fund Complex, including by previously serving as either Chairperson or Deputy Chairperson of the Audit Committee for nearly 20 years, and through his position as Chief Financial Officer of the J. Paul Getty Trust. He also has experience in financial, accounting, investment and regulatory matters through his position as President and founder of Kearns & Associates LLC, a financial consulting company. Mr. Kearns previously served as a Director of Electro Rent Corporation and previously served as Director of The Ford Family Foundation.

Through his prior positions as a Managing Director of Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and as President and a Trustee of the Morgan Stanley Institutional Funds, Mr. Klein has experience in the management

**62**

------

[Back To **Table of Contents**](#TOC_15545)

and operation of registered investment companies, enabling him to provide management input and investment guidance to the Board. Mr. Klein is the Chairperson of the Risk Committee. Mr. Klein also has extensive experience in the investment management industry based on his current positions as Managing Director and Co-Chief Executive and Co-President of Aetos Alternatives Management, LP and as a Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP. In addition, he also has experience as a member of the board of other funds in the Fund Complex.

Ms. Maleski has over 30 years of experience in the financial services industry and extensive experience with registered investment companies. Ms. Maleski began her career as a certified public accountant at Price Waterhouse LLP ("PW") and was a member of PW's Investment Company Practice. After a brief stint at the Bank of New York, Ms. Maleski began her affiliation with the JPMorgan Funds, at the Pierpont Group, and then with J.P. Morgan Investment Management Inc. From 2001-2013, Ms. Maleski held roles with increasing responsibilities, from Vice President and Board Liaison, Treasurer and Principal Financial Officer, Chief Administrative Officer and finally President and Principal Executive Officer for the JPMorgan Fund complex. Between 2013 and 2016, Ms. Maleski served as Global Head of Oversight and Control of JPMorgan Asset Management and then as Head of JPMorgan Chase's Fiduciary and Conflicts of Interest Program. Ms. Maleski has extensive experience in the management and operation of funds in addition to regulatory and accounting and valuation matters.

Mr. Reed has experience on investment company boards and is experienced with financial, accounting, investment and regulatory matters through his prior service as a Director of iShares Inc. and his service as Chair of the Board and as Trustee or Director of other funds in the Fund Complex. Mr. Reed also gained substantial experience in the financial services industry through his prior positions as a Director of Legg Mason, Inc. and as President and CEO of General Motors Asset Management.

The Trustees' principal occupations and other relevant professional experience during the past five years or more are shown in the above tables.

The Board has adopted a policy that Board members are expected to retire no later than the end of the year they reach the age of 78. The Governance Committee has discretion to grant waivers from this retirement policy under special circumstances, including for Board members to continue serving in Chair or Chair-related roles beyond the retirement age. Current Board members who reached the age of 75 as of January 1, 2021, are grandfathered as exceptions to the retirement policy and may continue to serve on the Board until the end of the year in which they turn 80 years of age.

**Advantages of Having the Same Individuals as Trustees for the Morgan Stanley Funds**

The Independent Trustees and the Funds' management believe that having the same Independent Trustees for each of the Morgan Stanley Funds avoids the duplication of effort that would arise from having different groups of individuals serving as Independent Trustees for each of the funds or even of sub-groups of funds. They believe that having the same individuals serve as Independent Trustees of all the Morgan Stanley Funds tends to increase their knowledge and expertise regarding matters which affect the Fund Complex generally and enhances their ability to negotiate on behalf of each fund with the fund's service providers. This arrangement also precludes the possibility of separate groups of Independent Trustees arriving at conflicting decisions regarding operations and management of the funds and avoids the cost and confusion that would likely ensue. Finally, having the same Independent Trustees serve on all fund boards enhances the ability of each fund to obtain, at modest cost to each separate fund, the services of Independent Trustees of the caliber, experience and business acumen of the individuals who serve as Independent Trustees of the Morgan Stanley Funds.

**Trustee and Officer Indemnification**

The Trust's Declaration of Trust provides that no Trustee, officer, employee or agent of the Trust is liable to the Trust or to a shareholder, nor is any Trustee, officer, employee or agent liable to any third persons in connection with the affairs of the Trust, except as such liability may arise from his/her or its own bad faith, willful misfeasance, gross negligence or reckless disregard of his/her or its duties. It also provides that all third persons shall look solely to Trust property for satisfaction of claims arising in connection with the affairs of the Trust. With the exceptions stated, the Declaration of Trust provides that a Trustee, officer, employee or agent is entitled to be indemnified against all liability in connection with the affairs of the Trust.

**Shareholder Communications**

Shareholders may send communications to the Trust's Board of Trustees. Shareholders should send communications intended for the Trust's Board by addressing the communications directly to the Board (or individual Board members) and/or otherwise clearly indicating in the salutation that the communication is for the Board (or individual Board members) and by sending the communication to either the Fund's office or directly to such Board member(s) at the address specified for each Trustee previously noted. Other shareholder communications received by the Trust not directly addressed and sent to the Board will be reviewed and generally responded to by management and will be forwarded to the Board only at management's discretion based on the matters contained therein.

**63**

------

[Back To **Table of Contents**](#TOC_15545)

**Compensation**

Each Trustee (except for the Chair of the Boards) receives an annual retainer fee of $335,000 ($295,000 prior to January 1, 2023) for serving as a Trustee of the Morgan Stanley Funds.

The Audit Committee Chairperson receives an additional annual retainer fee of $80,000, the Risk Committee Chairperson, the Equity Investment Committee Chairperson, Fixed Income, Liquidity and Alternatives Investment Committee Chairperson and Governance Committee Chairperson each receive an additional annual retainer fee of $50,000 and the Compliance and Insurance Committee Chairperson receives an additional annual retainer fee of $65,000. The aggregate compensation paid to each Trustee is paid by the Morgan Stanley Funds, and is allocated on a pro rata basis among each of the operational funds of the Morgan Stanley Funds based on the relative net assets of each of the funds. The Chair of the Boards receives a total annual retainer fee of $630,000 ($590,000 prior to January 1, 2023) for his services and for administrative services provided to each Board.

The Trust also reimburses such Trustees for travel and other out-of-pocket expenses incurred by them in connection with attending such meetings. Trustees of the Trust who are employed by the Adviser receive no compensation or expense reimbursement from the Trust for their services as a Trustee.

Effective April 1, 2004, the Trust began a Deferred Compensation Plan (the "DC Plan"), which allows each Trustee to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Trustees throughout the year. Each eligible Trustee generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley Funds that are offered as investment options under the DC Plan. At the Trustee's election, distributions are either in one lump sum payment, or in the form of equal annual installments over a period of five years. The rights of an eligible Trustee and the beneficiaries to the amounts held under the DC Plan are unsecured and such amounts are subject to the claims of the creditors of the Trust.

Prior to April 1, 2004, the Trust maintained a similar Deferred Compensation Plan (the "Prior DC Plan"), which also allowed each Independent Trustee to defer payment of all, or a portion, of the fees he or she received for serving on the Board of Trustees throughout the year. Generally, the DC Plan amends and supersedes the Prior DC Plan and all amounts payable under the Prior DC Plan are now subject to the terms of the DC Plan (except for amounts paid during the calendar year 2004, which remain subject to the terms of the Prior DC Plan).

The following table shows aggregate compensation payable to each of the Trust's Trustees from the Trust for the fiscal year ended September 30, 2022 and the aggregate compensation payable to each of the Trust's Trustees by the Fund Complex (which includes all of the Morgan Stanley Funds) for the calendar year ended December 31, 2022.

---

| | | |
|:---|:---|:---|
| **COMPENSATION<sup>1</sup>**  | **COMPENSATION<sup>1</sup>**  | **COMPENSATION<sup>1</sup>**  |
| **Name of Trustee** | **Aggregate Compensation**<br>**From the Trust<sup>2</sup>**  | **Total Compensation**<br>**From Trust and Fund**<br>**Complex Paid to the Trustees<sup>3</sup>**  |
| Frank L. Bowman | $16709 | $360000 |
| Frances L. Cashman<sup>4</sup>  | 13703 | 295000 |
| Kathleen A. Dennis | 16013 | 345000 |
| Nancy C. Everett | 15998 | 345000 |
| Eddie A. Grier<sup>4</sup>  | 13703 | 295000 |
| Jakki L. Haussler | 13680 | 295000 |
| Manuel H. Johnson | 16013 | 345000 |
| Joseph J. Kearns<sup>2</sup><sup>,</sup><sup>3</sup>  | 17372 | 375000 |
| Michael F. Klein<sup>2</sup><sup>,</sup><sup>3</sup>  | 15980 | 345000 |
| Patricia Maleski | 13680 | 295000 |
| W. Allen Reed<sup>3</sup>  | 27395 | 590000 |

---

---

| | |
|:---|:---|
| 1 | Includes all amounts paid for serving as director/trustee of the funds in the Fund Complex, as well as serving as Chair of the Boards or a Chairperson of a Committee. |

---

---

| | |
|:---|:---|
| 2 | The amounts shown in this column represent the aggregate compensation before deferral with respect to the Trust's fiscal year. The following Trustees deferred compensation from the Trust during the fiscal year ended September 30, 2022: Mr. Kearns, $7,404 and $ Mr. Klein, $15,980. |

---

---

| | |
|:---|:---|
| 3 | The amounts shown in this column represent the aggregate compensation paid by all of the funds in the Fund Complex as of December 31, 2022 before deferral by the Trustees under the DC Plan. As of December 31, 2022, the value (including interest) of the deferral accounts across the Fund Complex for Messrs. Kearns, Klein and Reed pursuant to the deferred compensation plan was $1,003,275, $3,052,005 and $3,795,878, respectively. Because the funds in the Fund Complex have different fiscal year ends, the amounts shown in this column are presented on a calendar year basis.Ms. Cashman and Mr. Grier have been trustees since February 1, 2022 |

---

Prior to December 31, 2003, 49 of the Morgan Stanley Funds (the "Adopting Funds") had adopted a retirement program under which an Independent Trustee who retired after serving for at least five years as an Independent Trustee of any such fund (an "Eligible Trustee") would have been entitled to retirement payments based on factors such as length of service, upon reaching the eligible retirement age. On December 31, 2003, the amount of accrued retirement benefits for each Eligible Trustee was frozen, and

**64**

------

[Back To **Table of Contents**](#TOC_15545)

will be payable, together with a return of 8% per annum, at or following each such Eligible Trustee's retirement as shown in the table below.

The following table illustrates the retirement benefits accrued to the Trust's Independent Trustees by the Trust for the period ended September 30, 2022 and by the Adopting Funds for the calendar year ended December 31, 2022, and the estimated retirement benefits for the Independent Trustees from the Adopting Funds for each calendar year following retirement. Only the Trustees listed below participated in the retirement program.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Retirement Benefits Accrued as Trust Expenses** | **Retirement Benefits Accrued as Trust Expenses** | **Estimated Annual Benefits Upon Retirement<sup>1</sup>**  | **Estimated Annual Benefits Upon Retirement<sup>1</sup>**  |
| <br>**Name of Independent Trustee** | **By the Trust<sup>2</sup>**<sup>**,**</sup><sup>**3**</sup>  | **By all Adopting Funds<sup>3</sup>**  | **From the Trust<sup>2</sup>**  | **From all Adopting Funds** |
| Manuel H. Johnson | ($796) | ($5498) | $5711 | $55816 |

---

---

| | |
|:---|:---|
| 1 | Total compensation accrued under the retirement plan, together with a return of 8% per annum, will be paid annually commencing upon retirement and continuing for the remainder of the Trustee's life. |

---

2 Corporate Bond Portfolio, Global Strategist Portfolio, Discovery Portfolio and Short Duration Income Portfolio

3 Mr. Johnson's retirement expenses are negative due to the fact that his retirement date has been extended and therefore his expenses have been overaccrued.

**Code of Ethics**

The Trust, the Adviser and the Distributor have each adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act. The Codes of Ethics are designed to detect and prevent improper personal trading. The Codes of Ethics permit personnel subject to the Codes of Ethics to invest in securities, including securities that may be purchased, sold or held by a Fund, subject to a number of restrictions and controls, including prohibitions against purchases of securities in an initial public offering and a preclearance requirement with respect to personal securities transactions.

**INVESTMENT ADVISORY AND OTHER SERVICES**

**Adviser**

The Adviser is a wholly-owned subsidiary of Morgan Stanley (NYSE: "MS"), a preeminent global financial services firm engaged in securities trading and brokerage activities, as well as providing investment banking, research and analysis, financing and financial advisory services. The principal offices of Morgan Stanley are located at 1585 Broadway, New York, NY 10036, and the principal offices of the Adviser are located at 522 Fifth Avenue, New York, NY 10036. As of December 31, 2022, the Adviser, together with its affiliated asset management companies, had approximately $1.3 trillion in assets under management or supervision.

The Adviser provides investment advice and portfolio management services pursuant to an Investment Advisory Agreement (the "Agreement") and, subject to the supervision of the Trust's Board of Trustees, makes or oversees each of the Fund's day-to-day investment decisions, arranges for the execution of portfolio transactions and generally manages each of the Fund's investments. Pursuant to the Agreement, the Adviser is entitled to receive from each class of shares of each Fund an annual management fee, payable quarterly, equal to the percentage of average daily net assets set forth in the below table reflecting the contractual advisory fee and the maximum expense ratios for each Fund. The Adviser has agreed to a reduction in the fees payable to it and to reimburse the Funds, if necessary, if such fees would cause the total annual operating expenses of each such Fund to exceed the percentage of average daily net assets set forth in the below table reflecting the contractual advisory fee and the maximum expense ratios for each Fund. In determining the actual amount of fee waivers and/or expense reimbursements for a Fund, if any, the Adviser excludes from total annual operating expenses acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation). The fee waivers and/or expense reimbursements for a Fund will continue for at least one year from the date of the applicable Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate. The Adviser may make additional voluntary fee waivers and/or expense reimbursements. The Adviser may discontinue these voluntary fee waivers and/or expense reimbursements at any time in the future. With respect to the Ultra-Short Income Portfolio and the Ultra-Short Municipal Income Portfolio, the Distributor, Adviser and Administrator may also waive distribution fees, advisory fees, administration fees and/or reimburse expenses to enable the Fund to maintain a minimum level of daily net investment income. The Adviser, Distributor and Administrator, as applicable, may discontinue the voluntary fee waivers and/or expense reimbursements at any time in the future.

With respect to Class W shares of the High Yield Portfolio, the Adviser is contractually obligated to waive the fees payable to it. The Adviser expects this obligation to remain in effect indefinitely, unless changed or terminated by the Trust's Board of Trustees.

The Global Strategist Portfolio may gain exposure to bitcoin and the commodities markets by investing up to 25% of its total assets in a wholly-owned subsidiary of the Global Strategist Portfolio organized as a company under the laws of the Cayman Islands. The Discovery Portfolio may gain exposure to bitcoin and other assets by investing up to 25% of its total assets in a wholly-owned subsidiary of the Discovery Portfolio organized as a company under the laws of the Cayman Islands. Each Subsidiary has entered into a separate contract with the Adviser whereby the Adviser provides investment advisory and other services to that Subsidiary. In consideration of these services, each Subsidiary will pay to the Manager at the end of each of the Subsidiary's fiscal quarters, an

**65**

------

[Back To **Table of Contents**](#TOC_15545)

advisory fee calculated by applying a quarterly rate, based on the annual percentage rate of 0.05%, to the average daily net assets of the Subsidiary for the quarter. The Adviser will waive or credit such amounts against the fees payable to the Adviser by the Funds.

The Discovery Portfolio and the Bitcoin Subsidiary have entered into contracts for the provision of custody and audit services with service providers. The Global Strategist Portfolio and the Global Strategist Subsidiary have also entered into contracts for the provision of custody and audit services with service providers.

The Bitcoin Subsidiary is managed pursuant to compliance policies and procedures that are the same, in all material respects, as the policies and procedures adopted by Discovery Portfolio. As a result, the Adviser, in managing the Bitcoin Subsidiary's portfolio, is subject to the same investment policies and restrictions that apply to the management of the Discovery Portfolio (as discussed above, the Bitcoin Subsidiary may invest in cash settled bitcoin futures or GBTC) and, in particular, to the requirements relating to portfolio leverage, liquidity, brokerage and the timing and method of valuation of the Bitcoin Subsidiary's portfolio investments and shares of the Bitcoin Subsidiary. Certain of these policies and restrictions are described in detail in this SAI. The Global Strategist Subsidiary is managed pursuant to compliance policies and procedures that are the same, in all material respects, as the policies and procedures adopted by the Global Strategist Portfolio. As a result, the Adviser, in managing the Global Strategist Subsidiary's portfolio, is subject to the same investment policies and restrictions that apply to the management of the Global Strategist Portfolio (as discussed above, the Global Strategist Subsidiary may invest in cash settled bitcoin futures or commodity-related instruments) and, in particular, to the requirements relating to portfolio leverage, liquidity, brokerage and the timing and method of valuation of the Global Strategist Subsidiary's portfolio investments and shares of the Global Strategist Subsidiary. Certain of these policies and restrictions are described in detail in this SAI.

The consolidated financial statements of the Bitcoin Subsidiary is included in the Annual Report and Semi-Annual Report of the Discovery Portfolio provided to shareholders. The consolidated financial statements of the Global Strategist Subsidiary is included in the Annual Report and Semi-Annual Report of the Global Strategist Portfolio.

The following table reflects for each Fund (i) the advisory fee paid; and (ii) the advisory fee waived and/or affiliated rebates for each of the past three fiscal years ended September 30, 2020, 2021 and 2022.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Advisory Fees Paid**<br>**(After Fee Waivers and**<br>**or Affiliated Rebates)** | **Advisory Fees Paid**<br>**(After Fee Waivers and**<br>**or Affiliated Rebates)** | **Advisory Fees Paid**<br>**(After Fee Waivers and**<br>**or Affiliated Rebates)** | **Advisory Fees Waived** | **Advisory Fees Waived** | **Advisory Fees Waived** | **Affiliated Rebates** | **Affiliated Rebates** | **Affiliated Rebates** |
| **Fund** | **2020**<br>**(000)** | **2021**<br>**(000)** | **2022**<br>**(000)** | **2020**<br>**(000)** | **2021**<br>**(000)** | **2022**<br>**(000)** | **2020**<br>**(000)** | **2021**<br>**(000)** | **2022**<br>**(000)** |
| Core Plus Fixed Income | $1492 | $2197 | $1748 | $1289 | $1466 | $1282 | $153 | $123 | $66 |
| Corporate Bond | 555 | 743 | 580 | 9 | 0 | 0 | 5 | 3 | 2 |
| Discovery | 6853 | 23352 | 11915 | 0 | 0 | 0 | 147 | 228 | 37 |
| Dynamic Value | <sup>^</sup>  | 0 | 0 | <sup>^</sup>  | 10 | 104 | <sup>^</sup>  | @ | 4 |
| Global Strategist | 1512 | 1983 | 2176 | 144 | 0 | 5 | 94 | 40 | 79 |
| High Yield | 617 | 612 | 539 | 522 | 526 | 494 | 3 | 1 | 1 |
| Short Duration Income | 10 | 385 | 377 | 508 | 594 | 563 | 16 | 6 | 6 |
| Ultra-Short Income | 22658 | 14139 | 12011 | 12455 | 18476 | 10500 | 0 | 0 | 0 |
| Ultra-Short Municipal Income | 0 | 0 | 0 | 600 | 461 | 292 | 0 | 0 | 0 |

---

@ Amount is less than $500.

^ Not operational during the period.

The following table reflects the contractual advisory fee and the maximum expense ratios for each Fund.

**66**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Fund** | **Contractual Rate of** **Advisory Fees** | **Expense** **Cap**<br>**Class I** | **Expense** **Cap**<br>**Class A** | **Expense** **Cap**<br>**Class L** | **Expense** **Cap**<br>**Class C** | **Expense** **Cap Class** **IR** | **Expense** **Cap**<br>**Class R6** | **Expense** **Cap**<br>**Institutional**<br>**Class** | **Expense** **Cap**<br>**Class W** |
| Core Plus Fixed Income | 0.375% of the portion of the daily net assets not exceeding $1 billion; and 0.300% of the portion of the daily net assets exceeding $1 billion | 0.42% | 0.77% | 1.02% | 1.52% | – | 0.37% | – | – |
| Corporate Bond | 0.375% | 0.70% | 1.05% | 1.52% | 1.80% | – | – | – | – |
| Discovery | 0.50% | 0.80% | 1.15% | 1.65% | 1.90% | – | 0.73% | – | – |
| Dynamic Value | 0.35% | 0.55% | 0.90% | – | 1.65% | – | 0.50% | – | – |
| Global Strategist | 0.45% | 0.74% | 1.09% | 1.59% | 1.84% | – | 0.71% | – | – |
| High Yield | 0.60% | 0.65% | 1.00% | 1.25% | 1.75% | 0.62% | 0.62% | – | 0.00% |
| Short Duration Income | 0.20% | 0.30% | 0.55% | 0.80% | 1.30% | – | 0.25% | – | – |
| Ultra-Short Income | 0.20% | – | 0.40% | – | – | 0.25% | – | 0.30% | – |
| Ultra-Short Municipal Income | 0.20% | – | 0.35% | – | – | 0.25% | – | 0.35% | – |

---

The Agreement continues for successive one year periods, only if each renewal is specifically approved by an in-person vote of the Trust's Board, including the affirmative votes of a majority of the Trustees who are not parties to the agreement or "interested persons" (as defined in the 1940 Act) of any such party at a meeting called for the purpose of considering such approval. In addition, the question of continuance of the Agreement may be presented to the shareholders of the Fund; in such event, continuance shall be effected only if approved by the affirmative vote of a majority of the outstanding voting securities of each Fund of the Trust. If the holders of any Fund fail to approve the Agreement, the Adviser may continue to serve as investment adviser to each Fund that approved the Agreement, and to any Fund that did not approve the Agreement until new arrangements have been made. The Agreement is automatically terminated if assigned, and may be terminated by any Fund without the payment of any penalty, at any time, (1) by vote of a majority of the entire Board or (2) by vote of a majority of the outstanding voting securities of the Trust on 60 days' written notice to the Adviser or (3) by the Adviser without the payment of any penalty, upon 90 days' written notice to the Trust.

The Trust bears all of its own costs and expenses, including but not limited to: services of its independent accountants, its administrator and dividend disbursing and transfer agent, legal counsel, taxes, insurance premiums, costs incidental to meetings of its shareholders and Trustees, the cost of filing its registration statements under federal and state securities laws, reports to shareholders, and custodian fees. These Trust expenses are, in turn, allocated to each Fund, based on their relative net assets. Each Fund bears its own advisory fees and brokerage commissions and transfer taxes in connection with the acquisition and disposition of its investment securities.

**Sub-Adviser**

The Adviser has entered into a Sub-Advisory Agreement with Morgan Stanley Investment Management Limited, located at 25 Cabot Square, Canary Wharf, London, E14 4QA, England (with respect to the Global Strategist Portfolio). The Sub-Adviser is a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with investment advisory services subject to the overall supervision of the Adviser and the Trust's officers and Trustees. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

**Participating Affiliate**

In rendering investment advisory services to the Dynamic Value and Global Strategist Portfolios, MSIM will use the portfolio management, research and other resources of Morgan Stanley Investment Management (Australia) Pty Limited ("MSIM Australia"). MSIM Australia is a foreign (non-U.S.) affiliate of MSIM that is not registered under the Advisers Act. One or more MSIM Australia employees may provide services to the Dynamic Value and Global Strategist Portfolios through a "participating affiliate" arrangement, as that term is used in relief granted by the staff of the SEC allowing U.S. registered investment advisers to use portfolio management or research resources of advisory affiliates subject to the regulatory supervision of the registered investment adviser. Under the participating affiliate arrangement, MSIM Australia is considered a Participating Affiliate of MSIM, and MSIM Australia and its employees are considered "associated persons" of MSIM (as that term is defined in the Advisers Act) and investment professionals from MSIM Australia may render portfolio management, research and other services to the Dynamic Value and Global Strategist Portfolios, subject to the supervision of MSIM.

**67**

------

[Back To **Table of Contents**](#TOC_15545)

**Principal Underwriter**

Morgan Stanley Distribution, Inc., an indirect wholly-owned subsidiary of Morgan Stanley, with its principal office at 522 Fifth Avenue, New York, NY 10036, distributes the shares of each Fund. Under the Distribution Agreement, the Distributor, as agent of the Trust, agrees to use its best efforts as sole distributor of each Fund's shares. The Distribution Agreement continues in effect so long as such continuance is approved at least annually by the Trust's Board, including a majority of those Trustees who are not parties to such Distribution Agreement nor interested persons of any such party. The Distribution Agreement provides that each Fund will bear the costs of the registration of its shares with the SEC and various states and the printing of its prospectuses, statements of additional information and reports to shareholders.

**Fund Administration**

The Adviser also provides administrative services to the Funds pursuant to an Amended and Restated Administration Agreement dated as of August 26, 2016 (the "Administration Agreement"). For its services under the Administration Agreement, the Trust pays the Adviser a monthly fee which on an annual basis equals 0.08% of the average daily net assets of each Fund. The Adviser may compensate other service providers for performing shareholder servicing and administrative services.

For the fiscal years ended September 30, 2020, 2021 and 2022, the Trust paid the following administrative fees

---

| | | | |
|:---|:---|:---|:---|
| | **Administrative Fees Paid** | **Administrative Fees Paid** | **Administrative Fees Paid** |
| <br>**Fund** | **2020**<br>**(000)** | **2021**<br>**(000)** | **2022**<br>**(000)** |
| Core Plus Fixed Income | $626 | $812 | $660 |
| Corporate Bond | 121 | 159 | 124 |
| Discovery | 1120 | 3773 | 1912 |
| Dynamic Value<sup>1</sup>  | <sup>^</sup>  | 2 | 24 |
| Global Strategist | 311 | 360 | 402 |
| High Yield | 152 | 152 | 138 |
| Short Duration Income | 214 | 394 | 378 |
| Ultra-Short Income | 14045 | 13046 | 9004 |
| Ultra-Short Municipal Income | 240 | 182\* | 117\*\* |

---

\* The administration fee paid reflects a waiver of approximately $2,000.

\*\* The administration fee paid reflects a waiver of less than $500.

^ Not operational during the period.

1 The Fund commenced operations on March 19, 2021.

*Sub-Administrator*. Under an agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Trust. For such services, the Administrator pays State Street a portion of the administrative fee the Administrator receives from the Trust. The Administrator supervises and monitors the administrative and accounting services provided by State Street. Their services are also subject to the supervision of the officers and Board of Trustees of the Trust.

**Custodian**

State Street, located at One Lincoln Street, Boston, MA 02111-2101, serves as custodian for the Funds. The Custodian holds cash, securities, and other assets of the Funds as required by the 1940 Act.

**Transfer and Dividend Disbursing Agent**

SS&C GIDS, 2000 Crown Colony Drive, Quincy, MA 02169-0953, serves as the Funds' transfer agent and dividend disbursing agent.

**Co-Transfer Agent**

Eaton Vance Management is the co-transfer agent with respect to Core Plus Fixed Income, Corporate Bond, Discovery, Dynamic Value, Global Strategist and High Yield Portfolios. Morgan Stanley Services Company, Inc. ("MSSCI"), 522 Fifth Avenue, New York, New York 10036, is a registered transfer agent and operates the Trust's call center with respect to the Short Duration Income, Ultra-Short Income and Ultra-Short Municipal Income Portfolios. In connection therewith, MSSCI performs certain transfer agency services related to processing and relaying purchase and redemption orders to SS&C GIDS, the Funds' transfer agent. MSSCI does not receive any direct compensation from the Funds for providing the call center or the related transfer agency services.

**Portfolio Managers**

*Other Accounts Managed by the Portfolio Managers*

**68**

------

[Back To **Table of Contents**](#TOC_15545)

Because the portfolio managers may manage assets for other investment companies, pooled investment vehicles and/or other accounts (including institutional clients, pension plans and certain high net worth individuals), there may be an incentive to favor one client over another resulting in conflicts of interest. For instance, the Adviser and/or Sub-Adviser may receive fees from certain accounts that are higher than the fee they receive from the Trust, or they may receive a performance-based fee on certain accounts. In those instances, the portfolio managers may have an incentive to favor the higher and/or performance-based fee accounts over the Trust. In addition, a conflict of interest could exist to the extent the Adviser and/or Sub-Adviser have proprietary investments in certain accounts, where portfolio managers have personal investments in certain accounts or when certain accounts are investment options in the Adviser's and/or Sub-Adviser's employee benefits and/or deferred compensation plans. The portfolio manager may have an incentive to favor these accounts over others. If the Adviser and/or Sub-Adviser manage accounts that engage in short sales of securities of the type in which the Trust invests, the Adviser and/or Sub-Adviser could be seen as harming the performance of the Trust for the benefit of the accounts engaging in short sales if the short sales cause the market value of the securities to fall. The Adviser and/or Sub-Adviser have adopted trade allocation and other policies and procedures that they believe are reasonably designed to address these and other conflicts of interest.

*Portfolio Manager Compensation Structure*

Morgan Stanley's compensation structure is based on a total reward system of base salary and incentive compensation, which is paid either in the form of cash bonus, or for employees meeting the specified deferred compensation eligibility threshold, partially as a cash bonus and partially as mandatory deferred compensation. Deferred compensation granted to Investment Management employees are generally granted as a mix of deferred cash awards under the Investment Management Alignment Plan (IMAP) and equity-based awards in the form of stock units. The portion of incentive compensation granted in the form of a deferred compensation award and the terms of such awards are determined annually by the Compensation, Management Development and Succession Committee of the Morgan Stanley Board of Directors.

*Base salary compensation.* Generally, portfolio managers receive base salary compensation based on the level of their position with the Adviser.

*Incentive compensation.* In addition to base compensation, portfolio managers may receive discretionary year-end compensation.

Incentive compensation may include:

■ Cash Bonus

■ Deferred Compensation:

■ A mandatory program that defers a portion of incentive compensation into restricted stock units or other awards based on Morgan Stanley common stock or other plans that are subject to vesting and other conditions.

■ IMAP is a cash-based deferred compensation plan designed to increase the alignment of participants' interests with the interests of the Advisor's clients. For eligible employees, a portion of their deferred compensation is mandatorily deferred into IMAP on an annual basis. Awards granted under IMAP are notionally invested in referenced funds available pursuant to the plan, which are funds advised by Investment Management. Portfolio managers are required to notionally invest a minimum of 40% of their account balance in the designated funds that they manage and are included in the IMAP notional investment fund menu.

■ Deferred compensation awards are typically subject to vesting over a multi-year period and are subject to cancellation through the payment date for competition, cause (i.e., any act or omission that constitutes a breach of obligation to the Company, including failure to comply with internal compliance, ethics or risk management standards, and failure or refusal to perform duties satisfactorily, including supervisory and management duties), disclosure of proprietary information, and solicitation of employees or clients. Awards are also subject to clawback through the payment date if an employee's act or omission (including with respect to direct supervisory responsibilities) causes a restatement of the Firm's consolidated financial results, constitutes a violation of the Firm's global risk management principles, policies and standards, or causes a loss of revenue associated with a position on which the employee was paid and the employee operated outside of internal control policies.

Investment Management compensates employees based on principles of pay-for-performance, market competitiveness and risk management. Eligibility for, and the amount of any, discretionary compensation is subject to a multi-dimensional process. Specifically, consideration is given to one or more of the following factors, which can vary by portfolio management team and circumstances:

■ Revenue and profitability of the business and/or each fund/accounts managed by the portfolio manager

■ Revenue and profitability of the Firm

■ Return on equity and risk factors of both the business units and Morgan Stanley

■ Assets managed by the portfolio manager

■ External market conditions

**69**

------

[Back To **Table of Contents**](#TOC_15545)

■ New business development and business sustainability

■ Contribution to client objectives

■ Individual contribution and performance

Further, the Firm's Global Incentive Compensation Discretion Policy requires compensation managers to consider only legitimate, business related factors when exercising discretion in determining variable incentive compensation, including adherence to Morgan Stanley's core values, conduct, disciplinary actions in the current performance year, risk management and risk outcomes.

**Other Accounts Managed by Portfolio Managers at September 30,** **2022** **(unless otherwise indicated)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Registered Investment Companies** | **Registered Investment Companies** | **Other Pooled Investment Vehicles** | **Other Pooled Investment Vehicles** | **Other Accounts** | **Other Accounts** |
| <br>**Fund and Portfolio Managers** | **Number of** **Accounts** | **Total Assets in the** **Accounts** | **Number of** **Accounts** | **Total Assets in the** **Accounts** | **Number of** **Accounts** | **Total Assets in the** **Accounts** |
| **Core Plus Fixed Income** |  |  |  |  |  |  |
| Joseph Mehlman | 3 | $266.8 million | 25 | $4.0 billion | 41 | $9.5 billion<sup>1</sup>  |
| Neil Stone | 4 | 925.4 million | 15 | 3.1 billion | 82 | 24.1 billion<sup>2</sup>  |
| Matthew Dunning | 3 | 745.2 million | 2 | 298.3 million | 74 | 22.6 billion<sup>3</sup>  |
| Gregory Finck | 2 | 265.9 million | 14 | 2.8 billion | 31 | 4.5 billion<sup>4</sup>  |
| **Corporate Bond** |  |  |  |  |  |  |
| Joseph Mehlman | 3 | $786.9 million | 25 | $4.0 billion | 41 | $9.5 billion<sup>1</sup>  |
| Angie Salam | 1 | 49.4 million | 8 | 1.3 billion | 4 | 675.3 million |
| Stella Ma | 0 | 0 | 0 | 0 | 0 | 0 |
| **Discovery** |  |  |  |  |  |  |
| Dennis P. Lynch | 23 | $14.6 billion | 33 | $10.9 billion | 17 | $4.5 billion<sup>5</sup>  |
| Sam G. Chainani | 22 | 14.6 billion | 30 | 10.8 billion | 16 | 4.4 billion<sup>5</sup>  |
| Jason C. Yeung | 22 | 14.6 billion | 30 | 10.8 billion | 16 | 4.4 billion<sup>5</sup>  |
| Armistead B. Nash | 22 | 14.6 billion | 30 | 10.8 billion | 16 | 4.4 billion<sup>5</sup>  |
| David S. Cohen | 22 | 14.6 billion | 30 | 10.8 billion | 16 | 4.4 billion<sup>5</sup>  |
| Alexander T. Norton | 22 | 14.6 billion | 30 | 10.8 billion | 16 | 4.4 billion<sup>5</sup>  |
| **Dynamic Value** |  |  |  |  |  |  |
| Mark A. Bavoso | 5 | $1.7 Billion | 7 | $935.2 million | 9 | $6.0 billion<sup>6</sup>  |
| Cyril Moullé-Berteaux | 5 | 1.7 Billion | 8 | 973.3 million | 10 | 6.0 billion<sup>6</sup>  |
| Sergei Parmenov | 5 | 1.7 Billion | 8 | 973.3 million | 9 | 6.0 billion<sup>6</sup>  |
| Douglas Rentz | 0 | 0 | 1 | 105 million | 0 | 0 |
| **Global Strategist** |  |  |  |  |  |  |
| Mark A. Bavoso | 5 | $1.3 billion | 7 | $935.2 million | 9 | $6.0 billion<sup>6</sup>  |
| Cyril Moullé-Berteaux | 5 | 1.3 billion | 8 | 973.3 million | 10 | 6.0 billion<sup>6</sup>  |
| Sergei Parmenov | 5 | 1.3 billion | 8 | 973.3 million | 9 | 6.0 billion<sup>6</sup>  |
| **High Yield** |  |  |  |  |  |  |
| Jack Cimarosa | 0 | 0 | 9 | 2.6 billion | 8 | 1.4 billion<sup>7</sup>  |
| Joseph F. Hurley | 0 | 0 | 9 | 2.6 billion | 8 | 1.4 billion<sup>7</sup>  |
| **Short Duration Income** |  |  |  |  |  |  |
| Neil Stone | 4 | $1.2 billion | 15 | $3.1 billion | 82 | $24.1 billion<sup>2</sup>  |
| Matthew Dunning | 3 | 981.9 million | 2 | 298.3 million | 74 | 22.6 billion<sup>3</sup>  |
| Eric Jesionowski | 0 | 0 | 1 | 285.5 million | 44 | 17.7 billion |
| **Ultra-Short Income** |  |  |  |  |  |  |
| Jonas Kolk | 8 | $261.5 billion | 4 | $49.9 billion | 9 | $9.6 billion |
| Michael Cha | 2 | 19.5 billion | 4 | 43.5 billion | 3 | 4.8 billion |
| David Schoenfeld | 2 | 19.5 billion | 2 | 29.7 billion | 3 | 4.8 billion |
| **Ultra-Short Municipal Income** |  |  |  |  |  |  |
| Jonas Kolk | 8 | $272.8 billion | 4 | $49.9 billion | 8 | $9.6 billion |
| Paul Daggy | 3 | 427.4 million | 0 | 0 | 0 | 0 |

---

---

| | |
|:---|:---|
| 1 | Of these other accounts, three accounts with a total of approximately $1.5 billion in assets had performance-based fees. |

---

---

| | |
|:---|:---|
| 2 | Of these other accounts, two accounts with a total of approximately $987.5 million in assets had performance-based fees. |

---

---

| | |
|:---|:---|
| 3 | Of these other accounts, one account with a total of approximately $321.4 million in assets had performance-based fees. |

---

**70**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | |
|:---|:---|
| 4 | Of these other accounts, one account with a total of approximately $666.1 million in assets had performance-based fees. |

---

---

| | |
|:---|:---|
| 5 | Of these other accounts, two accounts with a total of approximately $188.6 million in assets had performance-based fees. |

---

---

| | |
|:---|:---|
| 6 | Of these other accounts, two accounts with a total of approximately $2.4 billion in assets had performance-based fees. |

---

---

| | |
|:---|:---|
| 7 | Of these other accounts, two accounts with a total of approximately $475.5 million in assets had performance-based fees. |

---

As of September 30, 2022, the dollar range of securities beneficially owned (or held notionally through IMAP) by each portfolio manager in the Trust is shown below:

---

| | |
|:---|:---|
| **Fund and Portfolio Managers** | **Fund Holdings** |
| **Core Plus Fixed Income** | **Core Plus Fixed Income** |
| Joseph Mehlman |  |
| Neil Stone |  |
| Matthew Dunning |  |
| Gregory Finck |  |
| **Corporate Bond** | **Corporate Bond** |
| Joseph Mehlman | $10001-$50000 |
| Angie Salam | $1-$10000 |
| Stella Ma |  |
| **Discovery** | **Discovery** |
| Dennis P. Lynch | $500001-$1000000 |
| Sam G. Chainani | Over $1 million |
| Jason C. Yeung | $100001-$500000 |
| Armistead B. Nash | $10001-$50000 |
| David S. Cohen | $100001-$500000 |
| Alexander T. Norton | $10001-$50000 |
| **Dynamic Value** |  |
| Mark A. Bavoso |  |
| Cyril Moullé-Berteaux | $100001 - $500000 |
| Sergei Parmenov |  |
| Douglas Rentz |  |
| **Global Strategist** | **Global Strategist** |
| Mark Bavoso | $100001-$500000 |
| Cyril Moullé-Berteaux | $50001-$100000 |
| Sergei Parmenov |  |
| **High Yield** | **High Yield** |
| Jack Cimarosa | $100001 - $500000 |
| Joseph F. Hurley | $1-$10000 |
| **Short Duration Income** | **Short Duration Income** |
| Neil Stone |  |
| Matthew Dunning |  |
| Eric Jesionowski | $1-$10000 |
| **Ultra-Short Income** | **Ultra-Short Income** |
| Jonas Kolk |  |
| Michael Cha |  |
| David Schoenfeld |  |
| **Ultra-Short Municipal Income** |  |
| Jonas Kolk |  |
| Paul Daggy |  |

---

**Independent Registered Public Accounting Firm**

Ernst & Young LLP, located at 200 Clarendon Street, Boston, MA 02116-5021, serves as the Funds' independent registered public accounting firm and provides audit and audit-related services, tax-related services and assistance in connection with various SEC filings.

