Morgan Stanley Investment Funds Emerging Markets Domestic Debt Fund (MS INVF)

February 2011

Foreign investing involves certain risks, including currency fluctuations and controls, restrictions on foreign investments, less governmental supervision and regulation, less liquidity and the potential for market volatility and political instability. In addition, investing in emerging markets may involve a relative higher degree of volatility. For Institutional Investor Use Only And May Not Be Used With The General Public Page 1 Section 1 Introduction and Product Summary

Page 2 Morgan Stanley Investment Management MSIM Coverage Spans 48 Offices in 21 Countries

Over $265 billion 1 in assets under management Amsterdam Luxembourg Over $221 billion in Frankfurt Institutional Assets Greenwich Stockholm New York MSIM has 740 investment Montreal professionals globally West Conshohocken Paris • Portfolio managers – 136 Chicago London Munich Oakbrook Terrace • Research analysts – 136 Zurich Milan • Traders – 50 Beijing Seoul San Francisco Athens Tokyo Jersey City Shanghai • Portfolio specialists – 49 Menlo Park Atlanta Dubai New Delhi Los Angeles Hong Kong Merchant Banking Mumbai Chennai • Real Estate – 249 Singapore • Private Equity – 76 Mexico City Madrid Austin • Infrastructure – 40 Tampa Miami

MSIM investment professionals Sydney throughout the world Melbourne • U.S. – 354 • Europe / UK – 177

• Asia – 209 MSIM Office MSIM Client Coverage

1. Assets under management as of September 30, 2010, presented in U.S.$. Morgan Stanley Investment Management (MSIM) is the asset management division of Morgan Stanley. Assets are managed by teams representing different MSIM legal entities with offices in New York, Philadelphia, Houston, Chicago, London, Tokyo, Amsterdam, Singapore and Mumbai. Figure represents MSIM’s total assets under management/supervision. Assets represent only those investment teams/strategies that continued to be part of MSIM following the June 1, 2010 sale of Van Kampen/MSIM-Retail to Invesco. Page 3 Emerging Markets Domestic Debt Overview

Over $10.3 billion (1) managed in Morgan Stanley Emerging Markets Domestic Debt Strategy is a value-oriented fixed income strategy that the emerging markets debt seeks high total return from income and price appreciation by investing in a range of sovereign, strategy quasi-sovereign and corporate debt securities in emerging markets. Investments are mostly denominated Within dedicated mandates, over in emerging-market and/or non-U.S. currencies . To achieve its objective, the strategy combines top- $3 billion in local currency down country allocation with bottom-up security selection. (domestic) denominated fixed Our investment strategy is guided by the following principles income assets • We believe the prudent risk taking grounded in fundamental analysis will be the key to adding Experienced group of over 50 consistent alpha over a full market cycle fixed-income investors • We believe that good investment opportunities exist across the full credit quality spectrum and will be Managing the Emerging Markets found in the bonds of countries in which credit fundamentals are experiencing positive rates of change. Debt strategy since 1993 • Differentiating between currency, yield curve and excess carry opportunities will be important for generating consistent strong returns going forward.

Emerging Markets Domestic Debt (local Currency) Strategy at a Glance Strategy Inception February 2007 Benchmark JPMorgan Government Bond Index – Emerging Markets Global Diversified (“GBI-EM Global Diversified”) Expected Tracking Error 300-400 basis points annually Permitted Securities Sovereign global bonds, sovereign loans, corporate bonds, quasi-sovereign bonds, interest rate futures, credit default swaps, currency forwards and other derivatives Leverage None

Country Weight Typically within ±10 percentage points relative to the benchmark For non-indexed countries: Does not exceed 5% of the portfolio at cost Typical Number of Holdings 40 – 50 securities 1. This includes dedicated and cross-over EM Assets in U.S.$ and as of August 31, 2010 (un-audited). 2. Local currency assets only reflect dedicated EM Domestic Debt mandates Page 4 Who We Are

Pioneers in Emerging Markets with Global Franchise and Research Network • A Pioneer in emerging market with a local presence in emerging markets globally • Depth and breadth of our global platform allows team to identify opportunities and risks geographically and throughout market cycles

A Deep, Experienced Team • Our EMD team has been together through a variety of volatile markets • Comprised of professionals with deep experience and complimentary skill sets • Current PM’s have led the strategy since 1997 and 2002 and own the performance record

Rigorous Investment Process and Risk Management • Emphasis on dynamically assessing each country’s rate of change of underlying political, economic and social factors • Risk management is central to our process and an integral part of our portfolio construction

Strong competitive risk-adjusted Returns • Strong competitive risk-adjusted returns with strong market capture

Organization – Community of Boutiques • Allows entrepreneurial instincts to flourish and empowers teams to act quickly and decisively • Access to the substantial resources of Morgan Stanley, and the benefits that come with being part of such a sizeable organization

Page 5 A Deep, Experienced Team

EM Portfolio Management Experienced, high-quality EricEric Baurmeister Baurmeister FedericoFederico Kaune Kaune research teams WilliamWilliam W. W. Perry Perry SahilSudarshan Tandon P. Gururaj MichaelDaniel ChodosGuichon HenrySahil TandonGonzalez MasakazuToshikazu Kuwazoe Hirai Henry Gonzalez Significant depth Interest Rates Credit Team and Currencies Team Emerging Markets Equities Team Christian Roth Richard Ford Michael Kushma W.Yoshinobu David Armstrong Kou Global coverage Ruchir Sharma William Scott Piper Paul Psi ReginaLei Wang Borromeo Sanjay Verma AlexanderW. David Armstrong Bouzalis James Cheng Gaite Ali Colm Leahy Leon Grenyer Jaidip Singh YoshinobuAlexander KouBouzalis AdelineVincent KohEe Ana Piedrahita Cristian Ghiuvea Joseph Mehlman SethMasakazu Horwitz Kuwazoe DivyaSimon Chhibba Baxter Homiyar Vasania Paul Psaila Alice LaTrobe-Weston Virginia M. Keehan MichaelPhilippe GuichonKurzweil Divya Chhibba SebestianRama Rao Chia Eric Carlson Research integrated with portfolio JustinLois Pine Sham Nikolai K. Dimitrov Mikhael Breiterman-Loader Munib Madni Timothy Drinkall management JelalLois PineK. Kamil BrianKaren Ichord Toll Samuel Rhee Jitania Kandhari RyanJelal K.O’Connell Kamil Sara Karen West Toll May Yu Frank Zheng MattSara Millsfield West Tom Wills Sridhar Sivaram WarrenGary Cheung Zhang Sarah Singh Wilson He Amay Hattangadi Dan Raghoonundon Specialist focus on every aspect Swanand Kelkar Yulei Gong of client assignment Mortgage Team Trading

Shelia Huang Neil Stone Lai-Ming Suen Robert Harradine Peter Ru David Seto Justin Sham Rie Kawasaki Christopher Lin Adam August Dwayne Middleton

Note: Team members may change without notice from time to time.

