Morgan Stanley Institutional Fund Trust – ‘497’ on 3/25/02

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Document/Exhibit                   Description                      Pages   Size 

 1: 497         Morgan Stanley Institutional Fund Trust               98    839K 

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MORGAN STANLEY INSTITUTIONAL FUND, INC. 
Fixed Income III Portfolio  
High Yield II Portfolio 

P.O. Box 2798 
Boston, Massachusetts 02208-2798  
(800) 548-7786  

MORGAN STANLEY INSTITUTIONAL FUND TRUST 
Special Purpose Fixed Income Portfolio  

One Tower Bridge  
100 Front Street, Suite 1100  
West Conshohocken, PA 19428-2881  
(800) 548-7786  

NOTICE OF SPECIAL JOINT MEETING OF SHAREHOLDERS 
TO BE HELD MAY 15, 2002 

Notice is hereby given of a Special Joint Meeting of Shareholders of the  
Fixed Income III Portfolio (the "Fixed Income III Fund"), the High Yield II     
Portfolio (the "High Yield II Fund"), each a portfolio of the Morgan Stanley    
Institutional Fund, Inc. (the "Company"), and the Special Purpose Fixed Income  
Portfolio (the "Special Purpose Fund"), a portfolio of Morgan Stanley           
Institutional Fund Trust (the "Trust") (separately referred to as "your Fund"   
and collectively referred to as "the Funds"), to be held in the offices of      
Morgan Stanley Investment Management Inc., 1221 Avenue of the Americas, 5th     
Floor, Conference Room 1A, New York, NY, at 8:30 A.M., New York time, on May    
15, 2002, and any adjournments thereof (the "Meeting"), for the following       
purposes:                                                                       

1. To consider and vote upon an Agreement and Plan of Reorganization for
your Fund pursuant to which substantially all of the assets of:   

For Fixed Income III Fund shareholders only:                

     (i) Fixed Income III Fund will be combined with the assets of the
     Investment Grade Fixed Income Portfolio of the Trust (the
   "Investment Grade Fund"), in exchange for shares of the
            Investment Grade Fund. Class A shares will receive Institutional
       Class shares, and Class B shares will receive Adviser Class
shares, respectively, of the Investment Grade Fund. 

For High Yield II Fund shareholders only:                   

      (ii) High Yield II Fund will be combined with the assets of the High
             Yield Portfolio of the Trust (the "High Yield Fund"), in exchange
          for shares of the High Yield Fund. Class A shares will receive
       Institutional Class shares, and Class B shares will receive
       Adviser Class shares, respectively, of the High Yield Fund.

For Special Purpose Fund shareholders only:                 

       (iii) Special Purpose Fund will be combined with the assets of the Core
            Plus Fixed Income Portfolio of the Trust (the "Core Plus Fund"),
             in exchange for shares of the Core Plus Fund. Shareholders of the
           Special Purpose Fund will receive Institutional Class shares of
the Core Plus Fund; and                             

  2. To act upon such other matters as may properly come before the Meeting.

The Reorganizations are more fully described in the accompanying Proxy    
Statement and Prospectus and in the Form of Reorganization Agreement attached   
thereto. Shareholders of record at the close of business on February 19, 2002   
are entitled to notice of, and to vote at, the Meeting. Please read the Proxy   
Statement and Prospectus carefully before telling us, through your proxy or in  
person, how you wish your shares to be voted. Alternatively, if you are         
eligible to vote telephonically by touchtone telephone or electronically on the 
Internet                                                                        

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(as discussed in the enclosed Proxy Statement) you may do so in lieu of         
attending the Meeting in person. The Board of Directors of the Company and the  
Board of Trustees of the Trust recommend that you vote in favor of the          
Reorganization of your Fund. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED    
PROXY PROMPTLY.                                                                 

                           By Order of the Boards,

                  MARY E. MULLIN
             Secretary
                                      Morgan Stanley Institutional Fund,
            Inc.
                                     Morgan Stanley Institutional Fund
             Trust

March 25, 2002                                                                  

You can help avoid the necessity and expense of sending follow-up letters to  
ensure a quorum by promptly returning the enclosed Proxy. If you are unable to
be present in person, please fill in, sign and return the enclosed Proxy in   
order that the necessary quorum be represented at the Meeting. The enclosed   
envelope requires no postage if mailed in the United States. As discussed in  
the enclosed Proxy Statement, certain Shareholders will be able to vote       
telephonically by touchtone telephone or electronically on the Internet by    
following the instructions on their proxy cards.                              

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MORGAN STANLEY INSTITUTIONAL FUND, INC. 
Fixed Income III Portfolio  
High Yield II Portfolio 

P.O. Box 2798 
Boston, Massachusetts 02208-2798  
(800) 548-7786  

MORGAN STANLEY INSTITUTIONAL FUND TRUST 
Special Purpose Fixed Income Portfolio  

One Tower Bridge  
100 Front Street, Suite 1100  
West Conshohocken, PA 19428-2881  
(800) 548-7786  

This Proxy Statement and Prospectus is being furnished to shareholders of 
the Fixed Income III Portfolio (the "Fixed Income III Fund"), the High Yield II 
Portfolio (the "High Yield II Fund"), each a portfolio of the Morgan Stanley    
Institutional Fund, Inc. (the "Company"), and the Special Purpose Fixed Income  
Portfolio (the "Special Purpose Fund"), a portfolio of Morgan Stanley           
Institutional Fund Trust (the "Trust") (separately referred to as "a Fund" or   
"your Fund", and collectively referred to as "the Funds" or "the Target         
Funds"), in connection with an Agreement and Plan of Reorganization for each    
Fund, dated January 23, 2002 (the "Reorganization Agreement"), a form of which  
is attached hereto as Exhibit A. Pursuant to the Reorganization Agreements,     
substantially all of the assets of:                                             

   1. Fixed Income III Fund will be combined with the assets of the Investment
      Grade Fixed Income Portfolio of the Trust (the "Investment Grade Fund"),
      in exchange for shares of the Investment Grade Fund. Class A shares will
 receive Institutional Class shares, and Class B shares will receive
Adviser Class shares, respectively, of the Investment Grade Fund. 

2. High Yield II Fund will be combined with the assets of the High Yield
    Portfolio of the Trust (the "High Yield Fund"), in exchange for shares
     of the High Yield Fund. Class A shares will receive Institutional Class
shares, and Class B shares will receive Adviser Class shares,     
respectively, of the High Yield Fund.                             

 3. Special Purpose Fund will be combined with the assets of the Core Plus
     Fixed Income Portfolio of the Trust (the "Core Plus Fund"), in exchange
   for shares of the Core Plus Fund. Shareholders of the Special Purpose
 Fund will receive Institutional Class shares of the Core Plus Fund.

  Each of the three surviving funds is separately referred to as "an Acquiring
Fund", and collectively they are referred to as "the Acquiring Funds". As a     
result of the Reorganization of your Fund, you will become a shareholder of     
your Fund's respective Acquiring Fund and will receive shares of the Acquiring  
Fund with a value equal to the value of your holdings in your Fund (the         
"Reorganizations").                                                             

The Acquiring Funds are each portfolios of the Trust, a mutual fund       
consisting of 29 portfolios. The investment objective of each Acquiring Fund is 
to seek above-average total return over a market cycle of three to five years.  
For a more detailed description of the investment objective of each Acquiring   
Fund see "Comparison of Investment Objectives, Policies and Restrictions" below.

This Proxy Statement and Prospectus sets forth concisely information about
the Acquiring Funds that shareholders of the Target Funds should know before    
voting on the Reorganization Agreement of their Fund. This Proxy Statement and  
Prospectus also constitutes a Prospectus of each Acquiring Fund. A copy of the  
Prospectus for each Acquiring Fund (and for the Special Purpose Fund) dated     
January 31, 2002, and a copy of the Annual Report for each Acquiring Fund (and  
for the Special Purpose Fund) for the fiscal year ended September 30, 2001 are  
attached as Exhibits C and D, respectively, and are incorporated herein by      
reference. A Statement of Additional Information relating to the                
Reorganizations described in this Proxy Statement and Prospectus dated March    
25, 2002 has been filed with the Securities and Exchange Commission (the "SEC") 
and is also incorporated herein by reference. Also incorporated herein by       
reference are the Prospectuses of the Fixed Income III Fund and the High Yield  
II Fund dated May 1, 2001, and the Annual Report dated December 31, 2001 of the 
Fixed Income III Fund and the High Yield II Fund. Copies of such documents,     
including the Statement of Additional Information, can be obtained without      
charge by calling (800) 548-7786.                                               

  Investors are advised to read and retain this Proxy Statement and Prospectus
for future reference.                                                           

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY  
STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR  
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS      
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.           

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TABLE OF CONTENTS 

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INTRODUCTION...............................................................................   1 
   General.................................................................................   1 
   Record Date; Share Information..........................................................   2 
   Proxies.................................................................................   2 
   The Proxy Solicitation Process..........................................................   3 
   Vote Required...........................................................................   3 

SYNOPSIS...................................................................................   4 
   The Reorganizations.....................................................................   4 
   Fee Tables/Examples.....................................................................   5 
       I)  Reorganization of the Fixed Income III Fund into the Investment Grade Fund:.....   5 
       II)  Reorganization of the High Yield II Fund into the High Yield Fund:.............   6 
       III)  Reorganization of the Special Purpose Fund into the Core Plus Fund:...........   7 
   Tax Consequences of the Reorganizations.................................................   7 
   Comparison of the Target Fund and the Acquiring Fund....................................   7 
       I)  Fixed Income III Fund vs. Investment Grade Fund:................................   7 
       II)  High Yield II Fund vs. High Yield Fund:........................................   9 
       III)  Special Purpose Fund vs. Core Plus Fund:......................................  12 

THE REORGANIZATIONS........................................................................  14 
   The Boards' Considerations..............................................................  14 
       I)  Reorganization of the Fixed Income III Fund:....................................  14 
       II)  Reorganization of the High Yield II Fund:......................................  14 
       III)  Reorganization of the Special Purpose Fund:...................................  15 
       IV)  The Board of the Acquiring Funds:..............................................  15 
   The Reorganization Agreements...........................................................  15 
   Tax Aspects of the Reorganizations......................................................  17 
   Description of Shares...................................................................  19 
   Capitalization Tables (unaudited).......................................................  19 
   Appraisal Rights........................................................................  20 

COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS.............................  21 
       I)  Fixed Income III Fund vs. Investment Grade Fund:................................  21 
       II)  High Yield II Fund vs. High Yield Fund:........................................  22 
       III)  Special Purpose Fund vs. Core Plus Fund:......................................  23 