**71**

------

[Back To **Table of Contents**](#TOC_15545)

**Fund Counsel**

Dechert LLP, located at 1095 Avenue of the Americas, New York, NY 10036, acts as the Funds' legal counsel.

**Proxy Voting Policies and Procedures and Proxy Voting Record**

The Board of Trustees believes that the voting of proxies on securities held by the Trust is an important element of the overall investment process. As such, the Trustees have delegated the responsibility to vote such proxies to MSIM.

A copy of MSIM's Proxy Voting Policy ("Proxy Policy") is attached hereto as Appendix A. In addition, a copy of the Proxy Policy, as well as the Trust's most recent proxy voting record for the 12-month period ended June 30, as filed with the SEC, are available without charge on our web site at www.morganstanley.com/im. The Trust's proxy voting record is also available without charge on the SEC's web site at http://www.sec.gov.

**Securities Lending**

Pursuant to an agreement between the Trust and State Street, the Funds may lend their securities through State Street as securities lending agent to certain qualified borrowers. As securities lending agent of the Trust, State Street administers the Funds' securities lending program. These services include arranging the loans of securities with approved borrowers and their return to the Fund upon loan termination, negotiating the terms of such loans, selecting the securities to be loaned and monitoring dividend activity relating to loaned securities. State Street also marks-to-market daily the value of loaned securities and collateral and may require additional collateral as necessary from borrowers. State Street may also, in its capacity as securities lending agent, invest cash received as collateral in pre-approved investments in accordance with the Securities Lending Authorization Agreement. State Street maintains records of loans made and income derived therefrom and makes available such records that the Trust deems necessary to monitor the securities lending program.

For the fiscal year ended September 30, 2022, the following Funds earned income and incurred the following costs and expenses as a result of their securities lending activities:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Fund** | **Gross**<br>**Income<sup>1</sup>**  | **Revenue**<br>**Split<sup>2</sup>**  | **Cash**<br>**Collateral**<br>**Management**<br>**Fees<sup>3</sup>**  | **Administrative**<br>**Fees<sup>4</sup>**  | **Indemnification**<br>**Fees<sup>5</sup>**  | **Rebates to**<br>**Borrowers** | **Other**<br>**Fees** | **Total Cost**<br>**of the**<br>**Securities**<br>**Lending**<br>**Activities** | **Net Income**<br>**from the** **Securities**<br>**Lending** **Activities** |
| Core Plus Fixed Income | $90714 | $8253 | $0 | $0 | $0 | $35672 | $0 | $43925 | $46789 |
| Corporate Bond | 13693 | 1341 | 0 | 0 | 0 | 4746 | 0 | 6087 | 7606 |
| Discovery | 3191124 | 448040 | 0 | 0 | 0 | 204149 | 0 | 652189 | 2538935 |

---

1 Gross income includes income from the reinvestment of cash collateral.

2 Revenue split represents the share of revenue generated by the securities lending program and paid to State Street.

3 Cash collateral management fees include fees deducted from a pooled cash collateral reinvestment vehicle that are not included in the revenue split.

4 These administrative fees are not included in the revenue split.

5 These indemnification fees are not included in the revenue split.

**DISTRIBUTION AND SHAREHOLDER SERVICES PLANS**

**Class A, Class L, Class C and Institutional Class**

The Trust has adopted a Shareholder Services Plan for Class A shares and a Distribution and Shareholder Services Plan for Class L and Class C shares under Rule 12b-1 of the 1940 Act (together, the "Plans"). The Plans provide that the Trust, on behalf of each Fund, may pay the Distributor and other affiliated and unaffiliated broker-dealers, financial institutions and/or intermediaries an annualized service fee of up to 0.25% of the average daily net assets of each Fund (0.20% with respect to the Ultra-Short Municipal Income Portfolio) attributable to Class A, Class C and Class L shares, as applicable. This service fee is for providing "personal service and/or the maintenance of shareholder accounts" as provided for in Section 2830(b)(9) of the Financial Industry Regulatory Authority ("FINRA") Conduct Rules, including (i) expenditures for overhead and other expenses of the Distributor and other affiliated and unaffiliated broker-dealers, (ii) telephone and other communications expenses relating to the provision of shareholder services and (iii) compensation to and expenses of financial advisors and other employees of the Distributor and other affiliated and unaffiliated broker-dealers for the provision of shareholder services. In addition, the Class L Plan provides that the Trust, on behalf of each Fund, may pay the Distributor an annualized distribution fee of up to 0.25% (0.50% with respect to the Discovery and Global Strategist Portfolios) of the average daily net assets of each Fund attributable to Class L shares. The Class C Plan provides that the Trust, on behalf of each Fund, may pay the Distributor an annualized distribution fee of up to 0.75% of the average daily net assets of each Fund attributable to Class C shares. The Distributor may direct that all or any part of these fees be paid directly to its affiliates or other broker-dealers, financial institutions and/or intermediaries that provide shareholder services. The Distributor has

**72**

------

[Back To **Table of Contents**](#TOC_15545)

agreed to waive the 12b-1 fee on Class A shares of the Ultra-Short Income and Ultra-Short Municipal Income Portfolios to the extent it exceeds 0.10% of the average daily net assets of such shares on an annualized basis, and the 12b-1 fee on Class A shares of the Corporate Bond Portfolio to the extent it exceeds 0.15% of the average daily net assets of such shares on an annualized basis. This waiver will continue for at least one year from of the date of the applicable Prospectus or until such time as the Trust's Board of Trustees acts to discontinue all or a portion of such waiver when it deems such action is appropriate. For the Trust's fiscal year ended September 30, 2022, all amounts paid by the Trust with respect to the distribution fee were used to compensate broker-dealers, banks and other intermediaries for sales of Class L and Class C shares of the respective Funds.

The Trust has adopted a Shareholder Services Plan for Institutional Class shares, under which the Trust, on behalf of the Ultra-Short Income Portfolio and the Ultra-Short Municipal Income Portfolio, may pay Service Organizations (defined below) who provide shareholder services. Under the Shareholder Services Plan, the Trust, on behalf of Institutional Class, is authorized to pay the Distributor an annualized fee of 0.05% of the average daily net assets of the Ultra-Short Income Portfolio attributable to Institutional Class shares, and 0.10% of the average daily net assets of the Ultra-Short Municipal Income Portfolio attributable to Institutional Class shares, owned beneficially by the customers of such Service Organizations during such period, to compensate Service Organizations for providing the following services: processing and issuing confirmations concerning shareholder orders to purchase, redeem and exchange shares of Institutional Class; receiving and transmitting funds representing the purchase price or redemption proceeds of Institutional Class shares; and forwarding shareholder communications such as prospectus updates, proxies and shareholder reports. Service Organizations include institutions that (i) act directly or indirectly as nominees and recordholders of shares of each class for their respective customers who are or may become beneficial owners of such shares; (ii) provide services to other Service Organizations intended to facilitate or improve a Service Organization's services to shareholders of the Trust with respect to the applicable Portfolio; and/or (iii) perform certain account services with respect to the shareholders pursuant to agreements between the Trust, on behalf of Institutional Class, and such Service Organizations.

With respect to sales of Class C shares of a Fund, a commission or transaction fee generally will be compensated by the Distributor at the time of purchase directly out of the Distributor's assets (and not out of the Fund's assets) to Financial Intermediaries who initiate and are responsible for such purchases computed based on a percentage of the dollar value of such shares sold of up to 1.00% on Class C shares.

Proceeds from any CDSC and any distribution fees on Class C shares are paid to the Distributor and are used by the Distributor to defray its distribution related expenses in connection with the sale of the Fund's shares, such as the payment to Financial Intermediaries for selling such shares. With respect to Class C shares, the Financial Intermediaries generally receive from the Distributor ongoing distribution fees of up to 1.00% of the average daily net assets of the Fund's Class C shares annually commencing in the second year after purchase.

The following table describes the distribution and/or shareholder servicing fees paid by each Fund with respect to its Class A, Class L, Class C and Institutional Class shares pursuant to the Plans, including the Shareholder Services Plan for Institutional Class shares, and the distribution- and/or shareholder servicing-related expenses for each Fund with respect to its Class A, Class L, Class C and Institutional Class shares for the fiscal year ended September 30, 2022. To the extent that expenditures on distribution- and/or shareholder servicing-related activities exceed the fees paid by a Fund, the excess amounts were paid by the Adviser or the Distributor out of its own resources.

---

| | | | |
|:---|:---|:---|:---|
| **Fund** | **Total Distribution** **and/or Shareholder** **Servicing Fees Paid** **by Fund** | **Distribution and/or** **Shareholder** **Servicing Expenses<sup>1</sup>**  | **Distribution and/or Shareholder** **Servicing Fees Retained by Morgan** **Stanley Distribution, Inc.** **(Expenditures in Excess of** **Distribution and/or Shareholder** **Servicing Fees)** |
| **Class A** |  |  |  |
| Core Plus Fixed Income | $200242 | $198279 | $1963 |
| Corporate Bond | 25779<sup>2</sup>  | 35897 | (10118) |
| Discovery | 2692879 | 2603502 | 89377 |
| Dynamic Value | 1696 | 1659 | 37 |
| Global Strategist | 425668 | 410317 | 15351 |
| High Yield | 35958 | 35505 | 453 |
| Short Duration Income | 673559 | 670596 | 2963 |
| Ultra-Short Income | 5584023<sup>3</sup>  | 5546457 | 37566 |
| Ultra-Short Municipal Income | 57037<sup>4</sup>  | 99599 | (42562) |
| **Class L** |  |  |  |
| Core Plus Fixed Income | $4855 | $4567 | $288 |
| Corporate Bond | 6160 | 6153 | 7 |

---

**73**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | |
|:---|:---|:---|:---|
| **Fund** | **Total Distribution** **and/or Shareholder** **Servicing Fees Paid** **by Fund** | **Distribution and/or** **Shareholder** **Servicing Expenses** **<sup>1</sup>** | **Distribution and/or Shareholder** **Servicing Fees Retained by Morgan** **Stanley Distribution, Inc.** **(Expenditures in Excess of** **Distribution and/or Shareholder** **Servicing Fees)** |
| Discovery | 64360 | 62805 | 1555 |
| Global Strategist | 90552 | 88628 | 1924 |
| High Yield | 1628 | 1575 | 53 |
| Short Duration Income | 4791 | 4052 | 739 |
| **Class C** |  |  |  |
| Core Plus Fixed Income | $207256 | $193017 | $14239 |
| Corporate Bond | 20458 | 19126 | 1332 |
| Discovery | 333233 | 261774 | 71459 |
| Dynamic Value | 8959 | 8653 | 306 |
| Global Strategist | 21130 | 14954 | 6176 |
| High Yield | 55449 | 49916 | 5533 |
| Short Duration Income | 33652 | 26173 | 7479 |
| **Institutional Class** |  |  |  |
| Ultra-Short Income | $994627 | $976868 | $17759 |
| Ultra-Short Municipal Income | 4964<sup>5</sup>  | 3153 | 1811 |
| Total Class A, Class L, Class C and Institutional Class | $11548915 | $11323225 | $225690 |

---

1 Includes payments for distribution and/or shareholder servicing to third-parties and affiliated entities.

---

| | |
|:---|:---|
| 2 | The shareholder servicing fee paid by the Corporate Bond Portfolio pursuant to the Class A Plan reflects a waiver of $17,185. |

---

---

| | |
|:---|:---|
| 3 | The shareholder servicing fee paid by the Ultra-Short Income Portfolio pursuant to the Class A Plan reflects a waiver of $6,955,864. |

---

---

| | |
|:---|:---|
| 4 | The shareholder servicing fee paid by the Ultra-Short Municipal Income Portfolio pursuant to the Class A Plan reflects a waiver of $95,811. |

---

---

| | |
|:---|:---|
| 5 | The shareholder servicing fee paid by the Ultra-Short Municipal Income Portfolio pursuant to the Institutional Class Plan reflects a waiver of $1,329. |

---

The Plans, including the Shareholder Services Plan for Institutional Class shares, were approved by the Trust's Board of Trustees, including the Independent Trustees, none of whom has a direct or indirect financial interest in the operation of the Plan or in any agreements related thereto.

**Revenue Sharing**

This section does not apply to Class R6 shares.

The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of the Funds, to certain third-parties, such as banks, brokers, dealers, recordkeepers and administrators of various deferred compensation plans, other financial intermediaries or financial services firms or other persons ("Intermediaries"), in connection with the sale, distribution, marketing and retention of shares of the Funds and/or shareholder servicing. For example, the Adviser or the Distributor may pay additional compensation to an Intermediary for, among other things, promoting the sale and distribution of Fund shares, providing access to various programs, mutual fund platforms or preferred or recommended mutual fund lists that may be offered by an Intermediary, granting the Distributor access to an Intermediary's financial advisors and consultants, providing assistance in the ongoing education and training of an Intermediary's financial personnel, conferences or seminars, sales, client and investor events, due diligence events, other firm-sponsored events or other programs, furnishing marketing support, finders or referral fees for directing investors to a Fund, maintaining share balances and/or for sub-accounting, recordkeeping, administrative, shareholder or transaction processing services. The Adviser and/or Distributor will also reimburse certain investors, or make payments to certain third-party vendors, to defray costs incurred by investors for the use of treasury management systems or other business-related software for investments in funds. Such payments are in addition to any distribution fees, shareholder servicing fees and/or transfer agency fees that may be payable by the Funds. The additional payments may be based on various factors, including level of sales (based on gross or net sales or some specified minimum sales or some other similar criteria related to sales of the Funds and/or some or all other Morgan Stanley Funds), amount of assets invested by the Intermediary's customers (which could include current or aged assets of the Funds and/or some or all other Morgan Stanley Funds), a Fund's advisory fees, some other agreed upon amount or other measures as determined from time to time by the Adviser and/or the Distributor. These categories of additional compensation are not mutually exclusive and the Adviser and/or the Distributor may pay further types of additional compensation in the future. The amount of these payments may be different for different Intermediaries.

With respect to Morgan Stanley Smith Barney LLC, these payments may include the following amounts, which are paid in accordance with the applicable compensation structure:

**74**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | |
|:---|:---|
| **1** | an ongoing annual fee in an amount of $582,650 in consideration of the Adviser's participation at various Morgan Stanley Smith Barney LLC events, including seminars, conferences and meetings as determined by Morgan Stanley Smith Barney LLC; |

---

---

| | |
|:---|:---|
| **2** | an ongoing annual fee in an amount of $575,000 in consideration of Morgan Stanley Smith Barney LLC providing Adviser with access to distribution analytical data in relation to sales of the Funds and certain other products managed and/or sponsored by the Adviser or its affiliates; |

---

---

| | |
|:---|:---|
| **3** | on Class I, Class A, Class L and Class C shares of the Funds held in Morgan Stanley Smith Barney LLC brokerage and advisory accounts, an ongoing annual fee in an amount up to 0.10% of the total average daily NAV of such shares for the applicable quarterly period; |

---

---

| | |
|:---|:---|
| **4** | on Class I shares and Class IR shares converted from Class I shares of a Fund held in Morgan Stanley Smith Barney LLC brokerage and advisory accounts as of June 30, 2014, where each such account holds $5 million or more in Class I shares of the Fund, or had $4 million or more in assets (but less than $5 million) as of June 30, 2014 and reached $5 million by December 31, 2014, an ongoing annual fee in an amount equal to 35% of the advisory fee the Adviser receives from such Fund based on the average daily NAV of such shares for the applicable quarterly period; |

---

---

| | |
|:---|:---|
| **5** | on Class IR shares of a Fund, an ongoing annual fee in an amount up to 25% of the advisory fee the Adviser receives from the Fund based on the average daily NAV of such shares for the applicable quarterly period. |

---

---

| | |
|:---|:---|
| **6** | on purchases of $1 million or more of Class A shares (for which no initial sales charge was paid), Morgan Stanley Smith Barney LLC may, at the discretion of the Distributor, receive a gross sales credit of up to 1.00% (with respect to the U.S. Equity and Asset Allocation Funds) or 0.50% (with respect to the Fixed Income Funds) of the amount sold, as applicable.\* |

---

\* Commissions or transaction fees paid when Morgan Stanley Smith Barney LLC or other Intermediaries initiate and are responsible for purchases of $1 million or more are computed on a percentage of the dollar value of such shares sold as follows: (i) with respect to the U.S. Equity and Asset Allocation Funds: 1.00% on sales of $1 million to $4 million, then 0.50% on sales over $4 million to $15 million and then 0.25% on the excess over $15 million; and (ii) with respect to the Fixed Income Funds (except Short Duration Income Portfolio): 0.75% on sales of $500,000 to $4 million, then 0.50% on sales over $4 million to $15 million and then 0.25% on the excess over $15 million. Purchases of Class A shares for which no initial sales charge is paid are subject to a contingent deferred sales charge ("CDSC") of 1% with respect to the U.S. Equity and Asset Allocation Funds and 0.75% with respect to the Fixed Income Funds (except Short Duration Income Portfolio) if the redemption of such shares occurs within 12 months after purchase. The full amount of such CDSC will be retained by the Distributor. With respect to the Short Duration Income Portfolio: 0.25% on sales of $250,000 to $4 million, then 0.20% on sales over $4 million to $15 million and then 0.15% on the excess over $15 million.

With respect to Morgan Stanley & Co. LLC, these payments may include the following amounts, which are paid in accordance with the applicable compensation structure:

---

| | |
|:---|:---|
| **1** | on shares of a Fund, a fee in an amount up to 20% of the advisory fee the Adviser receives from such Fund attributable to such shares for the applicable period, not to exceed one year. |

---

With respect to certain affiliated entities of the Adviser and Distributor, these payments, which are paid in accordance with the applicable compensation structure, may include an ongoing annual fee in an amount up to 0.10% of the total average NAV in respect of the applicable period of shares of the Ultra-Short Income Portfolio or Ultra-Short Municipal Income Portfolio held in the applicable accounts.

The prospect of receiving, or the receipt of, additional compensation, as described above, by Intermediaries may provide such Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Funds over other investment options with respect to which these Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Funds or the amount that the Funds receive to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any disclosure provided by Intermediaries as to their compensation.

**Other Payments to Intermediaries**

The Adviser and/or the Distributor may also make payments, out of their own assets and not as an expense to a Fund, to Intermediaries to offset certain nominal expenses of Intermediaries related to setup, connectivity or other technological maintenance of the Intermediary's investment platform and/or the provision of services with respect to a Fund or share class on an Intermediary's investment platform. Investors may wish to take such payment arrangements into account when considering an investment in Fund shares.

**75**

------

[Back To **Table of Contents**](#TOC_15545)

**Dealer Reallowances**

Upon notice to selected broker-dealers, the Distributor may reallow up to the full applicable front-end sales charge during periods specified in such notice. During periods when 90% or more of the sales charge is reallowed, such selected broker-dealers may be deemed to be underwriters as that term is defined in the 1933 Act.

**BROKERAGE PRACTICES**

**Fund Transactions**

The Adviser and/or Sub-Adviser are responsible for decisions to buy and sell securities for a Fund, for broker-dealer selection and for negotiation of commission rates. The Adviser and/or Sub-Adviser are prohibited from directing brokerage transactions on the basis of the referral of clients or the sale of shares of advised investment companies. Purchases and sales of securities on a stock exchange are effected through brokers who charge a commission for their services. In the OTC market, securities may be traded as agency transactions through broker-dealers or traded on a "net" basis with dealers acting as principal for their own accounts without a stated commission, although the price of the security usually includes profit to the dealer. In underwritten offerings, securities are purchased at a fixed price which includes an amount of compensation to the underwriter, generally referred to as the underwriter's concession or discount. When securities are purchased or sold directly from or to an issuer, no commissions or discounts are paid.

A Fund may purchase certain money market instruments directly from an issuer without payment of a commission or concession. Money market instruments are generally traded on a "net" basis with dealers acting as principal for their own accounts without a stated commission, although the price of the security usually includes a profit to the dealer.

The Trust anticipates that certain of its transactions involving foreign securities will be effected on foreign securities exchanges. There is also generally less government supervision and regulation of foreign securities exchanges and brokers than in the United States.

The Adviser and/or Sub-Adviser select broker-dealers for the execution of transactions for the Funds in accordance with their duty to seek "best execution" (i.e., the most favorable terms of execution). In seeking best execution, the Adviser and/or Sub-Adviser are not obligated to choose the broker-dealer offering the lowest available commission rate if, in the Adviser's and/or Sub-Adviser's reasonable judgment, (i) the total costs or proceeds from the transaction might be less favorable than may be obtained elsewhere; (ii) a higher commission is justified by the brokerage and research services provided by the broker-dealer that fall within the safe harbor of Section 28(e) of the 1934 Act or otherwise is permitted under applicable law; or (iii) other considerations, such as the order size, the time required for execution, the depth and breadth of the market for the security or minimum credit quality requirements to transact business with a particular broker-dealer. The research services received include services which aid the Adviser and/or Sub-Adviser in fulfilling their investment decision-making responsibilities, including (a) furnishing advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; and (b) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts.

When effecting transactions on behalf of the Funds, the Adviser and/or Sub-Adviser may trade with any broker-dealer on their list of approved broker-dealers. Approved broker-dealers have met criteria as established by the Adviser's Trading and Research Governance team ("TRG"). TRG reviews and approves broker-dealers periodically to determine whether broker-dealers on the approved list continue to meet such criteria. The approval lists are reported quarterly to the Adviser's Counterparty Governance Committee. When selecting an approved broker-dealer (including an affiliate) to execute securities transactions, the following factors may be considered: (i) best available price; (ii) reliability, integrity and reputation in the industry (which may include a review of financial information and creditworthiness); (iii) execution capabilities, including block positioning, speed of execution and quality and responsiveness of its trading desk; (iv) knowledge of and access to the markets for the securities being traded; (v) potential ability to obtain price improvement; (vi) ability to maintain confidentiality; (vii) ability to handle non-traditional trades; (viii) commission and commission-equivalent rates; (ix) technology infrastructure; (x) clearance and settlement capabilities; (xi) the size of the trade relative to other trades in the same instrument; (xii) ability of a counterparty to commit its capital to a Fund's trade and its access to liquidity; (xiii) counterparty restrictions associated with a portfolio, including regulatory trading, documentation requirement or any specific clearing broker-dealer requirements; (xiv) client-directed execution; (xv) client-specific restrictions; and (xvi) such other factors as may be appropriate.

Subject to the duty to seek best execution, the Adviser uses a portion of the commissions generated when executing client transactions to acquire brokerage and research services that aid in fulfilling investment decision-making responsibilities in accordance with Section 28(e) and applicable law. Commissions paid to broker-dealers providing brokerage and research services may be higher than those charged by other broker-dealers. Subject to applicable law, the Adviser receives a benefit when using client commissions to obtain brokerage and research services because the Adviser does not have to produce or pay for the brokerage research services itself. Therefore, the Adviser has an incentive to select or recommend a broker-dealer based on its interest in receiving brokerage and research services, rather than solely on its clients' interest in obtaining the best price.

**76**

------

[Back To **Table of Contents**](#TOC_15545)

The Adviser has adopted policies and procedures designed to help track and evaluate the benefits received from brokerage and research services, as well as to track how much clients pay above the amount that broker-dealers from which the Adviser receives brokerage and research services may have charged solely for execution of such trades. The Adviser utilizes a voting system to assist in making a good faith determination of the value of brokerage and research services it receives in accordance with Section 28(e) and applicable law. In many cases, these involve subjective judgments or approximations. The Adviser has established a process for budgeting research costs and allocating such costs across client accounts.

The Adviser and certain other affiliated advisers have entered into commission sharing arrangements ("CSAs") with executing brokers ("CSA Partners") and a third-party vendor ("CSA Aggregator"). Pursuant to these arrangements, and under the Adviser's supervision, the CSA Partners and CSA Aggregator track execution and research commissions separately and pool and distribute research credits in accordance with the policies and procedures discussed above to approved research providers (which may include executing brokerage firms or independent research providers ("Approved Research Providers")) that provide brokerage and research services. The CSA Aggregator also reconciles research credits from trades with CSA Partners, and pays Approved Research Providers and provides other related administrative functions. In addition, a CSA Partner may provide the Adviser with proprietary research it has developed and, upon instruction, may retain research commission credits as compensation for the provision of such proprietary research services. The Adviser believes that these arrangements allow it to monitor the amount of trading costs that are attributable to execution services on the one hand and other brokerage and research services on the other.

Transactions that generate research credits include equity transactions executed on an agency basis or via a riskless principal transaction where the executing broker-dealer receives a commission. The Adviser does not use CSAs or otherwise have arrangements to pay for brokerage and research services with client commissions in connection with trading fixed-income securities. Consistent with long-standing industry practice in the fixed-income markets, however, the Adviser, subject to applicable law, may receive brokerage and research services and other information, including access to fixed-income trading platforms that dealers provide for no charge to their customers in the ordinary course of business. Fixed-income instruments typically trade at a bid/ask spread and without an explicit brokerage charge. While there is not a formal trading expense or commission, clients will bear the implicit trading costs reflected in these spreads.

The Adviser may receive "mixed use" products and services from an Approved Research Provider, where a portion of the product or service assists in its investment decision-making process in accordance with Section 28(e) and a portion may be used for other purposes. Where a product or service has a mixed use, the Adviser will make a reasonable allocation of its cost according to its use and will use client commissions to pay only for the portion of the product or service that assists in its investment decision-making process. The Adviser may have an incentive to allocate the costs to uses that assist in its investment decision-making process because the Adviser may pay for such costs with client commissions rather than its own resources. To the extent the Adviser receives "mixed use" products and services, the Adviser will allocate the anticipated costs of a mixed use product or service in good faith and maintain records concerning allocations in order to mitigate such conflicts.

Client accounts that pay a greater amount of commissions relative to other accounts may bear a greater share of the cost of brokerage and research services than such other accounts. The Adviser may use brokerage and research services obtained with brokerage commissions from some clients for the benefit of other clients whose brokerage commissions do not pay for such brokerage and research services. The Adviser may also share brokerage and research services with its affiliated advisers, and the clients of its affiliated advisers may receive the benefits of such brokerage and research services. These arrangements remain subject to the Adviser's overall obligation to seek best execution for client trading.

The EU's Markets in Financial Instruments Directive II ("MiFID II"), which became effective January 3, 2018, requires investment advisers regulated under MiFID II to pay for research services separately from trade execution services, either through their own resources or a research payment account funded by a specific charge to a client. Although the Adviser is not directly subject to the provisions of MiFID II, certain of its affiliated advisers are, such as Morgan Stanley Investment Management Limited; accordingly, as applicable, the Adviser makes a reasonable valuation and allocation of the cost of research services as between MiFID II client accounts and other accounts that participate in CSAs and will pay for research services received with respect to MiFID II client accounts from its own resources. The Adviser and affiliated advisers subject to MiFID II may separately pay for fixed-income research from their own resources. Following its withdrawal from the EU on January 31, 2020, the United Kingdom has entered a transition period, during which EU law (including MiFID II) will continue to apply in the United Kingdom. Following the transition period, investment managers in the United Kingdom may still be required to comply with certain MiFID II equivalent requirements in accordance with the handbook of rules and guidance issued by the Financial Conduct Authority.

When permitted under applicable law, portfolio managers generally will aggregate orders of their clients for the same securities in a single order so that such orders are executed simultaneously in order to facilitate best execution and to reduce brokerage costs. The Adviser and/or Sub-Adviser effect aggregated orders in a manner designed to ensure that no participating client is favored over any other client.

**77**

------

[Back To **Table of Contents**](#TOC_15545)

In general, accounts that participate in an aggregated order will participate on a pro rata or other objective basis. Pro rata allocation of securities and other instruments will generally consist of allocation based on the order size of a participating client account in proportion to the size of the orders placed for other accounts participating in the aggregated order. However, the Adviser and/or Sub-Adviser may allocate such securities and other instruments using a method other than pro rata if their supply is limited, based on differing portfolio characteristics among accounts or to avoid odd lots or small allocations, among other reasons. These allocations are made in the good faith judgment of the Adviser and/or the Sub-Adviser with a goal of seeking to ensure that fair and equitable allocation occurs over time. There may be times that the Adviser and/or Sub-Adviser are not able to aggregate orders because of applicable law or other considerations when doing so might otherwise be advantageous.

**Affiliated Brokers**

Subject to the overriding objective of obtaining the best execution of orders, the Trust may use broker-dealer affiliates of the Adviser to effect Fund brokerage transactions, including transactions in futures contracts and options on futures contracts, under procedures adopted by the Trust's Board of Trustees. In order to use such affiliates, the commission rates and other remuneration paid to the affiliates must be fair and reasonable in comparison to those of other broker-dealers for comparable transactions involving similar securities being purchased or sold during a comparable time period. This standard would allow the affiliated broker or dealer to receive no more than the remuneration which would be expected to be received by an unaffiliated broker.

Pursuant to an order issued by the SEC, the Trust is permitted to engage in principal transactions in money market instruments, subject to certain conditions, with Morgan Stanley & Co. LLC, a broker-dealer affiliated with the Trust's Adviser.

During the fiscal years ended September 30, 2020, 2021 and 2022, the Funds did not effect any principal transactions with Morgan Stanley & Co. LLC.

**Brokerage Commissions Paid**

During the fiscal years ended September 30, 2020, 2021 and 2022, the Trust paid brokerage commissions of approximately $670,953, $2,041,604 and $1,418,451 respectively. During the fiscal years ended September 30, 2020, 2021 and 2022, the Trust paid in the aggregate $0, $0, and $0, respectively, as brokerage commissions to Morgan Stanley & Co. LLC and/or its affiliated broker-dealers. During the fiscal year ended September 30, 2022, the brokerage commissions paid to Morgan Stanley & Co. LLC and/or its affiliated broker-dealers represented approximately 0.00% of the total brokerage commissions paid by the Trust during the period and were paid on account of transactions having an aggregate dollar value equal to approximately 0.00% of the aggregate dollar value of all portfolio transactions of the Trust during the period for which commissions were paid.