Page 6 Emerging Markets Debt Management Team

Over 90 years of collective team Our Investment Team experience in the industry

Years of Experience 1 Primary Role

Managers identify investment Eric Baurmeister 16 Co-Head/Portfolio Manager opportunities by focusing on their Federico Kaune 16 Co-Head/Portfolio Manager area of expertise William W. Perry 20 EM Corporate Research

Our team has managed the Sudarshan P. Gururaj 9 Research Emerging Markets Debt product Michael Guichon 3 Research through a variety of volatile markets Sahil Tandon 6 Trading Masakazu Kuwazoe 13 Portfolio Specialist

Morgan Stanley Investment Henry Gonzalez 14 Portfolio Specialist Management serves on the JPMorgan EMBI Index and EMBI Local Markets Advisory committees

1. Number of years of industry experience. Note: Team members may change without notice from time to time. Page 7 Section 2 Domestic Debt Investment Process

Page 8 Portfolio Construction Top-down/Bottom-up Approach

Our process combines top down sovereign analysis with bottom up security selection Top-Down Portfolio Construction

Risk management is integrated into our investment process

Client’s Objectives, Market Country FX and Interest Security Client Guidelines, Assessment Analysis Rate Analysis Selection Portfolio and Benchmark

Guideline Monitoring and Risk Management

Page 9 Analysis of Domestic Factors Market Assessment

Focus on local factors as Less Volatile Macroeconomic Performance Stable Fiscal Accounts and Domestic Debt important determinants of the performance of domestic assets 60 Public Debt (LHS) 12 60 1.0 Real GDP growth Inflation % 55 10 50 0.0

40 -1.0 For this assessment, the 50 8 Emerging Markets Debt team 30 -2.0 45 6 Percent Percent draws upon our in house expertise GDP of Percent 20 -3.0

Percent of GDP of Percent 40 4 in emerging economies 10 -4.0 35 2 0 -5.0 7 8 9 0 1 2 3 4 5 6 7 8 9 9 9 0 0 0 0 0 0 0 0 0 9E 0F 1F 30 0 1 1 19 19 19 20 20 20 20 20 20 20 20 20 0 20 20 20 0 1 2 3 4 5 6 7 8 0 0 0 0 0 0 0 0 0 9E 0F 1F 1 20 20 20 20 20 20 20 20 20 0 1 Public Debt Fiscal Balance (rhs) 20 20 20 Source: IMF, Ministries of Finance, Central Banks, MSIM Source: IMF, Ministries of Finance, Central Banks, MSIM Note: Weighted average of 40 emerging economies. Note: Weighted average of 40 emerging economies. Still Strong Balance Sheets Debt Service and International Reserves 1

50 16 External Debt % GDP 45 14 International Reserves (% GDP) 40 International Reserves/ ST External Liabilities External debt-service ratio (% of exports) 12 35 10 30 *For illustrative purposes only. 8 Ratio

25 Vulnerable Less

Past performance is no Percent 6 20 guarantee of future results. 15 4 Forecasts/estimates are based 10 2 on current market conditions, 5 0

0 Peru India Chile Israel China Brazil Russia Poland Turkey subject to change, and may not 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010F 2011F Mexico Hungary Malaysia Indonesia Colombia Argentina Venezuela Czech Czech Rep Philippines South Korea South necessarily come to pass Africa South Source: IMF, Ministries of Finance, Central Banks, MSIM Source: BIS and MSIM Note: Weighted average of 40 emerging economies. 1. External debt service falling due in the next 12 months. International Reserves in Brazil, Mexico and South Korea include a $30 billion Swap line from the FED. Page 10 Data as of December 31, 2010. FX and Interest Rate Analysis Top-down/Bottom-up Approach

Our process combines top down sovereign analysis with bottom up security selection Valuations Fundamental vs. Market Views on Exchanges Rates

Risk management is integrated into our investment process Global Conditions

• Domestic Conditions • Interest Rates Fundamental vs. Market • Exchanges Rates Views on • Output Gap • Inflation Gap Monetary Stance Risk Premium

Valuations Fundamental vs. Market Views on Rates and Yields

Page 11 Valuation Tools

We believe valuations are EM Domestic Debt: Valuation Models the key determinant of return by identifying dislocations between fundamentals and Exchange Rate Valuation Models market valuations Our proprietary valuation models Equilibrium real exchange Rates allow us to analyze the valuation Speed of Convergence of interest rates and exchange rates independently

Interest Rate Valuation Models Central Bank Reaction Functions Fair Yield Curves

Page 12 Domestic Debt Valuation Real Exchange Rates Valuation: GBI EM GD Countries

RER Valuation Model: GBI EM GD Countries Bilateral RER versus USD: GBI EM GD Countries

Our Fundamentals-based -30% -50 % Versus USD equilibrium exchange rate model Versus Euro -40 Versus Yen -20% Undervalued Trade Weighted considers the impact of -30 productivity differentials, terms -20 -10% of trade and external positions -10 0% 0

10 10%

We estimate the real exchange 20 20% rate for several emerging 30 Overvalued RER misalignment: (+) = Overvaluation (LHS) economies using appropriate 40 30% Peru

econometric techniques Chile Brazil Peru Egypt Korea Chile Brazil Egypt Turkey Russia Korea Poland Mexico Russia Turkey Poland Mexico Hungary Thailand Malaysia Hungary Colombia Thailand Indonesia Malaysia Colombia Indonesia

Source: MSIM. Philippines Philippines South Africa South Africa

Bilateral RER versus the USD: Potential 12 month Change Bilateral Nominal FX versus the USD: Potential12 month Change 15% 15% 15% Inflation Differential vs USD Potential 12m RER change (+) = Appreciation Potential 12m FX change (+) = Appreciation (RHS) Potential 12m RER change (+) = Appreciation 10% 10% 10%

5% 5% 5%

0% 0% 0%

-5% -5% -5%

-10% -10% -10%

-15% -15% -15% Peru Peru Chile Chile Brazil Brazil Egypt Egypt Korea Korea Turkey Turkey Russia Russia Poland Poland Mexico Mexico Hungary Hungary Thailand Thailand Malaysia Malaysia Colombia Colombia Indonesia Indonesia Philippines Philippines South Africa South Africa

Source: Morgan Stanley Investment Management

Page 13 Data as of December 31 2010. Domestic Debt Valuation (cont’d)