ADDITIONAL INFORMATION ABOUT THE TARGET FUNDS AND THE ACQUIRING                                 
  FUNDS....................................................................................  25 
   General.................................................................................  25 
   Financial Information...................................................................  25 
   Management..............................................................................  25 
   Description of Securities and Shareholder Inquiries.....................................  25 
   Dividends, Distributions and Taxes......................................................  25 
   Purchases, Repurchases and Redemptions..................................................  25 

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE................................................  25 

FINANCIAL STATEMENTS AND EXPERTS...........................................................  26 

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                             TABLE OF CONTENTS                                   
                                  (cont'd)                                       
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LEGAL MATTERS...............................................................  26 

AVAILABLE INFORMATION.......................................................  26 

OTHER BUSINESS..............................................................  27 

Exhibit A - Form of Agreement and Plan of Reorganization                         

Exhibit B - Control Persons and Ownership of Officers and Trustees/Directors     

Exhibit C - Prospectuses of the Acquiring Funds                                  

Exhibit D - Annual Report of the Acquiring Funds                                 

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MORGAN STANLEY INSTITUTIONAL FUND, INC. 
Fixed Income III Portfolio  
High Yield II Portfolio 

P.O. Box 2798 
Boston, Massachusetts 02208-2798  
(800) 548-7786  

MORGAN STANLEY INSTITUTIONAL FUND TRUST 
Special Purpose Fixed Income Portfolio  

One Tower Bridge  
100 Front Street, Suite 1100  
West Conshohocken, PA 19428-2881  
(800) 548-7786  

PROXY STATEMENT AND PROSPECTUS  

Special Joint Meeting of Shareholders 
to be held on May 15, 2002  

INTRODUCTION  

General                                                                         

This Proxy Statement and Prospectus is being furnished to the shareholders
of the Fixed Income III Portfolio (the "Fixed Income III Fund"), the High Yield 
II Portfolio (the "High Yield II Fund"), each a portfolio of the Morgan Stanley 
Institutional Fund, Inc. (the "Company"), and the Special Purpose Fixed Income  
Portfolio (the "Special Purpose Fund"), a portfolio of Morgan Stanley           
Institutional Fund Trust (the "Trust") (separately referred to as "a Fund" or   
"your Fund", and collectively referred to as "the Funds" or "the Target         
Funds"), in connection with the solicitation by the Board of Directors of the   
Company and the Board of Trustees of the Trust (the "Boards") of proxies to be  
used at the Special Joint Meeting of Shareholders to be held in the offices of  
Morgan Stanley Investment Management Inc., 1221 Avenue of the Americas, 5th     
Floor, Conference Room 1A, New York, NY, at 8:30 A.M., New York time, on May    
15, 2002, and any adjournments thereof (the "Meeting"). It is expected that the 
mailing of the Proxy Statement and Prospectus will be made on or about March    
26, 2002.                                                                       

At the Meeting, each Target Fund's shareholders ("Shareholders") will     
consider and vote upon an Agreement and Plan of Reorganization for its Fund,    
dated January 23, 2002 (the "Reorganization Agreement"). Pursuant to the        
Reorganization Agreements, substantially all of the assets of:                  

   1. Fixed Income III Fund will be combined with the assets of the Investment
      Grade Fixed Income Portfolio of the Trust (the "Investment Grade Fund"),
      in exchange for shares of the Investment Grade Fund. Class A shares will
 receive Institutional Class shares, and Class B shares will receive
Adviser Class shares, respectively, of the Investment Grade Fund. 

2. High Yield II Fund will be combined with the assets of the High Yield
    Portfolio of the Trust (the "High Yield Fund"), in exchange for shares
     of the High Yield Fund. Class A shares will receive Institutional Class
shares, and Class B shares will receive Adviser Class shares,     
respectively, of the High Yield Fund.                             

 3. Special Purpose Fund will be combined with the assets of the Core Plus
     Fixed Income Portfolio of the Trust (the "Core Plus Fund"), in exchange
   for shares of the Core Plus Fund. Shareholders of the Special Purpose
 Fund will receive Institutional Class shares of the Core Plus Fund.

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  Each of the three surviving funds is separately referred to as "an Acquiring
Fund", and collectively they are referred to as "the Acquiring Funds". As a     
result of the Reorganization of your Fund, you will become a shareholder of     
your Fund's respective Acquiring Fund and will receive shares of the Acquiring  
Fund with a value equal to the value of your holdings in your Fund (the         
"Reorganizations").                                                             

The terms and conditions of these transactions are more fully described in
this Proxy Statement and Prospectus and in the form of Reorganization Agreement 
attached hereto as Exhibit A. The shares to be issued by the Acquiring Funds    
pursuant to the Reorganizations will be issued at net asset value.              

Record Date; Share Information                                                  

The Boards have fixed the close of business on February 19, 2002 as the   
record date (the "Record Date") for the determination of the shareholders       
entitled to notice of, and to vote at, the Meeting. As of the Record Date,      
there were 21,889,453.572 Class A shares of the Fixed Income III Fund,          
224,162.803 Class B shares of the Fixed Income III Fund, 15,356,865.678 Class A 
shares of the High Yield II Fund, 1,898,065.304 Class B shares of the High      
Yield Fund and 23,335,889.659 shares of the Special Purpose Fund issued and     
outstanding. Shareholders on the Record Date are entitled to one vote per share 
on each matter relevant to their Fund submitted to a vote at the Meeting. For   
the Fixed Income III Fund and the High Yield II Fund, a majority of the         
outstanding shares entitled to vote, represented in person or by proxy, will    
constitute a quorum at the Meeting. For the Special Purpose Fund, 40% of the    
outstanding shares entitled to vote, represented in person or by proxy, will    
constitute a quorum at the Meeting.                                             

 For information regarding the more than 5% shareholders of each Target Fund
and each Acquiring Fund, and the ownership of the officers and                  
Directors/Trustees of each Target Fund and each Acquiring Fund see Exhibit B    
attached hereto.                                                                

Proxies                                                                         

  The enclosed form of proxy, if properly executed and returned, will be voted
in accordance with the choice specified thereon. The proxy will be voted in     
favor of the Reorganization of your Fund unless a choice is indicated to vote   
against or to abstain from voting on the Reorganization of your Fund. The       
Boards know of no business, other than that set forth in the Notice of Special  
Joint Meeting of Shareholders, to be presented for consideration at the         
Meeting. However, the proxy confers discretionary authority upon the persons    
named therein to vote as they determine on other business, not currently        
contemplated, which may come before the Meeting. For purposes of determining    
whether a quorum is present at the Meeting, abstentions and, if applicable,     
broker "non-votes" will be treated as shares that are present, but which have   
not been voted. Broker "non-votes" are shares held in street name for which the 
broker indicates that instructions have not been received from the beneficial   
owners or other persons entitled to vote and for which the broker does not have 
discretionary voting authority. If a Shareholder executes and returns a proxy   
but fails to indicate how the votes should be cast, the proxy will be voted in  
favor of the Reorganization of your Fund. The proxy may be revoked at any time  
prior to the voting thereof by: (i) delivering written notice of revocation to  
the Secretary of your Fund; (ii) attending the Meeting and voting in person; or 
(iii) completing and returning a new proxy (whether by mail or, as discussed    
below, by touchtone telephone or the Internet) (if returned and received in     
time to be voted). Attendance at the Meeting will not in and of itself revoke a 
proxy.                                                                          

In the event that the necessary quorum to transact business or the vote   
required to approve or reject the Reorganization of your Fund is not obtained   
at the Meeting, the persons named as proxies may propose one or more            
adjournments of the Meeting in accordance with applicable law to permit further 
solicitation of proxies. Any such adjournment will require the affirmative vote 
of the holders of a majority of shares of the Target Fund present in person or  
by proxy at the Meeting. The persons named as proxies will vote in favor of     
such adjournment for those proxies which they are entitled to vote in favor of  
the Reorganization of your Fund, and                                            

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will vote against any such adjournment for those proxies required to be voted   
against the Reorganization of your Fund.                                        

The Proxy Solicitation Process                                                  

All expenses of this solicitation, including the cost of preparing and    
mailing this Proxy Statement and Prospectus, will be borne equally by the       
Target Funds, and are expected to be approximately $165,000. The Target Funds   
and the Acquiring Funds will each bear all of their respective other expenses   
associated with the Reorganization of the Funds. In addition to the             
solicitation of proxies by mail, proxies may be solicited by officers of your   
Fund, and officers and regular employees of Morgan Stanley Investment           
Management Inc. ("MSIM") on behalf of the Company, and Morgan Stanley           
Investments LP ("MSI") on behalf of the Trust, personally or by telephone,      
telegraph or otherwise, without compensation therefor. Brokerage houses, banks  
and other fiduciaries may be requested to forward soliciting material to the    
beneficial owners of shares and to obtain authorization for the execution of    
proxies.                                                                        

 Shareholders will be able to vote their shares by touchtone telephone or by
Internet by following the instructions included with the proxy card             
accompanying this Proxy Statement and Prospectus. To vote by touchtone          
telephone, Shareholders can call the toll-free number 1-800-597-7836. To vote   
by Internet, shareholders can go to http://vote.proxy-direct.com, enter the 14  
digit control number included with your proxy card, and follow the recorded or  
on-screen directions. Do not mail your proxy card when you vote by phone or     
Internet.                                                                       

  In certain instances, MSIM or MSI may call Shareholders to ask if they would
be willing to have their votes recorded by telephone. The telephone voting      
procedure is designed to authenticate Shareholders' identities, to allow        
Shareholders to authorize the voting of their shares in accordance with their   
instructions and to confirm that their instructions have been recorded          
properly. No recommendation will be made as to how a Shareholder should vote on 
the Reorganization of their Fund other than to refer to the recommendation of   
the Board. Although a Shareholder's vote may be taken by telephone, each        
Shareholder will receive a copy of this Proxy Statement and Prospectus and may  
vote by mail using the enclosed proxy card or by touchtone telephone or the     
Internet as set forth above. The last proxy vote received in time to be voted,  
whether by proxy card, touchtone telephone or Internet, will be the vote that   
is counted and will revoke all previous votes by the Shareholder.               