For the fiscal year ended September 30, 2022, each Fund paid brokerage commissions, including brokerage commissions paid to affiliated broker-dealers, as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Brokerage Commissions Paid During Fiscal Year Ended September 30, 2022** | **Brokerage Commissions Paid During Fiscal Year Ended September 30, 2022** | **Brokerage Commissions Paid During Fiscal Year Ended September 30, 2022** | **Brokerage Commissions Paid During Fiscal Year Ended September 30, 2022** |
| | | **Commissions Paid to Morgan Stanley & Co. LLC and/or its** **affiliated broker-dealers** | **Commissions Paid to Morgan Stanley & Co. LLC and/or its** **affiliated broker-dealers** | **Commissions Paid to Morgan Stanley & Co. LLC and/or its** **affiliated broker-dealers** |
| <br>**Fund** | <br>**Total Commissions** **Paid** | **Total Commissions** | **Percent of Total** **Commissions** | **Percent of Total** **Brokered** **Transactions** |
| Core Plus Fixed Income | $41095 | $0 | 0.00% | 0.00% |
| Corporate Bond | 10995 | 0 | 0.00% | 0.00% |
| Discovery | 1200410 | 0 | 0.00% | 0.00% |
| Dynamic Value | 62599 | 0 | 0.00% | 0.00% |
| Global Strategist | 76963 | 0 | 0.00% | 0.00% |
| High Yield | 218 | 0 | 0.00% | 0.00% |
| Short Duration Income | 26171 | 0 | 0.00% | 0.00% |
| Ultra-Short Income | 0 | 0 | 0.00% | 0.00% |
| Ultra-Short Municipal Income | 0 | 0 | 0.00% | 0.00% |

---

During the fiscal years ended September 30, 2020 and 2021, each Fund paid brokerage commissions, including brokerage commissions paid to affiliated broker-dealers, as follows:

**78**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Brokerage Commissions**<br>**Paid During Fiscal Year**<br>**Ended September 30, 2020 and 2021** | **Brokerage Commissions**<br>**Paid During Fiscal Year**<br>**Ended September 30, 2020 and 2021** | **Brokerage Commissions**<br>**Paid During Fiscal Year**<br>**Ended September 30, 2020 and 2021** | **Brokerage Commissions**<br>**Paid During Fiscal Year**<br>**Ended September 30, 2020 and 2021** |
|  | **Fiscal Year Ended September 30, 2020** | **Fiscal Year Ended September 30, 2020** | **Fiscal Year Ended September 30, 2021** | **Fiscal Year Ended September 30, 2021** |
| **Fund** | **Total** | **Morgan Stanley &** **Co. LLC and/or its** **affiliated broker-** **dealers** | **Total** | **Morgan Stanley &** **Co. LLC and/or its** **affiliated broker-** **dealers** |
| Core Plus Fixed Income | $41201 | $0 | $39830 | $0 |
| Corporate Bond | 9968 | 0 | 13031 | 0 |
| Discovery | 502744 | 0 | 1849042 | 0 |
| Dynamic Value<sup>1</sup>  | - | - | 3318 | - |
| Global Strategist | 95199 | 0 | 101223 | 1969 |
| High Yield | 0 | 0 | 0 | 0 |
| Short Duration Income | 21562 | 0 | 34761 | 0 |
| Ultra-Short Income | 0 | 0 | 0 | 0 |
| Ultra-Short Municipal Income | 0 | 0 | 0 | 0 |

---

1 The Fund commenced operations on March 19, 2021.

**79**

------

[Back To **Table of Contents**](#TOC_15545)

**Regular Broker-Dealers**

During the fiscal year ended September 30, 2022, the following Funds purchased securities issued by the following issuers, which issuers were among the ten brokers or ten dealers that executed transactions for or with the Trust or the Funds in the largest dollar amounts during the period:

---

| | |
|:---|:---|
| **Fund** | **Issuer** |
| Core Plus Fixed Income | Bank of America Corp.<br>BNP Paribas SA<br>Citigroup Global Markets, Inc.<br>Goldman Sachs & Co.<br>JP Morgan Chase & Co. |
| Corporate Bond | Bank of America Corp.<br>Barclays Bank PLC<br>Citigroup Global Markets, Inc.<br>Deutsche Bank Financial LLC<br>Goldman Sachs & Co.<br>JP Morgan Chase & Co.<br>Wells Fargo & Co. |
| Dynamic Value | Jefferies & Company LLC<br>State Street Bank & Trust Co. |
| Global Strategist | Bank of America Securities LLC<br>Barclays Bank PLC<br>BNP Paribas SA<br>Citigroup Global Markets, Inc.<br>Goldman Sachs & Co.<br>HSBC Holdings PLC<br>JP Morgan Chase & Co.<br>State Street Bank & Tust Co.<br>Wells Fargo & Co. |
| Short Duration Income | Bank of America Securities LLC<br>Barclays Bank PLC<br>Citigroup Global Markets, Inc.<br>Goldman Sachs & Co.<br>JP Morgan Chase & Co.<br>Wells Fargo & Co. |
| Ultra-Short Income | Bank of New York Mellon<br>Bank of America Corp.<br>BNP Paribas SA<br>Credit Agricole Securities<br>ING Financial Markets LLC<br>Mizuho Securities USA Inc.<br>Natixis Global Asset Management, L.P.<br>Prudential Global Funding LLC<br>Wells Fargo & Co. |

---

**80**

------

[Back To **Table of Contents**](#TOC_15545)

At September 30, 2022, the Funds held securities issued by such brokers or dealers with the following market values:

---

| | | |
|:---|:---|:---|
| **Fund** | **Issuer** | **Approximate Market Value** **at 09/30/22** |
| Core Plus Fixed Income | Bank of America Securities LLC | $6309000 |
|  | Citigroup Global Markets, Inc. | 4058000 |
|  | Goldman Sachs & Co. | 2445000 |
|  | JP Morgan Chase & Co. | 1698000 |
|  | BNP Paribas SA | 1463000 |
| Corporate Bond | JP Morgan Chase & Co. | 3566000 |
|  | Bank of America Corp | 3109000 |
|  | Goldman Sachs & Co. | 2562000 |
|  | Citigroup Global Markets, Inc. | 2503000 |
|  | Wells Fargo & Co. | 1116000 |
|  | Deutsche Bank Financial LLC | 534000 |
| Dynamic Value | Jefferies & Company LLC | 667000 |
| Global Strategist | HSBC Holdings PLC | 2038000 |
|  | Bank of America Securities LLC | 1939000 |
|  | JP Morgan Chase & Co. | 1622000 |
|  | BNP Paribas SA | 1454000 |
|  | Citigroup Global Markets, Inc. | 1028000 |
|  | Goldman Sachs & Co. | 813000 |
|  | Wells Fargo & Co. | 746000 |
|  | Barclays Bank PLC | 145000 |
|  | State Street Bank & Tust Co. | 47000 |
| Short Duration Income | Citigroup Global Markets, Inc. | 8409000 |
|  | JP Morgan Chase & Co. | 6169000 |
|  | Bank of America Securities LLC | 2183000 |
|  | Barclays Bank PLC | 1923000 |
|  | Wells Fargo & Co. | 1889000 |
|  | Goldman Sachs & Co. | 1684000 |
| Ultra-Short Income | Prudential Global Funding LLC | 24993000 |
|  | Bank of America Corp. | 20015000 |
|  | Mizuho Securities USA Inc. | 12950000 |

---

**Portfolio Turnover**

The Funds generally do not invest for short-term trading purposes; however, when circumstances warrant, each Fund may sell investment securities without regard to the length of time they have been held. Market conditions in a given year could result in a higher or lower portfolio turnover rate than expected and the Funds will not consider portfolio turnover rate a limiting factor in making investment decisions consistent with their investment objective and policies. Higher portfolio turnover (e.g., over 100%) necessarily will cause the Funds to pay correspondingly increased brokerage and trading costs. In addition to transaction costs, higher portfolio turnover may result in the realization of capital gains. As discussed under "Taxes," to the extent net short-term capital gains are realized, any distributions resulting from such gains are considered ordinary income for federal income tax purposes.

**GENERAL INFORMATION**

**Fund History**

Morgan Stanley Institutional Fund Trust is an open-end, management investment company established under Pennsylvania law as a Pennsylvania business trust under an Amended and Restated Agreement and Declaration of Trust dated November 18, 1993 as further Amended and Restated on August 24, 2006 (the "Declaration of Trust"). The Trust was originally established as The MAS Pooled Trust Fund, a Pennsylvania business trust, in February 1984.

Each Fund is diversified. No Fund of the Trust is subject to the liabilities of any other Fund of the Trust.

**81**

------

[Back To **Table of Contents**](#TOC_15545)

**Description of Shares and Voting Rights**

The Declaration of Trust permits the Trustees to issue an unlimited number of shares of beneficial interest, without par value, from an unlimited number of series of shares. Currently, the Trust consists of nine Funds.

The shares of each Fund of the Trust are fully paid and non-assessable, except as set forth below, and have no preference as to conversion, exchange, dividends, retirement or other features. The shares of each Fund of the Trust have no preemptive rights. The shares of the Trust have non-cumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of Trustees can elect 100% of the Trustees if they choose to do so. A shareholder of a class is entitled to one vote for each full class share held (and a fractional vote for each fractional class share held) in the shareholder's name on the books of the Trust. Shareholders of a class have exclusive voting rights regarding any matter submitted to shareholders that relates solely to that class of shares (such as a service agreement relating to that class), and separate voting rights on any other matter submitted to shareholders in which the interests of the shareholders of that class differ from the interests of holders of any other class.

Meetings of shareholders will not be held except as required by the 1940 Act and other applicable law. A meeting will be held to vote on the removal of a Trustee or Trustees if requested in writing by the holders of not less than 10% of the outstanding shares of the Trust. The Trust will assist in shareholder communication in such matters to the extent required by law.

**Dividends and Capital Gains Distributions**

Each Fund's policy is to distribute substantially all of its net investment income, if any, together with any net realized capital gains in the amount and at the times that will avoid both income (including capital gains) taxes on it and the imposition of the federal excise tax on undistributed income and capital gains. The amounts of any income dividends or capital gains distributions cannot be predicted.

Any dividend or distribution paid shortly after the purchase of shares of a Fund by an investor may have the effect of reducing the per share NAV of that Fund by the per share amount of the dividend or distribution. Furthermore, such dividends or distributions, although in effect a return of capital, may be subject to income taxes.

As set forth in the Prospectuses, unless the shareholder elects otherwise in writing, all dividends and capital gains distributions for a class of shares are automatically reinvested in additional shares of the same class of the Fund at NAV (as of the business day following the record date). This automatic reinvestment of dividends and distributions will remain in effect until the shareholder notifies the Fund by telephone or in writing that either the Income Option (income dividends in cash and capital gain distributions reinvested in shares at NAV) or the Cash Option (both income dividends and capital gains distributions in cash) has been elected. It may take up to three business days to effect this change. An account statement is sent to shareholders whenever a dividend or distribution is paid.

Each Fund within the Trust is treated as a separate entity (and hence, as a separate "regulated investment company") for federal tax purposes. Any net capital gains recognized by a Fund are distributed to its investors without need to offset (for federal income tax purposes) such gains against any net capital losses of another Fund.

Undistributed net investment income is included in a Fund's net assets for the purpose of calculating NAV. Therefore, on the ex-dividend date, the NAV excludes the dividend (i.e., is reduced by the per share amount of the dividend). Dividends paid shortly after the purchase of shares by an investor, although in effect a return of capital, are taxable as ordinary income.

Certain mortgage securities may provide for periodic or unscheduled payments of principal and interest as the mortgages underlying the securities are paid or prepaid. However, such principal payments (not otherwise characterized as original issue discount or bond premium expense) will not normally be considered as income to a Fund and therefore will not be distributed as dividends. Rather, these payments on MBS will be reinvested on your behalf by a Fund.

**Shareholder and Trustee Liability**

Under Pennsylvania law, shareholders of a trust such as the Trust may, under certain circumstances, be held personally liable as partners for the obligations of the trust. The Trust's Declaration of Trust contains an express disclaimer of shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation, or instrument entered into or executed by the Trust or the Trustees, but this disclaimer may not be effective in some jurisdictions or as to certain types of claims. The Declaration of Trust further provides for indemnification out of the Trust's property of any shareholder held personally liable for the obligations of the Trust. The Declaration of Trust also provides that the Trust shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of the Trust and satisfy any judgment thereon. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Trust itself would be unable to meet its obligations.

Pursuant to the Declaration of Trust, the Trustees may also authorize the creation of additional series of shares (the proceeds of which would be invested in separate, independently managed portfolios with distinct investment objectives and policies and share purchase, redemption and net asset valuation procedures) with such preferences, privileges, limitations and voting and dividend rights as the Trustees may determine. All consideration received by the Trust for shares of any additional series or class, and all assets in

**82**

------

[Back To **Table of Contents**](#TOC_15545)

which such consideration is invested, would belong to that series or class (subject only to the rights of creditors of the Trust) and would be subject to the liabilities related thereto. Pursuant to the 1940 Act shareholders of any additional series or class of shares would normally have to approve the adoption of any advisory contract relating to such series or class and of any changes in the investment policies relating thereto.

The Declaration of Trust further provides that the Trustees will not be liable for errors of judgment or mistakes of fact or law, but nothing in the Declaration of Trust protects a Trustee against any liability to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the office.

**TAXES**

The following is only a summary of certain additional federal income tax considerations generally affecting the Trust, the Funds and their shareholders. No attempt is made to present a detailed explanation of the federal, state or local tax treatment of the Trust, the Funds or shareholders, and the discussion here and in the Prospectuses is not intended to be a substitute for careful tax planning.

The following general discussion of certain federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on the date of this SAI. New legislation, as well as administrative changes or court decisions, may significantly change the conclusions expressed herein, and may have a retroactive effect with respect to the transactions contemplated herein.

Each Fund of the Trust is generally treated as a separate corporation for federal income tax purposes. Thus, the provisions of the Code generally will be applied to each Fund separately, rather than to the Trust as a whole.

**Regulated Investment Company Qualification**

Each Fund intends to qualify and has either elected or will elect to be treated for each taxable year as a RIC as defined pursuant to Subchapter M of the Code. In order to so qualify, a Fund must, among other things, (i) derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, and other income derived with respect to its business of investing in such stock, securities or currencies, including, generally, certain gains from options, futures and forward contracts; and (ii) diversify its holdings so that, at the end of each fiscal quarter of the Fund's taxable year, (a) at least 50% of the market value of the Fund's total assets is represented by cash and cash items, U.S. government securities, securities of other RICs, and other securities, with such other securities limited, in respect to any one issuer, to an amount not greater than 5% of the value of the Fund's total assets or 10% of the outstanding voting securities of such issuer, and (b) not more than 25% of the value of its total assets are invested in the securities (other than U.S. government securities or securities of other RICs) of any one issuer or two or more issuers which the Fund controls and which are engaged in the same, similar, or related trades or businesses. If for any taxable year the Fund does not qualify as a RIC, all of its taxable income for that year (including its net capital gain) would be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions would be taxable as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits.

For purposes of the 90% gross income requirement described above, foreign currency gains will generally be treated as qualifying income under current federal income tax law. However, the Code expressly provides the U.S. Treasury with authority to issue regulations that would exclude foreign currency gains from qualifying income if such gains are not directly related to a RIC's business of investing in stock or securities (or options or futures with respect to stocks or securities). While to date the U.S. Treasury has not exercised this regulatory authority, there can be no assurance that it will not issue regulations in the future (possibly with retroactive application) that would treat some or all of a Fund's foreign currency gains as non-qualifying income.

For purposes of the 90% test described above, dividends received by a Fund will be treated as qualifying income to the extent they are attributable to the issuer's current and accumulated earnings and profits. Distributions in excess of the distributing issuer's current and accumulated earnings and profits will first reduce a Fund's basis in the stock as a return of capital and will not qualify as gross income. Distributions in excess of a Fund's basis in the stock will qualify for the 90% test discussed above as the distribution will be treated as gain from the sale of stock. This gain will be long-term capital gain if a Fund held the stock for more than a year.

For purposes of the diversification requirement described above, a Fund will not be treated as in violation of such requirement as a result of a discrepancy between the value of its various investments and the diversification percentages described above, unless such discrepancy exists immediately following the acquisition of any security or other property and is wholly or partly the result of such acquisition. Moreover, even in the event of noncompliance with the diversification requirement as of the end of any given quarter, a Fund is generally permitted to cure the violation by eliminating the discrepancy causing such noncompliance within a period of 30 days from the close of the relevant quarter.

Net income derived from an interest in a "qualified publicly traded partnership," as defined in the Code, will be treated as qualifying income for purposes of the income requirement in clause (i) above. In addition, for the purposes of the diversification requirements in clause (ii) above, the outstanding voting securities of any issuer includes the equity securities of a qualified publicly traded partnership, and no more than 25% of the value of a RIC's total assets may be invested in the securities of one or more qualified

**83**

------

[Back To **Table of Contents**](#TOC_15545)

publicly traded partnerships. The separate treatment for publicly traded partnerships under the passive loss rules of the Code applies to a RIC holding an interest in a qualified publicly traded partnership, with respect to items attributable to such interest.

A Fund may make certain investments indirectly through one or more entities treated as corporations for U.S. federal income tax purposes. Such entities will generally be required to pay U.S. corporate income tax, and possibly other taxes, on their earnings, which ultimately will reduce the Fund's return on income derived from such investments.

The Discovery Portfolio may seek to gain exposure to bitcoin through investments in the Bitcoin Subsidiary. The Global Strategist Portfolio may seek to gain exposure to bitcoin and the commodity markets through investments in the Global Strategist Subsidiary. Historically, the IRS has issued private letter rulings in which the IRS specifically concluded that income and gains from investments in a wholly-owned foreign subsidiary that invests in commodity-linked instruments are "qualifying income" for purposes of the 90% gross income test described above. The Funds have not received such a private letter ruling, and are not able to rely on private letter rulings issued to other taxpayers. The IRS recently issued final regulations that would generally treat a Fund's income inclusion with respect to a Subsidiary as qualifying income either if (i) there is a distribution out of the earnings and profits of the Subsidiary that are attributable to such income inclusion or (ii) such inclusion is derived with respect to the Fund's business of investing in stock, securities or currencies. The tax treatment of a Fund's investments in a Subsidiary may be adversely affected by future legislation, court decisions, Treasury Regulations and/or guidance issued by the IRS that could affect whether income derived from such investments is "qualifying income" under Subchapter M of the Code, or otherwise affect the character, timing and/or amount of the Fund's taxable income or any gains and distributions made by the Fund. No assurances can be provided that the IRS would not be able to successfully assert that a Fund's income from such investments was not "qualifying income," in which case the Fund would fail to qualify as a RIC under Subchapter M of the Code if over 10% of its gross income was derived from these investments. If the Fund failed to qualify as a RIC, it would be subject to federal and state income tax on all of its taxable income at regular corporate tax rates with no deduction for any distributions paid to shareholders, which would significantly adversely affect the returns to, and could cause substantial losses for, Fund shareholders.

A foreign corporation, such as a Subsidiary, will generally not be subject to U.S. federal income taxation unless it is deemed to be engaged in a U.S. trade or business. The rules regarding whether a Subsidiary will be treated as engaged in a U.S. trade or business as a result of its bitcoin related investments are not certain. It is expected that each Subsidiary will conduct its activities in a manner so as to meet the requirements of a safe harbor under Section 864(b)(2) of the Code under which the Subsidiary may engage in trading in stocks or securities or certain commodities without being deemed to be engaged in a U.S. trade or business. However, if certain of a Subsidiary's activities were determined not to be of the type described in the safe harbor, then the activities of the Subsidiary may constitute a U.S. trade or business, or be taxed as such. In general, a foreign corporation, such as a Subsidiary, that does not conduct a U.S. trade or business is nonetheless subject to tax at a flat rate of 30 percent (or lower tax treaty rate), generally payable through withholding, on the gross amount of certain U.S.-source income that is not effectively connected with a U.S. trade or business. There is presently no tax treaty in force between the U.S. and the Cayman Islands that would reduce this rate of withholding tax. It is not expected that any Subsidiary will derive income subject to such withholding tax.

Each Subsidiary will be treated as a controlled foreign corporation and each Fund will be treated as a "U.S. shareholder" of the Subsidiary. As a result, each Fund will be required to include in gross income for U.S. federal income tax purposes all of a Subsidiary's "Subpart F income," whether or not such income is distributed by the Subsidiary. Each Fund's recognition of a Subsidiary's "Subpart F income" will increase the Fund's tax basis in its respective Subsidiary. Distributions by a Subsidiary to a Fund will be tax-free, to the extent of their previously undistributed "Subpart F income," and will correspondingly reduce the Fund's tax basis in the Subsidiary. "Subpart F income" is generally treated as ordinary income, regardless of the character of a Subsidiary's underlying income. If a net loss is realized by a Subsidiary, such loss is not generally available to offset the income earned by a Fund, and such loss cannot be carried forward to offset taxable income of the Fund or the Subsidiary in future periods.

In addition to the requirements described above, in order to qualify as a RIC, a Fund must distribute at least 90% of its investment company taxable income (which generally includes dividends, taxable interest, and the excess of net short-term capital gains over net long-term capital losses less operating expenses) and at least 90% of its net tax-exempt interest income, for each tax year, if any, to its shareholders. If a Fund meets all of the RIC requirements, it will not be subject to federal income tax on any of its investment company taxable income or capital gains that it distributes to shareholders.

If a Fund fails to qualify as a RIC for any taxable year, all of its net income will be subject to tax at regular corporate rates (whether or not distributed to shareholders), and its distributions (including capital gains distributions) will be taxable as income dividends to its shareholders to the extent of a Fund's current and accumulated earnings and profits, and will be eligible for the dividends-received deduction for corporate shareholders and for treatment as qualified dividend income, in the case of individual shareholders. If a Fund fails to satisfy either the income test or asset diversification test described above, in certain cases, however, the Fund may be able to avoid losing its status as a RIC by timely providing notice of such failure to the IRS, curing such failure and possibly paying an additional tax or penalty.

**84**

------

[Back To **Table of Contents**](#TOC_15545)

**Tax Treatment of the Funds and Shareholders**

Each Fund intends to distribute substantially all of its net investment income (including, for this purpose, net short-term capital gains) to shareholders. Dividends from a Fund's net investment income (other than "exempt-interest dividends" discussed below) generally are taxable to shareholders as ordinary income, whether received in cash or in additional shares. Certain income distributions paid by a Fund to individual shareholders are taxed at rates equal to those applicable to net long-term capital gains (currently either 15% or 20%, depending on whether the individual's income exceeds certain threshold amounts). This tax treatment applies only if certain holding period requirements are satisfied by the shareholder and the dividends are attributable to qualified dividends received by a Fund itself. For this purpose, "qualified dividends" means dividends received by a Fund from certain U.S. corporations and qualifying foreign corporations, provided that the Fund satisfies certain holding period and other requirements in respect of the stock of such corporations. The Funds do not anticipate that they will make distributions of qualified dividends. Distributions received from REITs are generally comprised of ordinary income dividends and capital gains dividends, which are generally passed along to shareholders retaining the same character and are subject to tax accordingly, as described above. In the case of securities lending transactions, payments in lieu of dividends are not qualified dividends. Dividends received by a Fund from REITs are qualified dividends eligible for this lower tax rate only in limited circumstances. It is not anticipated that any portion of the distributions by the Funds would qualify for a lower tax rate as qualified dividend income. Further, such distributions are not anticipated to be eligible for a dividends received deduction for corporate shareholders.

Under recent tax legislation, individuals and certain other noncorporate entities are generally eligible for a 20% deduction with respect to ordinary dividends received from REITs ("qualified REIT dividends") and certain taxable income from MLPs. Treasury regulations permit a RIC to pass through to its shareholders qualified REIT dividends eligible for the 20% deduction. However, the regulations do not provide a mechanism for a RIC to pass through to its shareholders income from MLPs that would be eligible for such deduction if received directly by the shareholders.

A dividend paid by a Fund to a shareholder will not be treated as qualified dividend income of the shareholder if (1) the dividend is received with respect to any share held for fewer than 61 days during the 121-day period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend, (2) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property or (3) if the recipient elects to have the dividend treated as investment income for purposes of the limitation on deductibility of investment interest.

You should also be aware that the benefits of the reduced tax rate applicable to long-term capital gains and qualified dividend income may be impacted by the application of the alternative minimum tax to individual shareholders.

Dividends paid to you out of a Fund's investment company taxable income that are not attributable to qualified dividends generally will be taxable to you as ordinary income (currently at a maximum federal income tax rate of 37% in the case of an individual shareholder for taxable years beginning after 2017 and before 2026 and, in the case of a corporate shareholder, 21%) to the extent of the Fund's earnings and profits.

Distributions of net long-term capital gains, if any, are taxable to shareholders as long-term capital gains regardless of how long a shareholder has held a Fund's shares and regardless of whether the distribution is received in additional shares or in cash. The maximum individual rate applicable to long-term capital gains is generally either 15% or 20%, depending on whether the individual's income exceeds certain threshold amounts.

Each Fund will decide whether to distribute or to retain all or part of any net capital gains (the excess of net long-term capital gains over net short-term capital losses) in any year for reinvestment. Distributions of net capital gains are taxable to shareholders as a long-term capital gain regardless of how long shareholders have held their shares. A Fund will send reports annually to shareholders regarding the federal income tax status of all distributions made for the preceding year. To the extent such amounts include distributions received from a REIT, they may be based on estimates and be subject to change as REITs do not always have the information available by the time these reports are due and can recharacterize certain amounts after the end of the tax year. As a result, the final character and amount of distributions may differ from that initially reported. If any capital gains are retained, a Fund will pay federal income tax thereon, and, if the Fund makes an election, the shareholders will include such undistributed gains in their income, and will increase their tax basis in Fund shares by the difference between the amount of the includable gains and the tax deemed paid by the shareholder in respect of such shares. The shareholder will be able to claim their share of the tax paid by a Fund as a refundable credit.

Shareholders generally are taxed on any ordinary dividend or capital gain distributions from a Fund in the year they are actually distributed. However, if any such dividends or distributions are declared in October, November or December, to shareholders of record of such month and paid in January, then such amounts will be treated for tax purposes as received by the shareholders on December 31.

Although income received on direct U.S. Government obligations is taxable at the federal level, such income may be exempt from state tax, depending on the state, when received by a shareholder. Each Fund will inform shareholders annually of the percentage of

**85**

------

[Back To **Table of Contents**](#TOC_15545)

income and distributions derived from direct U.S. Government obligations. Shareholders should consult their tax advisors to determine whether any portion of dividends received from a Fund is considered tax exempt in their particular states.

A Fund may invest a portion of its net assets in below investment grade instruments. Investments in these types of instruments may present special tax issues for a Fund. U.S. federal income tax rules are not entirely clear about issues such as when a Fund may cease to accrue interest, original issue discount or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable. These and other issues will be addressed by a Fund to the extent necessary in order to ensure that it distributes sufficient income such that it does not become subject to U.S. federal income or excise tax.

After the end of each calendar year, shareholders will be sent information on their dividends and capital gain distributions for tax purposes, including the portion taxable as ordinary income, the portion taxable as long-term capital gains, and the amount of any dividends eligible for the federal dividends received deduction for corporations.

Gains or losses on the sale of securities by a Fund held as a capital asset will generally be long-term capital gains or losses if the securities have a tax holding period of more than one year at the time of such sale. Gains or losses on the sale of securities with a tax holding period of one year or less will be short-term capital gains or losses. Special tax rules described below may change the normal treatment of gains and losses recognized by a Fund when it makes certain types of investments. Those special tax rules can, among other things, affect the treatment of capital gain or loss as long-term or short-term and may result in ordinary income or loss rather than character of distributions made by a Fund.

A gain or loss realized by a shareholder on the sale, exchange or redemption of shares of a Fund held as a capital asset will be capital gain or loss, and such gain or loss will be long-term if the holding period for the shares exceeds one year and otherwise will be short-term. Any loss realized on a sale, exchange or redemption of shares of a Fund will be disallowed to the extent the shares disposed of are replaced with substantially identical shares within the 61-day period beginning 30 days before and ending 30 days after the shares are disposed of. Any loss realized by a shareholder on the disposition of shares held six months or less is treated as a long-term capital loss to the extent of any distributions of net long-term capital gains received by the shareholder with respect to such shares or any inclusion of undistributed capital gain with respect to such shares. The ability to deduct capital losses may otherwise be limited under the Code.

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

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

Each Fund will generally be subject to a nondeductible 4% federal excise tax to the extent it fails to distribute by the end of any calendar year an amount at least equal to the sum of 98% of its ordinary income for that year (taking into account certain deferrals and elections) and 98.2% of its capital gain net income (the excess of short- and long-term capital gains over short- and long-term capital losses, including any available capital loss carryforwards) for the one-year period ending on October 31 of that year, plus certain other amounts. Each Fund intends to make sufficient distributions or deemed distributions of its ordinary income and capital gain net income, prior to the end of each calendar year to avoid liability for federal excise tax, but can give no assurances that all such liability will be eliminated.

The Funds may be required to withhold and remit to the U.S. Treasury at the applicable rate a percentage of any dividends, capital gains distributions and redemption proceeds paid to any individual or certain other noncorporate shareholder (i) who has failed to provide a correct taxpayer identification number (generally an individual's social security number or non-individual's employer identification number) on the New Account Application; (ii) who is subject to backup withholding as notified by the IRS; or (iii) who has not certified to the Funds that such shareholder is not subject to backup withholding. This backup withholding is not an additional tax, and any amounts withheld would be sent to the IRS as an advance payment of taxes due on a shareholder's income for such year.

The Funds may make investments in which it recognizes income or gain prior to receiving cash with respect to such investment. For example, under certain tax rules, the Funds may be required to accrue a portion of any discount at which certain securities are

**86**

------

[Back To **Table of Contents**](#TOC_15545)

purchased as income each year even though the Funds receives no payments in cash on the security during the year. To the extent that the Funds makes such investments, it generally would be required to pay out such income or gain as a distribution in each year to avoid taxation at the Funds level. Such distributions will be made from the available cash of the Funds or by liquidation of portfolio securities if necessary. If a distribution of cash necessitates the liquidation of portfolio securities, the Adviser will select which securities to sell. The Funds may realize a gain or loss from such sales. In the event the Funds realizes net capital gains from such transactions, the Funds and consequently its shareholders may receive a larger capital gain distribution, if any, than they would in the absence of such transactions.

**Additional Tax Considerations with respect to Ultra-Short Municipal Income Portfolio**

*Investment Company Taxation.* The Fund intends to continue to qualify as a RIC under Subchapter M of the Code. As such, the Fund will not be subject to federal income tax on its net investment income and capital gains, if any, to the extent that it timely distributes such income and capital gains to its shareholders. If the Fund fails to qualify for any taxable year as a RIC, all of its taxable income will be subject to tax at regular corporate income tax rates without any deduction for distributions to shareholders, and such distributions generally will be taxable to shareholders as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits.

The Fund generally intends to distribute sufficient income and gains so that the Fund will not pay corporate income tax on its earnings. The Fund also generally intends to distribute to its shareholders in each calendar year a sufficient amount of ordinary income and capital gains to avoid the imposition of a 4% excise tax. However, the Fund may instead determine to retain all or part of any income or net long-term capital gains in any year for reinvestment. In such event, the Fund will pay federal income tax (and possibly excise tax) on such retained income or gains.

Gains or losses on sales of securities by the Fund will generally be long-term capital gains or losses if the securities have a tax holding period of more than one year at the time of such sale. Gains or losses on the sale of securities with a tax holding period of one year or less will be short-term capital gains or losses.

In computing net investment income, the Fund will amortize any premiums and original issue discounts on securities owned, if applicable. Capital gains or losses realized upon sale or maturity of such securities will be based on their amortized cost.

All or a portion of any of the Fund's gain from tax-exempt obligations purchased at a market discount (where bonds are purchased below their principal or face value) may be treated as ordinary income rather than capital gain. This may increase the amount of taxable distributions paid by the Fund to its shareholders.

From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the federal income tax exemption for interest on municipal securities. Similar proposals may be introduced in the future. If such a proposal were enacted, the availability of municipal securities for investment by the Fund could be affected. In that event, the Fund would reevaluate its investment objective and policies.

*Taxation of Dividends and Distributions.* The Fund intends to qualify to pay "exempt-interest dividends" to its shareholders by maintaining, as of the close of each of its taxable years, at least 50% of the value of its assets in tax-exempt securities. An obligation will be considered a tax-exempt security only if, in the opinion of bond counsel, the interest payable is exempt from federal income tax. An exempt-interest dividend is that part of the dividend distributions made by the Fund which consists of interest received by the Fund on tax-exempt securities upon which the shareholder generally incurs no federal income taxes. Exempt-interest dividends are included, however, in determining what portion, if any, of a person's Social Security benefits are subject to federal income tax.

The Fund may invest a portion of its assets in certain "private activity bonds." As a result, a portion of the exempt-interest dividends paid by the Fund will be an item of tax preference to shareholders subject to the alternative minimum tax. However, the alternative minimum tax consequences discussed in this paragraph do not apply with respect to interest paid on bonds issued after December 31, 2008 and before January 1, 2011 (including refunding bonds issued during that period to refund bonds originally issued after December 31, 2003 and before January 1, 2009).

Shareholders will be subject to federal income tax on dividends paid from interest income derived from taxable securities and on distributions of net short-term capital gains. Such dividends and distributions are taxable to the shareholder as ordinary dividend income regardless of whether the shareholder receives such distributions in additional shares or in cash. Such dividends and distributions would not be eligible for either the corporate dividend received deduction or for reduced rates applicable to equivalent dividends.

Distributions of net long-term capital gains, if any, are taxable as long-term capital gains, regardless of how long the shareholder has held the Fund shares and regardless of whether the distribution is received in additional shares or in cash. The maximum tax rate on long-term capital gains available to noncorporate shareholders generally is 15% or 20% depending on whether the shareholder's income exceeds certain threshold amounts. Since the Fund's income is expected to be derived entirely from interest rather than dividends, it is anticipated that no portion of such dividend distributions will be eligible for the federal dividends received deduction available to corporations.

**87**

------

[Back To **Table of Contents**](#TOC_15545)

Shareholders are generally taxed on any income dividend or capital gain distributions from the Fund in the year they are actually distributed. However, if any such dividends or distributions are declared in October, November or December and paid to shareholders of record of such month in January then such amounts will be treated for tax purposes as received by the shareholders on December 31.

Individuals are often exempt from state and local personal income taxes on distributions of tax-exempt dividends derived from assets located in the state in which they reside, but are usually subject to state and local taxes on distributions of tax-exempt dividends derived from assets located in other states. Shareholders should consult their tax advisers as to any other state and local taxes that apply to the dividends and distributions received from the Fund.

**Special Rules for Certain Foreign Currency and Derivatives Transactions**

In general, gains from foreign currencies and from foreign currency options, foreign currency futures and forward foreign exchange contracts relating to investments in stock, securities or foreign currencies are currently considered to be qualifying income for purposes of determining whether a Fund qualifies as a RIC.

Under Section 988 of the Code, special rules are provided for certain transactions in a foreign currency other than the taxpayer's functional currency (i.e., unless certain special rules apply, currencies other than the U.S. dollar). In general, foreign currency gains or losses from forward contracts, from futures contracts that are not "regulated futures contracts," and from unlisted options will be treated as ordinary income or loss under Section 988 of the Code. Also, certain foreign exchange gains or losses derived with respect to foreign fixed-income securities are also subject to Section 988 treatment. In general, therefore, Section 988 gains or losses will increase or decrease the amount of a Fund's investment company taxable income available to be distributed to shareholders as ordinary income, rather than increasing or decreasing the amount of the Fund's net capital gain.

A Fund's investment in options, swaps and related transactions, futures contracts and forward contracts, options on futures contracts and stock indices and certain other securities, including transactions involving actual or deemed short sales or foreign exchange gains or losses are subject to many complex and special tax rules. For example, OTC options on debt securities and equity options, including options on stock and on narrow-based stock indices, will be subject to tax under Section 1234 of the Code, generally producing a long-term or short-term capital gain or loss upon exercise, lapse or closing out of the option or sale of the underlying stock or security. By contrast, a Fund's treatment of certain other options, futures and forward contracts entered into by the Fund is generally governed by Section 1256 of the Code. These "Section 1256" positions generally include listed options on debt securities, options on broad-based stock indices, options on securities indices, options on futures contracts, regulated futures contracts and certain foreign currency contracts and options thereon.

When a Fund holds options or futures contracts which substantially diminish their risk of loss with respect to other positions (as might occur in some hedging transactions), this combination of positions could be treated as a "straddle" for tax purposes, resulting in possible deferral of losses, adjustments in the holding periods of Fund securities and conversion of short-term capital losses into long-term capital losses. Certain tax elections exist for mixed straddles (i.e., straddles comprised of at least one Section 1256 position and at least one non-Section 1256 position) which may reduce or eliminate the operation of these straddle rules.

A Section 1256 position held by a Fund will generally be marked-to-market (i.e., treated as if it were sold for fair market value) on the last business day of the Fund's fiscal year, and all gain or loss associated with fiscal year transactions and mark-to-market positions at fiscal year end (except certain currency gain or loss covered by Section 988 of the Code) will generally be treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss. The effect of Section 1256 mark-to-market rules may be to accelerate income or to convert what otherwise would have been long-term capital gains into short-term capital gains or short-term capital losses into long-term capital losses within a Fund. The acceleration of income on Section 1256 positions may require a Fund to accrue taxable income without the corresponding receipt of cash. In order to generate cash to satisfy the distribution requirements of the Code, a Fund may be required to dispose of portfolio securities that it otherwise would have continued to hold or to use cash flows from other sources. Any or all of these rules may, therefore, affect the amount, character and timing of income earned and, in turn, distributed to shareholders by a Fund.

**Special Tax Considerations Relating to Foreign Investments**

Gains or losses attributable to foreign currency contracts, or to fluctuations in exchange rates that occur between the time a Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects such receivables or pays such liabilities are treated as ordinary income or ordinary loss to the Fund. Similarly, gains or losses on disposition of debt securities denominated in a foreign currency attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security and the date of disposition also are treated as ordinary gain or loss to a Fund. These gains or losses increase or decrease the amount of a Fund's net investment income available to be distributed to its shareholders as ordinary income.