Peru: Macroeconomic Fundamentals and Policy Rateth Pa Peru: Market Yield Curve - Components Monetary policy is likely to affect 8% 7% 7.0 Risk Premium (%) the short end of the yield curve 6% 6.0 6% Inflation Expectations (%) Real rate (%) 5% 5.0 4% Our proprietary central bank 4% 4.0 reaction function model allows us 2% to determine the fair value of 3% 3.0 short-end rates consistent with 0% 2% 2.0 fundamentals Inflation Gap -2% Output Gap 1% 1.0 Interest Rate (RHS) Our fair yield curve model reflects -4% 0% 0.0 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 1M 3M 6M 9M 10Y O/N Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 the behavior of economic Jan-11 fundamentals and the likely Peru: Market versus Model Policy Rate Path Peru: Market versus Model Yield Curves behavior of monetary policy rates 7 5.0

6 We estimate risk premium and 4.5 5 use non-arbitrage conditions to 4.0 build the fair yield curve and 4 derive its components 3.5 3 3.0

2 Market Implied Rate 2.5 Market Yield Curve Model Policy rate 1 Cash Yield Curve 2.0 Model Yield Curve

0 Jul-11 Apr-11 Apr-12 Oct-11 Jan-11 Jun-11 Jan-12 Mar-11 Mar-12 Feb-11 Feb-12 Nov-11 Aug-11 Sep-11 Dec-11 May-11 May-12 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y O/N 10Y

Source: Morgan Stanley Investment Management

Page 14 Data as of December 31, 2010. Domestic Debt Valuation (cont’d)

Domestic Yield Curve Valuation Model: GBI EM GD Countries 1 Domestic Bond Return Potential: GBI EM GD Countries 1

2.0 % 10.0 Undervalued % 1 Year 1.0 8.0 5 Year 0.0 6.0 10 Year -1.0 4.0 -2.0 2.0 -3.0 0.0 -4.0 -2.0 1 Year -5.0 -4.0 5 Year -6.0 10 Year -6.0 -7.0 Overvalued -8.0 -8.0 -10.0 Peru Chile Peru Brazil Egypt Chile Chile Brazil Egypt Turkey Russia Poland Mexico Russia Turkey Poland Mexico Hungary Thailand Malaysia Hungary Thailand Colombia Malaysia Colombia Indonesia Indonesia Philippines Philippines South Africa South Korea South Korea South Africa

1/ Fair minus actual yields. 1/ Inclusive of the effect of duration.

Domestic Bonds Carry: GBI EM GD Countries Domestic Bonds 12 month Potential Return 12.0 20.0 % 1 Year % 1 Year 5 Year 5 Year 10.0 10 Year 15.0 10 Year

8.0 10.0 6.0

5.0 4.0

2.0 0.0

0.0 -5.0 Peru Chile Chile Peru Brazil Egypt Chile Brazil Egypt Turkey Russia Poland Mexico Turkey Russia Poland Mexico Hungary Thailand Malaysia Hungary Thailand Colombia Malaysia Indonesia Philippines Colombia Indonesia Philippines South Korea South Africa South Korea South Africa

Source: Morgan Stanley Investment Management, Central Bank and Bloomberg 1. Fair minus actual yields. 2. Inclusive of the effect of duration. Page 15 Data as of December 31, 2010. Domestic Valuation: 12 Month Potential Returns 1

25%

20%

15%

• We combine our exchange 10% rate and interest rate valuation models to assess 5% relative value 0%

•Total return potential looks -5% attractive in many EM countries. -10% Total Return from 1yr Bonds -15% Total Return from 5yr Bonds Total Return from 10yr Bonds -20% Peru Peru Chile Chile Brazil Brazil Egypt Egypt Poland Poland Russia Turkey Mexico Thailand Thailand Hungary Malaysia Malaysia Colombia Colombia Indonesia Indonesia Philippines South Korea South South Africa Africa South

Past performance is no guarantee of future results. The estimated returns or projections are provided by way of example only. There can be no assurance that estimated returns or projections can be realized or that actual returns or performance results will not be materially lower than those estimated herein. The expected returns do not reflect the performance of any Morgan Stanley investment. The estimated returns or projections are based on the research, analysis and opinions of the authors and on Morgan Stanley’s propriety models and various assumptions, and any changes to such models and assumptions could have a material impact on the returns set forth herein.

(1) Inclusive of the impact of FX exposure. Source: Morgan Stanley Investment Management. Data as of December 31, 2010. Page 16 Position Sizing

Positions are sized based on: Model vs. Actual Portfolio Weights Relative to the GBI-EM Global Diversified • Total return potential Data as of December 31, 2010 • Volatility and Correlation • Conviction factor 4.0 % Local Debt Model 3.0 Local Debt Actual

2.0

1.0

0.0

-1.0

-2.0

-3.0 India Peru Chile Egypt Brazil China Korea Poland Turkey Russia Mexico Thailand Hungary Malaysia Colombia Indonesia Philippines South Africa South

Source: Morgan Stanley Investment Management. For illustrative purposes only

Page 17 Section 3 Performance

Page 18 MS INVF Emerging Markets Domestic Debt Fund Presented in U.S.$ terms

Performance Returns 1 as of December 31, 2010 The inception date of the MS INVF EM Domestic Debt Fund is February 27, 2007

18 15.68 15.68 16 14.45 14.45 14 12.36 12 10.18 10.11 10 8.88

6 Percent (%) Percent 4 3.40 3.14

0 (0.39) (2) (1.20)

(4) Dec-10 QTD YTD 1 Year 3 Year Since Inception (Ann) MS INVF Emerging Markets Domestic Debt Fund JPM GBI-EM Global Diversified Index

1. Past performance should not be construed as a guarantee of future performance. Performance returns reflect the average annual rates of return. Periods less than 1 year are not annualized. MS INVF Emerging Markets Domestic Debt Class I shares performance figures are presented NET of investment management fees and are quoted in U.S.$ terms. Performance returns are compared to those of an unmanaged market index and are considered to be a relevant comparison to the portfolio. Comparisons of performance assume the reinvestment of all dividends and income. Performance figures are based on price comparison of NAV to NAV. Shares in the MS INVF Emerging Markets Domestic Debt Fund are not for distribution in the United States or to U.S. persons. Securities of small capitalization companies involve greater risk and the markets for such securities may be more volatile and less liquid. Applications for shares in any Morgan Stanley Investment Funds should not be made without first consulting the current Prospectus, Simplified Page 19 Prospectus, Annual Report and Semi-Annual Report or other documents available in your local jurisdiction which are available free of charge from Morgan Stanley Investment Management Limited. MSIM Local Debt Performance Relative to Peers 1,2

The Ranking information provided herein is provided solely for illustrative purposes only and to show the capabilities of the management team. The MS INVF Funds referenced herein should in no way be construed as an offer or solicitation to invest or participate and should not construe the results shown herein as an indicator of how the composite would have or will rank. In addition, the client should note that there are important differences (such as fees, client restrictions, and guidelines) in how the strategy is managed within the MS INVF Fund and a separate account, which can impact performance. Thus, performance can differ, perhaps significantly between investment vehicles. Individual results will vary.