Vote Required                                                                   

Shareholders of each Fund will vote separately on the approval of the     
Reorganization Agreement for their Fund. Approval of the Reorganization         
Agreement for the Fixed Income III Fund and the High Yield II Fund requires the 
affirmative vote of a majority (i.e., more than 50%) of the shares of the Fund  
represented in person or by proxy and entitled to vote at the Meeting, provided 
a quorum is present at the Meeting. Approval of the Reorganization Agreement    
for the Special Purpose Fund requires the affirmative vote of either (a) 67% or 
more of the shares of the Fund represented in person or by proxy and entitled   
to vote at the meeting if 50% or more of the outstanding shares are present at  
the meeting; or (b) more than 50% of the outstanding shares entitled to vote at 
the meeting whichever is less, provided a quorum is present at the meeting. If  
the Reorganization of your Fund is not approved by the Shareholders of your     
Fund, the Reorganization may nevertheless proceed with respect to the other     
Funds, and your Fund will continue in existence and the Board will consider     
alternative actions.                                                            

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SYNOPSIS  

The following is a synopsis of certain information contained in or        
incorporated by reference in this Proxy Statement and Prospectus. This synopsis 
is only a summary and is qualified in its entirety by the more detailed         
information contained or incorporated by reference in this Proxy Statement and  
Prospectus and the Reorganization Agreement. Shareholders should carefully      
review this Proxy Statement and Prospectus and the Reorganization Agreement in  
their entirety and, in particular, the Acquiring Funds Prospectuses, which are  
attached to this Proxy Statement and Prospectus as Exhibit C and incorporated   
herein by reference.                                                            

The Reorganizations                                                             

The Reorganization Agreement for each Target Fund provides that           
substantially all of the assets of:                                             

   1. Fixed Income III Fund will be combined with the assets of the Investment
      Grade Fund, subject to stated liabilities, in exchange for shares of the
    Investment Grade Fund. Class A shares will receive Institutional Class
shares, and Class B shares will receive Adviser Class shares,     
respectively, of the Investment Grade Fund.                       

2. High Yield II Fund will be combined with the assets of the High Yield
     Fund, subject to stated liabilities, in exchange for shares of the High
     Yield Fund. Class A shares will receive Institutional Class shares, and
    Class B shares will receive Adviser Class shares, respectively, of the
High Yield Fund.                                                  

 3. Special Purpose Fund will be combined with the assets of the Core Plus
     Fund, subject to stated liabilities, in exchange for shares of the Core
Plus Fund. Shareholders of the Special Purpose Fund will receive  
Institutional Class shares of the Core Plus Fund.                 

The aggregate net asset value of the Acquiring Fund shares issued in these
exchanges will equal the aggregate value of the net assets of your Fund         
received by the Acquiring Fund. On or after the closing date scheduled for the  
Reorganization of your Fund (the "Closing Date"), your Fund will distribute to  
you the Acquiring Fund shares received by your Fund as of the Valuation Date    
(as defined below under "The Reorganization Agreement") in complete liquidation 
of your Fund and your Fund will thereafter be liquidated. As a result of the    
Reorganization of your Fund, each Shareholder of your Fund will receive that    
number of full and fractional shares of the Acquiring Fund equal in value to    
such Shareholder's pro rata interest in the net assets of your Fund transferred 
to the Acquiring Fund. Accordingly, as a result of the Reorganization of your   
Fund, you will become a holder of the shares of the relevant Acquiring Fund.    
Shareholders holding their shares in certificate form will be asked to          
surrender their certificates in connection with the Reorganization.             
Shareholders who do not surrender their certificates prior to the Closing Date  
will still receive their shares of the relevant Acquiring Fund; however, such   
Shareholders will not be able to redeem, transfer or exchange the Acquiring     
Fund shares received until the old certificates have been surrendered. Your     
Board has determined that the interests of the Shareholders of your Fund will   
not be diluted as a result of the Reorganization of your Fund.                  

  At least one but not more than 20 business days prior to the Valuation Date,
the Target Fund will declare and pay a dividend or dividends which, together    
with all previous such dividends, will have the effect of distributing to       
Shareholders all of the Target Fund investment company taxable income for all   
periods since the inception of the Target Fund through and including the        
Valuation Date (computed without regard to any dividends paid deduction), and   
all of the Target Fund's net capital gain, if any, realized in such periods     
(after reduction for any capital loss carryforward).                            

For the reasons set forth below under "The Reorganization--The Board's    
Consideration," the Boards, including the Trustees/Directors who are not        
"interested persons" of the Company/Trust, on behalf of your Fund ("Independent 
Trustees"), as that term is defined in the Investment Company Act of 1940, as   
amended (the "1940 Act"), have concluded that the Reorganization of your Fund   
is in the best interests of your Fund and its Shareholders and recommend        
approval of the Reorganization of your Fund.                                    

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Fee Tables/Examples                                                             

 Your Fund and the Acquiring Funds each pay expenses for management of their
assets and other services, and those expenses are reflected in the net asset    
value per share of each fund. The following tables briefly describe the fees    
and expenses that a Shareholder of your Fund and a Shareholder of the relevant  
Acquiring Fund may pay if they buy and hold shares of each respective fund. The 
tables also set forth pro-forma fees for the surviving combined fund (the       
relevant Acquiring Fund) assuming consummation of the Reorganizations.          

I)  Reorganization of the Fixed Income III Fund into the Investment Grade Fund: 

Shareholder Fees--None                                                          

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)    

                                                        [Enlarge/Download Table]

                       Fixed Income III      Investment Grade       Investment Grade Fund   
                           Fund (1)              Fund (2)           Pro Forma Combined (3)  
                       ----------------- ------------------------- -------------------------
                                                                                            
Management Fees....... Class A .350%     Institutional Class .375% Institutional Class .375%
                       Class B .350%     Adviser Class .375%       Adviser Class .375%      
Distribution and                                                                            
  Service (12b-1) Fees Class A--%        Institutional Class--%    Institutional Class--%   
                       Class B (5) .250% Adviser Class--% (6)      Adviser Class (5) .250%  

Other Expenses........ Class A .210%     Institutional Class .125% Institutional Class .115%
                       Class B .210%     Adviser Class--%          Adviser Class .115%      
Total Annual Fund                                                                           
  Operating Expenses.. Class A (4) .560% Institutional Class .500% Institutional Class .490%
                       Class B (4) .710% Adviser Class--%          Adviser Class .640%      

--------                                                                        
(1) Based on expenses paid for the fiscal year ended December 31, 2001.         
(2) Based on expenses paid for the fiscal year ended September 30, 2001.        
(3) Reflects what the expenses would have been on September 30, 2001 if the     
Reorganization had been consummated twelve months prior to that date.   
(4) Pursuant to a voluntary expense cap which may be lifted at any time, actual 
operating expenses of Class A and Class B shares were 0.45% and .60%,   
respectively.                                                           
(5) Morgan Stanley & Co. Incorporated currently waives .10% of the .25%         
 distribution fee it is entitled to receive with respect to Class B Shares
   of Fixed Income III Fund. This waiver is voluntary and may be lifted at any
time. If the Reorganization is consummated, Morgan Stanley Distribution,
  Inc. has similarly agreed to waive .10% of the .25% distribution fee it is
entitled to receive with respect to Adviser Class Shares of Investment  
Grade Fund.                                                             
(6) The Adviser Class of the Investment Grade Fund is not operational as of     
September 30, 2001 but will commence operations upon the consummation of
the Reorganization.                                                     

Example                                                                         

 To attempt to show the effect of these expenses on an investment over time,
the hypotheticals shown below have been created. The Example assumes that an    
investor invests $10,000 in either the Fixed Income III Fund or the Investment  
Grade Fund or the new combined fund, that the investment has a 5% return each   
year and that the operating expenses for each fund remain the same (as set      
forth in the chart above). Although a Shareholder's actual costs may be higher  
or lower, the table below shows a Shareholder's costs at the end of each period 
based on these assumptions whether a Shareholder sold or held his shares at the 
end of each period.                                                             

                                                                [Download Table]

                                              1 year 3 years 5 years 10 years
                                              ------ ------- ------- --------
                                                                             
Fixed Income III Fund (Class A)..............  $57    $179    $313     $701  
Fixed Income III Fund (Class B)..............  $73    $227    $395     $883  
Investment Grade Fund (Institutional Class)..  $51    $160    $280     $628  
Investment Grade Fund (Adviser Class)........   --      --      --       --  
Pro-Forma Combined Fund (Institutional Class)  $50    $157    $274     $616  
Pro-Forma Combined Fund (Adviser Class)......  $65    $205    $357     $798  

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II)  Reorganization of the High Yield II Fund into the High Yield Fund:         

Shareholder Fees--None                                                      

Annual Fund Operating Expenses (expenses that are deducted from fund assets)

                                                        [Enlarge/Download Table]

                         High Yield II        High Yield            High Yield Fund    
                           Fund (1)            Fund (2)          Pro Forma Combined (3)
                         ------------- ------------------------  ----------------------
                                                                                       
Management Fees.........                                           Institutional Class 
                         Class A .375% Institutional Class .450%   .450%               
                                                                   Adviser Class       
                         Class B .375% Adviser Class .450%         .450%               
Distribution and Service                                           Institutional       
  (12b-1) Fees.......... Class A--%    Institutional Class--%      Class--%            
                                                                   Adviser Class       
                         Class B .250% Adviser Class .250%         .250%               
Other Expenses..........                                           Institutional Class 
                         Class A .275% Institutional Class .110%   .120%               
                                                                   Adviser Class       
                         Class B .275% Adviser Class .110%         .120%               
Total Annual Fund                                                  Institutional Class 
  Operating Expenses.... Class A .650% Institutional Class .560%   .570%               
                                                                   Adviser Class       
                         Class B .900% Adviser Class .810%         .820%               

--------                                                                        
(1) Based on expenses paid for the fiscal year ended December 31, 2001.         
(2) Based on expenses paid for the fiscal year ended September 30, 2001.        
(3) Reflects what the expenses would have been on September 30, 2001 if the     
Reorganization had been consummated twelve months prior to that date.   

Example                                                                         

 To attempt to show the effect of these expenses on an investment over time,
the hypotheticals shown below have been created. The Example assumes that an    
investor invests $10,000 in either the High Yield II Fund or the High Yield     
Fund or the new combined fund, that the investment has a 5% return each year    
and that the operating expenses for each fund remain the same (as set forth in  
the chart above). Although a Shareholder's actual costs may be higher or lower, 
the table below shows a Shareholder's costs at the end of each period based on  
these assumptions whether a Shareholder sold or held his shares at the end of   
each period.                                                                    

                                                                [Download Table]

                                              1 year 3 years 5 years 10 years
                                              ------ ------- ------- --------
                                                                             
High Yield II Fund (Class A).................  $66    $208    $362    $  810 
High Yield II Fund (Class B).................  $92    $287    $498    $1,108 
High Yield Fund (Institutional Class)........  $57    $179    $313    $  701 
High Yield Fund (Adviser Class)..............  $83    $259    $450    $1,002 
Pro-Forma Combined Fund (Institutional Class)  $58    $183    $318    $  714 
Pro-Forma Combined Fund (Adviser Class)......  $84    $262    $455    $1,014 

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III)  Reorganization of the Special Purpose Fund into the Core Plus Fund:       

Shareholder Fees--None                                                      

Annual Fund Operating Expenses (expenses that are deducted from fund assets)

                                                        [Enlarge/Download Table]

                                     Special           Core Plus Fund           Core Plus Fund    
                                 Purpose Fund (1) (Institutional Class) (1) Pro Forma Combined (2)
                                 ---------------- ------------------------- ----------------------
                                                                                                  
Management Fees.................       .375%                .375%                    .375%        
Distribution and Service (12b-1)                                                                  
  Fees..........................         --                   --                       --         
Other Expenses..................       .120%                .105%                    .095%        
Total Annual Fund Operating                                                                       
  Expenses......................       .495%                .480%                    .470%        

--------                                                                        
(1) Based on expenses paid for the fiscal year ended September 30, 2001.        
(2) Reflects what the expenses would have been on September 30, 2001 if the     
Reorganization had been consummated twelve months prior to that date.   