It is expected that a Fund will be subject to foreign withholding taxes with respect to its dividend and interest income from foreign countries, and the Fund may be subject to foreign income taxes with respect to other income. If more than 50% in value of a Fund's

**88**

------

[Back To **Table of Contents**](#TOC_15545)

total assets at the close of the taxable year consists of stock or securities of foreign corporations, the Fund may elect to treat certain foreign income taxes imposed on it for federal income tax purposes as paid directly by its shareholders. If a Fund is eligible to make this election, the Fund will make such an election only if it deems it to be in the best interest of its shareholders and will notify shareholders in writing each year if it makes an election and of the amount of foreign income taxes, if any, to be treated as paid by the shareholders. If a Fund makes the election, shareholders will be required to include in income their proportionate share of the amount of foreign income taxes treated as imposed on the Fund and will be entitled to claim either a credit (subject to the limitations discussed below) or, if they itemize deductions, a deduction, for their shares of the foreign income taxes in computing their federal income tax liability.

Shareholders who choose to utilize a credit (rather than a deduction) for foreign taxes will be subject to a number of complex limitations regarding the availability and utilization of the credit. Because of these limitations, shareholders may be unable to claim a credit for the full amount of their proportionate shares of the foreign income taxes paid by the Fund. Shareholders are urged to consult their tax advisors regarding the application of these rules to their particular circumstances.

A Fund may invest in stocks of foreign companies that may be classified under the Code as passive foreign investment companies ("PFICs"). In general, a foreign company is classified as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income. When investing in PFIC securities, each Fund intends to mark-to-market these securities under certain provisions of the Code and recognize any unrealized gains as ordinary income at the end of the Fund's fiscal and excise tax years. Deductions for losses are allowable only to the extent of any current or previously recognized gains. These gains (reduced by allowable losses) are treated as ordinary income that a Fund is required to distribute, even though it has not sold or received dividends from these securities. In addition, if a Fund is unable to identify an investment as a PFIC and thus does not make a mark-to-market election, the Fund may be subject to U.S. federal income tax and interest on a portion of any "excess distribution" or gain from the disposition of such shares even if such income is distributed as a taxable dividend by the Fund to its shareholders.

**Taxes and Foreign Shareholders**

Taxation of a shareholder who, as to the United States, is a nonresident alien individual, a foreign trust or estate, or a foreign corporation ("Foreign Shareholder") depends on whether the income from a Fund is "effectively connected" with a U.S. trade or business carried on by such shareholder.

If the income from a Fund is not effectively connected with a U.S. trade or business carried on by a Foreign Shareholder, distributions of investment company taxable income will generally be subject to U.S. withholding tax at the rate of 30% (or such lower treaty rate as may be applicable) upon the gross amount of the dividend (other than "exempt-interest dividends" discussed above). Furthermore, Foreign Shareholders will generally be exempt from U.S. federal income tax on gains realized on the sale of shares of a Fund, distributions of net long-term capital gains and amounts retained by the Fund that are reported as undistributed capital gains.

Dividends paid by a Fund to shareholders who are nonresident aliens or foreign entities that are derived from short-term capital gains and qualifying U.S. source net interest income (including income from original issue discount), and that are designated by the Fund as "interest-related dividends" or "short-term capital gain dividends," will generally not be subject to U.S. withholding tax, provided that the income would not be subject to U.S. federal income tax if earned directly by the foreign shareholder. However, depending on the circumstances, the Funds may designate all, some or none of the Fund's potentially eligible dividends as exempt.

Foreign Shareholders that own, either directly or indirectly, more than 5% of a class of Fund shares, are urged to consult their own tax advisors concerning special tax rules that may apply to their investment in Fund shares.

If the income from a Fund is effectively connected with a U.S. trade or business carried on by a Foreign Shareholder, then distributions from the Fund and any gains realized upon the sale of shares of the Fund will be subject to U.S. federal income tax at the rates applicable to U.S. citizens and residents or domestic corporations. In addition, Foreign Shareholders that are corporations may be subject to a branch profit tax.

A Fund may be required to withhold federal income tax on distributions that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate) unless the Foreign Shareholder complies with IRS certification requirements.

Each Fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive 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 provide additional information to a Fund to enable the Fund to determine whether withholding is required.

The tax consequences to a Foreign Shareholder entitled to claim the benefits of an applicable tax treaty may differ from those described here. Furthermore, Foreign Shareholders are strongly urged to consult their own tax advisors with respect to the particular tax consequences to them of an investment in a Fund and the possible applicability of the U.S. estate tax.

**89**

------

[Back To **Table of Contents**](#TOC_15545)

**State and Local Tax Considerations**

Rules of state and local taxation of dividend and capital gains from RICs often differ from the rules for federal income taxation described above. Shareholders are urged to consult their tax advisors as to the consequences of these and other state and local tax rules regarding an investment in a Fund.

**CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES**

As of January 1, 2023, the following persons or entities own, of record or beneficially, more than 5% of the shares of any Class of the following Funds' outstanding shares.

---

| | | |
|:---|:---|:---|
| **Fund** | **Name and Address** | **% of Class** |
| Core Plus Fixed Income<br> I | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 26.26% |
|  | Charles Schwab & Co Inc<br>Special Custody Account For The<br>Exclusive Benefit Of Customers<br>Attn Mutual Funds<br>101 Montgomery St<br>San Francisco, CA 94104-4151 | 9.24% |
|  | National Fincl Services Corp FBO<br>Their Customers<br>P.O. Box 3908<br>Church Street Station<br>New York, NY 10008-3908 | 24.75% |
|  | Raymond James<br>House Acct Firm 92500015<br>Omnibus For Mutual Funds<br>Attn Courtney Waller<br>880 Carillon Pkwy<br>St Petersburg, FL 33716-1102 | 5.43% |
|  | LPL Financial<br>Omnibus Customer Account<br>Attn Mutual Fund Trading<br>4707 Executive Dr<br>San Diego, CA 92121-3091 | 8.94% |
| Corporate Bond<br> I | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 49.80% |
|  | Charles Schwab & Co Inc<br>Special Custody Account For The<br>Exclusive Benefit Of Customers<br>Attn Mutual Funds<br>101 Montgomery St<br>San Francisco, CA 94104-4151 | 7.20% |
|  | Raymond James<br>House Acct Firm 92500015<br>Omnibus For Mutual Funds<br>Attn Courtney Waller<br>880 Carillon Pkwy<br>St Petersburg, FL 33716-1102 | 9.57% |
| Discovery<br> I | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 14.90% |
|  | Wells Fargo Clearing Services LLC<br>A/C 1699-0135<br>Special Custody Acct For The<br>Exclusive Benefit Of Customer<br>2801 Market St<br>Saint Louis, MO 63103-2523 | 6.03% |

---

**90**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | |
|:---|:---|:---|
| **Fund** | **Name and Address** | **% of Class** |
|  | Charles Schwab & Co Inc<br>Special Custody Account For The<br>Exclusive Benefit Of Customers<br>Attn Mutual Funds<br>101 Montgomery St<br>San Francisco, CA 94104-4151 | 11.38% |
|  | National Fincl Services Corp FBO<br>Their Customers<br>P.O. Box 3908<br>Church Street Station<br>New York, NY 10008-3908 | 30.09% |
|  | LPL Financial<br>Omnibus Customer Account<br>Attn Mutual Fund Trading<br>4707 Executive Dr<br>San Diego, CA 92121-3091 | 6.47% |
| Global Strategist<br> I | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 36.15% |
|  | World Foundation for Girl<br>Guides and Girl Scouts Inc<br>ATTN Ellen Petrino Treasurer<br>30 Spriteview Ave<br>Westport, CT 06880-6934 | 5.29% |
|  | National Fincl Svcs Corp Clients<br>For The Exclusive Benefit Of<br>National Fincl Svcs Corp Clients<br>P.O. Box 3908<br>Church Street Station<br>New York, NY 10008-3908 | 8.46% |
|  | UBS WM USA<br>0O0 11011 6100<br>OMNI Account M/F<br>Spec Cdy A/C EBOC UBSFSI<br>1000 Harbor Blvd<br>Weehawken, NJ 07086-6761 | 7.97% |
| High Yield<br> I | National Financial Services LLC<br>For Exclusive Benefit Of Our<br>Customers<br>499 Washington Blvd<br>Attn Mutual Funds Dept - 4th Floor<br>Jersey City, NJ 07310-1995 | 77.65% |
|  | LPL Financial<br>Omnibus Customer Account<br>Attn Mutual Fund Trading<br>4707 Executive Dr<br>San Diego, CA 92121-3091 | 8.11% |
| Short Duration Income<br> I | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 60.71% |
|  | Copinco<br>C/O US Bank NA<br>PO BOX 1787<br>Milwaukee, WI 53201-1787 | 6.03% |
|  | LPL Financial<br>Omnibus Customer Account<br>Attn Mutual Fund Trading<br>4707 Executive Dr<br>San Diego, CA 92121-3091 | 17.84% |

---

**91**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | |
|:---|:---|:---|
| **Fund** | **Name and Address** | **% of Class** |
| Core Plus Fixed Income<br> A | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 28.78% |
|  | National Financial Services LLC<br>For Exclusive Benefit Of Our Cust<br>Attn Mutual Funds Dept 4th Floor<br>499 Washington Blvd<br>Jersey City, NJ 07310-1995 | 54.95% |
| Corporate Bond<br> A | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 36.14% |
|  | National Financial Services LLC<br>For Exclusive Benefit Of Our Cust<br>Attn Mutual Funds Dept 4th Floor<br>499 Washington Blvd<br>Jersey City, NJ 07310-1995 | 19.35% |
|  | TD Ameritrade Inc<br>For The Exclusive Benefit Of Our Clients<br>P.O. Box 2226<br>Omaha, NE 68103-2226 | 29.30% |
|  | RBC Capital Markets LLC<br>Mutual Fund Omnibus Processing<br>Omnibus<br>Attn Mutual Fund Ops Manager<br>250 Nicollet Mall Ste 1400<br>Minneapolis Mn 55401-7554 | 5.19% |
| Discovery<br> A | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 16.40% |
|  | National Financial Services LLC<br>For Exclusive Benefit Of Our Cust<br>Attn Mutual Funds Dept 4th Floor<br>499 Washington Blvd<br>Jersey City, NJ 07310-1995 | 56.38% |
|  | Charles Schwab & Co Inc<br>Attn Mutual Funds<br>Special Custody FBO Customers<br>101 Montgomery St<br>San Francisco, CA 94104-4151 | 6.96% |
| Global Strategist<br> A | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 71.84% |
| High Yield<br> A | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 42.08% |
|  | National Financial Services LLC<br>For Exclusive Benefit Of Our Cust<br>Attn Mutual Funds Dept 4th Floor<br>499 Washington Blvd<br>Jersey City, NJ 07310-1995 | 26.69% |
|  | Pershing LLC<br>1 Pershing Plaza<br>Jersey City, NJ 07399-0002 | 5.64% |
|  | Charles Schwab & Co Inc<br>Attn Mutual Funds<br>101 Montgomery Street<br>San Francisco, CA 94104-4151 | 10.72% |

---

**92**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | |
|:---|:---|:---|
| **Fund** | **Name and Address** | **% of Class** |
| Short Duration Income<br> A | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 93.04% |
| Core Plus Fixed Income<br> L | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 73.72% |
|  | Vanguard Brokerage Service<br>Brokerage Dealer # 0062<br>A/C 11111111<br>PO BOX 1170<br>Valley Forge, PA 19482-1170 | 25.13% |
| Corporate Bond<br> L | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 85.30% |
|  | UBS WM USA<br>0O0 11011 6100<br>OMNI Account M/F<br>Spec Cdy A/C EBOC UBSFSI<br>1000 Harbor Blvd<br>Weehawken, NJ 07086-6761 | 14.31% |
| Discovery<br> L | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 69.15% |
|  | Wells Fargo Clearing Services LLC<br>A/C 1699-0135<br>Special Custody Acct For The<br>Exclusive Benefit Of Customer<br>2801 Market St<br>Saint Louis, MO 63103-2523 | 14.53% |
|  | UBS WM USA<br>0O0 11011 6100<br>OMNI Account M/F<br>Spec Cdy A/C EBOC UBSFSI<br>1000 Harbor Blvd<br>Weehawken, NJ 07086-6761 | 6.88% |
| Global Strategist<br> L | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 84.49% |
|  | UBS WM USA<br>0O0 11011 6100<br>OMNI Account M/F<br>Spec Cdy A/C EBOC UBSFSI<br>1000 Harbor Blvd<br>Weehawken, NJ 07086-6761 | 5.33% |
| High Yield<br> L | Morgan Stanley Investment Management<br>Attn Michael Agosta<br>1633 Broadway Fl 26<br>New York Ny 10019-6708 | 5.88% |
|  | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 86.60% |
|  | Pershing LLC<br>1 Pershing Plaza<br>Jersey City, NJ 07399-0002 | 7.52% |

---

**93**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | |
|:---|:---|:---|:---|
| **Fund** | **Share Class** | **Name and Address** | **% of Class** |
| Short Duration Income | L | Morgan Stanley & Co<br>Harborside Financial Center<br>Plaza II 3rd Floor<br>Jersey City, NJ 07311 | 74.44% |
|  |  | Edward D. Jones & Co<br>For The Benefit Of Customers<br>12555 Manchester Rd<br>Saint Louis, MO 63131-3710 | 9.56% |
|  |  | Brown Brothers Harriman & Co<br>Cust For Banque Pictet & Cie Sa:<br>W9 Omnibus 6659510 Reinvest<br>140 Broadway<br>New York, NY 10005-1101 | 14.01% |
| Discovery | R6 | Edward D. Jones & Co<br>For The Benefit Of Customers<br>Attn Terrance Spencer<br>12555 Manchester Rd<br>Saint Louis, MO 63131-3710 | 39.55% |
|  |  | Merrill Lynch Pierce Fenner & Smith<br>Inc For the Sole Benefit Of Its<br>Customers<br>4800 E Deer Lake Dr<br>Jacksonville, FL 32246-6484 | 5.93% |
|  |  | National Financial Services LLC<br>For Exclusive Benefit Of Our<br>Customers<br>499 Washington Blvd<br>Attn Mutual Funds Dept - 4th Floor<br>Jersey City, NJ 07310-1995 | 47.05% |
| High Yield | R6 | LM Fund LP<br>The Corporation Trust Company<br>Corporation Trust Center<br>1209 N Orange St<br>Wilmington, DE 19801-1120 | 37.75% |
|  |  | VNL LP<br>The Corporation Trust Company<br>Corporation Trust Center<br>1209 N Orange St<br>Wilmington, DE 19801-1120 | 10.32% |
|  |  | SN Fund LP - Series A<br>100 Front St Ste 400<br>West Conshohocken PA 19428-2881 | 46.35% |

---

As of January 1, 2023, no person was known by the Trust to own beneficially or of record 5% or more of any outstanding class of shares of a Fund not listed above.

The persons listed above as owning 25% or more of the outstanding shares of a Fund may be presumed to "control" (as that term is defined in the 1940 Act) such Fund. As a result, those persons would have the ability to vote a majority of the shares of the respective Fund on any matter requiring the approval of shareholders of the Fund.

**PERFORMANCE INFORMATION**

The average annual compounded rates of return for the Class I shares of the Funds for the 1-,5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | -15.58% | 0.13% | 2.58% | 6.35% | 11/14/1984 |
| Corporate Bond | -19.23% | -0.35% | 2.54% | 5.43% | 8/31/1990 |
| Discovery | -61.26% | 8.86% | 8.81% | 11.35% | 3/30/1990 |
| Dynamic Value | -7.26% | N/A | N/A | -2.08% | 3/19/2021 |

---

**94**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Global Strategist | -21.73% | 1.09% | 3.63% | 6.30% | 12/31/1992 |
| High Yield | -14.27% | 1.00% | 4.27% | 5.04% | 2/7/2012 |
| Short Duration Income | -5.62% | 0.91% | 1.73% | 2.76% | 3/31/1992 |

---

The average annual compounded rates of return for the Class A shares of the Funds for the 1-,5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | -15.75% | -0.19% | 2.23% | 3.92% | 11/7/1996 |
| Corporate Bond | -19.45% | -0.63% | 2.25% | 3.33% | 5/20/2002 |
| Discovery | -61.35% | 8.56% | 8.51% | 9.03% | 1/31/1997 |
| Dynamic Value | -7.70% | N/A | N/A | -2.51% | 3/19/2021 |
| Global Strategist | -21.99% | 0.79% | 3.30% | 5.21% | 11/1/1996 |
| High Yield | -14.69% | 0.64% | 3.90% | 4.67% | 2/7/2012 |
| Short Duration Income | -5.85% | 0.66% | 1.46% | 0.23% | 9/28/2007 |
| Ultra-Short Income | 0.67% | 1.09% | N/A | 1.01% | 4/28/2016 |
| Ultra Short Municipal Income | 0.53% | N/A | N/A | 0.61% | 12/19/2018 |

---

**95**

------

[Back To **Table of Contents**](#TOC_15545)

The average annual compounded rates of return, inclusive of a maximum sales charge of 3.25% (5.25% with respect to the Global Strategist and Discovery Portfolios and 2.25% with respect to Short Duration Income Portfolio), for Class A shares of the Funds for the 1-,5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | -18.51% | -0.86% | 1.90% | 3.78% | 11/7/1996 |
| Corporate Bond | -22.09% | -1.28% | 1.91% | 3.17% | 5/20/2002 |
| Discovery | -63.38% | 7.40% | 7.93% | 8.80% | 1/31/1997 |
| Dynamic Value | -12.56% | N/A | N/A | -5.85% | 3/19/2021 |
| Global Strategist | -26.10% | -0.29% | 2.75% | 5.00% | 11/1/1996 |
| High Yield | -17.43% | -0.03% | 3.56% | 4.35% | 2/7/2012 |
| Short Duration Income\* | -7.94% | 0.20% | 1.23% | 0.08% | 9/28/2007 |
| Ultra-Short Income\*\* | 0.67% | 1.09% | N/A | 1.01% | 4/28/2016 |
| Ultra Short Municipal Income\*\* | 0.53% | N/A | N/A | 0.61% | 12/19/2018 |

---

\* Effective April 29, 2022, the historical total returns with sales charges deducted for Class A shares have been restated to reflect the current maximum sales charge of 2.25%.

\*\* Class A shares of the Ultra-Short Income and Ultra-Short Municipal Income Portfolios do not have a sales charge.

The average annual compounded rates of return for the Class L shares of the Funds for the 1-, 5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | -16.05% | -0.47% | 1.98% | 2.33% | 4/27/2012 |
| Corporate Bond | -19.83% | -1.03% | 1.88% | 2.97% | 6/16/2008 |
| Discovery | -61.52% | 8.05% | 7.94% | 8.05% | 6/14/2012 |
| Global Strategist | -22.33% | 0.28% | 2.78% | 3.18% | 4/27/2012 |
| High Yield | -14.92% | 0.39% | 3.65% | 4.41% | 2/7/2012 |
| Short Duration Income | -6.21% | 0.38% | 1.16% | 1.21% | 4/27/2012 |

---

The average annual compounded rates of return for the Class C shares of the Funds for the 1-, 5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | -16.32% | -0.88% | N/A | 1.05% | 4/30/2015 |
| Corporate Bond | -20.05% | -1.43% | N/A | 0.87% | 4/30/2015 |
| Discovery | -61.66% | 7.70% | N/A | 7.73% | 5/31/2017 |
| Dynamic Value | -8.32% | N/A | N/A | -3.18% | 3/19/2021 |
| Global Strategist | -22.62% | -0.02% | N/A | 0.86% | 4/30/2015 |
| High Yield | -15.27% | -0.09% | N/A | 1.47% | 4/30/2015 |
| Short Duration Income | -6.46% | -0.11% | N/A | 0.80% | 4/30/2015 |

---

**96**

------

[Back To **Table of Contents**](#TOC_15545)

The average annual compounded rates of return, inclusive of maximum contingent deferred sales charge of 1.00% for the Class C\*\* shares of the Funds for the 1-,5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | -17.14% | -0.88% | N/A | 1.05% | 4/30/2015 |
| Corporate Bond | -20.81% | -1.43% | N/A | 0.87% | 4/30/2015 |
| Discovery | -61.91% | 7.70% | N/A | 7.73% | 5/31/2017 |
| Dynamic Value | -9.20% | N/A | N/A | -3.18% | 3/19/2021 |
| Global Strategist | -23.34% | -0.02% | N/A | 0.86% | 4/30/2015 |
| High Yield | -16.08% | -0.09% | N/A | 1.47% | 4/30/2015 |
| Short Duration Income | -7.40% | -0.11% | N/A | 0.80% | 4/30/2015 |

---

\*\* Class C shares have a 1.00% sales charge for shares redeemed within one year of purchase.

The average annual compounded rates of return for the Class R6 shares of the Funds for the 1-, 5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | -15.46% | N/A | N/A | 0.42% | 6/15/2018 |
| Discovery | -61.20% | 8.96% | N/A | 6.89% | 9/13/2013 |
| Dynamic Value | -7.35% | N/A | N/A | -2.15% | 3/19/2021 |
| Global Strategist | -21.67% | 1.13% | N/A | 2.20% | 5/29/2015 |
| High Yield | -14.30% | 1.03% | N/A | 2.53% | 3/28/2014 |
| Short Duration Income | -5.69% | 0.96% | N/A | 2.16% | 1/11/2016 |

---

The average annual compounded rates of return for the Institutional Class and Class IR shares of the Fund for the 1-,5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| High Yield - Class IR | -14.30% | N/A | N/A | 0.50% | 06/15/2018 |
| Ultra-Short Income - Institutional Class | 0.74% | 1.24% | N/A | 1.17% | 04/28/2016 |
| Ultra-Short Income - Class IR | 0.79% | 1.29% | N/A | 1.22% | 04/28/2016 |
| Ultra-Short Municipal Income - Institutional Class | 0.44% | N/A | N/A | 0.65% | 12/19/2018 |
| Ultra-Short Municipal Income - Class IR | 0.61% | N/A | N/A | 0.73% | 12/19/2018 |

---

**97**

------

[Back To **Table of Contents**](#TOC_15545)

The average annual compounded rates of return (after taxes on distributions) for the Class I shares of the Funds (except with respect to Ultra Short Income Portfolio and Ultra-Short Municipal Income Portfolio) for the 1-,5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | -16.55% | -1.25% | 1.08% | 3.90% | 11/14/1984 |
| Corporate Bond | -20.51% | -1.78% | 1.17% | 3.40% | 8/31/1990 |
| Discovery | -64.19% | 3.60% | 4.20% | 8.60% | 3/30/1990 |
| Dynamic Value | -8.80% | N/A | N/A | -3.14% | 3/19/2021 |
| Global Strategist | -23.86% | -0.61% | 2.23% | 4.58% | 12/31/1992 |
| High Yield | -16.24% | -1.51% | 1.16% | 1.97% | 2/7/2012 |
| Short Duration Income | -6.17% | 0.12% | 0.98% | 1.38% | 3/31/1992 |
| Ultra-Short Income<sup>1</sup>  | 0.39% | 0.70% | N/A | 0.67% | 4/28/2016 |
| Ultra-Short Municipal Income<sup>1</sup>  | 0.22% | N/A | N/A | 0.39% | 12/19/2018 |

---

1 The returns for the Ultra-Short Income Portfolio and Ultra-Short Municipal Income Portfolio reflect Institutional Class shares.

The average annual compounded rates of return (after taxes on distributions and redemptions) for the Class I shares of the Funds (except with respect to Ultra-Short Income Portfolio and Ultra-Short Municipal Income Portfolio) for the 1-,5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Fund** | **1 Year**<br>**Return**<br>**09/30/22** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | -9.11% | -0.40% | 1.36% | 3.99% | 11/14/1984 |
| Corporate Bond | -10.79% | -0.65% | 1.46% | 3.46% | 8/31/1990 |
| Discovery | -31.05% | 8.51% | 7.19% | 9.33% | 3/30/1990 |
| Dynamic Value | -4.08% | N/A | N/A | -1.91% | 3/19/2021 |
| Global Strategist | -12.18% | 0.65% | 2.57% | 4.53% | 12/31/1992 |
| High Yield | -8.32% | -0.22% | 1.94% | 2.58% | 2/7/2012 |
| Short Duration Income | -3.32% | 0.37% | 1.00% | 1.58% | 3/31/1992 |
| Ultra-Short Income<sup>1</sup>  | 0.43% | 0.71%, | N/A | 0.68% | 4/28/2016 |
| Ultra-Short Municipal Income<sup>1</sup>  | 0.26% | N/A | N/A | 0.39% | 12/19/2018 |

---

1 The returns for the Ultra-Short Income Portfolio and Ultra-Short Municipal Income Portfolio reflect Institutional Class shares.

The aggregate compounded rates of return for the Class I shares of each Funds (except with respect to Ultra-Short Income Portfolio and Ultra-Short Municipal Income Portfolio) for the 5- and 10-year periods ended September 30, 2022 and for the period from inception through September 30, 2022 are set forth below. One year aggregate total return figures are reflected under the average annual total return figures provided above.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Fund** | **5 Years**<br>**ended**<br>**09/30/22** | **10 Years**<br>**ended**<br>**09/30/22** | **Inception**<br>**to**<br>**09/30/22** | **Date**<br>**of Inception**<br>**of Class** |
| Core Plus Fixed Income | 0.66% | 29.00% | 928.00% | 11/14/1984 |
| Corporate Bond | -1.75% | 28.57% | 445.64% | 8/31/1990 |
| Discovery | 52.87% | 132.57% | 3191.00% | 3/30/1990 |
| Dynamic Value | N/A | N/A | -3.18% | 3/19/2021 |
| Global Strategist | 5.59% | 42.82% | 515.98% | 12/31/1992 |
| High Yield | 5.11% | 51.92% | 68.74% | 2/7/2012 |
| Short Duration Income | 4.65% | 18.70% | 129.63% | 3/31/1992 |
| Ultra-Short Income<sup>1</sup>  | 6.34% | N/A | 7.79% | 4/28/2016 |
| Ultra Short Municipal Income<sup>1</sup>  | N/A | N/A | 2.50% | 12/19/2018 |

---

1 The returns for the Ultra-Short Income and Ultra-Short Municipal Income Portfolio reflect Institutional Class shares.

**98**

------

[Back To **Table of Contents**](#TOC_15545)

The 30-day yield figures for each of the Trust's Fixed Income and Asset Allocation Funds is set forth below:

---

| | |
|:---|:---|
| **Class I Fund** | **Period Ending**<br>**09/30/22** |
| Core Plus Fixed Income | 4.78% |
| Corporate Bond | 5.01% |
| Dynamic Value | 2.18% |
| Global Strategist | 1.77% |
| High Yield | 8.79% |
| Short Duration Income | 4.06% |

---

---

| | |
|:---|:---|
| **Class A Fund** | **Period Ending**<br>**09/30/22** |
| Core Plus Fixed Income | 4.34% |
| Corporate Bond | 4.47% |
| Dynamic Value | 1.70% |
| Global Strategist | 1.37% |
| High Yield | 8.16% |
| Short Duration Income | 3.73% |
| Ultra-Short Income | 2.56% |
| Ultra-Short Municipal Income | 1.52% |

---

---

| | |
|:---|:---|
| **Class L Fund** | **Period Ending**<br>**09/30/22** |
| Core Plus Fixed Income | 4.15% |
| Corporate Bond | 4.11% |
| Global Strategist | 0.90% |
| High Yield | 8.17% |
| Short Duration Income | 3.56% |

---

---

| | |
|:---|:---|
| **Class C Fund** | **Period Ending**<br>**09/30/22** |
| Core Plus Fixed Income | 3.71% |
| Corporate Bond | 3.86% |
| Dynamic Value | 0.98% |
| Global Strategist | 0.61% |
| High Yield | 7.64% |
| Short Duration Income | 3.05% |

---

---

| | |
|:---|:---|
| **Class IR Fund** | **Period Ending**<br>**09/30/22** |
| High Yield | 8.81% |
| Ultra-Short Income | 2.66% |
| Ultra-Short Municipal Income | 1.63% |

---

---

| | |
|:---|:---|
| **Class R6 Fund** | **Period Ending**<br>**09/30/22** |
| Core Plus Fixed Income | 4.83% |
| Dynamic Value | 2.24% |
| Global Strategist | 1.80% |
| High Yield | 8.83% |
| Short Duration Income | 4.00% |

---

---

| | |
|:---|:---|
| **Institutional Class Fund** | **Period Ending**<br>**09/30/22** |
| Ultra-Short Income | 2.61% |
| Ultra-Short Municipal Income | 1.54% |

---

**99**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | |
|:---|:---|
| **Class W Fund** | **Period Ending**<br>**09/30/22** |
| High Yield | 9.49% |

---

Based upon a federal personal income tax bracket of 37%, the tax-equivalent yield of each of Class A, Class IR and Institutional Class of the Ultra-Short Municipal Income Portfolio for the 30-day period ended September 30, 2022 was 2.41%, 2.59% and 2.44% respectively.

**POTENTIAL CONFLICTS OF INTEREST**

As a diversified global financial services firm, Morgan Stanley, the parent company of the Adviser, engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley's interests or the interests of its clients may conflict with the interests of a Fund. Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with the Morgan Stanley Funds, any new or successor funds, programs, accounts or businesses (other than funds, programs, accounts or businesses sponsored, managed, or advised by former direct or indirect subsidiaries of Eaton Vance Corp. ("Eaton Vance Investment Accounts")), the ''MS Investment Accounts", and, together with the Eaton Vance Investment Accounts, the "Affiliated Investment Accounts'') with a wide variety of investment objectives that in some instances may overlap or conflict with a Fund's investment objectives and present conflicts of interest. In addition, Morgan Stanley or the Adviser may also from time to time create new or successor Affiliated Investment Accounts that may compete with a Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and, in fact, they may not be. Conflicts of interest not described below may also exist.

The discussions below with respect to actual, apparent and potential conflicts of interest also may be applicable to or arise from the Eaton Vance Investment Accounts whether or not specifically identified.

**Material Non-public and Other Information.** It is expected that confidential or material non-public information regarding an investment or potential investment opportunity may become available to the Adviser. If such information becomes available, the Adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. The Adviser may also from time to time be subject to contractual ''stand-still'' obligations and/or confidentiality obligations that may restrict its ability to trade in certain investments on a Fund's behalf. In addition, the Adviser may be precluded from disclosing such information to an investment team, even in circumstances in which the information would be beneficial if disclosed. Therefore, the investment team may not be provided access to material non-public information in the possession of Morgan Stanley that might be relevant to an investment decision to be made on behalf of a Fund, and the investment team may initiate a transaction or sell an investment that, if such information had been known to it, may not have been undertaken. In addition, certain members of the investment team may be recused from certain investment-related discussions so that such members do not receive information that would limit their ability to perform functions of their employment with the Adviser or its affiliates unrelated to that of a Fund. Furthermore, access to certain parts of Morgan Stanley may be subject to third party confidentiality obligations and to information barriers established by Morgan Stanley in order to manage potential conflicts of interest and regulatory restrictions, including without limitation joint transaction restrictions pursuant to the 1940 Act. Accordingly, the Adviser's ability to source investments from other business units within Morgan Stanley may be limited and there can be no assurance that the Adviser will be able to source any investments from any one or more parts of the Morgan Stanley network.

The Adviser may restrict its investment decisions and activities on behalf of the Funds in various circumstances, including because of applicable regulatory requirements or information held by the Adviser or Morgan Stanley. The Adviser might not engage in transactions or other activities for, or enforce certain rights in favor of, a Fund due to Morgan Stanley's activities outside the Funds. In instances where trading of an investment is restricted, the Adviser may not be able to purchase or sell such investment on behalf of a Fund, resulting in a Fund's inability to participate in certain desirable transactions. This inability to buy or sell an investment could have an adverse effect on a Fund's portfolio due to, among other things, changes in an investment's value during the period its trading is restricted. Also, in situations where the Adviser is required to aggregate its positions with those of other Morgan Stanley business units for position limit calculations, the Adviser may have to refrain from making investments due to the positions held by other Morgan Stanley business units or their clients. There may be other situations where the Adviser refrains from making an investment due to additional disclosure obligations, regulatory requirements, policies, and reputational risk, or the Adviser may limit purchases or sales of securities in respect of which Morgan Stanley is engaged in an underwriting or other distribution capacity.

**100**

------

[Back To **Table of Contents**](#TOC_15545)

Morgan Stanley has established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley. As a result of information barriers, the Adviser generally will not have access, or will have limited access, to certain information and personnel in other areas of Morgan Stanley and generally will not manage the Funds with the benefit of the information held by such other areas. Morgan Stanley, due to its access to and knowledge of funds, markets and securities based on its prime brokerage and other businesses, may make decisions based on information or take (or refrain from taking) actions with respect to interests in investments of the kind held (directly or indirectly) by the Funds in a manner that may be adverse to the Fund, and will not have any obligation or other duty to share information with the Adviser.

In limited circumstances, however, including for purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, Morgan Stanley personnel, including personnel of the Adviser, on one side of an information barrier may have access to information and personnel on the other side of the information barrier through "wall crossings." The Adviser faces conflicts of interest in determining whether to engage in such wall crossings. Information obtained in connection with such wall crossings may limit or restrict the ability of the Adviser to engage in or otherwise effect transactions on behalf of the Funds (including purchasing or selling securities that the Adviser may otherwise have purchased or sold for a Fund in the absence of a wall crossing). In managing conflicts of interest that arise because of the foregoing, the Adviser generally will be subject to fiduciary requirements. The Adviser may also implement internal information barriers or ethical walls, and the conflicts described herein with respect to information barriers and otherwise with respect to Morgan Stanley and the Adviser will also apply internally within the Adviser. As a result, a Fund may not be permitted to transact in (e.g., dispose of a security in whole or in part) during periods when it otherwise would have been able to do so, which could adversely affect a Fund. Other investors in the security that are not subject to such restrictions may be able to transact in the security during such periods. There may also be circumstances in which, as a result of information held by certain portfolio management teams in the Adviser, the Adviser limits an activity or transaction for a Fund, including if a Fund is managed by a portfolio management team other than the team holding such information.

**Investments by Morgan Stanley and its Affiliated Investment Accounts.** In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the Adviser and its investment teams, may have obligations to other clients or investors in Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of a Fund or its shareholders. A Fund's investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a result, the members of an investment team may face conflicts in the allocation of investment opportunities among a Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the Adviser. Certain Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the Adviser to favor such other accounts.

Morgan Stanley currently invests and plans to continue to invest on its own behalf and on behalf of its Affiliated Investment Accounts in a wide variety of investment opportunities globally. Morgan Stanley and its Affiliated Investment Accounts, to the extent consistent with applicable law and policies and procedures, will be permitted to invest in investment opportunities without making such opportunities available to a Fund beforehand. Subject to the foregoing, Morgan Stanley may offer investments that fall into the investment objectives of an Affiliated Investment Account to such account or make such investment on its own behalf, even though such investment also falls within a Fund's investment objectives. A Fund may invest in opportunities that Morgan Stanley and/or one or more Affiliated Investment Accounts has declined, and vice versa. All of the foregoing may reduce the number of investment opportunities available to a Fund and may create conflicts of interest in allocating investment opportunities. Investors should note that the conflicts inherent in making such allocation decisions may not always be resolved to a Fund's advantage. There can be no assurance that a Fund will have an opportunity to participate in certain opportunities that fall within their investment objectives.

To seek to reduce potential conflicts of interest and to attempt to allocate such investment opportunities in a fair and equitable manner, the Adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the Adviser, including the Fund, fair access to investment opportunities consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the Adviser. Each client of the Adviser that is subject to the allocation policies and procedures, including each Fund, is assigned an investment team and portfolio manager(s) by the Adviser. The investment team and portfolio managers review investment opportunities and will decide with respect to the allocation of each opportunity considering various factors and in accordance with the allocation policies and procedures. The allocation policies and procedures are subject to change. Investors should note that the conflicts inherent in making such allocation decisions may not always be resolved to the advantage of a Fund.

It is possible that Morgan Stanley or an Affiliated Investment Account, including another Morgan Stanley Fund, will invest in or advise (in the case of Morgan Stanley) a company that is or becomes a competitor of a company of which a Fund holds an investment. Such investment could create a conflict between the Fund, on the one hand, and Morgan Stanley or the Affiliated Investment Account, on the other hand. In such a situation, Morgan Stanley may also have a conflict in the allocation of its own resources to the portfolio investment. Furthermore, certain Affiliated Investment Accounts will be focused primarily on investing in other funds which may have strategies that overlap and/or directly conflict and compete with a Fund.