Source: MSIM and Bloomberg

1. Performance as of November 30 th , 2010. Past performance should not be construed as a guarantee of future performance. 2. Based on the comparison of 12 publicly traded funds (mostly SICAV). Page 20 Emerging Markets Domestic Debt Risk Report

Monthly Tracking Error +/- 0.256 Annualized Tracking Error +/- 0.89 Annualized Volatility of Benchmark +/- 10.054 Monthly Tracking Error = +0.256% Annualized Volatility of Portfolio +/- 9.977

Annualized Tracking Error = Relative Country Relative Contribution +0.89% Relative Relative Contribution Beta vs. ContributionAnnualized to Currency Bond Exposure FX Exposure to Duration Index to Beta Tracking Error

Annualized Volatility of Brazil 0.35 0.00 0.28 1.21 0.01 0.18 Benchmark = +10.054% Chile -0.13 -0.13 -0.01 0.55 0.00 0.00 Colombia -2.18 -2.18 -0.01 0.57 -0.01 0.04 Annualized Volatility of Portfolio = Egypt 1.99 1.99 0.09 -0.03 0.00 0.01 +9.977% Hungary -1.54 -1.54 -0.06 1.99 -0.03 0.13 Indonesia -0.35 -0.35 -0.07 0.79 0.00 0.08 Malaysia -6.45 -0.17 -0.36 0.41 0.00 0.01 Mexico 2.33 -0.03 0.64 1.06 0.01 0.26 Peru 2.61 2.61 0.22 0.19 0.01 0.00 Philippines -0.23 -0.23 -0.02 0.47 0.00 0.00 Poland 0.00 0.00 0.24 1.76 0.01 0.04 Russia -5.32 -0.09 -0.14 0.87 0.00 0.01 South Africa 2.46 -0.12 0.20 1.37 0.00 0.06 Thailand -6.12 -0.11 -0.43 0.15 0.00 0.04 Turkey 1.54 0.00 0.00 1.06 0.00 0.01

Total 0.59 -0.01 0.89

Data as of October 31, 2010 date. This is a representative account of the EM Domestic Debt Strategy. Each portfolio may differ due to specific investment restrictions and guidelines. Past performance is not a reliable indicator of future performance. Inception date for the representative account is February 28, Page 21 2007 . Performance is stated in USD currency. The representative account results shown are gross of investment advisory fees, and include the reinvestment of dividends and income. If fees had been deducted returns would have been lower. EM Domestic Debt Attribution Report 1 Year Summary Attribution Portfolio: EMDDSF_t Benchmark : idxJPM_221_GBI_EM_Global_Diversified_t Period: 12/31/2009 to 12/31/2010 Total Return Portfolio 1,575.5 Benchmark 1,570.8 Relative Performance 4.6 Common Factors Allocated Effects TOTAL 18.5 TOTAL -13.3 Our strategy benefited from: Foreign Exchange -114.9 Sector Allocation -3.5 Yield Curve 175.0 Security Selection -9.7 • Yield Curve positioning in Intra Day Trading -45.3 Pricing 3.6 Brazil, Mexico, and South FX YC Intra-Day Pricing Sec. Alloc. Sec. Sel. Africa Total -114.9 175.0 -45.3 3.6 -3.5 -9.7 • FX underweight in Hungary Brazil-BRL 14.2 153.5 -9.4 1.0 -6.8 -70.2 Chile-CLP 1.8 -1.1 0.0 0.0 0.0 0.0 • Overweight and security China-CNY 0.0 0.0 0.0 0.0 0.0 0.0 selection in Indonesia and Colombia-COP -16.2 -18.2 -1.9 -0.1 2.7 36.8 Ukraine Ecuador-USD 0.0 3.9 0.1 0.0 -1.5 0.0 Egypt-EGP -10.5 0.0 -1.0 0.0 11.4 -2.5 • Tactical allocation to European Union-EUR 1.2 0.0 -1.2 0.0 -0.4 0.0 Venezuelan external debt Hungary-HUF 20.9 -17.2 1.0 2.7 -1.2 -0.6 India-INRSegment 0.0 0.0Common 0.0 Factors 0.0 0.0 Allocated 0.0 Effects Indonesia-IDR 8.2 18.5 9.9 -0.9 20.1 6.8 Conversely, the following factors Malaysia-MYR -72.8 -30.7 -2.1 0.2 -9.1 -2.3 Mexico-MXN 16.1 60.6 -2.7 0.1 0.7 -3.9 impacted returns negatively Nigeria-NGN 0.0 0.0 0.0 0.0 0.0 0.0 • FX exposure in Malaysia and Other-USD 0.0 -3.5 5.0 0.0 0.0 0.0 Thailand Other-CNY 0.9 -0.7 -0.1 0.0 0.0 0.0 Other-EUR 42.2 -4.0 0.8 0.0 0.0 0.0 • Overweight to the Korean won Other-BRL -10.2 -1.3 0.3 0.0 0.0 0.0 • Yield curve positioning in Other-MXN -6.9 1.5 -2.6 0.0 0.0 0.0 Other-THB -3.8 1.9 -3.6 0.0 0.0 0.0 Russia Other-KRW -24.1 2.4 2.1 0.0 0.0 0.0 Other-CLP 3.3 0.6 -0.5 0.0 0.0 0.0 Other-HUF 0.8 0.1 0.0 0.0 0.0 0.0 Other-INR -1.2 1.0 -0.8 0.0 0.0 0.0 Other-MYR 26.5 14.0 -12.2 0.0 0.0 0.0 Other-PLN -5.2 8.7 -5.0 0.0 0.0 0.0 Other-RUB -5.9 18.3 -6.0 0.0 0.0 0.0 Other-ZAR -13.8 -2.9 -0.9 0.0 0.0 0.0 Other-TRY -18.0 -3.4 -0.9 0.0 0.0 0.0 Peru-PEN -5.1 -26.3 -6.3 0.1 9.3 19.4 Philippines-PHP -0.1 -3.3 0.7 0.0 2.2 0.0 Poland-PLN -20.2 -11.0 2.1 0.9 2.4 14.4 Page 22 Russia-RUB 4.4 -47.8 0.0 0.0 -4.5 0.0 S.Africa-ZAR 37.5 46.5 -3.0 0.0 0.8 2.2 S.Korea-KRW 0.0 0.0 0.0 0.0 0.0 0.0 Singapore-SGD 0.0 0.0 0.0 0.0 0.0 0.0 Thailand-THB -69.9 -44.7 -1.4 0.3 -5.9 -5.8 Turkey-TRY -11.0 10.2 5.4 -0.7 -4.4 -4.1 Ukraine-USD 0.0 1.7 0.3 0.0 10.7 0.0 United Kingdom-GBP 0.0 0.0 0.0 0.0 0.0 0.0 United States-USD 0.0 0.0 -3.1 0.0 -0.2 0.0 Venezuela-USD 0.0 43.1 -6.4 0.0 -25.7 0.0 N/A-IDR 1.8 4.4 -1.8 0.0 -4.1 0.0 Section 4 Market Outlook