Example                                                                         

 To attempt to show the effect of these expenses on an investment over time,
the hypotheticals shown below have been created. The Example assumes that an    
investor invests $10,000 in either the Special Purpose Fund or the Core Plus    
Fund or the new combined fund, that the investment has a 5% return each year    
and that the operating expenses for each fund remain the same (as set forth in  
the chart above). Although a Shareholder's actual costs may be higher or lower, 
the table below shows a Shareholder's costs at the end of each period based on  
these assumptions whether a Shareholder sold or held his shares at the end of   
each period.                                                                    

                                                                [Download Table]

                                         1 Year 3 Years 5 Years 10 Years
                                         ------ ------- ------- --------
                                                                        
Special Purpose Fund....................  $51    $160    $280     $628  
Core Plus Fund (Institutional Class)....  $49    $154    $269     $604  
Pro-Forma Combined (Institutional Class)  $48    $151    $263     $591  

Tax Consequences of the Reorganizations                                         

As a condition to each Reorganization, the Company on behalf of the Fixed 
Income III Fund and the High Yield II Fund, and the Trust on behalf of the      
Special Purpose Fund will receive an opinion of Mayer, Brown, Rowe & Maw to the 
effect that the Reorganization of each Fund will constitute a tax-free          
reorganization for federal income tax purposes, and that no gain or loss will   
be recognized by the Funds or the Shareholders of the Funds for federal income  
tax purposes as a result of the transactions included in the Reorganization of  
the Fund. For further information about the tax consequences of the             
Reorganization, see "The Reorganizations--Tax Aspects of the Reorganizations"   
below.                                                                          

Comparison of the Target Fund and the Acquiring Fund                            

I)  Fixed Income III Fund vs. Investment Grade Fund:                            

Investment Objectives and Policies.  The Fixed Income III Fund and the    
Investment Grade Fund have similar investment objectives. The Fixed Income III  
Fund seeks to produce a high total return consistent with the preservation of   
capital by investing primarily in a diversified portfolio of fixed income       
securities. The Investment Grade Fund seeks above-average total return over a   
market cycle of three to five years.                                            

Both Funds seek to achieve their investment objectives by investing       
primarily in a diversified mix of dollar-denominated fixed income securities,   
particularly U.S. Government, corporate and mortgage securities. Both Funds     
ordinarily maintain an average weighted maturity in excess of five years. Under 
normal market conditions,                                                       

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both Funds invest at least 80% of their assets in fixed income securities. Both 
Funds invest exclusively in securities that carry an investment grade rating at 
the time of purchase.                                                           

  The investment objective of the Fixed Income III Fund is not fundamental and
may be changed by its Board. The investment objective of the Investment Grade   
Fund is fundamental and cannot be changed without the vote of the majority of   
the outstanding voting securities of a fund, as defined in the 1940 Act.        

The investment policies of both Funds are essentially the same; the       
principal differences between them are described under "Comparison of           
Investment Objectives, Policies and Restrictions" below.                        

  Investment Management and Distribution Plan Fees.  The Fixed Income III Fund
obtains management services from MSIM, and the Investment Grade Fund obtains    
management services from MSI, an investment advisory affiliate of MSIM. MSI     
will serve as the investment adviser of the combined fund (the Investment Grade 
Fund) if the Reorganization is approved by Shareholders. With respect to the    
Fixed Income III Fund, the Fund pays MSIM monthly compensation calculated daily 
at an annual rate of 0.35% of the Fund's average daily net assets for both      
Class A and B shares. With respect to the Investment Grade Fund, the Fund pays  
MSI monthly compensation calculated daily at an annual rate of 0.375% of the    
Fund's average daily net assets for both the Institutional and the Adviser      
Classes of shares. Both the Fixed Income III Fund and the Investment Grade Fund 
are managed by the same portfolio management team. If the Reorganization is     
approved by Shareholders, this team will remain the portfolio management team   
for the combined fund.                                                          

 The Fixed Income III Fund obtains distribution services from Morgan Stanley
& Co., and the Investment Grade Fund obtains management services from Morgan    
Stanley Distribution, Inc. Morgan Stanley Distribution, Inc. will serve as the  
distributor of the combined fund (the Investment Grade Fund) if the             
Reorganization is approved by Shareholders. Both the Class B shares of the      
Fixed Income III Fund and the Adviser Class shares of the Investment Grade Fund 
have adopted a distribution plan ("Plan") pursuant to Rule 12b-1 under the 1940 
Act whereby each class pays its distributor a distribution fee of 0.25% of the  
class's shares average daily net assets on an annualized basis. With respect to 
the Fixed Income III Fund, its distributor has agreed to waive 0.10% of the     
0.25% distribution fee it is entitled to receive from the Fund. There is no     
such waiver agreement in place for the Adviser Class shares of the Investment   
Grade Fund. However, if the Reorganization is approved, the distributor has     
voluntarily agreed to waive .10% of its 12b-1 fee. For further information      
relating to the 12b-1 fees applicable to the Investment Grade Fund, see the     
section entitled "Distribution of Shares" in the Trust's Statement of           
Additional Information.                                                         

Other Significant Fees.  Both the Fixed Income III Fund and the Investment
Grade Fund pay additional fees in connection with their operations, including   
legal, auditing, transfer agent, trustees fees and custodial fees. See          
"Synopsis--Fee Tables/Example" above for the percentage of average net assets   
represented by such "Other Expenses."                                           

Purchases, Exchanges and Redemptions.  Shares of both the Fixed Income III
Fund and the Investment Grade Fund are sold at net asset value without an       
initial sales charge. Shares of both the Fixed Income III Fund and the          
Investment Grade Fund may be redeemed for cash without redemption or other      
charges at any time at the net asset value per share next determined following  
receipt of a redemption request.                                                

Shares of both the Fixed Income III Fund and the Investment Grade Fund may
be exchanged for shares of other available portfolios of the Company or the     
Trust without the imposition of an exchange fee. Both the Fixed Income III Fund 
and the Investment Grade Fund provide telephone exchange privileges to their    
shareholders. For greater details relating to exchange privileges applicable to 
the Investment Grade Fund, see the section entitled "Exchange Privilege" in the 
relevant Trust Prospectus.                                                      

The Fixed Income III Fund may redeem involuntarily, at net asset value, an
account whose value remains below $100,000 for a continuous 60-day period due   
to shareholder redemptions. The Investment Grade Fund is not subject to such a  
limitation.                                                                     

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Dividends.  The policy of the Fixed Income III Fund 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 policy of the Investment Grade Fund is to           
distribute to Shareholders substantially all of its net investment income, if   
any, in the form of a quarterly dividend and to distribute net realized capital 
gains, if any, at least annually. In both cases, the Funds automatically        
reinvest all dividends and distributions in additional shares of the Funds      
unless the Shareholder elects to receive cash.                                  

Structure.   The Fixed Income III Fund is a portfolio of a Maryland       
corporation. Shareholders of a Maryland corporation are not personally liable   
for the obligations of the company. The Investment Grade Fund is a portfolio of 
a Pennsylvania business trust. Under Pennsylvania law, shareholders of a        
business trust may, under certain limited circumstances, be held personally     
liable as partners for the obligations of the trust. However, the Declaration   
of Trust for the Trust contains an express disclaimer of shareholder liability  
for acts or obligations of the Fund, requires that notice of such Fund          
obligations include such disclaimer, and provides for indemnification out of    
the Fund's assets for any shareholder held personally liable for obligations of 
the Fund. Thus the risk of a shareholder incurring financial loss on account of 
shareholder liability is limited to circumstances in which the Fund itself      
would be unable to meet its obligations.                                        

  Principal Risk Factors.  The principal risk factors for the Fixed Income III
Fund and the Investment Grade Fund are essentially identical. The Funds are     
subject to the risks of investing in fixed income securities. The prices of     
fixed income securities respond to economic developments, particularly interest 
rate changes and changes in the actual or perceived creditworthiness of the     
issuer of the fixed income security. 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. Prices of fixed      
income securities generally will move in correlation to changes in an issuer's  
credit rating.                                                                  

 Mortgage securities are subject to the risk that if interest rates decline,
borrowers may pay off their mortgages sooner than expected. The Funds' return   
may be reduced if prepayments occur and the Fund has to reinvest at lower       
interest rates. Prepayment rates can also shorten or extend the average life of 
the Funds' mortgage securities.                                                 

 Foreign fixed income securities may involve greater risks than those issued
by U.S. companies or the U.S. government. Economic, political and other events  
unique to a country or region will affect those markets and their issuers, but  
may not affect the U.S. market or similar U.S. issuers. Some of the Fund's      
investments may be denominated in a foreign currency. Changes in the values of  
those currencies compared to the U.S. dollar may affect the value of the Fund's 
investments.                                                                    

The Funds are subject to the risks of using derivatives. A derivative     
instrument may involve risks different from, or greater than, the risks of      
investing directly in the underlying asset. A derivative instrument may be      
illiquid and changes in its value may not correlate to changes in the value of  
its underlying asset, which may magnify losses.                                 

The foregoing discussion is a summary of the principal risk factors. For a
more complete discussion of the risks of each Fund, see "Investment             
Summary--Fixed Income Portfolio--Risks" and "Additional Risk Factors and        
Information" in the Prospectus of the Company and "Investment Summary--Fixed    
Income--Principal Risks" and "Investment Strategies and Related Risks" in the   
Trust's Prospectus attached hereto and incorporated herein by reference.        

II)  High Yield II Fund vs. High Yield Fund:                                    

Investment Objectives and Policies.  The High Yield II Fund and the High  
Yield Fund have similar investment objectives. The High Yield II Fund seeks to  
maximize total return by investing primarily in a                               

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diversified portfolio of high yield fixed income securities that offer a yield  
above that generally available on debt securities in the four highest rating    
categories of the recognized rating services. The High Yield Fund seeks above   
average total return over a market cycle of three to five years.                