**101**

------

[Back To **Table of Contents**](#TOC_15545)

In addition, certain investment professionals who are involved in a Fund's activities remain responsible for the investment activities of other Affiliated Investment Accounts managed by the Adviser and its affiliates, and they will devote time to the management of such investments and other newly created Affiliated Investment Accounts (whether in the form of funds, separate accounts or other vehicles), as well as their own investments. In addition, in connection with the management of investments for other Affiliated Investment Accounts, members of Morgan Stanley and its affiliates may serve on the boards of directors of or advise companies which may compete with a Fund's portfolio investments. Moreover, these Affiliated Investment Accounts managed by Morgan Stanley and its affiliates may pursue investment opportunities that may also be suitable for a Fund.

It should be noted that Morgan Stanley may, directly or indirectly, make large investments in certain of its Affiliated Investment Accounts, and accordingly Morgan Stanley's investment in a Fund may not be a determining factor in the outcome of any of the foregoing conflicts. Nothing herein restricts or in any way limits the activities of Morgan Stanley, including its ability to buy or sell interests in, or provide financing to, equity and/or debt instruments, funds or portfolio companies, for its own accounts or for the accounts of Affiliated Investment Accounts or other investment funds or clients in accordance with applicable law.

Different clients of the Adviser, including a Fund, may invest in different classes of securities of the same issuer, depending on the respective clients' investment objectives and policies. As a result, the Adviser and its affiliates, at times, will seek to satisfy fiduciary obligations to certain clients owning one class of securities of a particular issuer by pursuing or enforcing rights on behalf of those clients with respect to such class of securities, and those activities may have an adverse effect on another client which owns a different class of securities of such issuer. For example, if one client holds debt securities of an issuer and another client holds equity securities of the same issuer, if the issuer experiences financial or operational challenges, the Adviser and its affiliates may seek a liquidation of the issuer on behalf of the client that holds the debt securities, whereas the client holding the equity securities may benefit from a reorganization of the issuer. Thus, in such situations, the actions taken by the Adviser or its affiliates on behalf of one client can negatively impact securities held by another client. These conflicts also exist as between the Adviser's clients, including the Fund, and the Affiliated Investment Accounts managed by Eaton Vance.

The Adviser and its affiliates may give advice and recommend securities to other clients which may differ from advice given to, or securities recommended or bought for, a Fund even though such other clients' investment objectives may be similar to those of the Fund.

The Adviser and its affiliates manage long and short portfolios. The simultaneous management of long and short portfolios creates conflicts of interest in portfolio management and trading in that opposite directional positions may be taken in client accounts, including client accounts managed by the same investment team, and creates risks such as: (i) the risk that short sale activity could adversely affect the market value of long positions in one or more portfolios (and vice versa) and (ii) the risks associated with the trading desk receiving opposing orders in the same security simultaneously. The Adviser and its affiliates have adopted policies and procedures that are reasonably designed to mitigate these conflicts. In certain circumstances, the Adviser invests on behalf of itself in securities and other instruments that would be appropriate for, held by, or may fall within the investment guidelines of its clients, including a Fund. At times, the Adviser may give advice or take action for its own accounts that differs from, conflicts with, or is adverse to advice given or action taken for any client.

From time to time, conflicts also arise due to the fact that certain securities or instruments may be held in some client accounts, including a Fund, but not in others, or that client accounts may have different levels of holdings in certain securities or instruments. In addition, due to differences in the investment strategies or restrictions among client accounts, the Adviser may take action with respect to one account that differs from the action taken with respect to another account. In some cases, a client account may compensate the Adviser based on the performance of the securities held by that account. The existence of such a performance based fee may create additional conflicts of interest for the Adviser in the allocation of management time, resources and investment opportunities. The Adviser has adopted several policies and procedures designed to address these potential conflicts including a code of ethics and policies that govern the Adviser's trading practices, including, among other things, the aggregation and allocation of trades among clients, brokerage allocations, cross trades and best execution.

In addition, at times an investment team will give advice or take action with respect to the investments of one or more clients that is not given or taken with respect to other clients with similar investment programs, objectives, and strategies. Accordingly, clients with similar strategies will not always hold the same securities or instruments or achieve the same performance. The Adviser's investment teams also advise clients with conflicting programs, objectives or strategies. These conflicts also exist as between the Adviser's clients, including the Fund, and the Affiliated Investment Accounts managed by Eaton Vance.

Morgan Stanley and its affiliates maintain separate trading desks that operate independently of each other and do not share information with the Adviser. The Morgan Stanley and affiliate trading desks may compete against the Adviser trading desks when implementing buy and sell transactions, possibly causing certain Affiliated Investment Accounts to pay more or receive less for a security than other Affiliated Investment Accounts.

**Investments by Separate Investment Departments.** The entities and individuals that provide investment-related services for the Fund and certain other MS Investment Accounts (the "MS Investment Department") may be different from the entities and

**102**

------

[Back To **Table of Contents**](#TOC_15545)

individuals that provide investment-related services to Eaton Vance Investment Accounts (the "Eaton Vance Investment Department" and, together with the MS Investment Department, the "Investment Departments"). Although Morgan Stanley has implemented information barriers between the Investment Departments in accordance with internal policies and procedures, each Investment Department may engage in discussions and share information and resources with the other Investment Department on certain investment-related matters. The sharing of information and resources between the Investment Departments is designed to further increase the knowledge and effectiveness of each Investment Department. Because each Investment Department generally makes investment decisions and executes trades independently of the other, the quality and price of execution, and the performance of investments and accounts, can be expected to vary. In addition, each Investment Department may use different trading systems and technology and may employ differing investment and trading strategies. As a result, an Eaton Vance Investment Account could trade in advance of the Fund (and vice versa), might complete trades more quickly and efficiently than the Fund, and/or achieve different execution than the Fund on the same or similar investments made contemporaneously, even when the Investment Departments shared research and viewpoints that led to that investment decision. Any sharing of information or resources between the Investment Department servicing the Fund and the Eaton Vance Investment Department may result, from time to time, in the Fund simultaneously or contemporaneously seeking to engage in the same or similar transactions as an account serviced by the other Investment Department and for which there are limited buyers or sellers on specific securities, which could result in less favorable execution for the Fund than such Affiliated Investment Account. The MS Investment Department will not knowingly or intentionally cause the Fund to engage in a cross trade with an account serviced by the Eaton Vance Investment Department, however, subject to applicable law and internal policies and procedures, the Fund may conduct cross trades with other accounts serviced by the MS Investment Department. Although the MS Investment Department may aggregate the Fund's trades with trades of other accounts serviced by the MS Investment Department, subject to applicable law and internal policies and procedures, there will be no aggregation or coordination of trades with accounts serviced by the Eaton Vance Investment Department, even when both Investment Departments are seeking to acquire or dispose of the same investments contemporaneously.

**Payments to Broker-Dealers and Other Financial Intermediaries.** The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of the Fund, to certain Financial Intermediaries (which may include affiliates of the Adviser and the Distributor), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Fund and/or shareholder servicing. For example, the Adviser or the Distributor may pay additional compensation to a Financial Intermediary for, among other things, promoting the sale and distribution of Fund shares, providing access to various programs, mutual fund platforms or preferred or recommended mutual fund lists that may be offered by a Financial Intermediary, granting the Distributor access to a Financial Intermediary's financial advisors and consultants, providing assistance in the ongoing education and training of a Financial Intermediary's financial personnel, furnishing marketing support, maintaining share balances and/or for sub-accounting, recordkeeping, administrative, shareholder or transaction processing services. Such payments are in addition to any distribution fees, shareholder servicing fees and/or transfer agency fees that may be payable by the Fund. The additional payments may be based on various factors, including level of sales (based on gross or net sales or some specified minimum sales or some other similar criteria related to sales of the Fund and/or some or all other Morgan Stanley Funds), amount of assets invested by the Financial Intermediary's customers (which could include current or aged assets of the Fund and/or some or all other Morgan Stanley Funds), a Fund's advisory fee, some other agreed upon amount or other measures as determined from time to time by the Adviser and/or the Distributor. The amount of these payments may be different for different Financial Intermediaries.

The prospect of receiving, or the receipt of, additional compensation, as described above, by Financial Intermediaries may provide such Financial Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Fund over other investment options with respect to which these Financial Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Fund or the amount that the Fund receives to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any disclosures provided by Financial Intermediaries as to their compensation.

In addition, in certain circumstances, the Adviser restricts, limits or reduces the amount of the Fund's investment, or restricts the type of governance or voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.

**Morgan Stanley Trading and Principal Investing Activities.** Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for a Fund's holdings, although these activities could have an adverse impact on the value of one or more of the Fund's investments, or could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and potentially adverse to that of a Fund. Furthermore, from time to time, the Adviser or its affiliates may invest "seed" capital in a Fund, typically to enable the Fund to commence investment operations and/or achieve sufficient scale. The Adviser and its affiliates may hedge such seed capital exposure by investing in derivatives or other instruments expected to produce offsetting exposure. Such hedging transactions, if any, would occur outside of a Fund.

**103**

------

[Back To **Table of Contents**](#TOC_15545)

Morgan Stanley's sales and trading, financing and principal investing businesses (whether or not specifically identified as such, and including Morgan Stanley's trading and principal investing businesses) will not be required to offer any investment opportunities to a Fund. These businesses may encompass, among other things, principal trading activities as well as principal investing.

Morgan Stanley's sales and trading, financing and principal investing businesses have acquired or invested in, and in the future may acquire or invest in, minority and/or majority control positions in equity or debt instruments of diverse public and/or private companies. Such activities may put Morgan Stanley in a position to exercise contractual, voting or creditor rights, or management or other control with respect to securities or loans of portfolio investments or other issuers, and in these instances Morgan Stanley may, in its discretion and subject to applicable law, act to protect its own interests or interests of clients, and not a Fund's interests.

Subject to the limitations of applicable law, a Fund may purchase from or sell assets to, or make investments in, companies in which Morgan Stanley has or may acquire an interest, including as an owner, creditor or counterparty.

**Morgan Stanley's Investment Banking and Other Commercial Activities.** Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment funds that may compete with a Fund and with respect to investments that a Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve an action of a different timing or nature than the action taken, by a Fund. Morgan Stanley may give advice and provide recommendations to persons competing with a Fund and/or any of a Fund's investments that are contrary to the Fund's best interests and/or the best interests of any of its investments.

Morgan Stanley could be engaged in financial advising, whether on the buy-side or sell-side, or in financing or lending assignments that could result in Morgan Stanley's determining in its discretion or being required to act exclusively on behalf of one or more third parties, which could limit a Fund's ability to transact with respect to one or more existing or potential investments. Morgan Stanley may have relationships with third-party funds, companies or investors who may have invested in or may look to invest in portfolio companies, and there could be conflicts between a Fund's best interests, on the one hand, and the interests of a Morgan Stanley client or counterparty, on the other hand.

To the extent that Morgan Stanley advises creditor or debtor companies in the financial restructuring of companies either prior to or after filing for protection under Chapter 11 of the U.S. Bankruptcy Code or similar laws in other jurisdictions, the Adviser's flexibility in making investments in such restructurings on a Fund's behalf may be limited.

Morgan Stanley could provide investment banking services to competitors of portfolio companies, as well as to private equity and/or private credit funds; such activities may present Morgan Stanley with a conflict of interest vis-a-vis a Fund's investment and may also result in a conflict in respect of the allocation of investment banking resources to portfolio companies.

To the extent permitted by applicable law, Morgan Stanley may provide a broad range of financial services to companies in which a Fund invests, including strategic and financial advisory services, interim acquisition financing and other lending and underwriting or placement of securities, and Morgan Stanley generally will be paid fees (that may include warrants or other securities) for such services. Morgan Stanley will not share any of the foregoing interest, fees and other compensation received by it (including, for the avoidance of doubt, amounts received by the Adviser) with a Fund, and any advisory fees payable will not be reduced thereby.

Morgan Stanley may be engaged to act as a financial advisor to a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in connection with such transactions. Morgan Stanley's compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, a Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to merger or acquisition.

The involvement or presence of Morgan Stanley in the investment banking and other commercial activities described above (or the financial markets more broadly) may restrict or otherwise limit investment opportunities that may otherwise be available to the Fund. For example, issuers may hire and compensate Morgan Stanley to provide underwriting, financial advisory, placement agency, brokerage services or other services and, because of limitations imposed by applicable law and regulation, a Fund may be prohibited from buying or selling securities issued by those issuers or participating in related transactions or otherwise limited in its ability to engage in such investments.

**Morgan Stanley's Marketing Activities.** Morgan Stanley is engaged in the business of underwriting, syndicating, brokering, administering, servicing, arranging and advising on the distribution of a wide variety of securities and other investments in which a Fund may invest. Subject to the restrictions of the 1940 Act, including Sections 10(f) and 17(e) thereof, a Fund may invest in transactions in which Morgan Stanley acts as underwriter, placement agent, syndicator, broker, administrative agent, servicer, advisor, arranger or structuring agent and receives fees or other compensation from the sponsors of such products or securities. Any fees earned by Morgan Stanley in such capacity will not be shared with the Adviser or the Fund. Certain conflicts of interest, in addition to the receipt of fees or other compensation, would be inherent in these transactions. Moreover, the interests of one of Morgan

**104**

------

[Back To **Table of Contents**](#TOC_15545)

Stanley's clients with respect to an issuer of securities in which a Fund has an investment may be adverse to the Adviser's or a Fund's best interests. In conducting the foregoing activities, Morgan Stanley will be acting for its other clients and will have no obligation to act in the Adviser's or a Fund's best interests.

**Client Relationships.** Morgan Stanley has existing and potential relationships with a significant number of corporations, institutions and individuals. In providing services to its clients, Morgan Stanley may face conflicts of interest with respect to activities recommended to or performed for such clients, on the one hand, and a Fund, its shareholders or the entities in which the Fund invests, on the other hand. In addition, these client relationships may present conflicts of interest in determining whether to offer certain investment opportunities to a Fund.

In acting as principal or in providing advisory and other services to its other clients, Morgan Stanley may engage in or recommend activities with respect to a particular matter that conflict with or are different from activities engaged in or recommended by the Adviser on a Fund's behalf.

**Principal Investments.** To the extent permitted by applicable law, there may be situations in which a Fund's interests may conflict with the interests of one or more general accounts of Morgan Stanley and its affiliates or accounts managed by Morgan Stanley or its affiliates. This may occur because these accounts hold public and private debt and equity securities of many issuers which may be or become portfolio companies, or from whom portfolio companies may be acquired.

**Transactions with Portfolio Companies of Affiliated Investment Accounts.** The companies in which a Fund may invest may be counterparties to or participants in agreements, transactions or other arrangements with portfolio companies or other entities of portfolio investments of Affiliated Investment Accounts (for example, a company in which a Fund invests may retain a company in which an Affiliated Investment Account invests to provide services or may acquire an asset from such company or vice versa). Certain of these agreements, transactions and arrangements involve fees, servicing payments, rebates and/or other benefits to Morgan Stanley or its affiliates. For example, portfolio entities may, including at the encouragement of Morgan Stanley, enter into agreements regarding group procurement and/or vendor discounts. Morgan Stanley and its affiliates may also participate in these agreements and may realize better pricing or discounts as a result of the participation of portfolio entities. To the extent permitted by applicable law, certain of these agreements may provide for commissions or similar payments and/or discounts or rebates to be paid to a portfolio entity of an Affiliated Investment Account, and such payments or discounts or rebates may also be made directly to Morgan Stanley or its affiliates. Under these arrangements, a particular portfolio company or other entity may benefit to a greater degree than the other participants, and the Morgan Stanley Funds, investment vehicles and accounts (which may or may not include a Fund) that own an interest in such entity will receive a greater relative benefit from the arrangements than the Morgan Stanley Funds, investment vehicles or accounts that do not own an interest therein. Fees and compensation received by portfolio companies of Affiliated Investment Accounts in relation to the foregoing will not be shared with a Fund or offset advisory fees payable.

**Investments in Portfolio Investments of Other Funds.** To the extent permitted by applicable law, when a Fund invests in certain companies or other entities, other funds affiliated with the Adviser may have made or may be making an investment in such companies or other entities. Other funds that have been or may be managed by the Adviser may invest in the companies or other entities in which a Fund has made an investment. Under such circumstances, a Fund and such other funds may have conflicts of interest (e.g., over the terms, exit strategies and related matters, including the exercise of remedies of their respective investments). If the interests held by a Fund are different from (or take priority over) those held by such other funds, the Adviser may be required to make a selection at the time of conflicts between the interests held by such other funds and the interests held by a Fund.

**Allocation of Expenses.** Expenses may be incurred that are attributable to a Fund and one or more other Affiliated Investment Accounts (including in connection with issuers in which a Fund and such other Affiliated Investment Accounts have overlapping investments). The allocation of such expenses among such entities raises potential conflicts of interest. The Adviser and its affiliates intend to allocate such common expenses among a Fund and any such other Affiliated Investment Accounts on a pro rata basis or in such other manner as the Adviser deems to be fair and equitable or in such other manner as may be required by applicable law.

**Temporary Investments.** To more efficiently invest short-term cash balances held by a Fund, the Adviser may invest such balances on an overnight "sweep" basis in shares of one or more money market funds or other short-term vehicles. It is anticipated that the investment adviser to these money market funds or other short-term vehicles may be the Adviser (or an affiliate) to the extent permitted by applicable law, including Rule 12d1-1 under the 1940 Act. In such a case, the affiliated investment adviser may receive asset-based fees in respect of a Fund's investment (which will reduce the net return realized by a Fund).

**Transactions with Affiliates.** The Adviser and any investment sub-adviser might purchase securities from underwriters or placement agents in which a Morgan Stanley affiliate is a member of a syndicate or selling group, as a result of which an affiliate might benefit from the purchase through receipt of a fee or otherwise. Neither the Adviser nor any investment sub-adviser will purchase securities on behalf of a Fund from an affiliate that is acting as a manager of a syndicate or selling group. Purchases by the Adviser on behalf of a Fund from an affiliate acting as a placement agent must meet the requirements of applicable law. Furthermore, Morgan Stanley may face conflicts of interest when a Fund uses service providers affiliated with Morgan Stanley because Morgan Stanley receives greater overall fees when they are used.

**105**

------

[Back To **Table of Contents**](#TOC_15545)

**General Process for Potential Conflicts.** All of the transactions described above involve the potential for conflicts of interest between the Adviser, related persons of the Adviser and/or their clients. The Advisers Act, the 1940 Act and ERISA impose certain requirements designed to decrease the possibility of conflicts of interest between an investment adviser and its clients. In some cases, transactions may be permitted subject to fulfillment of certain conditions. Certain other transactions may be prohibited. In addition, the Adviser has instituted policies and procedures designed to prevent conflicts of interest from arising and, when they do arise, to ensure that it effects transactions for clients in a manner that is consistent with its fiduciary duty to its clients and in accordance with applicable law. The Adviser seeks to ensure that potential or actual conflicts of interest are appropriately resolved taking into consideration the overriding best interests of the client.

**FINANCIAL STATEMENTS**

[The Funds' audited financial statements for the fiscal year ended September 30, 2022, including notes thereto, and the reports of Ernst & Young LLP, an independent registered public accounting firm, are herein incorporated by reference to the Funds' Annual Reports to Shareholders. A copy of the Funds' Annual Reports to Shareholders must accompany the delivery of this SAI.](https://www.sec.gov/Archives/edgar/data/741375/000110465922124864/tm2227756d1_ncsr.htm)

**106**

------

[Back To **Table of Contents**](#TOC_15545)

**APPENDIX A — MORGAN STANLEY INVESTMENT MANAGEMENT PROXY VOTING POLICY** **AND PROCEDURES**

**I. POLICY STATEMENT**

Morgan Stanley Investment Management's policy and procedures for voting proxies, the Equity Proxy Voting Policy and Procedures (the "Policy"), with respect to securities held in the accounts of clients applies to those Morgan Stanley Investment Management ("MSIM") entities that provide discretionary investment management services and for which an MSIM entity has authority to vote proxies<sup>1</sup>. For purposes of this Policy, clients shall include: Morgan Stanley U.S. registered investment companies, other Morgan Stanley pooled investment vehicles, and MSIM separately managed accounts (including accounts for Employee Retirement Income Security ("ERISA") clients and ERISA-equivalent clients). This Policy is reviewed and updated as necessary to address new and evolving proxy voting issues and standards.

The MSIM entities covered by this Policy currently include the following: Morgan Stanley AIP GP LP, Morgan Stanley Investment Management Inc., Morgan Stanley Investment Management Limited, Morgan Stanley Investment Management Company, Morgan Stanley Saudi Arabia, MSIM Fund Management (Ireland) Limited, Morgan Stanley Asia Limited, Morgan Stanley Investment Management (Japan) Co. Limited, Morgan Stanley Investment Management Private Limited, Morgan Stanley Eaton Vance CLO Manager LLC, and, Morgan Stanley Eaton Vance CLO CM LLC (each an "MSIM Affiliate" and collectively referred to as the "MSIM Affiliates" or as "we" below).

Each MSIM Affiliate will use its best efforts to vote proxies as part of its authority to manage, acquire and dispose of account assets.

■ With respect to the U.S. registered investment companies sponsored, managed or advised by any MSIM Affiliate (the "MS Funds"), each MSIM Affiliate will vote proxies under this Policy pursuant to authority granted under its applicable investment advisory agreement or, in the absence of such authority, as authorized by the Board of Directors/Trustees of the MS Funds.

■ For other pooled investment vehicles (e.g., UCITS), each MSIM Affiliate will vote proxies under this Policy pursuant to authority granted under its applicable investment advisory agreement or, in the absence of such authority, as authorized by the relevant governing board.

■ For separately managed accounts (including ERISA and ERISA-equivalent clients), each MSIM Affiliate will vote proxies under this Policy pursuant to authority granted under the applicable investment advisory agreement or investment management agreement. Where an MSIM Affiliate has the authority to vote proxies on behalf of ERISA and ERISA-equivalent clients, the MSIM Affiliate must do so in accordance with its fiduciary duties under ERISA (and the Internal Revenue Code).

■ In certain situations, a client or its fiduciary may reserve the authority to vote proxies for itself or an outside party or may provide an MSIM Affiliate with a statement of proxy voting policy. The MSIM Affiliate will comply with the client's policy.

An MSIM Affiliate will not vote proxies unless the investment management agreement, investment advisory agreement or other authority explicitly authorizes the MSIM Affiliate to vote proxies.

MSIM Affiliates will vote proxies in a prudent and diligent manner and in the best interests of clients, including beneficiaries of and participants in a client's benefit plan(s) for which the MSIM Affiliates manage assets, consistent with the objective of maximizing long-term investment returns ("Client Proxy Standard") and this Policy. In addition to voting proxies of portfolio companies, MSIM routinely engages with the management or board of companies in which we invest on a range of environmental, social and governance issues. Governance is a window into or proxy for management and board quality. MSIM engages with companies where we have larger positions, voting issues are material or where we believe we can make a positive impact on the governance structure. MSIM's engagement process, through private communication with companies, allows us to understand the governance structures at investee companies and better inform our voting decisions.

1 This Policy does not apply to MSIM's authority to exercise certain decision-making rights associated with investments in loans and other fixed income instruments (collectively, for purposes hereof, "Fixed Income Instruments").

**Retention and Oversight of Proxy Advisory Firms** - Institutional Shareholder Services ("ISS") and Glass Lewis (together with other proxy research providers as we may retain from time to time, the "Research Providers") are independent advisers that specialize in providing a variety of fiduciary-level proxy-related services to institutional investment managers, plan sponsors, custodians, consultants, and other institutional investors. The services provided include in-depth research, global issuer analysis, record retention, ballot processing and voting recommendations.

To facilitate proxy voting, MSIM has retained Research Providers to provide company level reports that summarize key data elements contained within an issuer's proxy statement. Although we are aware of the voting recommendations included in the Research Providers' company level reports, these recommendations are not an input into our vote nor is any potential vote prepopulated based on a Research Provider's research. MSIM votes all proxies based on its own proxy voting policies, consultation with the investment teams, and in the best interests of each client. In addition to research, MSIM retains ISS to provide vote execution, reporting, and recordkeeping services.

**A-1**

------

[Back To **Table of Contents**](#TOC_15545)

As part of MSIM's ongoing oversight of the Research Providers, MSIM performs periodic due diligence on the Research Providers. Topics of the reviews include, but are not limited to, conflicts of interest, methodologies for developing their policies and vote recommendations, and resources.

**Voting Proxies for Certain Non-U.S. Companies** - Voting proxies of companies located in some jurisdictions may involve several problems that can restrict or prevent the ability to vote such proxies or entail significant costs. These problems include, but are not limited to: (i) proxy statements and ballots being written in a language other than English; (ii) untimely and/or inadequate notice of shareholder meetings; (iii) restrictions on the ability of holders outside the issuer's jurisdiction of organization to exercise votes; (iv) requirements to vote proxies in person; (v) the imposition of restrictions on the sale of the securities for a period of time in proximity to the shareholder meeting; and (vi) requirements to provide local agents with power of attorney to facilitate our voting instructions. As a result, we vote clients' non-U.S. proxies on a best efforts basis only, after weighing the costs and benefits of voting such proxies, consistent with the Client Proxy Standard. ISS has been retained to provide assistance in connection with voting non-U.S. proxies.

**Securities Lending** - MS Funds or any other investment vehicle sponsored, managed or advised by an MSIM affiliate may participate in a securities lending program through a third party provider. The voting rights for shares that are out on loan are transferred to the borrower and therefore, the lender (i.e., an MS Fund or another investment vehicle sponsored, managed or advised by an MSIM affiliate) is not entitled to vote the lent shares at the company meeting. In general, MSIM believes the revenue received from the lending program outweighs the ability to vote and we will not recall shares for the purpose of voting. However, in cases in which MSIM believes the right to vote outweighs the revenue received, we reserve the right to recall the shares on loan on a best efforts basis.

**II. GENERAL PROXY VOTING GUIDELINES**

To promote consistency in voting proxies on behalf of our clients, we follow this Policy (subject to any exception set forth herein). The Policy addresses a broad range of issues, and provides general voting parameters on proposals that arise most frequently. However, details of specific proposals vary, and those details affect particular voting decisions, as do factors specific to a given company. Pursuant to the procedures set forth herein, we may vote in a manner that is not in accordance with the following general guidelines, provided the vote is approved by the Proxy Review Committee (see Section 3) and is consistent with the Client Proxy Standard. Morgan Stanley AIP GP LP ("Morgan Stanley AIP") will follow the procedures as described in Appendix A.

We endeavor to integrate governance and proxy voting policy with investment goals, using the vote to encourage portfolio companies to enhance long-term shareholder value and to provide a high standard of transparency such that equity markets can value corporate assets appropriately.

We seek to follow the Client Proxy Standard for each client. At times, this may result in split votes, for example when different clients have varying economic interests and/or priorities reflected in their mandates with respect to the outcome of a particular voting matter (such as a case in which varied ownership interests in two companies involved in a merger result in different stakes in the outcome). We also may split votes at times based on differing views of portfolio managers.

We may abstain from or vote against matters for which disclosure is inadequate.

**A. Routine Matters.**

We generally support routine management proposals. The following are examples of routine management proposals:

■ Approval of financial statements and auditor reports if delivered with an unqualified auditor's opinion.

■ General updating/corrective amendments to the charter, articles of association or bylaws, unless we believe that such amendments would diminish shareholder rights.

■ Most proposals related to the conduct of the annual meeting, with the following exceptions. We generally oppose proposals that relate to "the transaction of such other business which may come before the meeting," and open-ended requests for adjournment. However, where management specifically states the reason for requesting an adjournment and the requested adjournment would facilitate passage of a proposal that would otherwise be supported under this Policy (i.e., an uncontested corporate transaction), the adjournment request will be supported. We do not support proposals that allow companies to call a special meeting with a short (generally two weeks or less) time frame for review.

We generally support shareholder proposals advocating confidential voting procedures and independent tabulation of voting results.

**B. Board of Directors.**

---

| | |
|:---|:---|
| **1** | Election of directors: Votes on board nominees can involve balancing a variety of considerations. In vote decisions, we may take into consideration whether the company has a majority voting policy in place that we believe makes the director vote more meaningful. In the absence of a proxy contest, we generally support the board's nominees for director except as follows: |

---

---

| | |
|:---|:---|
| a | We consider withholding support from or voting against a nominee if we believe a direct conflict exists between the interests of the nominee and the public shareholders, including failure to meet fiduciary standards of care and/or loyalty. We may oppose directors where we conclude that actions of directors are unlawful, unethical or negligent. We consider |

---

**A-2**

------

[Back To **Table of Contents**](#TOC_15545)

opposing individual board members or an entire slate if we believe the board is entrenched and/or dealing inadequately with performance problems; if we believe the board is acting with insufficient independence between the board and management; or if we believe the board has not been sufficiently forthcoming with information on key governance or other material matters.

---

| | |
|:---|:---|
| b | We consider withholding support from or voting against interested directors if the company's board does not meet market standards for director independence, or if otherwise we believe board independence is insufficient. We refer to prevalent market standards as promulgated by a stock exchange or other authority within a given market (e.g., New York Stock Exchange or Nasdaq rules for most U.S. companies, and The Combined Code on Corporate Governance in the United Kingdom). Thus, for an NYSE company with no controlling shareholder, we would expect that at a minimum a majority of directors should be independent as defined by NYSE. Where we view market standards as inadequate, we may withhold votes based on stronger independence standards. Market standards notwithstanding, we generally do not view long board tenure alone as a basis to classify a director as non-independent. |

---

i At a company with a shareholder or group that controls the company by virtue of a majority economic interest in the company, we have a reduced expectation for board independence, although we believe the presence of independent directors can be helpful, particularly in staffing the audit committee, and at times we may withhold support from or vote against a nominee on the view the board or its committees are not sufficiently independent. In markets where board independence is not the norm (e.g. Japan), however, we consider factors including whether a board of a controlled company includes independent members who can be expected to look out for interests of minority holders.

ii We consider withholding support from or voting against a nominee if he or she is affiliated with a major shareholder that has representation on a board disproportionate to its economic interest.

c Depending on market standards, we consider withholding support from or voting against a nominee who is interested and who is standing for election as a member of the company's compensation/remuneration, nominating/governance or audit committee.

d We consider withholding support from or voting against nominees if the term for which they are nominated is excessive. We consider this issue on a market-specific basis.

---

| | |
|:---|:---|
| e | We consider withholding support from or voting against nominees if in our view there has been insufficient board renewal (turnover), particularly in the context of extended poor company performance. Also, if the board has failed to consider diversity, including but not limited to, gender and ethnicity, in its board composition. |

---

---

| | |
|:---|:---|
| f | We consider withholding support from or voting against a nominee standing for election if the board has not taken action to implement generally accepted governance practices for which there is a "bright line" test. For example, in the context of the U.S. market, failure to eliminate a dead hand or slow hand poison pill would be seen as a basis for opposing one or more incumbent nominees. |

---

---

| | |
|:---|:---|
| g | In markets that encourage designated audit committee financial experts, we consider voting against members of an audit committee if no members are designated as such. We also consider voting against the audit committee members if the company has faced financial reporting issues and/or does not put the auditor up for ratification by shareholders. |

---

---

| | |
|:---|:---|
| h | We believe investors should have the ability to vote on individual nominees, and may abstain or vote against a slate of nominees where we are not given the opportunity to vote on individual nominees. |

---

i We consider withholding support from or voting against a nominee who has failed to attend at least 75% of the nominee's board and board committee meetings within a given year without a reasonable excuse. We also consider opposing nominees if the company does not meet market standards for disclosure on attendance.

---

| | |
|:---|:---|
| j | We consider withholding support from or voting against a nominee who appears overcommitted, particularly through service on an excessive number of boards. Market expectations are incorporated into this analysis; for U.S. boards, we generally oppose election of a nominee who serves on more than five public company boards (excluding investment companies), or public company CEOs that serve on more than two outside boards given the level of time commitment required in their primary job. |

---

k We consider withholding support from or voting against a nominee where we believe executive remuneration practices are poor, particularly if the company does not offer shareholders a separate "say-on-pay" advisory vote on pay.

---

| | |
|:---|:---|
| **2** | Discharge of directors' duties: In markets where an annual discharge of directors' responsibility is a routine agenda item, we generally support such discharge. However, we may vote against discharge or abstain from voting where there are serious findings of fraud or other unethical behavior for which the individual bears responsibility. The annual discharge of responsibility represents shareholder approval of disclosed actions taken by the board during the year and may make future shareholder action against the board difficult to pursue. |

---

---

| | |
|:---|:---|
| **3** | Board independence: We generally support U.S. shareholder proposals requiring that a certain percentage (up to 66⅔%) of the |

---

**A-3**

------

[Back To **Table of Contents**](#TOC_15545)

company's board members be independent directors, and promoting all-independent audit, compensation and nominating/governance committees.

---

| | |
|:---|:---|
| **4** | Board diversity: We generally support shareholder proposals urging diversity of board membership with respect to gender, race or other factors where we believe the board has failed to take these factors into account. We will also consider not supporting the re-election of the nomination committee and/or chair (or other resolutions when the nomination chair is not up for re- election) where we perceive limited progress in gender diversity, with the expectation where feasible and with consideration of any idiosyncrasies of individual markets, that female directors represent not less than a third of the board, unless there is evidence that the company has made significant progress in this area. In markets where information on director ethnicity is available, and it is legal to obtain it, and where it is relevant, we will generally also consider not supporting the re-election of the nomination committee chair (or other resolutions when the nomination chair is not up for re-election) if the board lacks ethnic diversity and has not outlined a credible diversity strategy. |

---

---

| | |
|:---|:---|
| **5** | Majority voting: We generally support proposals requesting or requiring majority voting policies in election of directors, so long as there is a carve-out for plurality voting in the case of contested elections. |

---

---

| | |
|:---|:---|
| **6** | Proxy access: We consider proposals on procedures for inclusion of shareholder nominees and to have those nominees included in the company's proxy statement and on the company's proxy ballot on a case-by-case basis. Considerations include ownership thresholds, holding periods, the number of directors that shareholders may nominate and any restrictions on forming a group |

---

---

| | |
|:---|:---|
| **7** | Reimbursement for dissident nominees: We generally support well-crafted U.S. shareholder proposals that would provide for reimbursement of dissident nominees elected to a board, as the cost to shareholders in electing such nominees can be factored into the voting decision on those nominees. |

---

---

| | |
|:---|:---|
| **8** | Proposals to elect directors more frequently: In the U.S. public company context, we usually support shareholder and management proposals to elect all directors annually (to "declassify" the board), although we make an exception to this policy where we believe that long-term shareholder value may be harmed by this change given particular circumstances at the company at the time of the vote on such proposal. As indicated above, outside the United States, we generally support greater accountability to shareholders that comes through more frequent director elections, but recognize that many markets embrace longer term lengths, sometimes for valid reasons given other aspects of the legal context in electing boards. |

---

---

| | |
|:---|:---|
| **9** | Cumulative voting: We generally support proposals to eliminate cumulative voting in the U.S. market context. (Cumulative voting provides that shareholders may concentrate their votes for one or a handful of candidates, a system that can enable a minority bloc to place representation on a board.) U.S. proposals to establish cumulative voting in the election of directors generally will not be supported. |

---

---

| | |
|:---|:---|
| **10** | Separation of Chairman and CEO positions: We vote on shareholder proposals to separate the Chairman and CEO positions and/or to appoint an independent Chairman based in part on prevailing practice in particular markets, since the context for such a practice varies. In many non-U.S. markets, we view separation of the roles as a market standard practice, and support division of the roles in that context. In the United States, we consider such proposals on a case-by-case basis, considering, among other things, the existing board leadership structure, company performance, and any evidence of entrenchment or perceived risk that power is overly concentrated in a single individual. |

---

---

| | |
|:---|:---|
| **11** | Director retirement age and term limits: Proposals setting or recommending director retirement ages or director term limits are voted on a case-by-case basis that includes consideration of company performance, the rate of board renewal, evidence of effective individual director evaluation processes, and any indications of entrenchment. |

---

---

| | |
|:---|:---|
| **12** | Proposals to limit directors' liability and/or broaden indemnification of officers and directors: Generally, we will support such proposals provided that an individual is eligible only if he or she has not acted in bad faith, with gross negligence or with reckless disregard of their duties. |

---

**C. Statutory Auditor Boards**

The statutory auditor board, which is separate from the main board of directors, plays a role in corporate governance in several markets. These boards are elected by shareholders to provide assurance on compliance with legal and accounting standards and the company's articles of association. We generally vote for statutory auditor nominees if they meet independence standards. In markets that require disclosure on attendance by internal statutory auditors, however, we consider voting against nominees for these positions who failed to attend at least 75% of meetings in the previous year. We also consider opposing nominees if the company does not meet market standards for disclosure on attendance.