Page 23 Current Outlook: Developed Policy Uncertainty Driving EM

• We expect growth in the developed world to recover somewhat in 2011, reflecting a new wave of expansionary fiscal and monetary policies -particularly in the US. However, the unresolved fiscal sustainability issues in the periphery of Europe and states in the US are likely to generate periodic bouts of risk aversion into 2011. Such expansionary policies in the developed world are likely to provide further support to commodity prices and capital inflows to EM countries, but will also exacerbate inflationary and currency appreciation pressures.

• Our constructive view on EM assets in 2011 reflects strong domestic demand- driven growth, supportive terms of trade and large capital inflows. EM countries are likely to respond to expansionary polices in the developed world by hardening capital controls to avoid a further appreciation of their currencies while hiking rates at a pace adequate to contain inflationary pressures in their economies. Overall, we believe that EM central banks will be able to slow but not to reverse the appreciation trend in their currencies.

• The impact of the strong macroeconomic fundamentals in EM on sovereign risk premium appears to be fully priced in most countries, with pockets of undervaluation on which we will focus. In contrast, we believe that higher carry and continued portfolio flows will continue to support EM currencies. Several currencies in Asia and certain commodity currencies remain undervalued and could benefit further from a benign external environment and easy monetary policy in the developed world.. Page 24 Potential Returns: Emerging Markets Debt 2011 • A 10-15% total return range could be achievable for EM Domestic Debt in 2011; while EM External debt could have a total return between 8-10%

• The carry on our EMDD strategy is around 7.0% and we believe it is possible to produce around 2-3% from FX exposure and a similar amount from curve exposure in 2011. Hard- currency debt could tighten another 50-75 to 250-225bps over US Treasuries in 2011. Since the current yield is 5.5%, given the 7 yr spread duration of the index this 50-75bps compression in spreads translates into an additional 3.5-5.0% return, hence the 8-10% estimate for total return in EMD.

• We expect policy rates to remain lower for longer in the developed world. We also expect EM to hike rates at a slower pace than previously anticipated. Rates in EMEA and Latin America looks generally attractive. Rates in Asia are too low.

• We find that EM external debt valuations in aggregate are close to fair value, with pockets of significant undervaluation. Spread compression could happen in lower quality credits with no payment capacity problems (Argentina, Venezuela) other with less solid external accounts but multinational aid (Pakistan, Ukraine,) and high quality credits that are undervalued (Russia, Kazakhstan). The strong fundamentals in EM appear to be mostly priced in by the markets.

• Higher carry and continued portfolio flows could support EM currencies. Several currencies in Asia are undervalued and could benefit from a more rapid appreciation of the CNY. Other commodity currencies in EM are also undervalued and could benefit further from QE in the developed world. Page 25 Global Growth: No Double Dip But Softer in 2011 Real GDP Growth: EM vs. Developed Economies Data as of December 31, 2010

We expect world GDP growth to reach 4.8% in 2010 and 4.2% in 2011, from -0.8% in 2009.

EM real GDP growth should recover to 7.7% in 2010 but soften to 6.4% in 2011, from 2.4% in 2009.

Developed countries’ growth should reach 2.5% in 2010 and 2.4% in 2011, from -3.3% in 2009

*Past performance is no guarantee of future results. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass.

Page 26 Source: MSIM, Official Sources and Bloomberg. Higher Interest rates: Supportive for EM Currencies

Monetary normalization in EM countries is likely to gain speed in an effort to contain inflationary pressures in 2011.

We expect major EM economies to hike policy rates 100 bps in 2011: 175 bps in Latin America, 100 bps in Asia and 50 bps in Eastern Europe.

(1) Overnight Monetary Policy Rates.

Page 27 Source: Morgan Stanley Investment Management. Data as of December 31, 2010 Stronger fundamentals in Emerging Countries Data as of December 31, 2010

300 12 Public Sector Gross Debt/GDP 2010 (lhs) EM economies present Fiscal Def icit/GDP 2011 250 10 healthier fiscal stances than Real GDP Growth 2011 the developed world. 200 8 EM countries have relatively

low debt levels and good 150 6 fiscal positions. Less constrained by debt 100 4 Percent levels and deteriorating fiscal Percent dynamics, EM economies are 50 2 likely to outperform their developed counterparts in 0 0 terms of economic growth in

2010 and 2011. -50 -2

-100 -4 U.S. Brazil Spain China Japan Poland Russia Turkey Mexico Europe Greece Portugal Indonesia South Africa

Source: Morgan Stanley Investment Management and Official Sources. Page 28 Changes in Credit Ratings During 2010*

Moody's S&P Fitch Change Change Change Changes in credit ratings Country Date New / Old Date New / Old Date New / Old during 2010 show a large Latam divergence between Argentina 9/13/10 B / B- 7/12/10 B / B- developed and emerging Chile 6/16/10 Aa3 / A1 countries. Dominican Rep Jamaica 3/2/10 B3 / Caa1 2/24/10 B- / CCC 2/16/10 B- / CCC Panama 6/9/10 Baa3 / Ba1 5/25/10 BBB- / BB+ 3/23/10 BBB- / BB+ During 1H 2010, many Asia developed countries faced China 11/11/10 Aa3 / A1 12/16/10 AA- / A+ downgrade pressures, Indonesia 3/12/10 BB / BB- 1/25/10 BB+ / BB whereas many EM countries Korea 4/14/10 A1 / A2 experienced ratings Philippines 11/12/10 BB / BB- upgrades. Vietnam 12/15/10 B1 / Ba3 12/23/10 BB- / BB 7/28/10 B+ / BB- EMEA Belarus 5/20/10 BBB- / BB+ Ratings in EM reflect solid Estonia 6/10/10 A / A- 7/19/10 A / BBB+ macro policies, strong fiscal Georgia 4/12/10 B+ / B accounts and low debt ratios. Turkey 1/8/10 Ba2 / Ba3 2/19/10 BB / BB- Ukraine 7/29/10 B+ / B 7/6/10 B / B- Developed Greece 6/14/10 Ba1 / A3 4/27/10 BB+ / BBB+ 4/9/10 BBB- / BBB+ Ireland 12/17/10 Baa1 / Aa2 8/24/10 A / AA- 12/9/10 BBB+ / A+ Portugal 7/13/10 A1 / Aa2 4/27/10 A- / A+ 12/23/10 A+ / AA- Spain 9/30/10 Aa1 / AAA 4/28/10 AA / AA+ 5/28/10 AA+ / AAA