Under normal circumstances, both Funds seek to achieve their investment   
objectives by investing at least 80% of their assets in high yield securities.  

The investment objective of the High Yield II Fund is not fundamental and 
may be changed by its Board. The investment objective of the High Yield Fund is 
fundamental and cannot be changed without the vote of the majority of the       
outstanding voting securities of the Fund, as defined in the 1940 Act.          

The investment policies of both Funds are essentially the same; the       
principal differences between them are described under "Comparison of           
Investment Objectives, Policies and Restrictions" below.                        

Investment Management and Distribution Plan Fees.  The High Yield II Fund 
obtains management services from MSIM, and the High Yield Fund obtains          
management services from MSI. MSI will serve as the investment adviser to the   
combined fund (the High Yield Fund) if the Reorganization is approved by        
Shareholders. With respect to the High Yield II Fund, the Fund pays MSIM        
monthly compensation calculated daily at an annual rate of 0.375% of the Fund's 
average daily net assets for both Class A and B shares of the Fund. With        
respect to the High Yield Fund, the portfolio pays MSI monthly compensation     
calculated daily at an annual rate of 0.45% of the Fund's average daily net     
assets for both of the Institutional and Adviser Classes of shares of the Fund. 
Both the High Yield Fund and the High Yield II Fund are managed by the same     
portfolio management team. If the reorganization is approved by Shareholders,   
this team will remain the portfolio management team for the combined fund.      

The High Yield II Fund obtains distribution services from Morgan Stanley &
Co., and the High Yield Fund obtains management services from Morgan Stanley    
Distribution, Inc. Morgan Stanley Distribution, Inc. will serve as the          
distributor of the combined fund (the High Yield Fund) if the Reorganization is 
approved by Shareholders. Both the Class B shares of the High Yield II Fund and 
the Adviser Class of shares of the High Yield Fund have adopted a Plan pursuant 
to Rule 12b-1 under the 1940 Act whereby each class pays its distributor a      
distribution fee of 0.25% of the class's shares average daily net assets on an  
annualized basis. For further information relating to the 12b-1 fees applicable 
to the High Yield Fund's Adviser Class shares, see the section entitled         
"Distribution of Shares" in the Trust's Statement of Additional Information.    

  Other Significant Fees.  Both the High Yield II Fund and the High Yield Fund
pay additional fees in connection with their operations, including legal,       
auditing, transfer agent, trustees fees and custodial fees. See "Synopsis--Fee  
Tables/Example" above for the percentage of average net assets represented by   
such "Other Expenses."                                                          

  Purchases, Exchanges and Redemptions.  Shares of both the High Yield II Fund
and the High Yield Fund are sold at net asset value without an initial sales    
charge. Shares of both the High Yield II Fund and the High Yield Fund may be    
redeemed for cash without redemption or other charge at any time at the net     
asset value per share next determined following receipt of a redemption request.

Shares of both the High Yield II Fund and the High Yield Fund may be      
exchanged for shares of other available portfolios of the Company or the Trust  
without the imposition of an exchange fee. Both the High Yield II Fund and the  
High Yield Fund provide telephone exchange privileges to their shareholders.    
For greater details relating to exchange privileges applicable to the High      
Yield Fund, see the section entitled "Exchange Privilege" in the relevant Trust 
Prospectus.                                                                     

The High Yield II Fund may redeem involuntarily, at net asset value, an   
account whose value remains below $100,000 for a continuous 60-day period due   
to shareholder redemptions. The High Yield Fund is not subject to such a        
limitation.                                                                     

Dividends.  Both the High Yield II Fund and the High Yield Fund pay       
dividends from net investment income quarterly. The High Yield II Fund          
distributes net realized capital gains, if any, at least annually. The High     

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Yield Fund distributes net realized capital gains, if any, at least annually.   
In both cases, the Funds automatically reinvest all dividends and distributions 
in additional shares of the Funds at net asset value unless the Shareholder     
elects to receive cash.                                                         

Structure.   The High Yield II Fund is a portfolio of a Maryland          
corporation. Shareholders of a Maryland corporation are not personally liable   
for the obligations of the company. The High Yield Fund is a portfolio of a     
Pennsylvania business trust. Under Pennsylvania law, shareholders of a business 
trust may, under certain limited circumstances, be held personally liable as    
partners for the obligations of the trust. However, the Declaration of Trust    
for the Trust contains an express disclaimer of shareholder liability for acts  
or obligations of the Fund, requires that notice of such Fund obligations       
include such disclaimer, and provides for indemnification out of the Fund's     
assets for any shareholder held personally liable for obligations of the Fund.  
Thus the risk of a shareholder incurring financial loss on account of           
shareholder liability is limited to circumstances in which the Fund itself      
would be unable to meet its obligations.                                        

Principal Risk Factors.  The risk factors for both High Yield II Fund and 
the High Yield Fund are essentially identical. Both of the Funds are subject to 
the risks of investing in fixed income securities. The prices of fixed income   
securities respond to economic developments, particularly interest rate changes 
and changes in the actual or perceived creditworthiness of the issuer of the    
fixed income security. 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. Prices of fixed income securities  
generally will move in correlation to changes in an issuer's credit rating.     

  The Funds' investments in high yield securities expose them to a substantial
degree of credit risk. These investments are considered speculative under       
traditional investment standards. Prices of high yield securities will rise and 
fall primarily in response to changes in the issuer's financial health,         
although changes in market interest rates also will affect prices. High yield   
securities may experience reduced liquidity and sudden and substantial          
decreases in price.                                                             

 Mortgage securities are subject to the risk that if interest rates decline,
borrowers may pay off their mortgages sooner than expected. The Funds' return   
may be reduced if prepayments occur and the Fund has to reinvest at lower       
interest rates. Prepayment rates can also shorten or extend the average life of 
the Funds' mortgage securities.                                                 

 Foreign fixed income securities may involve greater risks than those issued
by U.S. companies or the U.S. government. Economic, political and other events  
unique to a country or region will affect those markets and their issuers, but  
may not affect the U.S. market or similar U.S. issuers. Some of the Fund's      
investments may be denominated in a foreign currency. Changes in the values of  
those currencies compared to the U.S. dollar may affect the value of the Fund's 
investments. These risks are greater in emerging market countries.              

The Funds are subject to the risks of using derivatives. A derivative     
instrument may involve risks different from, or greater than, the risks of      
investing directly in the underlying asset. A derivative instrument may be      
illiquid and changes in its value may not correlate to changes in the value of  
its underlying asset, which may magnify losses.                                 

The foregoing discussion is a summary of the principal risk factors. For a
more complete discussion of the risks of each Fund, see "Investment             
Summary-High Yield Portfolio-Risks" and "Additional Risk Factors and            
Information" in the Prospectus of the Company and "Investment Summary-High      
Yield-Principal Risks" and "Investment Strategies and Related Risks" in the     
Trust's Prospectus attached hereto and incorporated herein by reference.        

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III)  Special Purpose Fund vs. Core Plus Fund:                                  

Investment Objectives and Policies.  The Special Purpose Fund and the Core
Plus Fund have identical investment objectives. Both Funds seek above-average   
total return over a market cycle of three to five years.                        

Both Funds seek to achieve their investment objectives by investing       
primarily in a diversified mix of dollar-denominated fixed income securities,   
particularly U.S. Government, corporate and mortgage securities. Both Funds     
ordinarily maintain an average weighted maturity in excess of five years. Under 
normal market conditions, both Funds invest at least 80% of their net assets in 
fixed income securities.                                                        

 The investment objective of both the Special Purpose Fund and the Core Plus
Fund is fundamental and cannot be changed without the vote of the majority of   
the outstanding voting securities of a fund, as defined in the 1940 Act.        

The investment policies of both Funds are essentially the same; the       
principal differences between them are described under "Comparison of           
Investment Objectives, Policies and Restrictions" below.                        

Investment Management and Distribution Plan Fees.  Both Funds obtain      
management services from MSI, and MSI will continue to serve as the investment  
adviser of the combined fund (the Core Plus Fund) if the Reorganization is      
approved by Shareholders. Both Funds, pay MSI monthly compensation calculated   
daily at an annual rate of 0.375% of the Fund's average daily net assets. Both  
Funds obtain distribution services from Morgan Stanley Distribution, Inc., and  
Morgan Stanley Distribution, Inc. will continue to serve as the distributor of  
the combined fund. Neither Fund imposes distribution plan fees on these classes 
of shares. Both Funds are managed by the same portfolio management team. If the 
Reorganization is approved by Shareholders, this team will remain the portfolio 
management team for the combined fund.                                          

  Other Significant Fees. Both the Special Purpose Fund and the Core Plus Fund
pay additional fees in connection with their operations, including legal,       
auditing, transfer agent, trustees fees and custodial fees. See "Synopsis--Fee  
Tables/Example" above for the percentage of average net assets represented by   
such "Other Expenses."                                                          

Purchases, Exchanges and Redemptions.  Shares of both the Special Purpose 
Fund and the Core Plus Fund are sold at net asset value without an initial      
sales charge. Shares of both the Special Purpose Fund and the Core Plus Fund    
may be redeemed for cash without redemption or other charges at any time at the 
net asset value per share next determined following receipt of a redemption     
request.                                                                        

  Shares of the Special Purpose Fund and the Institutional Class shares of the
Core Plus Fund can be exchanged for Institutional Class shares of other         
available portfolios of the Trust, or for Class A shares of available           
portfolios of the Company without the imposition of an exchange fee.            

Both the Special Purpose Fund and the Core Plus Fund provide telephone    
exchange privileges to their shareholders. For greater details relating to      
exchange privileges applicable to the Core Plus Fund, see the section entitled  
"Exchange Privilege" in the relevant Trust Prospectus.                          

Dividends.  The policy of both the Special Purpose Fund and the Core Plus 
Fund is to distribute to Shareholders substantially all of their net investment 
income, if any, in the form of a quarterly dividend and to distribute net       
realized capital gains, if any, at least annually. In both cases, the Funds     
automatically reinvest all dividends and distributions in additional shares of  
the Funds unless the Shareholder elects to receive cash.                        

 Principal Risk Factors.  The Funds are subject to the risks of investing in
fixed income securities. The prices of fixed income securities respond to       
economic developments, particularly interest rate changes and changes in the    
actual or perceived creditworthiness of the issuer of the fixed income          
security. Securities with longer durations are likely to be more sensitive to   
changes in interest rates, generally making them more volatile                  

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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. Prices of fixed income securities  
generally will move in correlation to changes in an issuer's credit rating.     