**D. Corporate Transactions and Proxy Fights.**

We examine proposals relating to mergers, acquisitions and other special corporate transactions (i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings and recapitalizations) on a case-by-case basis in the interests of each fund or other account. Proposals for mergers or other significant transactions that are friendly and approved by the Research Providers usually are supported if there is no portfolio manager objection. We also analyze proxy contests on a case-by-case basis.

**A-4**

------

[Back To **Table of Contents**](#TOC_15545)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**E. Changes in Capital Structure.**

---

| | |
|:---|:---|
| **1** | We generally support the following: |

---

■ Management and shareholder proposals aimed at eliminating unequal voting rights, assuming fair economic treatment of classes of shares we hold.

■ U.S. management proposals to increase the authorization of existing classes of common stock (or securities convertible into common stock) if: (i) a clear business purpose is stated that we can support and the number of shares requested is reasonable in relation to the purpose for which authorization is requested; and/or (ii) the authorization does not exceed 100% of shares currently authorized and at least 30% of the total new authorization will be outstanding. (We consider proposals that do not meet these criteria on a case-by-case basis.)

■ U.S. management proposals to create a new class of preferred stock or for issuances of preferred stock up to 50% of issued capital, unless we have concerns about use of the authority for anti-takeover purposes.

■ Proposals in non-U.S. markets that in our view appropriately limit potential dilution of existing shareholders. A major consideration is whether existing shareholders would have preemptive rights for any issuance under a proposal for standing share issuance authority. We generally consider market-specific guidance in making these decisions; for example, in the U.K. market we usually follow Association of British Insurers' ("ABI") guidance, although company-specific factors may be considered and for example, may sometimes lead us to voting against share authorization proposals even if they meet ABI guidance.

■ Management proposals to authorize share repurchase plans, except in some cases in which we believe there are insufficient protections against use of an authorization for anti-takeover purposes.

■ Management proposals to reduce the number of authorized shares of common or preferred stock, or to eliminate classes of preferred stock.

■ Management proposals to effect stock splits.

■ Management proposals to effect reverse stock splits if management proportionately reduces the authorized share amount set forth in the corporate charter. Reverse stock splits that do not adjust proportionately to the authorized share amount generally will be approved if the resulting increase in authorized shares coincides with the proxy guidelines set forth above for common stock increases.

■ Management dividend payout proposals, except where we perceive company payouts to shareholders as inadequate.

---

| | |
|:---|:---|
| **2** | We generally oppose the following (notwithstanding management support): |

---

■ Proposals to add classes of stock that would substantially dilute the voting interests of existing shareholders.

■ Proposals to increase the authorized or issued number of shares of existing classes of stock that are unreasonably dilutive, particularly if there are no preemptive rights for existing shareholders. However, depending on market practices, we consider voting for proposals giving general authorization for issuance of shares not subject to preemptive rights if the authority is limited.

■ Proposals that authorize share issuance at a discount to market rates, except where authority for such issuance is de minimis, or if there is a special situation that we believe justifies such authorization (as may be the case, for example, at a company under severe stress and risk of bankruptcy).

■ Proposals relating to changes in capitalization by 100% or more.

We consider on a case-by-case basis shareholder proposals to increase dividend payout ratios, in light of market practice and perceived market weaknesses, as well as individual company payout history and current circumstances. For example, currently we perceive low payouts to shareholders as a concern at some Japanese companies, but may deem a low payout ratio as appropriate for a growth company making good use of its cash, notwithstanding the broader market concern.

**F. Takeover Defenses and Shareholder Rights**

---

| | |
|:---|:---|
| **1** | Shareholder rights plans: We generally support proposals to require shareholder approval or ratification of shareholder rights plans (poison pills). In voting on rights plans or similar takeover defenses, we consider on a case-by-case basis whether the company has demonstrated a need for the defense in the context of promoting long-term share value; whether provisions of the defense are in line with generally accepted governance principles in the market (and specifically the presence of an adequate qualified offer provision that would exempt offers meeting certain conditions from the pill); and the specific context if the proposal is made in the midst of a takeover bid or contest for control. |

---

---

| | |
|:---|:---|
| **2** | Supermajority voting requirements: We generally oppose requirements for supermajority votes to amend the charter or bylaws, unless the provisions protect minority shareholders where there is a large shareholder. In line with this view, in the absence of a large shareholder we support reasonable shareholder proposals to limit such supermajority voting requirements. Also, we oppose provisions that do not allow shareholders any right to amend the charter or bylaws. |

---

**A-5**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | |
|:---|:---|
| **3** | Shareholders right to call a special meeting: We consider proposals to enhance a shareholder's rights to call meetings on a case-by-case basis. At large-cap U.S. companies, we generally support efforts to establish the right of holders of 10% or more of shares to call special meetings, unless the board or state law has set a policy or law establishing such rights at a threshold that we believe to be acceptable. |

---

---

| | |
|:---|:---|
| **4** | Written consent rights: In the U.S. context, we examine proposals for shareholder written consent rights on a case-by-case basis. |

---

---

| | |
|:---|:---|
| **5** | Reincorporation: We consider management and shareholder proposals to reincorporate to a different jurisdiction on a case-by-case basis. We oppose such proposals if we believe the main purpose is to take advantage of laws or judicial precedents that reduce shareholder rights. |

---

---

| | |
|:---|:---|
| **6** | Anti-greenmail provisions: Proposals relating to the adoption of anti-greenmail provisions will be supported, provided that the proposal: (i) defines greenmail; (ii) prohibits buyback offers to large block holders (holders of at least 1% of the outstanding shares and in certain cases, a greater amount) not made to all shareholders or not approved by disinterested shareholders; and (iii) contains no anti-takeover measures or other provisions restricting the rights of shareholders. |

---

---

| | |
|:---|:---|
| **7** | Bundled proposals: We may consider opposing or abstaining on proposals if disparate issues are "bundled" and presented for a single vote. |

---

**G. Auditors**

We generally support management proposals for selection or ratification of independent auditors. However, we may consider opposing such proposals with reference to incumbent audit firms if the company has suffered from serious accounting irregularities and we believe rotation of the audit firm is appropriate, or if fees paid to the auditor for non-audit-related services are excessive. Generally, to determine if non-audit fees are excessive, a 50% test will be applied (i.e., non-audit-related fees should be less than 50% of the total fees paid to the auditor). We generally vote against proposals to indemnify auditors.

**H. Executive and Director Remuneration**

---

| | |
|:---|:---|
| **1** | We generally support the following: |

---

■ Proposals for employee equity compensation plans and other employee ownership plans, provided that our research does not indicate that approval of the plan would be against shareholder interest. Such approval may be against shareholder interest if it authorizes excessive dilution and shareholder cost, particularly in the context of high usage ("run rate") of equity compensation in the recent past; or if there are objectionable plan design and provisions.

■ Proposals relating to fees to outside directors, provided the amounts are not excessive relative to other companies in the country or industry, and provided that the structure is appropriate within the market context. While stock-based compensation to outside directors is positive if moderate and appropriately structured, we are wary of significant stock option awards or other performance-based awards for outside directors, as well as provisions that could result in significant forfeiture of value on a director's decision to resign from a board (such forfeiture can undercut director independence).

■ Proposals for employee stock purchase plans that permit discounts, but only for grants that are part of a broad-based employee plan, including all non-executive employees, and only if the discounts are limited to a reasonable market standard or less.

■ Proposals for the establishment of employee retirement and severance plans, provided that our research does not indicate that approval of the plan would be against shareholder interest.

---

| | |
|:---|:---|
| **2** | We generally oppose retirement plans and bonuses for non-executive directors and independent statutory auditors. |

---

---

| | |
|:---|:---|
| **3** | In the U.S. context, we generally vote against shareholder proposals requiring shareholder approval of all severance agreements, but we generally support proposals that require shareholder approval for agreements in excess of three times the annual compensation (salary and bonus) or proposals that require companies to adopt a provision requiring an executive to receive accelerated vesting of equity awards if there is a change of control and the executive is terminated. We generally oppose shareholder proposals that would establish arbitrary caps on pay. We consider on a case-by-case basis shareholder proposals that seek to limit Supplemental Executive Retirement Plans (SERPs), but support such shareholder proposals where we consider SERPs excessive. |

---

---

| | |
|:---|:---|
| **4** | Shareholder proposals advocating stronger and/or particular pay-for-performance models will be evaluated on a case-by-case basis, with consideration of the merits of the individual proposal within the context of the particular company and its labor markets, and the company's current and past practices. While we generally support emphasis on long-term components of senior executive pay and strong linkage of pay to performance, we consider factors including whether a proposal may be overly prescriptive, and the impact of the proposal, if implemented as written, on recruitment and retention. |

---

---

| | |
|:---|:---|
| **5** | We generally support proposals advocating reasonable senior executive and director stock ownership guidelines and holding requirements for shares gained in executive equity compensation programs. |

---

**A-6**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | |
|:---|:---|
| **6** | We generally support shareholder proposals for reasonable "claw-back" provisions that provide for company recovery of senior executive bonuses to the extent they were based on achieving financial benchmarks that were not actually met in light of subsequent restatements. |

---

---

| | |
|:---|:---|
| **7** | Management proposals effectively to re-price stock options are considered on a case-by-case basis. Considerations include the company's reasons and justifications for a re-pricing, the company's competitive position, whether senior executives and outside directors are excluded, potential cost to shareholders, whether the re-pricing or share exchange is on a value-for-value basis, and whether vesting requirements are extended. |

---

---

| | |
|:---|:---|
| **8** | Say-on-Pay: We consider proposals relating to an advisory vote on remuneration on a case-by-case basis. Considerations include a review of the relationship between executive remuneration and performance based on operating trends and total shareholder return over multiple performance periods. In addition, we review remuneration structures and potential poor pay practices, including relative magnitude of pay, discretionary bonus awards, tax gross ups, change-in-control features, internal pay equity and peer group construction. As long-term investors, we support remuneration policies that align with long-term shareholder returns. |

---

**I. Social and Environmental Issues.** Shareholders in the United States and certain other markets submit proposals encouraging changes in company disclosure and practices related to particular social and environmental matters. MSIM believes that relevant social and environmental issues, including principal adverse sustainability impacts, can influence risk and return. Consequently, we consider how to vote on proposals related to social and environmental issues on a case-by-case basis by determining the relevance of social and environmental issues identified in the proposal and their likely impacts on shareholder value. In reviewing proposals on social and environmental issues, we consider a company's current disclosures and our understanding of the company's management of material social and environmental issues in comparison to peers. We seek to balance concerns on reputational and other risks that lie behind a proposal against costs of implementation, while considering appropriate shareholder and management prerogatives. We may abstain from voting on proposals that do not have a readily determinable financial impact on shareholder value and we may oppose proposals that intrude excessively on management prerogatives and/or board discretion. We generally vote against proposals requesting reports or actions that we believe are duplicative, related to matters not material to the business, or that would impose unnecessary or excessive costs. We consider proposals on these sustainability risks, opportunities and impacts on a case-by-case basis but generally support proposals that seek to enhance useful disclosure. We focus on understanding the company's business and commercial context and recognise that there is no one size fits all that can apply to all companies. In assessing and prioritising proposals, we carefully reflect on the materiality of the issues as well as the sector and geography in which the company operates. We also consider the explanation companies provide where they may depart from best practice to assess the adequacy and appropriateness of measures that are in place.

<u>Environmental Issues</u>

We generally support proposals that, if implemented, would enhance useful disclosure on climate, biodiversity, and other environmental risks such as disclosures aligned with SASB (Sustainability Accounting Standards Board) and the TCFD (Task Force on Climate-related Financial Disclosures). We also generally support proposals that aim to meaningfully reduce or mitigate a company's impact on the global climate. We generally will support reasonable proposals to reduce negative environmental impacts and ameliorate a company's overall environmental footprint, including any threats to biodiversity in ecologically sensitive areas. We generally will also support proposals asking companies to report on their environmental practices, policies and impacts, including environmental damage and health risks resulting from operations, and the impact of environmental liabilities on shareholder value.

<u>Social Issues</u>

We generally support proposals that, if implemented, would enhance useful disclosure on employee and board diversity, including gender, race, and other factors. We consider proposals on other social issues on a case-by-case basis but generally support proposals that: Seek to enhance useful disclosure or improvements on material issues such as human rights risks, supply chain management, workplace safety, human capital management and pay equity.

In order to encourage policies to eliminate gender-based violence and other forms of harassment from the workplace, we may consider withholding support where we have material concerns in relation to a company's involvement/remediation of a breach of global conventions such as UN Global Compact Principles on Human Rights, Labour Standards, Environment and Business Malpractice.

**J. Funds of Funds.** Certain MS Funds advised by an MSIM Affiliate invest only in other MS Funds. If an underlying fund has a shareholder meeting, in order to avoid any potential conflict of interest, such proposals will be voted in the same proportion as the votes of the other shareholders of the underlying fund, unless otherwise determined by the Proxy Review Committee. In markets where proportional voting is not available we will not vote at the meeting, unless otherwise determined by the Proxy Review Committee. Other MS Funds invest in unaffiliated funds. If an unaffiliated underlying fund has a shareholder meeting and the MS Fund owns more than 25% of the voting shares of the underlying fund, the MS Fund will vote its shares in the unaffiliated underlying fund in the same proportion as the votes of the other shareholders of the underlying fund to the extent possible.

**A-7**

------

[Back To **Table of Contents**](#TOC_15545)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**III. ADMINISTRATION OF THE POLICY**

The MSIM Proxy Review Committee (the "Committee") has overall responsibility for the Policy. The Committee consists of investment professionals who represent the different investment disciplines and geographic locations of MSIM, and is chaired by the director of the Global Stewardship Team ("GST"). Because proxy voting is an investment responsibility and may affect shareholder value, and because of their knowledge of companies and markets, as well as their understanding of their clients' objectives, portfolio managers and other members of investment staff play a key role in proxy voting, and the GST will consult with investment teams ahead of decisions on proxy votes. Consequently, there may be instances where we may split votes at times based on differing views of portfolio managers and / or different client objectives. The GST administers and implements the Policy, as well as monitoring services provided by the proxy advisory firms and other research providers used in the proxy voting process.

The GST Director is responsible for identifying issues that require Committee deliberation or ratification. The GST, working with advice of investment teams and the Committee, is responsible for voting on routine items and on matters that can be addressed in line with these Policy guidelines. The GST has responsibility for voting case-by-case where guidelines and precedent provide adequate guidance.

The Committee may periodically review and has the authority to amend, as necessary, the Policy and establish and direct voting positions consistent with the Client Proxy Standard.

GST and members of the Committee may take into account Research Providers' recommendations and research as well as any other relevant information they may request or receive, including portfolio manager and/or analyst comments and research, as applicable. Generally, proxies related to securities held in client accounts that are managed pursuant to quantitative, index or index-like strategies ("Index Strategies") will be voted in the same manner as those held in actively managed accounts, unless economic interests or investment guidelines of the accounts differ. Because accounts managed using Index Strategies are passively managed accounts, research from portfolio managers and/or analysts related to securities held in these accounts may not be available. If the affected securities are held only in accounts that are managed pursuant to Index Strategies, and the proxy relates to a matter that is not described in this Policy, the GST will consider all available information from the Research Providers, and to the extent that the holdings are significant, from the portfolio managers and/or analysts.

**A. Committee Procedures**

The Committee meets at least quarterly, and reviews and considers changes to the Policy at least annually. Through meetings and/or written communications, the Committee is responsible for monitoring and ratifying material "split votes" (i.e., allowing certain shares of the same issuer that are the subject of the same proxy solicitation and held by one or more MSIM portfolios to be voted differently than other shares) and/or "override voting" (i.e., voting all MSIM portfolio shares in a manner contrary to the Policy). The Committee will review developing issues and approve upcoming votes, as appropriate, for matters as requested by GST.

The Committee reserves the right to review voting decisions at any time and to make voting decisions as necessary to ensure the independence and integrity of the votes.

**B. Material Conflicts of Interest**

In addition to the procedures discussed above, if the GST Director determines that an issue raises a material conflict of interest, the GST Director may request a special committee ("Special Committee") to review, and recommend a course of action with respect to, the conflict(s) in question.

A potential material conflict of interest could exist in the following situations, among others:

---

| | |
|:---|:---|
| **1** | The issuer soliciting the vote is a client of MSIM or an affiliate of MSIM and the vote is on a matter that materially affects the issuer. |

---

---

| | |
|:---|:---|
| **2** | The proxy relates to Morgan Stanley common stock or any other security issued by Morgan Stanley or its affiliates except if echo voting is used, as with MS Funds, as described herein. |

---

---

| | |
|:---|:---|
| **3** | Morgan Stanley has a material pecuniary interest in the matter submitted for a vote (e.g., acting as a financial advisor to a party to a merger or acquisition for which Morgan Stanley will be paid a success fee if completed). |

---

---

| | |
|:---|:---|
| **4** | One of Morgan Stanley's independent directors or one of MS Funds' directors also serves on the board of directors or is a nominee for election to the board of directors of a company held by an MS Fund or affiliate. |

---

If the GST Director determines that an issue raises a potential material conflict of interest, depending on the facts and circumstances, the issue will be addressed as follows:

---

| | |
|:---|:---|
| **1** | If the matter relates to a topic that is discussed in this Policy, the proposal will be voted as per the Policy. |

---

---

| | |
|:---|:---|
| **2** | If the matter is not discussed in this Policy or the Policy indicates that the issue is to be decided case-by-case, the proposal will be voted in a manner consistent with the Research Providers, provided that all the Research Providers consulted have the same recommendation, no portfolio manager objects to that vote, and the vote is consistent with MSIM's Client Proxy Standard. |

---

**A-8**

------

[Back To **Table of Contents**](#TOC_15545)

---

| | |
|:---|:---|
| **3** | If the Research Providers' recommendations differ, the GST Director will refer the matter to a Special Committee to vote on the proposal, as appropriate. |

---

Any Special Committee shall be comprised of the GST Director, and at least two portfolio managers (preferably members of the Committee), as approved by the Committee. The GST Director may request non-voting participation by MSIM's General Counsel or his/her designee and the Chief Compliance Officer or his/her designee. In addition to the research provided by Research Providers, the Special Committee may request analysis from MSIM Affiliate investment professionals and outside sources to the extent it deems appropriate.

**C. Proxy Voting Reporting**

The GST will document in writing all Committee and Special Committee decisions and actions, which documentation will be maintained by the GST for a period of at least six years. To the extent these decisions relate to a security held by an MS Fund, the GST will report the decisions to each applicable Board of Trustees/Directors of those MS Funds (the "Board") at each Board's next regularly scheduled Board meeting. The report will contain information concerning decisions made during the most recently ended calendar quarter immediately preceding the Board meeting.

In addition, to the extent that Committee and Special Committee decisions and actions relate to a security held by other pooled investment vehicles, the GST will report the decisions to the relevant governing board of the pooled investment vehicle.

MSIM will promptly provide a copy of this Policy to any client requesting it. MSIM will also, upon client request, promptly provide a report indicating how each proxy was voted with respect to securities held in that client's account.

MSIM's Legal Department, in conjunction with GST and GST IT for MS Fund reporting and with the AIP investment team for AIP Closed-End 40 Act Fund reporting, is responsible for filing an annual Form N-PX on behalf of each MS Fund and AIP Closed-End 40 Act Fund for which such filing is required, indicating how all proxies were voted with respect to each such fund's holdings.

Also, MSIM maintains voting records of individual agenda items at company meetings in a searchable database on its website on a rolling 12-month basis.

In addition, ISS provides vote execution, reporting and recordkeeping services to MSIM.

**IV. RECORDKEEPING**

Records are retained in accordance with Morgan Stanley's Global Information Management Policy, which establishes general Firm-wide standards and procedures regarding the retention, handling, and destruction of official books and records and other information of legal or operational significance. The Global Information Management Policy incorporates Morgan Stanley's Master Retention Schedule, which lists various record classes and associated retention periods on a global basis.

Approved by the Board September 2015, September 27-28, 2016, September 27-28, 2017, October 3-4, 2018, September 24-25, 2019, September 30-October 1, 2020 and March 1-2, 2022.

**A-9**

------

[Back To **Table of Contents**](#TOC_15545)

**APPENDIX A**

Appendix A applies to the following accounts managed by Morgan Stanley AIP GP LP (i) closed-end funds registered under the Investment Company Act of 1940, as amended; (ii) discretionary separate accounts; (iii) unregistered funds; and (iv) non-discretionary accounts offered in connection with AIP's Custom Advisory Portfolio Solutions service.

Generally, AIP will follow the guidelines set forth in Section II of MSIM's Proxy Voting Policy and Procedures. To the extent that such guidelines do not provide specific direction, or AIP determines that consistent with the Client Proxy Standard, the guidelines should not be followed, the Proxy Review Committee has delegated the voting authority to vote securities held by accounts managed by AIP to the Fund of Hedge Funds investment team, the Private Markets investment team or the Portfolio Solutions team of AIP. A summary of decisions made by the applicable investment teams will be made available to the Proxy Review Committee for its information at the next scheduled meeting of the Proxy Review Committee.

In certain cases, AIP may determine to abstain from determining (or recommending) how a proxy should be voted (and therefore abstain from voting such proxy or recommending how such proxy should be voted), such as where the expected cost of giving due consideration to the proxy does not justify the potential benefits to the affected account(s) that might result from adopting or rejecting (as the case may be) the measure in question.

*Waiver of Voting Rights*

For regulatory reasons, AIP may either 1) invest in a class of securities of an underlying fund (the "Fund") that does not provide for voting rights; or 2) waive 100% of its voting rights with respect to the following:

---

| | |
|:---|:---|
| **1** | Any rights with respect to the removal or replacement of a director, general partner, managing member or other person acting in a similar capacity for or on behalf of the Fund (each individually a "Designated Person," and collectively, the "Designated Persons"), which may include, but are not limited to, voting on the election or removal of a Designated Person in the event of such Designated Person's death, disability, insolvency, bankruptcy, incapacity, or other event requiring a vote of interest holders of the Fund to remove or replace a Designated Person; and |

---

---

| | |
|:---|:---|
| **2** | Any rights in connection with a determination to renew, dissolve, liquidate, or otherwise terminate or continue the Fund, which may include, but are not limited to, voting on the renewal, dissolution, liquidation, termination or continuance of the Fund upon the occurrence of an event described in the Fund's organizational documents; <u>provided, however</u>, that, if the Fund's organizational documents require the consent of the Fund's general partner or manager, as the case may be, for any such termination or continuation of the Fund to be effective, then AIP may exercise its voting rights with respect to such matter. |

---

**A-10**

------

[Back To **Table of Contents**](#TOC_15545)

**APPENDIX B — DESCRIPTION OF RATINGS**

**Standard & Poor's Ratings Services**

An S&P Global Ratings issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects S&P Global Ratings' view of the obligor's capacity and willingness to meet its financial commitments as they come due, and this opinion may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default.

Issue credit ratings can be either long-term or short-term. Short-term ratings are generally assigned to those obligations considered short-term in the relevant market. Short-term ratings are also used to indicate the creditworthiness of an obligor with respect to put features on long-term obligations. Medium-term notes are assigned long-term ratings.

*I. S&P's Long-Term Issue Credit Ratings*

**AAA:** An obligation rated 'AAA' has the highest rating assigned by S&P Global Ratings. The obligor's capacity to meet its financial commitments on the obligation is extremely strong.

**AA:** An obligation rated 'AA' differs from the highest-rated obligations only to a small degree. The obligor's capacity to meet its financial commitments on the obligation is very strong.

**A:** An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitments on the obligation is still strong.

**BBB:** An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor's capacity to meet its financial commitments on the obligation.

**BB; B; CCC; CC; and C:** Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposure to adverse conditions.

**BB:** An obligation rated 'BB' is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to the obligor's inadequate capacity to meet its financial commitments on the obligation.

**B:** An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments on the obligation.

**CCC:** An obligation rated 'CCC' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitments on the obligation.

**CC:** An obligation rated 'CC' is currently highly vulnerable to nonpayment. The 'CC' rating is used when a default has not yet occurred but S&P Global Ratings expects default to be a virtual certainty, regardless of the anticipated time to default.

**C:** An obligation rated 'C' is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared with obligations that are rated higher.

**D:** An obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed exchange offer.

**NR:** Indicates that a rating has not been assigned or is no longer assigned.

*Note:* Ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories.

*II. S&P's Short-Term Issue Credit Ratings*

**B-1**

------

[Back To **Table of Contents**](#TOC_15545)

**A-1:** A short-term obligation rated 'A-1' is rated in the highest category by S&P Global Ratings. The obligor's capacity to meet its financial commitments on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitments on these obligations is extremely strong.

**A-2:** A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitments on the obligation is satisfactory.

**A-3:** A short-term obligation rated 'A-3' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken an obligor's capacity to meet its financial commitments on the obligation.

**B:** A short-term obligation rated 'B' is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the obligor's inadequate capacity to meet its financial commitments.

**C:** A short-term obligation rated 'C' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation.

**D:** A short-term obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed exchange offer.

**NR:** Indicates that a rating has not been assigned or is no longer assigned.

*III. Municipal Short-Term Note Ratings*

**SP-1:** Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation.

**SP-2:** Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.

**SP-3:** Speculative capacity to pay principal and interest.

**D:** 'D' is assigned upon failure to pay the note when due, completion of a distressed exchange offer, or the filing of a bankruptcy petition or the taking of similar action anywhere default on an obligation is a virtual certainty, for example, due to automatic stay provisions*.*

**Moody's Investors, Inc.**

Ratings assigned on Moody's global long-term and short-term rating scales are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities. Long-term ratings are assigned to issuers or obligations with an original maturity of one year or more and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default. Short-term ratings are assigned to obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default.

*I. Moody's Global Long-Term Rating Scale*

**Aaa:** Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.

**Aa:** Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

**A:** Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.

**Baa:** Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

**Ba:** Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

**B:** Obligations rated B are considered speculative and are subject to high credit risk.

**Caa:** Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.

**Ca:** Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.

**B-2**

------

[Back To **Table of Contents**](#TOC_15545)

**C:** Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.

*Note:* Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a "(hyb)" indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.

*II. Moody's Global Short-Term Rating Scale*

**P-1:** Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.

**P-2:** Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.

**P-3:** Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations.

**NP:** Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.

**Fitch Ratings Inc.**

Fitch Ratings' credit ratings relating to issuers are an opinion on the relative ability of an entity to meet financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. Credit ratings relating to securities and obligations of an issuer can include a recovery expectation. Credit ratings are used by investors as indications of the likelihood of receiving the money owed to them in accordance with the terms on which they invested. The agency's credit ratings cover the global spectrum of corporate, sovereign financial, bank, insurance, and public finance entities (including supranational and sub-national entities) and the securities or other obligations they issue, as well as structured finance securities backed by receivables or other financial assets.

*I. Fitch's Long-Term Issuer Credit Rating Scale*

**AAA:** Highest credit quality. 'AAA' ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

**AA:** Very high credit quality. 'AA' ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

**A:** High credit quality. 'A' ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.

**BBB:** Good credit quality. 'BBB' ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

**BB:** Speculative. 'BB' ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments.

**B:** Highly speculative. 'B' ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.

**CCC:** Substantial credit risk. Default is a real possibility.

**CC:** Very high levels of credit risk. Default of some kind appears probable.

**C:** Near default. A default or default-like process has begun, or the issuer is in standstill, or for a closed funding vehicle, payment capacity is irrevocably impaired. Conditions that are indicative of a 'C' category rating for an issuer include: a. the issuer has entered into a grace or cure period following non-payment of a material financial obligation; b. the issuer has entered into a temporary negotiated waiver or standstill agreement following a payment default on a material financial obligation; c. the formal announcement by the issuer or their agent of a distressed debt exchange; d. a closed financing vehicle where payment capacity is irrevocably impaired such that it is not expected to pay interest and/or principal in full during the life of the transaction, but where no payment default is imminent.

**RD:** Restricted default. 'RD' ratings indicate an issuer that in Fitch's opinion has experienced: a. an uncured payment default or distressed debt exchange on a bond, loan or other material financial obligation, but b. has not entered into bankruptcy filings, administration, receivership, liquidation, or other formal winding-up procedure, and c. has not otherwise ceased operating. This would include: i. the selective payment default on a specific class or currency of debt; ii. the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a bank loan, capital markets security or other

**B-3**

------

[Back To **Table of Contents**](#TOC_15545)

material financial obligation; iii. the extension of multiple waivers or forbearance periods upon a payment default on one or more material financial obligations, either in series or in parallel; ordinary execution of a distressed debt exchange on one or more material financial obligations.

**D:** Default. 'D' ratings indicate an issuer that in Fitch's opinion has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure or that has otherwise ceased business.

Default ratings are not assigned prospectively to entities or their obligations; within this context, non-payment on an instrument that contains a deferral feature or grace period will generally not be considered a default until after the expiration of the deferral or grace period, unless a default is otherwise driven by bankruptcy or other similar circumstance, or by a distressed debt exchange.

Imminent default, categorized under 'C', typically refers to the occasion where a payment default has been intimated by the issuer and is all but inevitable. This may, for example, be where an issuer has missed a scheduled payment but (as is typical) has a grace period during which it may cure the payment default. Another alternative would be where an issuer has formally announced a distressed debt exchange, but the date of the exchange still lies several days or weeks in the immediate future.

In all cases, the assignment of a default rating reflects the agency's opinion as to the most appropriate rating category consistent with the rest of its universe of ratings and may differ from the definition of default under the terms of an issuer's financial obligations or local commercial practice.

*Note:* The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to 'AAA' ratings and ratings below the 'CCC' category.

*II. Fitch's Short-Term Ratings Assigned to Issuers or Obligations in Corporate, Public and Structure Finance*

**F1:** Highest Short-Term Credit Quality. Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature.

**F2:** Good Short-Term Credit Quality. Good intrinsic capacity for timely payment of financial commitments.

**F3:** Fair Short-Term Credit Quality. The intrinsic capacity for timely payment of financial commitments is adequate.

**B:** Speculative Short-Term Credit Quality. Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions.

**C:** High Short-Term Default Risk. Default is a real possibility.

**RD:** Restricted Default. Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Typically applicable to entity ratings only.

**D:** Default. Indicates a broad-based default event for an entity, or the default of a short-term obligation.

*Note*: The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. For the short-term rating category of 'F1', a '+' may be appended.

**B-4**

------

[Back To **Table of Contents**](#TOC_15545)

(This page intentionally left blank)

------

[Back To **Table of Contents**](#TOC_15545)

(This page intentionally left blank)

------

**MORGAN STANLEY INSTITUTIONAL FUND TRUST**

**PART C**

**OTHER INFORMATION**

**ITEM 28.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits**

(a) [Amended and Restated Declaration of Trust, dated August 24, 2006, is incorporated by reference to Exhibit (a) of Post- Effective Amendment No. 70 to the Registration Statement on Form N-1A, as filed on November 30, 2006.](https://www.sec.gov/Archives/edgar/data/741375/000119312506244607/dex99a.htm)

(b) [Amended and Restated By-Laws, dated July 31, 2003, are incorporated by reference to Exhibit (b)(5) of Post-Effective Amendment No. 61 to the Registration Statement on Form N-1A, as filed on December 10, 2003.](https://www.sec.gov/Archives/edgar/data/741375/000119312503092182/dex99b5.txt)

(c) Not Applicable.