(*) Green = upgrade; Red = downgrade. In brackets, +/- means positive/negative outlook. Source: Morgan Stanley Investment Management and Official Sources. Page 29 Data as of December 31, 2010 EM Domestic Debt Index Returns Components Using GBI-EM Global Diversified Index data

300 A significant portion of the return comes from a stable Total Return 280 income stream and currency. Currency Return 260 Capital Appreciation/Depreciation Income Return 240

220

200

180

160 Index (Base 100=Dec 2002) 100=Dec Index (Base

140

120

100 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10

Source: Morgan Stanley Investment Management using data from JP Morgan. Page 30 Data as of December 31, 2010. Past performance is no guarantee of future results. For illustrative purposes only. Appendix A Portfolio Characteristics – Domestic

Page 31 Country Breakdown

Portfolio 1 Benchmark 2 Country Breakdown Difference Between Portfolio and Benchmark Country (%) (%) Data as of December 31, 2010 Brazil 10.26 10.00 Chile 0.00 0.13 4 Colombia 4.87 4.85 3 Egypt 2.27 0.24 Hungary 4.90 6.98 2 Indonesia 9.34 9.93 1 Malaysia 3.59 10.00 Mexico 11.00 10.00 0 Peru 4.35 1.72 Philippines 0.00 0.24 (1) Poland 11.06 10.00 (2) Russia 0.00 5.92 South Africa 12.59 10.00 (3) Thailand 3.80 10.00 (4) Turkey 12.25 10.00 (5)

(6)

(7) Peru Chile Brazil Egypt Turkey Russia Poland Mexico Hungary Thailand Malaysia Colombia Indonesia Philippines South Africa South

1. The Portfolio represents the MS INVF EM Domestic Debt Fund. 2. The benchmark is the JPM GBI-EM Global Diversified Index. Applications for shares in any Morgan Stanley Investment Funds should not be made without first consulting the current Prospectus, Simplified Prospectus, Annual Report and Semi-Annual Report or other documents available in your local jurisdiction which are available free of charge from Morgan Stanley Investment Management Limited. Page 32 FX Breakdown

Portfolio 1 Benchmark 2 FX Breakdown Difference Between Portfolio and Benchmark Country (%) (%) Data as of December 31, 2010 Brazil 11.76 10.00 Chile 1.06 0.13 4 Colombia 4.87 4.85 Egypt 2.29 0.24 Hungary 4.88 6.98 India 1.01 0.00 2 Indonesia 9.46 9.93 Malaysia 10.14 10.00 Mexico 11.73 10.00 Peru 4.44 1.72 Philippines 0.00 0.24 0 Poland 11.07 10.00 Russia 5.75 5.92 South Africa 12.64 10.00 South Korea 1.01 0.00 Thailand 9.93 10.00 (2) Turkey 12.29 10.00

(4) Peru India Chile Brazil Egypt Turkey Russia Poland Mexico Hungary Thailand Malaysia Colombia Indonesia Philippines South Africa South South Korea South

Portfolio 1 Benchmark 2 Interest Rate Duration Difference Between Portfolio and Benchmark Country (%) (%) Data as of December 31, 2010 Brazil 0.48 0.25 Chile 0.00 0.01 0.7 Colombia 0.33 0.26 Egypt 0.10 0.00 Hungary 0.18 0.25 0.5 Indonesia 0.58 0.62 Malaysia 0.08 0.43 0.3 Mexico 1.03 0.54 Peru 0.37 0.15 0.1 Philippines 0.00 0.02 Poland 0.66 0.36 Russia 0.00 0.15 (0.1) South Africa 0.81 0.60 Thailand 0.15 0.59 (0.3) Turkey 0.29 0.21 Total 5.06 4.44 (0.5)

(0.7) Peru Chile Brazil Egypt Russia Turkey Poland Mexico Hungary Thailand Malaysia Colombia Indonesia Philippines South Africa South

Portfolio Statistics 1 Data as of December 31, 2010

Portfolio Benchmark 2 Interest Rate Duration 5.06 4.43

Current Yield 6.63 6.62

Average YTM 7.10 6.73

Average Coupon 7.00 7.08

Average Price 104.08 104.29

Average Maturity 7.86 6.66

Average Rating A- BBB+

Beta 1.18 1.00

Asset Breakdown (Portfolio) Benchmark Asset Breakdown (Index) Data as of December 31, 2010 Data as of December 31, 2010

9.5%

Sovereign Sovereign Cash

90.3% 100%

Region Breakdown (Portfolio) Region Breakdown (Index) Data as of December 31, 2010 Data as of December 31, 2010

9.5% 30.2% 16.7% LATAM 26.7% LATAM 30.5% Africa/ Middle East Africa/ Middle East Europe 10.2% Europe Asia 14.9% 28.2% 32.9% Asia Cash

Page 37 Market Capitalization of EM and Other Fixed Income Markets

Size of EMD asset class larger • EMBIG $ (external debt): $407B • GBI: $18,101B than many expect

• EMBIG EUR (external debt): €65B • U.S. Aggregate: $14,980B

• GBI-EM Gbl Div (domestic debt): $802B • Global Aggregate: $37,231B

• EM Corporates in USD: $340B • U.S. HY: $942B

• EM Total: $1,635B • European HY: $193B

• Global HY: $1,402B

Source: JPMorgan, Merrill Lynch and Barclays. December 31, 2010.

Page 38 Characteristics of Emerging Markets Debt Indices Based on month-end data from December 31, 2002 through December 31, 2010 Characteristics of Emerging Markets Debt Indices Domestic Debt (GBI-EM GD): Based on month-end data from December, 2002 through December 31, 2010, unless otherwise indicated EM GBI Global Div EMBIG • 15 Countries (Domestic currency (Hard currency bonds bonds expressed in • Average rating of BBB+ expressed in USD) USD) • Strong historic returns Characteristics as of December, 2010 Yield to maturity (%) 6.94 6.08 External Debt (EMBIG): Interest rate duration (yrs) 4.65 7.17 Market capitalization (USD bn) 802 407 • 41 Countries Countries 15 41 Rating BBB+ BB+ • Average rating of BB+ Total return (%) as of December, 2010 • Strong historic returns 2003 16.92 25.68 2004 22.97 11.74 2005 6.27 10.50 2006 15.22 9.88 2007 18.11 6.28 2008 -5.23 -10.91 1 yr 15.68 12.04 3 yr 10.17 8.56 5 yr 12.72 8.36 YTD 15.68 12.04 Dec 2002-December 2010 -- Annualized Figures (%) Total Return 13.64 11.08 Volatility 11.50 9.30 Sharpe ratio 0.96 0.92 Source: JP Morgan Chase and Morgan Stanley Investment Management. Past performance is no guarantee of future results.