The Funds 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 experience reduced liquidity and sudden and substantial    
decreases in price.                                                             

  Mortgages securities are subject to the risk that if interest rates decline,
borrowers may pay off their mortgages sooner than expected. The Fund's return   
may be reduced if prepayments occur and the Fund has to reinvest at lower       
interest rates. Prepayment rates can also shorten or extend the average life of 
the Fund's mortgage securities.                                                 

 Foreign fixed income securities may involve greater risks than those issued
by U.S. companies or the U.S. government. Economic, political and other events  
unique to a country or region will affect those markets and their issuers, but  
may not affect the U.S. market or similar U.S. issuers. Some of the Fund's      
investments may be denominated in a foreign currency. Changes in the values of  
those currencies compared to the U.S. dollar may affect the value of the Fund's 
investments.                                                                    

The Funds are subject to the risks of using derivatives. A derivative     
instrument may involve risks different from, or greater than, the risks of      
investing directly in the underlying asset. A derivative instrument may be      
illiquid and changes in its value may not correlate to changes in the value of  
its underlying asset, which may magnify losses.                                 

The foregoing discussion is a summary of the principal risk factors. For a
more complete discussion of the risks of each fund, see "Investment             
Summary--Special Purpose Fixed Income Fund--Risks" and "Additional Risk Factors 
and Information" in the Prospectus of the Trust and "Investment Summary--Core   
Plus Fund--Principal Risks" and "Investment Strategies and Related Risks" in    
the Trust's Prospectus attached hereto and incorporated herein by reference.    

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THE REORGANIZATIONS 

The Boards' Considerations                                                      

At meetings held on January 23, 2002, the Board of Directors/Trustees of  
each Target Fund, including all of the Independent Directors/Trustees,          
unanimously approved the Reorganization of each Target Fund, and recommended    
its approval by shareholders of such Target Fund. In reaching this              
determination, each Board evaluated a variety of factors relating to (i) the    
economic costs and benefits to shareholders; (ii) the compatibility of the      
investment objectives, policies, restrictions and portfolios of each Fund; and  
(iii) the tax consequences to each Fund. Particular consideration was given to  
the following:                                                                  

I)  Reorganization of the Fixed Income III Fund:                                

  1.  The Board noted that as a result of the Reorganization, Fixed Income III
shareholders would become shareholders of a substantially larger fund with an   
expense ratio approximately .07% lower than the expense ratio of the Fixed      
Income III Fund (assuming that the Reorganization had occurred at the beginning 
of the Investment Grade Fund's most recent fiscal year). Although as a result   
of a voluntary expense cap in place for the Investment Grade Fund, the expense  
ratio of the combined fund would have been approximately .04% higher than the   
expense ratio of the Fixed Income III Fund's actual expense ratio for its most  
recent fiscal year, the Board viewed as significant the fact that the voluntary 
expense cap imposed by MSIM on the Fixed Income III Fund may be lifted at any   
time.                                                                           

  2.  The Investment Grade Fund has approximately $6.2 million of capital loss
carryforwards whereas the Fixed Income III Fund has none. As a result of the    
Reorganization, Fixed Income III shareholders should benefit to the extent that 
the Investment Grade Fund's capital loss carryforwards are available to offset  
capital gains realized by the combined fund. See "Tax Aspects of the            
Reorganization" below.                                                          

 3.  The Funds have substantially similar investment objectives and policies
and are managed by the same team of portfolio managers.                         

4.  The Reorganization is intended to qualify as a tax-free reorganization
for Federal income tax purposes, pursuant to which no gain or loss will be      
recognized by the Fixed Income III Fund or its Shareholders for Federal income  
tax purposes as a result of transactions included in the Reorganization.        

5.  Absent the Reorganization, the Fixed Income III Fund will continue to 
compete for investor funds with the Investment Grade Fund. The Reorganization   
should allow for more concentrated selling efforts which may result in          
additional economies of scale through an increase in sales of the combined fund 
to the benefit of shareholders.                                                 

II)  Reorganization of the High Yield II Fund:                                  

1.  The Board noted that as a result of the Reorganization, High Yield II 
Fund shareholders would become shareholders of a larger fund with an expense    
ratio approximately .08% lower than that of the High Yield II Fund (assuming    
that the Reorganization had occurred at the beginning of the High Yield II      
Fund's most recent fiscal year).                                                

 2.  The Funds have substantially similar investment objectives and policies
and are managed by the same team of portfolio managers.                         

3.  The Reorganization is intended to qualify as a tax-free reorganization
for Federal income tax purposes, pursuant to which no gain or loss will be      
recognized by the High Yield II Fund or its Shareholders for Federal income tax 
purposes as a result of transactions included in the Reorganization.            

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4.  Absent the Reorganization, the High II Yield Fund will continue to    
compete for investor funds with the High Yield Fund. The Reorganization should  
allow for more concentrated selling efforts which may result in additional      
economies of scale through an increase in sales of the combined fund to the     
benefit of shareholders.                                                        

III)  Reorganization of the Special Purpose Fund:                               

 1.  The Board noted that as a result of the Reorganization, Special Purpose
Fund shareholders would become Shareholders of a substantially larger fund with 
an expense ratio approximately .02% lower than that of the Special Purpose Fund 
(assuming that the Reorganization had occurred at the beginning of the Core     
Plus Fund's most recent fiscal year).                                           

2.  The Funds have identical investment objectives, substantially similar 
policies, and are managed by the same team of portfolio managers.               

3.  The Core Plus Fund has approximately $15.7 million of capital loss    
carryforwards as of September 30, 2001 and the Special Purpose Fund has none.   
As a result of the Reorganization, Special Purpose Fund Shareholders should     
benefit to the extent that the Core Plus Fund's capital loss carryforwards are  
available to offset capital gains realized by the combined fund. See "Tax       
Aspects of the Reorganization" below.                                           

4.  The Reorganization is intended to qualify as a tax-free reorganization
for Federal income tax purposes, pursuant to which no gain or loss will be      
recognized by the Special Purpose Fund or its Shareholders for Federal income   
tax purposes as a result of transactions included in the Reorganization.        

5.  Absent the Reorganization, the Special Purpose Fund will continue to  
compete for investor funds with the Core Plus Fund. The Reorganization should   
allow for more concentrated selling efforts which may result in additional      
economies of scale through an increase in sales of the combined fund to the     
benefit of Shareholders.                                                        

IV)  The Board of the Acquiring Funds:                                          

The Board of the Acquiring Funds, including a majority of the Independent 
Trustees, also have determined that the Reorganizations are in the best         
interests of each Acquiring Fund and its shareholders and that the interests of 
existing Shareholders will not be diluted as a result thereof. The transaction  
will enable the Acquiring Funds to acquire investment securities which are      
consistent with its investment objective without the costs attendant to the     
purchase of such securities in the market. In addition, like the Shareholders   
of the Target Funds, the shareholders of the Acquiring Funds may realize a      
benefit of having concentrated selling efforts on one rather than two similar   
funds which may result in additional economies of scale through an increase in  
sales. Also, the Board considered that even if the benefits enumerated above    
are not realized, the costs to the Acquiring Funds are sufficiently minor to    
warrant taking the opportunity to realize these benefits.                       

The Reorganization Agreements                                                   

The terms and conditions under which the Reorganizations would be         
consummated, as summarized below are set forth in the Reorganization            
Agreements. This summary is qualified in its entirety by reference to the       
Reorganization Agreement, a form of which is attached as Exhibit A to this      
Proxy Statement and Prospectus.                                                 

  The Reorganization Agreements provide that (i) the Target Fund will transfer
all of its assets, including portfolio securities, cash (other than cash        
amounts retained by the Target Fund as a "Cash Reserve" in the amount           
sufficient to discharge its liabilities not discharged prior to the Valuation   
Date (as defined below) and for expenses of the dissolution), cash equivalents  
and receivables to the Acquiring Fund on the Closing Date in exchange for the   
assumption by the Acquiring Fund of stated liabilities of the Target Fund,      
including all expenses, costs, charges and reserves, as reflected on an         
unaudited statement of assets and liabilities of the Target Fund prepared by    
the Treasurer of the Company/Trust, on behalf of the Target Fund, as of the     
Valuation Date (as                                                              

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defined below) in accordance with generally accepted accounting principles      
consistently applied from the prior audited period, and the delivery of the     
Acquiring Fund shares; (ii) such Acquiring Fund shares would be distributed to  
Shareholders on the Closing Date or as soon as practicable thereafter; (iii)    
The Target Fund would be liquidated; and (iv) the outstanding shares of Target  
Fund would be canceled.                                                         

 The number of Acquiring Fund shares to be delivered to the Target Fund will
be determined by dividing the aggregate net asset value of the shares of the    
Target Fund acquired by the Acquiring Fund by the net asset value per share of  
the shares of the Acquiring Fund; these values will be calculated as of the     
close of business of the New York Stock Exchange on the third business day      
following the receipt of the requisite approval by Shareholders of the          
Reorganization Agreement or at such other time as the Target and Acquiring      
Funds may agree (the "Valuation Date"). As an illustration, assume that on the  
Valuation Date, Class A shares of the Target Fund had an aggregate net asset    
value (not including any Cash Reserve of the Target Fund) of $100,000. If the   
net asset value per share of the corresponding Institutional Class of the       
Acquiring Fund were $10 per share at the close of business on the Valuation     
Date, the number of shares of the Acquiring Fund to be issued would be 10,000   
($100,000 / $10). These 10,000 shares would be distributed to the former Class  
A Shareholders of the Target Fund. This example is given for illustration       
purposes only and does not bear any relationship to the dollar amounts or       
shares expected to be involved in the Reorganizations.                          

On the Closing Date or as soon as practicable thereafter, each Target Fund
will distribute pro rata to its Shareholders of record as of the close of       
business on the Valuation Date, the respective Acquiring Fund shares it         
receives. Each Shareholder will receive shares of the Acquiring Fund that       
corresponds to the shares of Target Fund currently held by that Shareholder.    
The Acquiring Fund will cause its transfer agent to credit and confirm an       
appropriate number of Acquiring Fund shares to each Shareholder. Certificates   
for Acquiring Fund shares will be issued only upon written request of a         
Shareholder and only for whole shares, with fractional shares credited to the   
name of the Shareholder on the books of Acquiring Fund. Shareholders who wish   
to receive certificates representing their Acquiring Fund shares must, after    
receipt of their confirmations, make a written request to the Trust's transfer  
agent J.P. Morgan Investor Services Company, 73 Tremont Street, Boston,         
Massachusetts 02108. Shareholders of the Target Fund holding their shares in    
certificate form will be asked to surrender such certificates in connection     
with the Reorganization of their Fund. Shareholders who do not surrender their  
certificates prior to the Closing Date will still receive their shares of the   
Acquiring Fund; however, such Shareholders will not be able to redeem, transfer 
or exchange the Acquiring Fund shares received until the old certificates have  
been surrendered.                                                               

  The Closing Date will be the next business day following the Valuation Date.
The consummation of the Reorganization of your Fund is contingent upon the      
approval of the Reorganization of your Fund by the Shareholders of your Fund    
and the receipt of the other opinions and certificates set forth in Sections 6, 
7 and 8 of the Reorganization Agreements and the occurrence of the events       
described in those Sections, certain of which may be waived by the Target Fund  
or the Acquiring Fund. The Reorganization Agreements may be amended in any      
mutually agreeable manner. All expenses of this solicitation, including the     
cost of preparing and mailing this Proxy Statement and Prospectus, will be      
borne equally by the Target Funds, which expenses are expected to approximate   
$165,000. Each Target Fund and its Acquiring Fund will bear all of their        
respective other expenses associated with the Reorganization.                   