(d) (1) [Amended and Restated Investment Advisory Agreement with Morgan Stanley Investment Management Inc., dated June 1, 2005, is incorporated by reference to Exhibit (d)(1) of Post-Effective Amendment No. 216 to the Registration Statement on Form N-1A, as filed on March 16, 2021.](https://www.sec.gov/Archives/edgar/data/741375/000113322821001347/msift-html3432_ex99d1.htm)

(2) [Sub-Advisory Agreement, dated September 17, 2014, between Morgan Stanley Investment Management Inc. and Morgan Stanley Investment Management Limited (relating to the Global Strategist Portfolio), is incorporated by reference to Exhibit (d)(2) of Post-Effective Amendment No. 204 to the Registration Statement on Form N-1A, as filed on January 28, 2020.](https://www.sec.gov/Archives/edgar/data/741375/000113322820000261/msift-html1933_ex99d2.htm)

(e) [Distribution Agreement with MAS Fund Distribution, Inc. (now Morgan Stanley Distribution, Inc.), dated May 31, 1997, is incorporated by reference to Exhibit 6(b) of Post-Effective Amendment No. 50 to the Registration Statement on Form N-1A, as filed on July 10, 1998.](https://www.sec.gov/Archives/edgar/data/741375/0000950116-98-001475.txt)

(f) [Form of Deferred Compensation Plan, is incorporated by reference to Exhibit (f) of Post-Effective Amendment No. 88 to the Registration Statement on Form N-1A, as filed on January 28, 2009.](https://www.sec.gov/Archives/edgar/data/741375/000093041309000530/c53034_ex99-f.htm)

(g) [Custodian Contract between Registrant and State Street Bank and Trust Company, dated March 7, 2008, is incorporated by reference to Exhibit (g) of Post-Effective Amendment No. 216 to the Registration Statement on Form N-1A, as filed on March 16, 2021.](https://www.sec.gov/Archives/edgar/data/741375/000113322821001347/msift-html3432_ex99g.htm)

(h) (1) [Amended and Restated Administration Agreement with Morgan Stanley Investment Management Inc., dated December 30, 2021, filed herein.](msift-html5938_ex99h1.htm)

(2) [Transfer Agency and Service Agreement with Boston Financial Data Services, Inc., dated April 1, 2013, is incorporated by reference to Exhibit (h)(2) of Post-Effective Amendment No. 216 to the Registration Statement on Form N-1A, as filed on March 16, 2021.](https://www.sec.gov/Archives/edgar/data/741375/000113322821001347/msift-html3432_ex99h2.htm)

(3) [Amendment to the Transfer Agency and Service Agreement with Boston Financial Data Services, Inc., dated July 1, 2013, is incorporated herein by reference to Exhibit (h)(2) of Post-Effective Amendment No. 34 to the Registration Statement on Form N-1A of Morgan Stanley Limited Duration U.S. Government Trust, as filed on September 26, 2014.](https://www.sec.gov/Archives/edgar/data/876162/000110465914068543/a14-20455_1ex99dh2.htm)

(4) [Call Center and Transfer Agency Services Amendment, dated January 11, 2016, to the Administration Agreement, dated November 1, 2004, between the Registrant and Morgan Stanley Investment Management Inc., is incorporated herein by reference to Exhibit (h)(4) of Post-Effective Amendment No. 147 to the Registration Statement on Form N-1A, as filed on January 28, 2016.](https://www.sec.gov/Archives/edgar/data/741375/000110465916092141/a15-24312_1ex99dh4.htm)

(5) [Fee Waiver Agreement between the Registrant (relating to Global Multi-Asset Income Portfolio) and Morgan Stanley Investment Management Inc., is incorporated by reference to Exhibit (h)(5) of Post-Effective Amendment No. 150 to the Registration Statement on Form N-1A, as filed on August 26, 2016.](https://www.sec.gov/Archives/edgar/data/741375/000110465916141689/a16-13037_1ex99dh5.htm)

(6) [<u>Form of Appointment of Agent for Service of Process relating to Global Multi-Asset Income Cayman Portfolio, Ltd., is incorporated by reference to Exhibit (h)(6) of Post-Effective Amendment No. 150 to the Registration Statement on Form N-1A, as filed on August 26, 2016.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465916141689/a16-13037_1ex99dh6.htm)

(7) [<u>Fee Waiver Agreement between the Registrant (relating to Global Strategist Portfolio) and Morgan Stanley Investment Management Inc., is incorporated by reference to Exhibit (h)(7) of Post-Effective Amendment No. 150 to the Registration Statement on Form N-1A, as filed on August 26, 2016.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465916141689/a16-13037_1ex99dh7.htm)

(8) [<u>Form of Appointment of Agent for Service of Process relating to Global Strategist Cayman Portfolio, Ltd., is incorporated by reference to Exhibit (h)(8) of Post-Effective Amendment No. 150 to the Registration Statement on Form N-1A, as filed on August 26, 2016.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465916141689/a16-13037_1ex99dh8.htm)

(9) [<u>Amendment to the Transfer Agency and Service Agreement with Boston Financial Data Services, Inc., dated May 23, 2017, is incorporated herein by reference to Exhibit (h)(4) of Post-Effective Amendment No. 33 to the Registration Statement on Form N-1A of Active Assets Prime Trust, as filed on October 27, 2017.</u>](https://www.sec.gov/Archives/edgar/data/1096962/000113322817006271/h10047582_ex99h4.htm)

(10) [<u>Addendum to the Transfer Agency and Service Agreement with Boston Financial Data Services, Inc., dated October 5, 2017, is incorporated herein by reference to Exhibit (h)(5) of Post-Effective Amendment No. 33 to the Registration Statement on Form N-1A of Active Assets Prime Trust, as filed on October 27, 2017.</u>](https://www.sec.gov/Archives/edgar/data/1096962/000113322817006271/h10047582_ex99h5.htm)

(11) [Call Center and Transfer Agency Services Amendment, dated November 28, 2022, to the Amended and Restated Administration Agreement with Morgan Stanley Investment Management Inc., dated December 30, 2021, filed herein.](msift-html5938_ex99h11.htm)

(12) [Amendment to the Transfer Agency and Service Agreement with DST Asset Manager Solutions, Inc., dated November 28, 2022, filed herein.](msift-html5938_ex99h12.htm)

(i) (1) [<u>Opinion of Morgan, Lewis & Bockius LLP, dated January 28, 2005, is incorporated by reference to Exhibit (i)(1) of Post-Effective Amendment No. 64 to the Registration Statement on Form N-1A, as filed on January 28, 2005.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312505014068/dex99i1.htm)

(2) [<u>Opinion of Clifford Chance US LLP, dated January 28, 2005, is incorporated by reference to Exhibit (i)(2) of Post-Effective Amendment No. 64 to the Registration Statement on Form N-1A, as filed on January 28, 2005.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312505014068/dex99i2.htm)

(3) [<u>Opinion of Morgan, Lewis & Bockius LLP, dated April 26, 2006 (with respect to the Equities Plus Portfolio), is incorporated by reference to Exhibit (i)(1) of Post-Effective Amendment No. 67 to the Registration Statement on Form N-1A, as filed on April 26, 2006.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312506089518/dex99i1.htm)

(4) [<u>Opinion of Clifford Chance US LLP, dated April 26, 2006 (with respect to the Equities Plus Portfolio), is incorporated by reference to Exhibit (i)(2) of Post-Effective Amendment No. 67 to the Registration Statement on Form N-1A, as filed on April 26, 2006.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312506089518/dex99i2.htm)

(5) [<u>Opinion of Morgan, Lewis & Bockius LLP, dated July 19, 2006 (with respect to the Long Duration Fixed Income Portfolio), is incorporated by reference to Exhibit (i)(1) of Post-Effective Amendment No. 69 to the Registration Statement on Form N-1A, as filed on July 19, 2006.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312506149297/dex99i1.htm)

(6) [<u>Opinion of Clifford Chance US LLP, dated July 19, 2006 (with respect to the Long Duration Fixed Income Portfolio), is incorporated by reference to Exhibit (i)(2) of Post-Effective Amendment No. 69 to the Registration Statement on Form N-1A, as filed on July 19, 2006.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312506149297/dex99i2.htm)

(7) [<u>Opinion of Morgan, Lewis & Bockius LLP, dated December 21, 2007 (with respect to Class H Shares), is incorporated by reference to Exhibit (i)(7) of Post-Effective Amendment No. 81 to the Registration Statement on Form N-1A, as filed on December 21, 2007.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312507270265/dex99i7.htm)

(8) [<u>Opinion of Clifford Chance US LLP, dated December 21, 2007 (with respect to Class H Shares), is incorporated by reference to Exhibit (i)(8) of Post-Effective Amendment No. 81 to the Registration Statement on Form N-1A, as filed on December 21, 2007.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312507270265/dex99i8.htm)

(9) [<u>Opinion of Morgan, Lewis & Bockius LLP, dated January 30, 2008 (with respect to the Advisory Portfolio II), is incorporated by reference to Exhibit (i)(9) of Post-Effective Amendment No. 82 to the Registration Statement on Form N-1A, as filed on January 30, 2008.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312508015568/dex99i9.htm)

(10) [<u>Opinion of Clifford Chance US LLP, dated January 30, 2008 (with respect to the Advisory Portfolio II) is incorporated by reference to Exhibit (i)(10) of Post-Effective Amendment No. 82 to the Registration Statement on Form N-1A, as filed on January 30, 2008.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312508015568/dex99i10.htm)

(11) [<u>Opinion of Morgan, Lewis & Bockius, dated June 3, 2008 (with respect to Class L Shares), is incorporated by reference to Exhibit (i)(11) of Post-Effective Amendment No. 85 to the Registration Statement on Form N-1A, as filed on June 3, 2008.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312508127479/dex99i11.htm)

(12) [<u>Opinion of Clifford Chance US LLP, dated June 3, 2008 (with respect to Class L Shares), is incorporated by reference to Exhibit (i)(12) of Post-Effective Amendment No. 85 to the Registration Statement on Form N-1A, as filed on June 3, 2008.</u>](https://www.sec.gov/Archives/edgar/data/741375/000119312508127479/dex99i12.htm)

(13) [<u>Opinion of Morgan, Lewis & Bockius LLP, dated August 12, 2008 (with respect to the Advisory Portfolio V), is incorporated by reference to Exhibit (i)(11) of Post-Effective Amendment No. 87 to the Registration Statement on Form N-1A, as filed on August 12, 2008.</u>](https://www.sec.gov/Archives/edgar/data/741375/000093041308004825/c52951_ex99-i11.htm)

(14) [<u>Opinion of Clifford Chance US LLP, dated August 12, 2008 (with respect to the Advisory Portfolio V), is incorporated by reference to Exhibit (i)(12) of Post-Effective Amendment No. 87 to the Registration Statement on Form N-1A, as filed on August 12, 2008.</u>](https://www.sec.gov/Archives/edgar/data/741375/000093041308004825/c52951_ex99-i12.htm)

(15) [<u>Opinion and Consent of Dechert LLP, dated February 6, 2012 (with respect to the High Yield Portfolio), is incorporated by reference to Exhibit (i)(16) of Post-Effective Amendment No. 100 to the Registration Statement on Form N-1A, as filed on February 6, 2012.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465912006974/a11-28850_1ex99di16.htm)

(16) [<u>Opinion and Consent of Dechert LLP, dated April 27, 2012 (with respect to Class H and Class L shares of the Balanced, Core Fixed Income, Core Plus Fixed Income, Limited Duration and Mid Cap Growth Portfolios), is incorporated by reference to Exhibit (i)(16) of Post-Effective Amendment No. 104 to the Registration Statement on Form N-1A, as filed on April 27, 2012.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465912029743/a12-4593_1ex99di16.htm)

(17) [<u>Opinion and Consent of Dechert LLP, dated July 12, 2013 (with respect to Class IS shares of the Mid Cap Growth Portfolio), is incorporated by reference to Exhibit (i)(17) of Post-Effective Amendment No. 112 to the Registration Statement on Form N-1A, as filed on July 12, 2013.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465913054218/a13-9653_1ex99di17.htm)

(18) [<u>Opinion and Consent of Dechert LLP, dated March 25, 2014 (with respect to Class IS shares of the High Yield Portfolio), is incorporated herein by reference to Exhibit (i)(18) of Post-Effective Amendment No. 118 to the Registration Statement on Form N-1A, as filed on March 25, 2014.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465914022619/a13-25088_1ex99di18.htm)

(19) [<u>Opinion and Consent of Dechert LLP, dated March 25, 2014 (with respect to the Strategic Income Portfolio), is incorporated herein by reference to Exhibit (i)(19) of Post-Effective Amendment No. 121 to the Registration Statement on Form N-1A, as filed on December 2, 2014.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465914084391/a14-18482_1ex99di19.htm)

(20) [<u>Opinion and Consent of Dechert LLP (with respect to the Global Multi-Asset Income Portfolio), is incorporated herein by reference to Exhibit (i)(20) of Post-Effective Amendment No. 127 to the Registration Statement on Form N-1A, as filed on March 4, 2015.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465915016750/a14-24968_1ex99di20.htm)

(21) [<u>Opinion and Consent of Dechert LLP, dated April 28, 2015 (with respect to Class C shares of the Core Fixed Income, Core Plus Fixed Income, Corporate Bond, Global Strategist, High Yield, Limited Duration, Mid Cap Growth and Strategic Income Portfolios), is incorporated herein by reference to Exhibit (i)(21) of Post-Effective Amendment No. 131 to the Registration Statement on Form N-1A, as filed on April 28, 2015.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465915031092/a15-4210_1ex99di21.htm)

(22) [<u>Opinion and Consent of Dechert LLP, dated May 5, 2015 (with respect to Class C shares of the Global Multi-Asset Income Portfolio), of incorporated herein by reference to Exhibit (i)(22) of Post-Effective Amendment No. 132 to the Registration Statement on Form N-1A, as filed on May 5, 2015.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465915034340/a15-5796_1ex99di22.htm)

(23) [<u>Opinion and Consent of Dechert LLP (with respect to Class IS shares of the Global Strategist Portfolio), is incorporated herein by reference to Exhibit (i)(23) of Post-Effective Amendment No. 133 to the Registration Statement on Form N-1A, as filed on May 12, 2015.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465915037335/a15-4059_1ex99di23.htm)

(24) [<u>Opinion and Consent of Dechert LLP (with respect to the Ultra-Short Income Portfolio), is incorporated herein by reference to Exhibit (i)(24) of Post-Effective Amendment No. 142 to the Registration Statement on Form N-1A, as filed on December 11, 2015.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465915084395/a15-19083_1ex99di24.htm)

(25) [<u>Opinion and Consent of Dechert LLP (with respect to Class IS shares of the Short Duration Income Portfolio), is incorporated herein by reference to Exhibit (i)(25) of Post-Effective Amendment No. 145 to the Registration Statement on Form N-1A, as filed on January 8, 2016.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465916088889/a15-13744_1ex99di25.htm)

(26) [<u>Opinion and Consent of Dechert LLP (with respect to Class IS shares of the Core Plus Fixed Income Portfolio and Class IR shares of the High Yield Portfolio), is incorporated herein by reference to Exhibit (i)(26) of Post-Effective Amendment No. 188 to the Registration Statement on Form N-1A, as filed on June 7, 2018.</u>](https://www.sec.gov/Archives/edgar/data/741375/000113322818003694/e495078_ex99-i26.htm)

(27) [<u>Opinion and Consent of Dechert LLP (with respect to the Ultra-Short Municipal Income Portfolio), is incorporated herein by reference to Exhibit (i)(27) of Post-Effective Amendment No. 191 to the Registration Statement on Form N-1A, as filed on December 19, 2018.</u>](https://www.sec.gov/Archives/edgar/data/741375/000113322818006724/html695_ex99-i27.htm)

(28) [<u>Opinion and Consent of Dechert LLP (with respect to the Liquid Assets Prime Portfolio), is incorporated herein by reference to Exhibit (i)(28) of Post-Effective Amendment No. 196 to the Registration Statement on Form N-1A, as filed on May 15, 2019.</u>](https://www.sec.gov/Archives/edgar/data/741375/000113322819003438/msift-html1230_ex99i28.htm)

(29) [<u>Opinion and Consent of Dechert LLP (with respect to the Senior Loan Portfolio), is incorporated herein by reference to Exhibit (i)(29) of Post-Effective Amendment No. 202 to the Registration Statement on Form N-1A, as filed on December 23, 2019.</u>](https://www.sec.gov/Archives/edgar/data/741375/000113322819007059/msift-html1858_ex99i29.htm)

(30) [<u>Opinion and Consent of Dechert LLP (with respect to the Intermediate Municipal Income and Municipal Income Portfolios), is incorporated herein by reference to Exhibit (i)(30) of Post-Effective Amendment No. 209 to the Registration Statement on Form N-1A, as filed on September 28, 2020.</u>](https://www.sec.gov/Archives/edgar/data/741375/000113322820006485/msift-html3012_ex99i30.htm)

(31) [<u>Opinion and Consent of Dechert LLP (with respect to Class W shares of High Yield Portfolio), is incorporated herein by reference to Exhibit (i)(31) of Post-Effective Amendment No. 213 to the Registration Statement on Form N-1A, as filed on November 13, 2020.</u>](https://www.sec.gov/Archives/edgar/data/741375/000113322820007266/msift-html3078_ex99i30.htm)

(32) [Opinion and Consent of Dechert LLP (with respect to Dynamic Value Portfolio), is incorporated herein by reference to Exhibit (i)(31) of Post-Effective Amendment No. 216 to the Registration Statement on Form N-1A, as filed on March 16, 2021.](https://www.sec.gov/Archives/edgar/data/741375/000113322821001347/msift-html3432_ex99i32.htm)

(33) [Consent of Dechert LLP, filed herein.](msift-html5938_ex99i33.htm)

(j) [Consent of Independent Registered Public Accounting Firm, filed herein.](msift-html5938_ex99j.htm)

(k) Not Applicable.

(l) Not Applicable.

(m) (1) [<u>Amended and Restated Shareholder Services Plan under Rule 12b-1 relating to Class A Shares, is incorporated herein by reference to Exhibit (m)(1) of Post-Effective Amendment No. 216 to the Registration Statement on Form N-1A, as filed on March 16, 2021.</u>](https://www.sec.gov/Archives/edgar/data/741375/000113322821001347/msift-html3432_ex99m1.htm)

(2) [<u>Amended and Restated Distribution and Shareholder Services Plan under Rule 12b-1 relating to Class L shares, is incorporated herein by reference to Exhibit (m)(2) of Post-Effective Amendment No. 127 to the Registration Statement on Form N-1A, as filed on March 4, 2015.</u>](https://www.sec.gov/Archives/edgar/data/741375/000110465915016750/a14-24968_1ex99dm2.htm)

(3) [Distribution and Shareholder Services Plan under Rule 12b-1 relating to Class C shares, is incorporated herein by reference to Exhibit (m)(3) of Post-Effective Amendment No. 216 to the Registration Statement on Form N-1A, as filed on March 16, 2021.](https://www.sec.gov/Archives/edgar/data/741375/000113322821001347/msift-html3432_ex99m3.htm)

(4) [Amended and Restated Shareholder Services Plan relating to Institutional Class shares, is incorporated by reference to Exhibit (m)(4) of Post-Effective Amendment No. 196 to the Registration Statement on Form N-1A, as filed on May 15, 2019.](https://www.sec.gov/Archives/edgar/data/741375/000113322819003438/msift-html1230_ex99m4.htm)

(n) [<u>Amended and Restated Rule 18f-3 Multiple Class Plan, is incorporated herein by reference to Exhibit (n) of Post-Effective Amendment No. 216 to the Registration Statement on Form N-1A, as filed on March 16, 2021.</u>](https://www.sec.gov/Archives/edgar/data/741375/000113322821001347/msift-html3432_ex99n.htm)

(o) Reserved.

(p) (1) [Code of Ethics for Morgan Stanley Investment Management, dated December 15, 2022, is incorporated herein by reference to Pre-Effective Amendment No. 5 to the Registration Statement on Form N-1A of Morgan Stanley ETF Trust, as filed on January 20, 2023.](https://www.sec.gov/ix?doc=/Archives/edgar/data/1676326/000113322823000143/msetf-html5909_ex99p1.htm)

(2) [<u>Code of Ethics for Morgan Stanley Funds, dated December 2021, is incorporated herein by reference to Exhibit (p)(2) to Post-Effective Amendment No. 250 to the Registration Statement on Form N-1A of Morgan Stanley Institutional Fund, Inc., filed on December 21, 2021.</u>](https://www.sec.gov/Archives/edgar/data/836487/000113322821006096/msif-html4214_ex99p2.htm)

(q) [Powers of Attorney of Trustees, dated September 28, 2022, is incorporated herein by reference to Exhibit (q) of Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A of Morgan Stanley ETF Trust, as filed on November 17, 2022](https://www.sec.gov/Archives/edgar/data/1676326/000113322822007179/msetft-html5652_ex99q.htm) .

**ITEM 29. Persons Controlled by or Under Common Control with the Fund**

&nbsp;&nbsp;&nbsp;&nbsp;None.

**ITEM 30. Indemnification**

Reference is made to Article VI of Registrant's Amended and Restated By-Laws, dated July 31, 2003, which is incorporated by reference.

Registrant hereby also makes the undertaking consistent with Rule 484 under the Securities Act of 1933, as amended.

The Trust shall indemnify each of its Trustees and officers (including persons who serve at the Trust's request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise) (hereinafter referred to as a "Covered Person") against all liabilities and expenses, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees reasonably incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, or whether by or in the right of the Trust, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such person may be or may have been threatened, while in office or thereafter, by reason of any alleged act or omission as a Trustee or officer, except with respect to any matter as to which such Covered Person shall have been finally adjudicated in any such action, suit or other proceeding not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interest of the Trust and except that no Covered Person shall be indemnified against any liability to the Trust or its Shareholders to which such Covered Person would otherwise be subject by reason of self-dealing, willful misconduct or recklessness. Expenses, including counsel fees so incurred by any such Covered Person, may be paid from time to time by the Trust in advance of the final disposition of any such action, suit or proceeding on the condition that the amounts so paid shall

be repaid to the Trust if it is ultimately determined that indemnification of such expenses is not authorized under this Article.

**ITEM 31. Business and Other Connections of Investment Adviser**

Describe any other business, profession, vocation or employment of a substantial nature in which the investment adviser and each director, officer or partner of the investment adviser, is or has been, engaged within the last two fiscal years for his or her own account or in the capacity of director, officer, employee, partner or trustee. (Disclose the name and principal business address of any company for which a person listed below serves in the capacity of director, officer, employee, partner or trustee, and the nature of the relationship.)

See "Fund Management" in the Prospectus regarding the business of the investment adviser. The following information is given regarding directors and officers of Morgan Stanley Investment Management Inc. Morgan Stanley Investment Management Inc. is a wholly-owned subsidiary of Morgan Stanley.

Set forth below is the name and principal business address of each company for which directors or officers of Morgan Stanley Investment Management Inc. serve as directors, officers or employees:

**Morgan Stanley Investment Management Inc.**

**Morgan Stanley Distribution, Inc.**

**Morgan Stanley Services Company Inc.**

522 Fifth Avenue, New York, NY 10036

Listed below as of December 31, 2022 are the officers and Directors of Morgan Stanley Investment Management Inc.:

---

| | |
|:---|:---|
| **NAME AND POSITION WITH**<br>**MORGAN STANLEY INVESTMENT MANAGEMENT INC.** | **OTHER SUBSTANTIAL BUSINESS,**<br>**PROFESSION OR VOCATION** |
| Dan Simkowitz<br> Managing Director and President | Managing Director of Morgan Stanley. |
| Stefanie V. Chang Yu<br> Managing Director, Secretary and General Counsel | Managing Director and Secretary of other entities affiliated with the Adviser. |
| Tom Torrisi <br> Managing Director and Chief Compliance Officer |  |
| Jeannine Ali<br> Managing Director and Chief Financial Officer |  |
| John Hagarty<br> Managing Director and Director |  |
| Anita Rios |  |
| Executive Director and Treasurer |  |
| Ken Topping<br> Managing Director and Director |  |
| Anton Kuzmanov<br> Managing Director and Director |  |
| Tatiana Segal<br> Managing Director and Director |  |
| Jared P. Wong<br> Executive Director and Chief Anti-Money Laundering Officer | Executive Director and Anti-Money Laundering Officer of Morgan Stanley Distribution, Inc. and Morgan Stanley Services Company, Inc. |

---

For information as to the business, profession, vocation or employment of a substantial nature of additional officers of the Adviser, reference is made to the Adviser's current Form ADV (File No. 801-15757) filed under the Investment Advisers Act of 1940, incorporated herein by reference.

**ITEM 32. Principal Underwriters**

(a) Morgan Stanley Distribution, Inc., a Delaware corporation, is the principal underwriter of the Registrant. Morgan Stanley Distribution, Inc. is also the principal underwriter of the following investment companies:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

(1)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley California Tax-Free Daily Income Trust

(2)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley Europe Opportunity Fund Inc.

(3)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley Global Fixed Income Opportunities Fund

(4)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley Insight Fund

(5)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley Institutional Fund, Inc.

(6)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley Institutional Liquidity Funds

(7)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley Mortgage Securities Trust

(8)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley Tax-Free Daily Income Trust

(9)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley U.S. Government Money Market Trust

(10)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley U.S. Government Securities Trust

(11)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley Variable Insurance Fund, Inc.

(12)&nbsp;&nbsp;&nbsp;&nbsp; Morgan Stanley Variable Investment Series

(b) The following information is given as of December 31, 2022 regarding directors and officers of Morgan Stanley Distribution, Inc. The principal address of Morgan Stanley Distribution, Inc. is 522 Fifth Avenue, New York, NY 10036.

---

| | | |
|:---|:---|:---|
| **NAME AND PRINCIPAL BUSINESS**<br>**ADDRESS** | **POSITIONS AND OFFICES WITH**<br>**UNDERWRITER** | **POSITIONS AND OFFICES WITH**<br>**REGISTRANT** |
| Matthew J. Witkos | President | None |
| David Smith | Chief Compliance Officer | None |
| Jared P. Wong | Chief Anti-Money Laundering Officer | None |
| Stefanie V. Chang Yu | General Counsel | None |
| Jacques Chappuis | Managing Director | None |
| Jeffrey Corso | Managing Director | None |
| Frank J Famiglietti | Managing Director | None |
| Frederick McMullen | Managing Director | None |
| Samantha Schoen | Managing Director | None |
| Brian Taranto | Managing Director | None |
| Kristin Carcio | Executive Director | None |
| Anita Rios | Treasurer | None |
| Luis Castello | Assistant Treasurer | None |
| John Crowe | Principal Financial Officer and Financial and Operations Principal | None |
| Aaron Guth | Assistant Secretary | None |
| Lawrence L. Fahey | Principal Operations Officer | None |
| Erick Lopez | Deputy Anti-Money Laundering Officer | None |

---

(c) Not applicable.

**ITEM 33. Location of Accounts and Records**

State the name and address of each person maintaining physical possession of each account, book, or other document required to be maintained by section 31(a) [15 U.S.C. 80a-30(a)] and the rules under that section.

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111

(records relating to its function as custodian and sub-administrator)

SS&C Global Investor and Distribution Solutions, Inc.

2000 Crown Colony Drive

Quincy, MA 02169-0953

(records relating to its functions as transfer agent and dividend disbursing agent)

Morgan Stanley Investment Management Inc.

1633 Broadway

New York, NY 10019

(records relating to its function as investment adviser and administrator)

Morgan Stanley Investment Management Inc.

522 Fifth Avenue

New York, NY 10036

(records relating to its function as investment adviser and administrator)

**ITEM 34. Management Services**

Registrant is not a party to any such management-related service contract.

**ITEM 35. Undertakings**

None.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the 27th day of January, 2023.

---

| | |
|:---|:---|
| MORGAN STANLEY INSTITUTIONAL FUND TRUST | MORGAN STANLEY INSTITUTIONAL FUND TRUST |
| By: | /s/ John H. Gernon |
|  | John H. Gernon |
|  | President and Principal Executive Officer |

---

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 218 has been signed below by the following persons in the capacities and on the dates indicated.

---

| | | | |
|:---|:---|:---|:---|
| **Signatures** | **Signatures** | **Title** | **Date** |
| (1) Principal Executive Officer |  | President and Principal Executive Officer |  |
| /s/ John H. Gernon | /s/ John H. Gernon |  | January 27, 2023 |
| John H. Gernon |  |  |  |
| (2) Principal Financial Officer |  | Principal Financial Officer |  |
| /s/ Francis J. Smith | /s/ Francis J. Smith |  | January 27, 2023 |
| Francis J. Smith |  |  |  |
| (3) Majority of the Trustees |  |  |  |
| Independent Trustees |  |  |  |
| Frank L. Bowman | Dr. Manuel H. Johnson | Dr. Manuel H. Johnson |  |
| Frances L. Cashman | Joseph J. Kearns | Joseph J. Kearns |  |
| Kathleen A. Dennis | Michael F. Klein | Michael F. Klein |  |
| Nancy C. Everett | Patricia A. Maleski | Patricia A. Maleski |  |
| Eddie A. Grier | W. Allen Reed (Chairman) | W. Allen Reed (Chairman) |  |
| Jakki L. Haussler |  |  |  |
| /s/ Carl Frischling |  |  | January 27, 2023 |
| Carl Frischling |  |  |  |
| Attorney-in-Fact for the Independent Trustees | Attorney-in-Fact for the Independent Trustees | Attorney-in-Fact for the Independent Trustees |  |

---

EXHIBIT INDEX

MORGAN STANLEY INSTITUTIONAL FUND TRUST

---

| | |
|:---|:---|
| (h)(1) | [Amended and Restated Administration Agreement with Morgan Stanley Investment Management Inc., dated December 30, 2021.](msift-html5938_ex99h1.htm) |
| (h)(11) | [Call Center and Transfer Agency Services Amendment, dated November 28, 2022, to the Amended and Restated Administration Agreement with Morgan Stanley Investment Management Inc., dated December 30, 2021.](msift-html5938_ex99h11.htm) |
| (h)(12) | [Amendment to the Transfer Agency and Service Agreement with DST Asset Manager Solutions, Inc., dated November 28, 2022.](msift-html5938_ex99h12.htm) |
| (i)(33) | [Consent of Dechert LLP.](msift-html5938_ex99i33.htm) |
| (j) | [Consent of Independent Registered Public Accounting Firm.](msift-html5938_ex99j.htm) |
| EX-101.INS | XBRL Instance Document |
| EX-101.SCH | XBRL Taxonomy Extension Schema Document |
| EX-101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
| EX-101.DEF | XBRL Taxonomy Extension Definition Linkbase |
| EX-101.LAB | XBRL Taxonomy Extension Labels Linkbase |
| EX-101.PRE | XBRL Taxonomy Extension Presentation Linkbase |

---

## Ex-99.(H)(1)

**Exhibit (h)(1)**

**AMENDED AND RESTATED ADMINISTRATION AGREEMENT**

AMENDED AND RESTATED ADMINISTRATION AGREEMENT made as of this 30th day of March, 2021, by and between Morgan Stanley Institutional Fund Trust, a Pennsylvania business trust (the "Fund"), and Morgan Stanley Investment Management Inc., a Delaware corporation ("MSIM").

**WITNESSETH:**

WHEREAS, the Fund is an open-end, management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Fund entered into an Administration Agreement to provide certain administrative and other services with Miller Anderson & Sherrerd, LLP (to which MSIM succeeded), effective as of January 3, 1996, as amended (the "Current Administration Agreement"); and

WHEREAS, the Fund wishes to retain MSIM to provide administration and fund accounting services with respect to the Fund and MSIM is willing to furnish such services; and

WHEREAS, as of November 1, 2004, the Current Administration Agreement was amended and restated (the "Amended Administration Agreement"), in its entirety, to remove the provisions related to dividend disbursing and shareholder communication services; and

WHEREAS, as of August 26, 2016, the Amended Administration Agreement was amended and restated (the "First Amended Administration Agreement"), in its entirety, to revise Schedule A; and

WHEREAS, this Agreement amends and restates, in its entirety, the First Amended Administration Agreement as set forth below.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Additional Funds</u> 

All references in this Agreement to "Cayman Funds" shall be deemed to apply to the subsidiary funds listed in Schedule C attached hereto. All references in this Agreement to "Portfolio" shall be deemed to apply to the series of the Fund listed in Schedule A attached hereto and the Cayman Funds, as applicable. The Cayman Funds are each an exempted company incorporated and existing under the laws of the Cayman Islands, and each has been established as a wholly-owned subsidiary of the applicable Portfolio, as listed in Schedule C.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Appointment of MSIM</u> 

The Fund hereby appoints the Administrator to provide administration and fund accounting services to each series of the Fund identified on Schedule A hereto (each a "Portfolio" and, collectively, the "Portfolios"), subject to the supervision of the Board of Trustees of the Fund (the "Board"), for the period and on the terms set forth in this Agreement. In connection therewith, MSIM accepts such appointment and agrees to render the services and provide, at its own expense, the office space, furnishings and equipment and the personnel required by it to perform the services on the terms and for the compensation herein provided. The Fund shall notify MSIM in writing of each additional Portfolio established by the Fund. Each new Portfolio shall be subject to the provisions of this Agreement, except to the extent that the provisions (including those relating to the compensation and expenses payable by the Fund) may be modified with respect to such new Portfolio in writing by the Fund and MSIM at the time of the addition of the new Portfolio. The parties hereto agree that MSIM may render and provide the services described herein directly or through the services of third parties.

In connection with such appointment, the Fund has delivered or will deliver to MSIM copies of each of the following documents and will deliver to it all future amendments and supplements, if any:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Certified copies of the Articles of Incorporation of the Fund as presently in effect and as amended from time to time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A certified copy of the Fund's By-Laws as presently in effect as amended from time to time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A copy of the resolution of the Fund's Board of Directors authorizing this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Fund's registration statement on Form N-1A as filed with, and declared effective by, the U.S. Securities and Exchange Commission ("SEC"), and all amendments thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Certified copies of the resolutions of the Fund's Board of Directors authorizing: (1) certain persons to give instructions to the Fund's Custodian pursuant to the Corporate Custody Agreement and (2) certain persons to sign checks and pay expenses on behalf of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) A copy of the Investment Advisory Agreement dated October 1, 1988 between the Fund and Morgan Stanley Investment Management Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) A copy of the Corporate Custody Agreement dated October 1, 1988 between the Fund and The Morgan Guaranty Trust Company of New York.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Such other certificates, documents or opinions which MSIM may, in its reasonable discretion, deem necessary or appropriate in the proper performance of its duties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Representation and Warranties of MSIM</u> 

MSIM represents and warrants to the Fund that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) It is a corporation, duly organized and existing in good standing under the laws of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) It is duly qualified to carry on its business in the State of New York.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) It is empowered under applicable laws and by its Articles of Incorporation and

By-Laws to enter into and perform the services contemplated in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) It has and will continue to have and maintain, directly or through third parties, the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Services Provided by MSIM</u> 

MSIM shall discharge, directly, or through third parties, the following responsibilities subject to the control of the Fund's Board of Directors, and in compliance with the objectives, policies and limitations set forth in the Fund's registration statement, By-Laws and applicable laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>General Administration</u>. Under the direction of the Fund's Board of Directors, MSIM shall manage, administer, and conduct all of the general business activities of the Fund other than those which have been contracted to third parties by the Fund, and shall, directly or through third

parties, provide the personnel and facilities necessary to perform such general business activities under the supervision of the Fund's Board of Directors and Executive Officers. In addition, MSIM shall oversee the performance of administrative and professional services rendered to the Fund by others.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Accounting</u>. MSIM shall, directly or through third parties, provide the following accounting services to the Fund:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Maintenance of the books and records and accounting controls for the Fund's assets, including records of all securities transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Daily calculation of the net asset value for each of the Fund's Portfolios;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Accounting for dividends and interest received and distributions made by each of the Fund's Portfolios;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Preparation and filing of the Fund's U.S. tax returns and annual and semi-annual reports;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The production of transaction data, financial reports and such other periodic and special reports as the Board of Directors of the Fund may reasonably request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The preparation of financial statements for the annual and semi-annual reports and other shareholder communications;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Liaison with the Fund's independent registered public accounting firms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Monitoring and administration of arrangements with the Fund's custodian and depository banks; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Maintenance of (but not the payment for) the Fidelity Bond required to be maintained under the 1940 Act and preparation of the filings required in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Call Center and Transfer Agency Services.</u> Subject to the terms and conditions set forth in this Agreement, the Fund hereby engages and appoints the Administrator to provide, and the Administrator agrees to provide, the following call center services and related transfer agency services for certain Portfolios of the Fund, and such additional call center and related transfer agency services as may be mutually agreed in writing by the Fund and the Administrator (collectively, the "Services"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Administrator shall maintain a unit to provide call center services for the Fund. This unit will provide coverage each day during which the Fund is open. The Administrator will adjust the staffing of call center unit from time to time based upon existing call center volume.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The call center unit described in paragraph (i) above will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Answer and respond to inquiries from existing shareholders, prospective shareholders of the Fund and broker-dealers on behalf of such shareholders, such inquiries may include, but are not limited to, requests for information on account set-up and maintenance, general questions regarding the operation of the Fund, general account information including dates of purchases, redemptions, exchanges and account balances, requests for account access instructions and literature requests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Process orders for purchase, exchange and/or redemption of Fund shares received by the call center in accordance with the Fund's current registration statement, including the entering of any such orders received by the call center into systems designated by the Fund for official recording on the books and records of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Administrator shall be permitted to act upon any instruction of any person by telephone reasonably believed to be genuine to redeem exchange and/or transfer Fund shares from any account for which such telephone transactions has been authorized by a shareholder. In accordance with Section 6 herein, the Fund hereby agrees to indemnify and hold the Administrator or its affiliates harmless against all losses costs or expenses, including attorney's fees, suffered or incurred by the Administrator or its affiliates directly or indirectly as a result of (i) taping the telephone conversation of any shareholder; and (ii) relying on telephone instructions of any person acting on behalf of a shareholder account for which telephone services have been authorized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) To the extent required by applicable law, the Administrator, or any affiliate of the Administrator performing the Services, is and will remain registered with the SEC or other appropriate regulatory agency as a Transfer Agent pursuant to the requirements of Section 17A of the Securities Exchange Act of 1934, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Services To Be Obtained Independently By The Fund</u> 

The following shall be provided at no expense to MSIM hereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Organizational expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Services of an independent registered public accounting firm;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Services of outside legal counsel (including such counsel's review of the Fund's registration statement, proxy materials and other reports and materials prepared by MSIM directly or through third parties under this Agreement);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any services contracted for by the Fund directly from parties other than MSIM;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Trading operations and brokerage fees, commissions and transfer taxes connection with the purchase and sale of securities for its investment portfolio;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Taxes, insurance premiums and other fees and expenses applicable to it operation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Investment advisory services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Costs incidental to any meetings of shareholders including, but not limited to, legal and accounting fees, proxy filing fees and the preparation, printing and mailing of any proxy materials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Costs incidental to Directors' meetings, including fees and expenses of Directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The salary and expenses of any officer or employee of the Fund;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Custodian and depository banks, and all services related thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Transfer Agents and Dividend Disbursing Agents, and all services related thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Costs incidental to the preparation, printing and distribution of its registration statement and any amendments thereto, and shareholder reports;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) All registration fees and filing fees required under the securities laws of the United States and state regulatory authorities

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Fidelity bond and Director's and Officers' liability insurance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Prices, Charges and Instructions</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Fund will pay to MSIM, as compensation for the services provided and the expenses assumed pursuant to this Agreement, as agreed to in a written fee schedule approved by the parties hereto (see Schedule B). MSIM shall bear the cost of heat, light, power and other utilities provided to the Fund and the cost of out-of-pocket expenses incurred in the ordinary course of providing services under this Agreement, such as telephone, fax, system usage, internal controls assurance (such as a Statement on Auditing Standards (SAS) No. 70 report), envelopes, postage and special delivery mail.