Source: MSIM and JPMorgan Chase. Indexes do not include any expenses, fees or sales charges, which would lower performance. Indexes are unmanaged and should not be considered an investment. It is not possible to invest directly in an index. Page 39 Strategic and Tactical Allocation

Historical Multi-Year Performance Record for Fixed Income 1 Historically, emerging markets Data as of December 31, 2010 debt has demonstrated strong 20 returns 15.7 15.2 15.2 15 12.0 12.7 10.2 10.1 10.3 10 7.3 8.6 8.8 8.4 8.6 6.8 8.0 7.6 5 2.3 1.4 0 Rates of Return (%) Average Annualized (5) (2.8) 1 Year 3 Years 5 Years 10 Years EMD Domestic (GBI EMGD) JPMGGBxUS ML High Yield S&P 500 EMD External (EMBIG)

Longer term correlations between Correlations of Emerging Markets Debt vs. Other Asset Classes emerging markets debt and other Based on month end data from December 31, 2002 through December 31, 2010 markets are relatively low JPM GBI-EMJPM EMBI JPM EMBI ML High JPM MSCI Barclays US Barclays US Global Div Global Div Global Yield Barclays Gov'tGGBxUS S&P 500NASDAQ EMF Agg Global Agg JPM GBI-EM Global Div 1.00 … … … … … … … … … … JPM EMBI Global Div 0.79 1.00 … … … … … … … … … JPM EMBI Global 0.79 1.00 1.00 … … … … … … … … ML High Yield 0.68 0.78 0.77 1.00 … … … … … … … Barclays Gov't 0.21 0.37 0.39 -0.12 1.00 … … … … … … JPM GGBxUS 0.56 0.45 0.47 0.22 0.58 1.00 … … … … … S&P 500 0.69 0.57 0.57 0.71 -0.17 0.20 1.00 … … … … NASDAQ 0.60 0.50 0.50 0.67 -0.26 0.11 0.93 1.00 … … … MSCI EMF 0.77 0.65 0.64 0.71 -0.14 0.26 0.82 0.79 1.00 … … Barclays US Aggregate 0.45 0.67 0.68 0.28.01 0.90 0.14 0.62 1.00 0.09 … -0 Barclays Global Aggregate 0.64 0.57 0.58 0.3331 0.19 0.61 0.37 0.90 0.71 0. 1.00

Page 40 Source: MSIM and JPMorgan Chase. Past performance is not a guarantee of future returns. Correlations of Emerging Markets Local Debt Based on month-end data from December 31, 2002 – December 31, 2010

Inter-country correlations are quite low

Correlations of Emerging Markets Local Debt Countries - Total Returns Based on month-end data from December, 2002 through December, 2010 Average = 0.48

GBI-EM Global Div Brazil Colombia Czech Republic Egypt Hungary Indonesia Malaysia Mexico Peru Poland Russia Slovakia South Africa Thailand Turkey GBI-EM Global Div 1.00 Brazil 0.66 1.00 Colombia 0.72 0.62 1.00 Czech Republic 0.73 0.36 0.29 1.00 Egypt 0.47 0.53 0.56 0.21 1.00 Hungary 0.82 0.33 0.48 0.74 0.46 1.00 Indonesia 0.73 0.57 0.53 0.36 0.41 0.49 1.00 Malaysia 0.66 0.38 0.58 0.43 0.22 0.44 0.59 1.00 Mexico 0.70 0.59 0.54 0.43 0.33 0.45 0.55 0.49 1.00 Peru 0.62 0.38 0.64 0.35 0.56 0.51 0.52 0.52 0.48 1.00 Poland 0.82 0.40 0.45 0.81 0.27 0.81 0.39 0.45 0.55 0.47 1.00 Russia 0.47 0.33 0.24 0.62 0.10 0.48 0.23 0.31 0.52 0.241.00 0.57 Slovakia 0.73 0.38 0.34 0.84 0.33 0.75 0.41 0.45 0.42 0.4174 0.420. 1.00 South Africa 0.76 0.41 0.53 0.48 0.31 0.57 0.47 0.45 0.3652 0. 0.56 0.28 0.47 1.00 Thailand 0.47 0.16 0.29 0.35 -0.02 0.27 0.45 0.56 0.28 0.28.32 0.110 0.35 0.29 1.00 Turkey 0.81 0.65 0.68 0.39 0.51 0.58 0.62 0.48 0.59 0.510.20 0.56 0.43 0.68 0.27 1.00

Source: MSIM and JPMorgan Chase. For illustrative purposes only. Correlation results are historical and subject to change. Page 41 Potentially Higher Returns, Lower Risk

Potential Effects of Adding Emerging Markets Debt to a Fixed Income Portfolio Data as of December 31, 2010 Emerging Markets Debt could serve as: 15.0 • Part of an overall asset 14.0 allocation strategy • Part of a fixed income strategy 13.0 • A tactical allocation strategy 12.0 11.0 10.0 9.0

Annualized Return (%) 8.0 7.0 6.0 5.5 6.5 7.5 8.5 9.5 10.5 11.5 12.5 Annualized Standard Deviation (%)

EM External Debt vs GBI Global EM External Debt vs EM Domestic Debt EM Domestic Debt vs GBI Global EMD 50% / EMDX 50% vs GBI Global

EMDD Variance Minimizing Mix with: GBI Global 71% EM External Debt 29% GBI Global 88% EM Domestic Debt 12% EMD External Debt 94% EM Domestic Debt 6% GBI Global 78% EMD 50% / EMDX 50% 22%

Source: Morgan Stanley Investment Management and JPMorgan. Past performance is no guarantee of future results. For illustrative purposes only Page 42 Volatility Has Receded Lately Rolling 3 Month Volatility 1

Volatility has come down from the 70 % highs in December 2008

60 EM external debt has one of the lowest current volatility among various asset classes 50

3 5 7 9 9 0 03 0 05 0 07 -08 0 0 -10 r- r-04 g-04 - r-06 g-06 - r-08 g - r-10 g p ec- u u u u A Aug-03 D Ap A Dec-04 Apr Aug-05 Dec- Ap A Dec-06 Apr Aug-07 Dec- Ap A Dec-08 Apr Aug-09 Dec- Ap A Dec-10 S&P 500 EMBI Global JPM 10Yr Treasury CSFB High Yield JPM GBI JPM EM GBI GD MSCI EME

Source: MSIM, JPMorgan, MSCI Barra and Credit Suisse.