Each Reorganization Agreement may be terminated and the Reorganization    
abandoned at any time, before or after approval by Shareholders or by mutual    
consent of the Company, on behalf of the Fixed Income III Fund and the High     
Yield II Fund, and the Trust, on behalf of the Special Purpose Fund and the     
Acquiring Funds. In addition, either party may terminate the Reorganization     
Agreement upon the occurrence of a material breach of the Reorganization        
Agreement by the other party or if, by August 15, 2002, any condition set forth 
in the Reorganization Agreement has not been fulfilled or waived by the party   
entitled to its benefits.                                                       

 Under the Reorganization Agreement, within one year after the Closing Date,
the Company, on behalf of the Fixed Income III Fund and the High Yield II Fund, 
and the Trust, on behalf of the Special Purpose Fund, shall:                    

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either pay or make provision for all of its liabilities and distribute any      
remaining amount of the Cash Reserve (after paying or making provision for such 
liabilities and the estimated cost of making the distribution) to former        
Shareholders of the Target Funds that received Acquiring Fund shares. The       
Target Funds shall be liquidated promptly following the distributions of shares 
of the Acquiring Funds to Shareholders of record of the Target Funds.           

 The effect of the Reorganization is that Shareholders who vote their shares
in favor of the Reorganization of their Fund are electing to sell their shares  
of their Fund (at net asset value on the Valuation Date calculated after        
subtracting any Cash Reserve) and reinvest the proceeds in the corresponding    
Acquiring Fund shares at net asset value and without recognition of taxable     
gain or loss for Federal income tax purposes. See "Tax Aspects of the           
Reorganization" below. As noted in "Tax Aspects of the Reorganization" below,   
if the Target Fund recognizes net gain from the sale of securities prior to the 
Closing Date, such gain, to the extent not offset by capital loss               
carryforwards, will be distributed to Shareholders prior to the Closing Date    
and will be taxable to Shareholders as capital gain.                            

Shareholders will continue to be able to redeem their shares of the Target
Fund at net asset value next determined after receipt of the redemption request 
until the close of business on the business day next preceding the Closing      
Date. Redemption requests received by the Company, on behalf of the Fixed       
Income III Fund and the High Yield II Fund, and the Trust, on behalf of the     
Special Purpose Fund, thereafter will be treated as requests for redemption of  
shares of the Investment Grade Fund, High Yield Fund or Core Plus Fund,         
respectively.                                                                   

Tax Aspects of the Reorganizations                                          

Tax Consequences of the Reorganizations to the Shareholders.  The         
Reorganizations are intended to qualify for Federal income tax purposes as      
tax-free reorganizations under Section 368(a)(1)(C) of the Internal Revenue     
Code of 1986, as amended (the "Code").                                          

As a condition to the Reorganizations, the Company, on behalf of the Fixed
Income III Fund and the High Yield II Fund, and the Trust on behalf of the
  Special Purpose Fund, will receive an opinion of Mayer, Brown, Rowe & Maw to
the effect that, based on certain assumptions, facts, the terms of the    
Reorganization Agreements and representations set forth in the            
  Reorganization Agreements or otherwise provided by the Company, on behalf of
the Fixed Income III Fund and the High Yield II Fund, and the Trust on    
behalf of the Special Purpose Fund and the Acquiring Funds (including a   
  representation to the effect that Acquiring Fund has no plan or intention to
sell or otherwise dispose of more than sixty-six percent of the assets of 
  the Target Fund acquired in the Reorganizations except for dispositions made
in the ordinary course of business):                                      

  1. The transfer of the Target Fund assets in exchange for the Acquiring Fund
shares and the assumption by the Acquiring Fund of certain stated         
liabilities of the Target Fund followed by the distribution by the Target 
Fund of the Acquiring Fund shares to Shareholders in exchange for their   
Target Fund shares pursuant to and in accordance with the terms of the    
Reorganization Agreements will constitute "reorganizations" within the    
meaning of Section 368(a)(1)(C) of the Code, and the Target Fund and the  
  Acquiring Fund will each be a "party to a reorganization" within the meaning
of Section 368(b) of the Code;                                            

  2. No gain or loss will be recognized by the Acquiring Fund upon the receipt
of the assets of the Target Fund solely in exchange for the Acquiring Fund
  shares and the assumption by the Acquiring Fund of the stated liabilities of
the Target Fund;                                                          

3. No gain or loss will be recognized by the Target Fund upon the transfer
of the assets of the Target Fund to the Acquiring Fund in exchange for the
  Acquiring Fund shares and the assumption by the Acquiring Fund of the stated
liabilities or upon the distribution of the Acquiring Fund shares to      
Shareholders in exchange for their Target Fund shares;                    

4. No gain or loss will be recognized by Shareholders upon the exchange of
the shares of the Target Fund for the Acquiring Fund shares;              

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     5. The aggregate tax basis for the Acquiring Fund shares received by each
 of the Shareholders pursuant to the Reorganizations will be the same as the
aggregate tax basis of the shares in the Target Fund held by each such    
Shareholder immediately prior to the Reorganizations;                     

     6. The holding period of the Acquiring Fund shares to be received by each
Shareholder will include the period during which the shares in the Target 
  Fund surrendered in exchange therefor were held (provided such shares in the
  Target Fund were held as capital assets on the date of the Reorganizations);

7. The tax basis of the assets of the Target Fund acquired by the   
Acquiring Fund will be the same as the tax basis of such assets of the    
Target Fund immediately prior to the Reorganizations; and                 

  8. The holding period of the assets of the Target Fund in the hands of
the Acquiring Fund will include the period during which those assets were 
held by the Target Fund.                                                  

  Shareholders should consult their tax advisors regarding the effect, if any,
of the proposed transaction in light of their individual circumstances. Because 
the foregoing discussion only relates to the Federal income tax consequences of 
the proposed transaction, Shareholders should also consult their tax advisors   
as to state and local tax consequences, if any, of the proposed transaction.    

Tax Consequences of the Reorganizations to the Funds.  Under the Code, the
Reorganizations may result in limitations on the utilization of the capital     
loss carryovers and built-in capital losses of either the Target Fund or the    
Acquiring Fund. The amount of such limitations, if any, will depend on the      
existence and amount of a Fund's capital loss carryovers, built-in capital      
losses and built-in capital gains at the time of the Reorganizations. A Fund    
will have built-in capital gains if the fair market value of its assets on the  
date of the Reorganization exceeds its tax basis in such assets and a Fund will 
have built-in capital losses if its tax basis in its assets exceeds the fair    
market value of such assets on the date of the Reorganization.                  

 The Reorganization of Fixed Income III Fund into Investment Grade Fund.  As
of September 30, 2001, Investment Grade Fund had capital loss carryovers of     
approximately $6.2 million and Fixed Income III Fund had no capital loss        
carryovers. Investment Grade Fund's capital loss carryovers will be available   
to offset any capital gains recognized on the disposition of (i) assets         
acquired by the combined fund after the date of the Reorganization; (ii) assets 
of Fixed Income III Fund held by the combined fund, but only to the extent such 
capital gains are attributable to an increase in the value of such assets above 
fair market value of such assets on the date of the Reorganization; and (iii)   
assets of Investment Grade Fund held by the combined fund. However, the         
combined fund will be unable to utilize Investment Grade Fund's capital loss    
carryovers to offset any capital gains recognized on the disposition of Fixed   
Income III Fund's assets acquired in the Reorganization to the extent such      
capital gains are attributable to the built-in capital gains of such assets on  
the date of the Reorganization. As of September 30, 2001, Fixed Income III Fund 
had net unrealized capital gains of approximately $.8 million.                  

The Reorganization of High Yield II Fund into High Yield Fund.  As of     
September 30, 2001, High Yield II Fund had approximately $15.7 million of       
capital loss carryovers and approximately $54.9 million of net unrealized       
built-in capital losses and High Yield Fund had approximately $39.9 million of  
capital loss carryovers and approximately $344 million of net unrealized        
built-in capital losses. Under the Code, there will not be a limitation on the  
utilization of High Yield Fund's capital loss carryovers and recognized         
built-in capital losses to offset capital gains recognized by the combined      
fund. However, there will be a limitation on the ability of the combined fund   
to offset capital gains with High Yield II Fund's capital loss carryovers and,  
if the built-in losses are recognized within five years of the Reorganization,  
such recognized built-in capital losses. Although the actual amount of the      
limitation will be determined at the time of the Reorganization, if the         
Reorganization had occurred on September 30, 2001, approximately $6.3 million   
was the maximum amount of High Yield II Fund's capital loss carryovers and      
recognized built-in capital losses (if any) the combined fund would have been   
able to utilize in any year.                                                    

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The Reorganization of Special Purpose Fund into Core Plus Fund.  As of    
September 30, 2001, Special Purpose Fund had no capital loss carryovers and     
approximately $2.3 million of net unrealized built-in capital losses and Core   
Plus Fund had approximately $15.7 million of capital loss carryovers and        
approximately $12.9 million of net unrealized built-in capital losses. Under    
the Code, there will not be a limitation on the ability of the combined fund to 
offset capital gains with Special Purpose Fund's recognized built-in capital    
losses or Core Plus Fund's capital loss carryovers and recognized built-in      
capital losses.                                                                 

Description of Shares                                                           

Institutional and Adviser Class shares of the Acquiring Fund to be issued 
pursuant to the Reorganization Agreements will, when issued, be fully paid and  
non-assessable by the Acquiring Fund and transferable without restrictions and  
will have no preemptive rights.                                                 

Capitalization Tables (unaudited)                                               

The following tables set forth the capitalizations of the Acquiring Funds 
and the Target Funds as of December 31, 2001 and on a pro forma combined basis  
as if the Reorganization had occurred on that date:                             

                                                                [Download Table]

                                                                           Net Asset
                                                                 Shares    Value Per
                                                   Net Assets  Outstanding   Share  
                                                  ------------ ----------- ---------
                                                                                    