The Fund shall reimburse MSIM or s sub-administrator for all extraordinary expenses and the expenses of one or more independent pricing services, approved from time to time by the Board of Directors of the Fund, to obtain securities prices in connection with determining the net asset value of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At any time MSIM, and third parties providing such services for the benefit of the Fund through arrangements with MSIM may apply to any officer of the Fund or officer of the Fund's investment adviser for instructions, and may consult with legal counsel for the Fund, or its own outside legal counsel, at the expense of the Fund, with respect to any matter arising in connection with the services to be performed by MSIM or any third party appointed by MSIM under this Agreement and MSIM and such third parties shall not be liable and shall be indemnified by the Fund for any action taken or omitted by it in good faith in reliance upon such instructions. In carrying out its duties hereunder MSIM and such third parties shall be protected and indemnified in acting upon any paper or document believed by it to be genuine and to have been signed by the proper person or persons and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Limitation of Liability and Indemnification</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) MSIM shall be responsible hereunder for the performance of only such duties as are set forth or contemplated herein or contained in instructions given to it which are not contrary to this Agreement. MSIM shall have no liability for any loss or damage resulting from the performance or nonperformance of its duties hereunder unless solely caused by or resulting from the gross negligence or willful misconduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Fund shall indemnify and hold MSIM, and third parties providing services for the benefit of the Fund through arrangements with MSIM, harmless from all loss, cost, damage and expense, including reasonable expenses for counsel, incurred by such person resulting from any claim, demand, action or omission by it in the performance of its duties hereunder or under such arrangements with MSIM, or as a result of acting upon any instructions reasonably believed by any such person to have been executed by a duly authorized officer of the Fund or of the Fund's investment advisers, provided that this indemnification shall not apply to actions or omissions of MSIM, its officers, employees or agents in cases of its or their own gross negligence or willful misconduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Fund will be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any liability subject to the indemnification provided above, but, if the Fund elects to assume the defense, such defense shall be conducted by counsel chosen by the Fund. In the event the Fund elects to assume the defense of any such suit and retain such counsel, MSIM or any of its affiliated persons or any third parties providing services for the benefit of the Fund through arrangements with MSIM, named as defendant or

defendants in the suit, may retain additional counsel but shall bear the fees and expenses of such counsel unless at such time the Fund specifically authorizes in writing the retaining of such counsel at the Fund's expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) No provisions of this Agreement shall be deemed to protect MSIM or any of its directors, officers and/or employees, against liability to the Fund or its shareholders to which it might otherwise be subject by reason of any fraud, willful misfeasance or gross negligence in the performance of its duties or the reckless disregard of its obligations under this Agreement.

8. <u>Confidentiality</u>

MSIM agrees that, except as otherwise required by law or as necessary in accordance with this Agreement, MSIM will keep confidential all records and information in its possession relating to the Fund or its shareholders or shareholder accounts and will not disclose the same to any person except at the request or with the written consent of the Fund.

9. <u>Compliance With Governmental Rules and Regulations</u>

The Fund assumes full responsibility hereunder for complying with all applicable requirements of the Securities Act of 1933, the 1940 Act and the Securities Exchange Act of 1934, all as amended, and any laws, rules and regulations of governmental authorities having jurisdiction, except to the extent that MSIM specifically assumes any such obligations under the terms of this Agreement.

MSIM shall, directly or through third parties, maintain and preserve for the periods prescribed, such records relating to the services to be performed by MSIM under this Agreement as are required pursuant to the 1940 Act and the Securities Exchange Act of 1934. All such records shall at all times remain the respective properties of the Fund, shall be readily accessible during normal business hours to each, and shall be promptly surrendered upon the termination of this Agreement or otherwise on written request. Records shall be surrendered in usable machine readable form.

Each Cayman Fund is a subsidiary of an entity registered with the SEC under the 1940 Act. MSIM agrees to perform its obligations hereunder as if each Cayman Fund itself were so registered, and shall create and maintain in accordance with the 1940 Act and other applicable law any and all records relating to the services to be performed hereunder that it would be required to create and maintain under Section 31(a) of the 1940 Act or Rule 31a-1 or otherwise under the 1940 Act if the Cayman Fund was so registered; provided however that MSIM shall otherwise keep such records in the form and manner it deems advisable. Such records may be inspected by each Cayman Fund or its agents during regular business hours upon reasonable prior notice. MSIM may, at its option at any time, and shall forthwith upon each Cayman Fund's demand, turn over to the Cayman Fund and cease to retain in MSIM's files, records and documents created and maintained by MSIM in performance of its service or for its protection, except to the extent that MSIM is required to retain such records in accordance with laws, rules or regulations applicable to it as an administrator. At the end of the applicable retention period, such documents shall, at each Cayman Fund's option, either be turned over to the Cayman Fund or destroyed in accordance with the Cayman Fund's authorization.

10. <u>Status of MSIM</u>

The services of MSIM to the Fund are not to be deemed exclusive, and MSIM shall be free to render similar services to others. MSIM shall be deemed to be an independent contractor hereunder and shall, unless otherwise expressly provided herein authorized by the Fund from time to time, have no authority to act or represent the Fund in any way or otherwise be deemed an agent of the Fund with respect to this Agreement.

11. <u>Printed Matter Concerning the Fund or MSIM</u>

Neither the Fund nor MSIM shall, with respect to this Agreement, publish and circulate any printed matter which contains any reference to the other party without its prior written approval, excepting such printed matter as refers in accurate terms to MSIM's appointment under this Agreement and except as required by applicable laws.

12. <u>Term, Amendment and Termination</u>

This Agreement may be modified or amended from time to time by mutual agreement between the parties hereto. The Agreement shall remain in effect for a period of one year from the date the Fund's registration statement on file with the SEC becomes effective and shall automatically continue in effect thereafter unless terminated by either party at the end of such period or thereafter on 60 days' prior written notice. Upon termination of the Agreement, the Fund shall pay to MSIM such compensation as may be due under the terms hereof as of the time of such termination.

13. <u>Notices</u>

Any notice or other communication authorized or required by this Agreement to be given to any party mentioned herein shall be sufficiently given if addressed to such party and mailed postage prepaid or delivered to its principal office.

14. <u>Non-Assignability</u>

This Agreement shall not be assigned by any of the parties hereto without the prior consent in writing of the other party.

15. <u>Successors</u>

This Agreement shall be binding on and shall inure to the benefit of the Fund and MSIM, and their respective successors.

16. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

17. <u>Counterparts</u>

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original.

18. <u>Use of Affiliates</u>

The Administrator hereby delegates the Services to MSSCI and MSSCI hereby accepts such delegation in accordance with the terms of the Agreement and Call Center and Transfer Agency Services Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the date first written above.

---

| | |
|:---|:---|
| MORGAN STANLEY INSTITUTIONAL FUND TRUST | MORGAN STANLEY INSTITUTIONAL FUND TRUST |
| By: | /s/ John H. Gernon |
| Name: | John H. Gernon |
| Title: | President & Principal Executive Officer |

---

---

| | |
|:---|:---|
| MORGAN STANLEY INVESTMENT MANAGEMENT INC. | MORGAN STANLEY INVESTMENT MANAGEMENT INC. |
| By: | /s/ John H. Gernon |
| Name: | John H. Gernon |
| Title: | Managing Director |

---

**SCHEDULE A**

 **LIST OF PORTFOLIOS SUBJECT TO THIS AGREEMENT**

*as amended, March 30, 2021*

Core Plus Fixed Income Portfolio

Corporate Bond Portfolio

Discovery Portfolio

Dynamic Value Portfolio

Global Strategist Portfolio

High Yield Portfolio

Intermediate Municipal Income Portfolio

Municipal Income Portfolio

Senior Loan Portfolio

Short Duration Income Portfolio

Strategic Income Portfolio

Ultra-Short Income Portfolio

Ultra-Short Municipal Income Portfolio

**SCHEDULE B**

**FEE SCHEDULE**

MSIM shall be compensated at the annual rate of 0.08%, paid monthly, based on the average daily net assets of all Portfolios listed on Schedule A, as amended.

**SCHEDULE C**

**LIST OF SUBSIDIARY FUNDS**

---

| | |
|:---|:---|
| **Portfolio** | **Subsidiary Fund** |
| Discovery Portfolio | Discovery Cayman Portfolio, Ltd. |
| Global Strategist Portfolio | Global Strategist Cayman Portfolio, Ltd. |

---

## Ex-99.(H)(11)

**Exhibit (h)(11)**

**<u>CALL CENTER AND TRANSFER AGENCY SERVICES AMENDMENT</u>**

This Amendment dated November 28, 2022 (the "Amendment") to the Administration Agreement (the "Administration Agreement"), by and between the Funds listed on Schedule A to the respective Administration Agreement (as amended, supplemented or otherwise modified) (the "Fund") and Morgan Stanley Investment Management Inc. (the "Administrator").

**WITNESSETH:**

WHEREAS, MSIM serves as administrator to the Fund and its portfolios pursuant to the Administration Agreement and provides the general administration of the affairs of the Fund; and

WHEREAS, the Fund desires to engage the Administrator to provide certain call center and related transfer agency services to the Fund and certain of its portfolios identified on Schedule A to this Amendment; and

WHEREAS, the Administrator wishes to delegate the performance of these services to its affiliate, Eaton Vance Management ("EVM") pursuant to the terms of the Agreement and this Amendment and EVM wishes to accept such delegation;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Administration Agreement is amended as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The following is hereby added as (i) section 4(C) to the Administration Agreements between the Administrator
and each of Morgan Stanley Institutional Fund Trust and Morgan Stanley Institutional Fund, Inc.; (ii) section 3(C) to the Administration
Agreement between the Administrator and each of Morgan Stanley Global Fixed Income Opportunities Fund, Morgan Stanley Mortgage Securities
Trust, Morgan Stanley U.S. Government Securities Trust, Morgan Stanley Variable Investment Series, Morgan Stanley Europe Opportunity Fund,
Inc., Morgan Stanley Insight Fund, Morgan Stanley California Tax-Free Daily Income Trust, Morgan Stanley Tax-Free Daily Income Trust and
Morgan Stanley U.S. Government Money Market Trust; and sections 5(C) through (K) of the Administration Agreement between the Administrator
and Morgan Stanley Variable Insurance Fund, Inc. are hereby deleted and replaced with the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. *Call Center and Transfer Agency Services.* Subject to the terms and conditions set forth in this Agreement, the Fund hereby engages and appoints the Administrator to provide, and the Administrator agrees to provide, the following call center services and related transfer agency services for certain Portfolios of the Fund, and such additional call center and related transfer agency services as may be mutually agreed in writing by the Fund and the Administrator (collectively, the "Services"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) The Administrator shall maintain a unit to provide call center services for the Fund. This unit will provide
coverage each day during which the Fund is open. The Administrator will adjust the staffing of call center unit from time to time based
upon existing call center volume.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) The call center unit described in paragraph (a) above will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Answer and respond to inquiries from existing shareholders, prospective shareholders of the Fund and broker-dealers
on behalf of such shareholders, such inquiries may include, but are not limited to, requests for information on account set-up and maintenance,
general questions regarding the operation of the Fund, general account information including dates of purchases, redemptions, exchanges
and account balances, requests for account access instructions and literature requests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Process orders for purchase, exchange and/or redemption of Fund shares received by the call center in
accordance with the Fund's current registration statement, including the entering of any such orders received by the call center
into systems designated by the Fund for official recording on the books and records of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) The Administrator shall be permitted to act upon any instruction of any person by telephone reasonably
believed to be genuine to redeem exchange and/or transfer Fund shares from any account for which such telephone transactions has been
authorized by a shareholder. In accordance with Section 6 herein, the Fund hereby agrees to indemnify and hold the Administrator or its
affiliates harmless against all losses costs or expenses, including attorney's fees, suffered or incurred by the Administrator or
its affiliates directly or indirectly as a result of (i) taping the telephone conversation of any shareholder; and (ii) relying on telephone
instructions of any person acting on behalf of a shareholder account for which telephone services have been authorized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) To the extent required by applicable law, the Administrator, or any affiliate of the Administrator performing
the Services, is and will remain registered with the SEC or other appropriate regulatory agency as a Transfer Agent pursuant to the requirements
of Section 17A of the Securities Exchange Act of 1934, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The following is hereby added as (i) section 18 to the Administration Agreement between the Administrator
and Morgan Stanley Institutional Fund, Inc.; (ii) section 17 to the Administration Agreement between the Administrator and each of Morgan
Stanley Global Fixed Income Opportunities Fund, Morgan Stanley Mortgage Securities Trust, Morgan Stanley U.S. Government Securities Trust,
Morgan Stanley Variable Investment Series, Morgan Stanley Europe Opportunity Fund, Inc., Morgan Stanley Insight Fund, Morgan Stanley California
Tax-Free Daily Income Trust, Morgan Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. Government Money Market Trust; and (iii)
section 19 to the Administration Agreement between the Administrator and Morgan Stanley Variable Insurance Fund, Inc.:

**Use of Affiliates.**

The Administrator hereby delegates the Services to EVM and EVM hereby accepts such delegation in accordance with the terms of the Agreement and Call Center and Transfer Agency Services Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Section 18 of the Administration Agreement between the Administrator and Morgan Stanley Institutional
Fund Trust is hereby deleted and replaced with the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18. Use of Affiliates.**

The Administrator hereby delegates the Services to EVM and Morgan Stanley Services Company Inc. ("MSSCI"), as applicable, and EVM and MSSCI hereby accept such delegation in accordance with the terms of the respective Agreement and Call Center and Transfer Agency Services Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to the Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.

EACH FUND, INDIVIDUALLY AND NOT JOINTLY, AS LISTED ON SCHEDULE A

By: ______________________________________ <br> Name: <br> Title:

MORGAN STANLEY INVESTMENT MANAGEMENT INC.

By: ______________________________________ <br> Name: <br> Title:

EATON VANCE MANAGEMENT

By: ______________________________________ <br> Name: <br> Title:

**SCHEDULE A**

**EQUITY FUNDS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Morgan Stanley Europe Opportunity Fund Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Morgan Stanley Insight Fund

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Morgan Stanley Institutional Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Active International Allocation Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Advantage Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• American Resilience Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Asia Opportunity Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Counterpoint Global Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Developing Opportunity Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Emerging Markets Leaders Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Emerging Markets Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Insight Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Concentrated Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Core Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Endurance Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Focus Real Estate Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Franchise Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Infrastructure Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Opportunity Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Permanence Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Real Estate Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Sustain Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Growth Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inception Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• International Advantage Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• International Equity Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• International Opportunity Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• International Resilience Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Multi-Asset Real Return Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Next Gen Emerging Markets Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Permanence Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Sustainable Emerging Markets
Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• US Core Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• U.S. Focus Real Estate Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• U.S. Real Estate Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Vitality Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Morgan Stanley Institutional Fund Trust

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Discovery Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Dynamic Value Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Strategist Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Morgan Stanley Variable Insurance Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Discovery Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Emerging Markets Equity Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Franchise Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Infrastructure Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Real Estate Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global Strategist Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Growth Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• U.S. Real Estate Portfolio

**FIXED INCOME FUNDS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Morgan Stanley Global Fixed Income Opportunities Fund

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Morgan Stanley Mortgage Securities Trust

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Morgan Stanley U.S. Government Securities Trust

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Morgan Stanley Variable Investment Series

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Income Plus Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Morgan Stanley Institutional Fund Trust

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Core Plus Fixed Income Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Corporate Bond Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• High Yield Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Morgan Stanley Variable Insurance Fund, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Core Plus Fixed Income Portfolio

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Emerging Markets Debt Portfolio

**MONEY MARKET FUNDS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Morgan Stanley California Tax-Free Daily Income Trust

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Morgan Stanley Tax-Free Daily Income Trust

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Morgan Stanley U.S. Government Money Market Trust

## Ex-99.(H)(12)

**Exhibit (h)(12)**

**AMENDMENT**

*To Transfer Agency and Service Agreement*

*Between*

*Morgan Stanley Mutual Funds*

*And*

*DST Asset Manager Solutions, Inc.*

This amendment, made as of this 28<sup>th</sup> day of November, 2022, effective as of November 28, 2022, (the "Amendment") amends the Transfer Agency and Service Agreement dated April 1, 2013, and effective July 1, 2013, (the "Agreement") between DST Asset Manager Solutions, Inc. (formerly, Boston Financial Data Services, Inc.) and each of the entities, individually and not jointly, as listed on Schedule A to the Agreement (as amended, supplemented or otherwise modified). In accordance with Section 16.1 (Amendment) of the Agreement, the parties desire to amend the Agreement as set forth herein.

NOW THEREFORE, the parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The fourth and fifth "WHEREAS" clauses are deleted in their entirety and replaced with the
following language:

"WHEREAS, each Fund, on behalf of itself and, where applicable, its Portfolios, desires to appoint the Transfer Agent, as its transfer agent, dividend disbursing agent and in connection with certain other activities, and the Transfer Agent desires to accept such appointment;

WHEREAS, each of the Morgan Stanley Institutional Liquidity Funds (as identified in Annex 1.1), each a series of the Funds, on behalf of itself and, where applicable, its Portfolios, also desires to appoint Morgan Stanley Services Company, Inc., ("MSSCI") (the "Limited Co-Transfer Agent"), a transfer agent registered pursuant to Section 17A of the Securities Exchange Act of 1934 ("Exchange Act"), for certain purposes set forth below, which shall be in addition to, or in lieu of, the services provided by the Transfer Agent to such Funds; and

WHEREAS, each of the Funds identified in Annex 1.2, each a series of the Funds, on behalf of itself and, where applicable, its Portfolios, also desires to appoint Eaton Vance Management, ("EVM") (the "Co-Transfer Agent"), a transfer agent registered pursuant to Section 17A of the Exchange Act, for certain purposes set forth below, which shall be in addition to, or in lieu of, the services provided by the Transfer Agent to such Funds."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Section 1.1 is amended to add Annex 1.2, attached and incorporated herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Paragraph 1.1(e) is amended as follows:

In respect to items (b) through (d) above, Transfer Agent may execute transactions directly with broker-dealers authorized by the Fund; and, subject to Annex 1.1 and Annex 1.2, with respect to items (b), (c), (d), (f) and (g) Transfer Agent may process (i) transactions of Liquidity Fund Direct Investors on behalf of the Liquidity Funds in reliance on transaction information recorded in the TA2000 System (as defined below) by the Limited Co-Transfer Agent and (ii) transactions of Non-Liquidity Fund Direct Investors no behalf of the Non-Liquidity Funds in reliance on transaction information recorded in the TA2000 System by the Co-Transfer Agent. Transfer Agent shall provide all additional services with respect to the Liquidity Funds and Non-Liquidity Funds and the Liquidity Fund Direct Investors and Non-Liquidity Fund Direct Investors under the terms of this Agreement, except as specifically provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Paragraph 1.1(w) is amended as follows:

Call Center Services. Except with respect to existing and prospective Liquidity Fund Direct Investors, as such term is defined in Annex 1.1, and Non-Liquidity Fund Direct Investors, as such term is defined in Annex 1.2, the Transfer Agent shall upon request of the Fund, answer telephone inquiries from 8:00 a.m. to 6:00 p.m., Eastern Time, each day on which the New York Stock Exchange is open for trading. The Transfer Agent shall answer and respond to inquiries from existing Shareholders, prospective Shareholders of the Fund and broker-dealers on behalf of such Shareholders in accordance with the telephone scripts provided by the Fund to the Transfer Agent, such inquiries may include, but are not limited to, requests for information on account set-up and maintenance, general questions regarding the operation of the Fund, general account information including dates of purchases, redemptions, exchanges and account balances, requests for account access instructions and literature requests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. *Schedule 3.1 (Fees and Expenses).* Schedule 3.1 ("Fees and Expenses") to the Agreement
shall be replaced and superseded with the Schedule 3.1 attached hereto, dated November 28, 2022;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. All defined terms in the Agreement shall be the same in this amendment (the "Amendment") except
as specifically revised by this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Except as specifically set forth in this Amendment, all other terms and conditions of the Agreement shall
remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.

---

| | |
|:---|:---|
| **EACH OF THE ENTITIES, INDIVIDUALLY AND NOT JOINTLY, AS LISTED ON SCHEDULE A** | **DST Asset Manager Solutions, Inc.** |
| By: | By: |
| Name: | Name: |
| Title: | Title: |

---

As an authorized Office on behalf of each of the Fund on Schedule A

**ANNEX 1.2**

**Non-Liquidity Funds Services**

**Dated: November 28, 2022**

Solely with respect to Morgan Stanley Institutional Fund Trust (on behalf of each series other than Short Duration Income Portfolio, Ultra-Short Income Portfolio and Ultra-Short Municipal Income Portfolio), Morgan Stanley Institutional Fund, Inc., Morgan Stanley Global Fixed Income Opportunities Fund, Morgan Stanley Mortgage Securities Trust, Morgan Stanley U.S. Government Securities Trust, Morgan Stanley Variable Investment Series, Morgan Stanley Variable Insurance Fund, Inc., Morgan Stanley Europe Opportunity Fund, Inc., Morgan Stanley Insight Fund, Morgan Stanley California Tax-Free Daily Income Trust, Morgan Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. Government Money Market Trust ("Non-Liquidity Funds"), Eaton Vance Management, ("EVM") as Co-Transfer Agent under the Transfer Agency and Services Agreement dated April 1, 2013, as amended herein ("Agreement"), will provide certain call center and transfer agency services set forth in the Call Center and Transfer Agency Services Amendment dated November 28, 2022 between the Non-Liquidity Funds and Morgan Stanley Investment Management Inc. ("Call Center Services"). Call Center Services will be provided by the Co-Transfer Agent only to those Shareholders of the Non-Liquidity Funds that are, or will be, registered Shareholders of the Non-Liquidity Funds and any broker-dealers or other intermediaries acting on behalf of beneficial holders ("Non-Liquidity Fund Direct Investors"). The Parties agree that in connection with providing Call Center Services on behalf of the Non-Liquidity Funds, the Co-Transfer Agent will enter information into the TA2000 System to effect purchase orders, redemption requests, exchanges requests and transfers of Non-Liquidity Fund Direct Investors.

Unless otherwise agreed to by the Parties, including the Co-Transfer Agent, the Transfer Agent will provide all Services set forth in the Agreement, other than the Call Center Services, on behalf of the Non-Liquidity Funds, including with respect to the Shares and Shareholder accounts of the Non-Liquidity Fund Direct Investors.

Services provided by the Transfer Agent and Co-Transfer Agent with respect to Non-Liquidity Fund Direct Investors shall be in accordance with procedures ("Procedures") that are established from time to time by agreement between the Transfer Agent and Co-Transfer Agent, in each case with such changes and deviations therefrom as have been or will be (or may from time to time be) agreed on by the two parties.

Non-Liquidity Funds:

Morgan Stanley California Tax-Free Daily Income Trust

Morgan Stanley Europe Opportunity Fund Inc.

Morgan Stanley Global Fixed Income Opportunities Fund

Morgan Stanley Insight Fund

Morgan Stanley Institutional Fund Inc. – Active International Allocation Portfolio

Morgan Stanley Institutional Fund Inc. – Advantage Portfolio

Morgan Stanley Institutional Fund Inc. – American Resilience Portfolio

Morgan Stanley Institutional Fund Inc. – Asia Opportunity Portfolio

Morgan Stanley Institutional Fund Inc. – Counterpoint Global Portfolio

Morgan Stanley Institutional Fund Inc. – Developing Opportunity Portfolio

Morgan Stanley Institutional Fund Inc. – Emerging Markets Leaders Portfolio

Morgan Stanley Institutional Fund Inc. – Emerging Markets Portfolio

Morgan Stanley Institutional Fund Inc. – Global Insight Portfolio

Morgan Stanley Institutional Fund Inc. – Global Concentrated Portfolio

Morgan Stanley Institutional Fund Inc. – Global Core Portfolio

Morgan Stanley Institutional Fund Inc. – Global Endurance Portfolio

Morgan Stanley Institutional Fund Inc. – Global Focus Real Estate Portfolio

Morgan Stanley Institutional Fund Inc. – Global Franchise Portfolio

Morgan Stanley Institutional Fund Inc. – Global Infrastructure Portfolio

Morgan Stanley Institutional Fund Inc. – Global Opportunity Portfolio

Morgan Stanley Institutional Fund Inc. – Global Permanence Portfolio

Morgan Stanley Institutional Fund Inc. – Global Real Estate Portfolio

Morgan Stanley Institutional Fund Inc. – Global Sustain Portfolio

Morgan Stanley Institutional Fund Inc. – Growth Portfolio

Morgan Stanley Institutional Fund Inc. – Inception Portfolio

Morgan Stanley Institutional Fund Inc. – International Advantage Portfolio

Morgan Stanley Institutional Fund Inc. – International Equity Portfolio

Morgan Stanley Institutional Fund Inc. – International Opportunity Portfolio

Morgan Stanley Institutional Fund Inc. – International Resilience Portfolio

Morgan Stanley Institutional Fund Inc. – Multi-Asset Real Return Portfolio

Morgan Stanley Institutional Fund Inc. – Next Gen Emerging Markets Portfolio

Morgan Stanley Institutional Fund Inc. – Permanence Portfolio

Morgan Stanley Institutional Fund Inc. – Sustainable Emerging Markets Portfolio

Morgan Stanley Institutional Fund Inc. – US Core Portfolio

Morgan Stanley Institutional Fund Inc. – U.S. Focus Real Estate Portfolio

Morgan Stanley Institutional Fund Inc. – U.S. Real Estate Portfolio

Morgan Stanley Institutional Fund Inc. – Vitality Portfolio

Morgan Stanley Institutional Fund Trust – Core Plus Fixed Income Portfolio

Morgan Stanley Institutional Fund Trust – Corporate Bond Portfolio

Morgan Stanley Institutional Fund Trust – Discovery Portfolio

Morgan Stanley Institutional Fund Trust – Dynamic Value Portfolio

Morgan Stanley Institutional Fund Trust – Global Strategist Portfolio

Morgan Stanley Institutional Fund Trust – High Yield Portfolio

Morgan Stanley Mortgage Securities Trust

Morgan Stanley Tax-Free Daily Income Trust

Morgan Stanley U.S. Government Money Market Trust

Morgan Stanley U.S. Government Securities Trust

Morgan Stanley Variable Insurance Fund, Inc. – Core Plus Fixed Income Portfolio

Morgan Stanley Variable Insurance Fund, Inc. – Discovery Portfolio

Morgan Stanley Variable Insurance Fund, Inc. – Emerging Markets Equity Portfolio

Morgan Stanley Variable Insurance Fund, Inc. – Emerging Markets Debt Portfolio

Morgan Stanley Variable Insurance Fund, Inc. – Global Franchise Portfolio

Morgan Stanley Variable Insurance Fund, Inc. – Global Infrastructure Portfolio

Morgan Stanley Variable Insurance Fund, Inc. – Global Real Estate Portfolio

Morgan Stanley Variable Insurance Fund, Inc. – Global Strategist Portfolio

Morgan Stanley Variable Insurance Fund, Inc. – Growth Portfolio

Morgan Stanley Variable Insurance Fund, Inc. – U.S. Real Estate Portfolio

Morgan Stanley Variable Investment Series – Income Plus Portfolio

**SCHEDULE 3.1**

**FEES AND EXPENSES**

**Dated: November 28, 2022**

<u>General:</u> Fees are billable on a monthly basis at the rate of 1/12 of the annual fee. The monthly fee for an open account shall be charged in the month during which an account is opened through the month in which the account is closed. The monthly fee for a closed account shall be charged in the month following the month during which such account is closed and shall continue until such account is purged from the system. Account service fees are the higher of: open account charges plus closed account charges for the fund minimum. Fees shall only be payable upon completion of all acceptance testing and the commencement of provision of the Services.

<u>Annual Account Service Fees</u><sup>1</sup>

---

| | |
|:---|:---|
| &nbsp;&nbsp;Open Account |  |
| &nbsp;&nbsp; Direct Account Fee | &nbsp;&nbsp;$9.00 per account |
| &nbsp;&nbsp; Networked Account (NSCC Matrix III Accounts) | &nbsp;&nbsp;$1.90 per account |
| &nbsp;&nbsp;Closed Accounts<sup>2</sup> | &nbsp;&nbsp;$1.20 per account |
| &nbsp;&nbsp;CUSIP Fee | &nbsp;&nbsp;$1,375.00 per CUSIP per year |
| &nbsp;&nbsp;Complex Base Fee | &nbsp;&nbsp;$750,000.00 per year |
| &nbsp;&nbsp; Reimbursement for Call Center Services Provided by EVM | &nbsp;&nbsp;($117,000 per year) |
| &nbsp;&nbsp;FIRMport (up to 25 user IDs) | &nbsp;&nbsp;$150,000.00 per year |
| &nbsp;&nbsp;FIA Services set-up Fee<sup>3</sup> | &nbsp;&nbsp;$150,000.00 one-time |
| &nbsp;&nbsp;<u>Services Specific to the Liquidity Funds</u> |  |
| &nbsp;&nbsp; Telephone trade quality review | &nbsp;&nbsp;$5,000/monthly |
| &nbsp;&nbsp; Third tier Business Continuity Planning | &nbsp;&nbsp;$3,000/monthly |
| &nbsp;&nbsp;<u>Compliance Services</u> |  |
| &nbsp;&nbsp; Omnibus Transfer Fees |  |
| &nbsp;&nbsp; Omnibus Transparency Full Service Annual Base Fee | &nbsp;&nbsp;$150,000.00/Year |
| &nbsp;&nbsp; Accountlet Fees |  |
| &nbsp;&nbsp; 1 – 2,000,000 accountlets | &nbsp;&nbsp;Included in Base fee |
| &nbsp;&nbsp; 2,000,001 and above accountlets | &nbsp;&nbsp;$0.12/Accountlet/Year |
| &nbsp;&nbsp; Investigation Fee |  |
| &nbsp;&nbsp; 1 – 50 Investigation/Month | &nbsp;&nbsp;Included in Base Fee |

---

<sup>1</sup> Fees include charges for TA2000 Voice<sup>TM</sup>, TA2000 Same-Day Cash Management, PowerSelect, FAN Web<sup>TM</sup>, Short Term Trader.

<sup>2</sup> There will be no charge for maintaining closed (zero balance) accounts as long as the Fund complies with the Transfer Agent's purge process.

<sup>3</sup> This fee has already been paid as of the date hereof.

---

| | |
|:---|:---|
| &nbsp;&nbsp; 50+ Investigations/Month | &nbsp;&nbsp;$12.00/Investigation |
| &nbsp;&nbsp; Client Requested Accountlet Purges |  |
| &nbsp;&nbsp; First Purge per Year | &nbsp;&nbsp;$195.00/Hour |
| &nbsp;&nbsp; Compliance | &nbsp;&nbsp;$50,000.00 per year |
| &nbsp;&nbsp; AML/CIP<sup>4</sup> | &nbsp;&nbsp;$0.40 per account |
| &nbsp;&nbsp; Suspicious Activity Monitoring for Networked Accounts | &nbsp;&nbsp;$0.25 per account |
| &nbsp;&nbsp; Regulatory Compliance<sup>5</sup> | &nbsp;&nbsp;$100.00 per CUSIP |
| &nbsp;&nbsp;<u>IRA Custodial Fees</u> | &nbsp;&nbsp;Existing shareholder paid fees apply |
| &nbsp;&nbsp;<u>Additional Fees</u> |  |
| &nbsp;&nbsp;Federal Manual Wire Charges | &nbsp;&nbsp;$8.00 per wire |
| &nbsp;&nbsp;State Tax Reporting | &nbsp;&nbsp;$200.00 per CUSIP<sup>6</sup> |
| &nbsp;&nbsp;Escheatment | &nbsp;&nbsp;$7,500.00 annual base fee<br> $250.00 per CUSIP<br> $5.00 per escheated item |
| &nbsp;&nbsp;Disaster Recovery | &nbsp;&nbsp;$0.20 per open account |
| &nbsp;&nbsp;Lost Shareholder Search | &nbsp;&nbsp;$0.20 per search |
| &nbsp;&nbsp;Lost Shareholder Tracking | &nbsp;&nbsp;$1.20 per account |
| &nbsp;&nbsp;Microfiche | &nbsp;&nbsp;$24,000.00 per year |
| &nbsp;&nbsp;On Request Reporting | &nbsp;&nbsp;$60.00 per report |
| &nbsp;&nbsp;Returned Checks | &nbsp;&nbsp;$30.00 per check |
| &nbsp;&nbsp;Transcripts | &nbsp;&nbsp;$25.00 per report |
| &nbsp;&nbsp;<u>Reimbursable Expenses</u> |  |
| &nbsp;&nbsp;Postage | &nbsp;&nbsp;Billed as incurred |
| &nbsp;&nbsp;Special Mailings | &nbsp;&nbsp;Billed as incurred |
| &nbsp;&nbsp;NSCC processing and communications | &nbsp;&nbsp;Billed as incurred |

---

<sup>4</sup> There is an additional charge of $0.05 per account for AML/CIP for foreign accounts.

<sup>5</sup> There is an additional charge of $0.25 per account for Regulatory Compliance for foreign accounts.

<sup>6</sup> Charge applies only to CUSIPs for which state tax reporting is performed.

---

| | |
|:---|:---|
| &nbsp;&nbsp;Offsite records storage | &nbsp;&nbsp;Billed as incurred |
| &nbsp;&nbsp;Print/mail service (DSTO) | &nbsp;&nbsp;Billed as incurred |
| &nbsp;&nbsp;Statements | &nbsp;&nbsp;Billed as incurred |
| &nbsp;&nbsp;Telephone and fax lines | &nbsp;&nbsp;Billed as incurred |
| &nbsp;&nbsp;<u>Cost of Living</u> |  |
| &nbsp;&nbsp;In accordance with <u>Section 3.5</u> of the Agreement |  |

---

<u>Billing for DST Systems, Inc. products</u>

The following products (which are controlled by separate agreements between DST Systems, Inc. and Morgan Stanley Services Company) will be billed by the Transfer Agent in accordance with the provisions of <u>Section 3.2</u> of this Agreement. Fees under any other agreements between DST and Morgan Stanley Services Company will be billed by DST directly.

FAN Mail Master

FAN Services (including Vision)

Purchase Processing

Universal Dealers

SalesConnect

PowerSelect

<u>Billing for DST Output Fees</u>

Fees for output will be the standard DST Output fees which have been provided to the Fund.

<u>Programming Hours</u>

---

| | |
|:---|:---|
| Up to 500 programming hours<br> (these programming hours may be used by Fund affiliates) | No Charge |
| Programmer technical support in excess of 500 hours | $195.00 per hour |

---

---

| | |
|:---|:---|
| **EACH OF THE ENTITIES, INDIVIDUALLY AND NOT JOINTLY, AS LISTED ON SCHEDULE A** | **DST Asset Manager Solutions, Inc.** |
| By: | By: |
| Name: | Name: |
| Title: | Title: |

---

As an authorized Office on behalf of each of the Fund on Schedule A

## Ex-99.(I)(33)

**Exhibit (i)(33)**

**CONSENT OF DECHERT LLP**

We hereby consent to the reference to our firm under the caption "Fund Counsel" in the Statement of Additional Information comprising a part of Post-Effective Amendment No. 218 to the Form N-1A Registration Statement of Morgan Stanley Institutional Fund Trust, File No. 2-89729. We do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the rules and regulations of the Securities and Exchange Commission thereunder.

---

| |
|:---|
| /s/ DechertLLP |
| New York, New York |
| January 27, 2023 |

---

## Ex-99.(J)

**Exhibit (j)**

Consent of Independent Registered Public Accounting Firm

We consent to the references to our firm under the captions "Financial Highlights" in the Prospectuses of Core Plus Fixed Income Portfolio, Corporate Bond Portfolio, Dynamic Value Portfolio, High Yield Portfolio, Short Duration Income Portfolio, Ultra-Short Income Portfolio, and Ultra-Short Municipal Income Portfolio and "Consolidated Financial Highlights" in the Prospectuses of Discovery Portfolio and Global Strategist Portfolio, and "Independent Registered Public Accounting Firm" and "Financial Statements" in the Statement of Additional Information of the Morgan Stanley Institutional Fund Trust, each dated January 27, 2023, and each included in this Post-Effective Amendment No. 218 to the Registration Statement (Form N-1A, No. 2-89729) of Morgan Stanley Institutional Fund Trust (the "Registration Statement").

We also consent to the incorporation by reference of our reports dated November 29, 2022, with respect to the financial statements and financial highlights of Core Plus Fixed Income Portfolio, Corporate Bond Portfolio, Discovery Portfolio, Dynamic Value Portfolio, Global Strategist Portfolio, High Yield Portfolio, Short Duration Income Portfolio, Ultra-Short Income Portfolio, and Ultra-Short Municipal Income Portfolio (nine of the funds constituting Morgan Stanley Institutional Fund Trust) included in the Annual Reports to Shareholders (Form N-CSR) for the year ended September 30, 2022, into this Registration Statement, filed with the Securities and Exchange Commission.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts

January 27, 2023