Page 43 1. Based on daily data from December 2002 through December 2010. Domestic Debt (GBI-EM GD Weights) Data as of December 31, 2010

By Region By Rating By Country Brazil 10.0 Mexico 10.0 Malaysia 10.0 Poland 10.0 South Africa 10.0 Thailand 10.0 10.2% Turkey 10.0 Indonesia 9.9 26.7% 50.0% 29.6% Hungary 7.0 Africa/ME Colombia 4.9 BBB Russia 5.9 30.2% Asia Peru 1.7 BB Europe Egypt 0.2 A Philippines 0.2 Latin America Chile 0.1 20.2% 32.9%

Source: JPMorgan Source: JPMorgan

Page 44 Appendix C Team Biographies

Page 45 Emerging Markets Debt Team

Eric Baurmeister, CFA Federico Kaune, Ph.D. William W. Perry Sudarshan P. Gururaj, Ph.D. Managing Director Managing Director Executive Director Vice President

[email protected] [email protected] William.W. [email protected] [email protected] Eric is co-head of the Global Emerging Federico is co-head of the Global William joined Morgan Stanley in 2010 Sudarshan joined Morgan Stanley in 2010 Markets Debt team. He joined Emerging Markets Debt team. He joined and has over 20 years of industry and has nine years of investment Morgan Stanley in 1997 and has 16 years Morgan Stanley in 2002 and has 16 years experience. He is an Executive Director experience. He is a Vice President for our of investment experience. Prior to joining of investment experience. Prior to joining for our Emerging Markets Debt team. Emerging Markets Debt team. Prior to the Firm, he was a portfolio manager at the Firm, he was a senior vice president Prior to joining the Firm, he worked for joining the firm, he worked for Neuberger MIMCO. Eric received a B.A. from and senior economist at Goldman Sachs & over 16 years at JP Morgan. In his last Berman in the quantitative investment Cornell University in Economics and Co. Previously, he was an Economist at position he led the Latin American team group managing the firm's emerging Government, and holds the Chartered International Monetary Fund. Federico for Global Special Opportunities. markets debt strategy. Previously, he Financial Analyst designation. He is also a received a B.A. from University del Previously, he was credit deputy to the worked for Goldman Sachs Asset member of the CFA Institute and the Pacifico in Economics (Lima-Perú), and Global Head of Emerging Markets and Management in their quantitative JPMorgan EMBI Index Advisory an M.A. and Ph.D. from the University of Co-Head of EM Corporate Research. He strategies group. Sudarshan received a Committee. Chicago in Economics. He is a member of also worked in the Latin Corporate Debt Ph.D. from Columbia University's the American Economic Association. Restructuring and Debt Capital Markets Graduate School of Business. He also Groups of JP Morgan. He received his holds a BS from Yale University in MBA in Finance from Columbia Business Electronic Engineering/Computer Science School and his BA from Colgate and Economics. University in International Relations.

Page 46 Emerging Markets Debt Team

Masakazu Kuwazoe, CFA Sahil Tandon, CFA Michael Guichon Henry Gonzalez Executive Director Vice President Associate Vice President

[email protected] [email protected] [email protected] [email protected] Sahil joined Morgan Stanley in 2004 and Michael joined Morgan Stanley in 2007 Masakazu is a member of the Fixed Henry joined Morgan Stanley in 2005 and has 6 years of investment experience. He and has 3 years of investment experience. Income team. He joined Morgan Stanley has over 14 years of experience in is a Vice President for our Emerging He is an Associate for our Emerging in 2001 and has 13 years of investment financial markets, economic development Markets Debt Team. Sahil received a B.A. Markets Debt Team. Prior to this role, experience. Prior to joining the firm, he and pubic policy. He led the coverage from Brandeis University in Economics Michael worked as a rates analyst. He was a member of the performance efforts for the Firm’s Microfinance Group and holds the Chartered Financial Analyst received a B.S. from the University of attribution team at Nomura Asset after working as Investment designation. Pennsylvania in Mechanical Engineering. Management, a role in which he measured Representative for the Latin American performance and managed risk. Masakazu Private Wealth Management division. received a B.S. in mathematics from Prior to that, he worked for the United Osaka University and holds the Chartered Nations, the World Bank, and the Financial Analyst designation. He is a Government of Costa Rica. Henry member of the Security Analysts received an MBA from Oxford University Association of Japan. and an MPA from Harvard University. He also holds a BA in Political Science from the University of Costa Rica.

Page 47 Compliance Disclosure

For Business & Professional Investors Only and Not To Be used With The General Public This financial promotion was issued and approved in the UK by Morgan Stanley Investment Management Limited, 25 Cabot Square, Canary Wharf, London E14 4QA, authorized and regulated by the Financial Services Authority, for distribution to Professional Clients or Eligible Counterparties only and must not be relied upon or acted upon by Retail Clients (each as defined in the UK Financial Services Authority’s rules). This communication is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations. The document has been prepared solely for information purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The material contained herein has not been based on a consideration of any individual client circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision. Except as otherwise indicated herein, the views and opinions expressed herein are those of Morgan Stanley Investment Management, are based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date hereof. This communication is a marketing communication. It is not a product of Morgan Stanley’s Research Department and should not be regarded as a research recommendation. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto. All information contained herein is proprietary and is protected under copyright law.

Risk Warning Past performance is not a guarantee of future performance. The value of the investments and the income from them can go down as well as up and an investor may not get back the amount invested. There can be no assurance that the Fund will achieve its investment objectives. Investments may be in a variety of currencies and therefore changes in rates of exchange between currencies may cause the value of investments to decrease or increase. Furthermore, the value of investments may be adversely affected by fluctuations in exchange rates between the investor’s reference currency and the base currency of the investments. For investments in emerging markets, the volatility and risk to your capital may be greater due to potential price volatility, political and/or economic risks. Debt securities may not be rated by a recognized rating agency. High yield fixed income securities are considered speculative, involve greater risk of default and tend to be more volatile than investment grade fixed income securities. Securities of small capitalization companies: these securities involve greater risk and the markets for such securities may be more volatile and less liquid. Funds that specialize in a particular region or market sector are more risky than those which hold a very broad spread of investments. Where portfolio concentration is in one sector it is subject to greater risk and volatility than other portfolios that are more diversified and the value of its shares may be more substantially affected by economic events in the real estate industry. Investments in derivative instruments carry certain inherent risks such as the risk of counter party default and before investing you should ensure you fully understand these risks. Use of leverage may also magnify losses as well as gains to the extent that leverage is employed. These investments are designed for investors who understand and are willing to accept these risks. Performance may be volatile, and an investor could lose all or a substantial portion of his or her investment.

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