Fixed Income III Fund:                                                              
   (Class A)..................................... $238,950,246 21,735,416   $10.99  
   (Class B)..................................... $  2,848,031    259,488   $10.98  
Investment Grade Fund:                                                              
   (Institutional Class)......................... $273,959,849 24,617,097   $11.13  
   (Adviser Class)............................... $         --         --   $   --  
Combined Fund (Investment Grade Fund) (pro forma)                                   
   (Institutional Class)......................... $512,910,095 46,084,546   $11.13  
   (Adviser Class)............................... $  2,848,031    259,488   $10.98  

                                                                [Download Table]

                                                                     Net Asset
                                                           Shares    Value Per
                                             Net Assets  Outstanding   Share  
                                            ------------ ----------- ---------
                                                                              
High Yield II Fund:                                                           
   (Class A)............................... $120,125,991  16,601,877   $7.24  
   (Class B)............................... $ 14,002,051   1,949,223   $7.18  
High Yield Fund:                                                              
   (Institutional Class)................... $544,903,106  96,791,538   $5.63  
   (Investment Class)...................... $ 10,151,503   1,800,758   $5.64  
   (Adviser Class)......................... $103,993,178  18,538,414   $5.61  
Combined Fund (High Yield Fund) (pro forma)                                   
   (Institutional Class)................... $665,029,097 118,128,304   $5.63  
   (Investment Class)...................... $ 10,151,503   1,800,758   $5.64  
   (Adviser Class)......................... $117,995,229  21,034,323   $5.61  

                                                                [Download Table]

                                                                      Net Asset
                                                            Shares    Value Per
                                             Net Assets   Outstanding   Share  
                                           -------------- ----------- ---------
                                                                               
Special Purpose Fund:                      $  282,917,580  24,358,688  $11.61  
Core Plus Fund:                                                                
   (Institutional Class).................. $3,929,677,684 337,944,836  $11.63  
Combined Fund (Core Plus Fund) (pro forma)                                     
   (Institutional Class).................. $4,212,595,264 362,271,369  $11.63  

Appraisal Rights                                                                

Shareholders will have no appraisal rights in connection with the         
Reorganization of their Fund.                                                   

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COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS  

I)  Fixed Income III Fund vs. Investment Grade Fund:                            

Investment Objectives and Policies                                              

The Fixed Income III Fund and the Investment Grade Fund have similar      
investment objectives and similar investment policies. The Fixed Income III     
Fund seeks to produce a high total return consistent with the preservation of   
capital by investing primarily in a diversified portfolio of fixed income       
securities. The Investment Grade Fund seeks above-average total return over a   
market cycle of three to five years.                                            

  Both the Fixed Income III Fund and the Investment Grade Fund normally invest
at least 80% of their assets in fixed income securities in accordance with      
their respective investment objectives set forth above. Both Funds seek to      
achieve their investment objectives by investing primarily in a diversified mix 
of dollar-denominated fixed income securities, particularly U.S. Government,    
corporate and mortgage securities. Both Funds ordinarily maintain an average    
weighted maturity in excess of five years.                                      

 Both the Fixed Income III Fund and the Investment Grade Fund employ a value
approach toward fixed income investing. The Fund's investment management teams  
seek to identify relative attractiveness among corporate, mortgage and U.S.     
Government securities, and also may consider the relative attractiveness of     
non-dollar denominated issues. Fixed income securities generally represent an   
issuer's obligation to repay money that it has borrowed together with interest  
on the amount borrowed.                                                         

  Both the Fixed Income III Fund and the Investment Grade Fund may invest over
50% of their assets in 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.                   

  The Fixed Income III Fund may invest up to 15% of its assets in fixed income
securities denominated in foreign currencies. The Investment Grade Fund can     
also invests in fixed income securities denominated in foreign currencies, but  
does not have a 15% limit on such investments.                                  

Both the Fixed Income III Fund and the Investment Grade Fund may take     
temporary "defensive" positions that are inconsistent with each fund's          
principal investment strategies in attempting to respond to adverse market      
conditions.                                                                     

Both the Fixed Income III Fund and the Investment Grade Fund may (i)      
purchase securities on a when-issued or delayed delivery basis, (ii) purchase   
or sell securities on a forward commitment basis, (iii) purchase municipal      
obligations, (iv) enter into repurchase agreements subject to certain           
procedures designed to minimize risks associated with such agreements, (v)      
invest in zero coupon securities, (vi) lend their portfolio securities and      
(vii) enter into options and futures transactions.                              

  The investment objective of the Fixed Income III Fund is not fundamental and
can be changed by its Board. The investment objective of the Investment Grade   
Fund is fundamental and cannot be changed without the vote of the majority of   
the outstanding voting securities of a fund, as defined in the 1940 Act.        

The foregoing discussion is a summary of the principal differences and    
similarities between the investment policies of the Funds. For a more complete  
discussion of each Fund's policies, see the Prospectus and Statement of         
Additional Information for each Fund.                                           

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Investment Restrictions                                                         

The investment restrictions adopted by the Fixed Income III Fund and the  
Investment Grade Fund as fundamental policies are substantially similar and are 
summarized in their respective Statements of Additional Information.            

A fundamental investment restriction cannot be changed without the vote of
the majority of the outstanding voting securities of a fund, as defined in the  
1940 Act. The material differences are as follows: (a) as a fundamental policy  
the Investment Grade Fund may not make loans except (i) by purchasing bonds,    
debentures or similar obligations (including repurchase agreements, subject to  
the limitations as described in its Prospectus) that are publicly distributed;  
(ii) by lending its portfolio securities to banks, brokers, dealers and other   
financial institutions so long as such loans are not inconsistent with the 1940 
Act or the Rules and Regulations or interpretations of the SEC there under.     
This is a non-fundamental policy for the Fixed Income III Fund; (b) as a        
fundamental policy the Investment Grade Fund may not borrow money, except (i)   
from banks for extraordinary or emergency purposes, and (ii) in connection with 
reverse repurchase agreements, provided that (i) and (ii) in combination do not 
exceed 33 1/3% of the Fund's total assets (including amount borrowed) less      
liabilities (other than borrowings). The Fixed Income III Fund has a            
non-fundamental policy which limits Fund borrowings to 10% of the Fund's total  
assets.                                                                         

II)  High Yield II Fund vs. High Yield Fund:                                    

Investment Objectives and Policies                                              

High Yield II Fund and High Yield Fund have similar investment objectives 
and investment policies. High Yield II Fund seeks to maximize total return by   
investing primarily in a diversified portfolio of high yield fixed income       
securities that offer a yield above that generally available on debt securities 
in the four highest rating categories of the recognized rating services. High   
Yield Fund seeks above average total return over a market cycle of three to     
five years.                                                                     

 Both High Yield II Fund and High Yield Fund normally invest at least 80% of
their assets in high yield securities. Both High Yield II Fund and High Yield   
Fund may invest in investment grade fixed income securities, including U.S.     
Government securities, corporate bonds and mortgage securities. The Funds may   
invest to a limited extent in foreign fixed income securities, including        
emerging market securities. High Yield Fund generally maintains an average      
weighted maturity in excess of five years although there is no minimum or       
maximum maturity for any individual security. The Funds may also invest in      
futures, swaps and other derivatives.                                           

 The management teams of both the High Yield II Fund and the High Yield Fund
use equity and fixed income valuation techniques, together with analyses of     
economic and industry trends, to determine the Funds' overall structure, sector 
allocation and desired maturity. The Funds' investment management teams         
emphasize securities of companies that have strong industry positions and       
favorable outlooks for cash flow and asset values.                              

Both High Yield II Fund and High Yield Fund may take temporary "defensive"
positions that are inconsistent with each Fund's principal investment           
strategies in attempting to respond to adverse market conditions in which any   
amount of their respective assets may be invested without limit in certain      
short- and medium-term fixed income securities.                                 

  Both High Yield II Fund and High Yield Fund may (i) purchase securities on a
when-issued or delayed delivery basis, (ii) purchase or sell securities on a    
forward commitment basis, (iii) purchase municipals, (iv) enter into repurchase 
agreements subject to certain procedures designed to minimize risks associated  
with such agreements, (v) invest in zero coupon securities, (vi) lend their     
portfolio securities and (vii) enter into options and futures transactions.     

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The investment objective of the High Yield II Fund is not fundamental and 
can be changed by its Board. The investment objective of the High Yield Fund is 
fundamental and cannot be changed without the vote of the majority of the       
outstanding voting securities of a fund, as defined in the 1940 Act.            

The foregoing discussion is a summary of the principal differences and    
similarities between the investment policies of the Funds. For a more complete  
discussion of each Fund's policies, see the Prospectus and Statement of         
Additional Information for each Fund.                                           

Investment Restrictions                                                         

The investment restrictions adopted by High Yield II Fund and High Yield  
Fund as fundamental policies are substantially similar and are summarized in    
their respective Statements of Additional Information.                          

A fundamental investment restriction cannot be changed without the vote of
the majority of the outstanding voting securities of a portfolio, as defined in 
the 1940 Act. The material differences are as follows: (a) High Yield II Fund   
may not write or acquire options or interests in oil, gas or other mineral      
exploration or development programs; the High Yield Fund has no such investment 
restriction; (b) as a fundamental policy the High Yield Fund may not make loans 
except (i) by purchasing bonds, debentures or similar obligations (including    
repurchase agreements, subject to the limitations as described in its           
Prospectus) that are publicly distributed; (ii) by lending its portfolio        
securities to banks, brokers, dealers and other financial institutions so long  
as such loans are not inconsistent with the 1940 Act or the Rules and           
Regulations or interpretations of the SEC there under. This is a                
non-fundamental policy for the High Yield II Fund; (c) as a fundamental policy  
the High Yield II Fund may not borrow money, except (i) from banks for          
extraordinary or emergency purposes, and (ii) in connection with reverse        
repurchase agreements, provided that (i) and (ii) in combination do not exceed  
33 1/3% of the Fund's total assets (including amount borrowed) less liabilities 
(other than borrowings). This is a non-fundamental policy of the High Yield     
Fund.                                                                           

III)  Special Purpose Fund vs. Core Plus Fund:                                  

Investment Objectives and Policies                                              

The Special Purpose Fund and the Core Plus Fund have identical investment 
objectives and policies. Both Funds seek above-average total return over a      
market cycle of three to five years.                                            

Both the Special Purpose Fund and the Core Plus Fund normally invest at   
least 80% of their assets in fixed income securities in accordance with their   
investment objectives set forth above. Both Funds seek to achieve their         
investment objective by investing primarily in a diversified mix of             
dollar-denominated fixed income securities, particularly U.S. Government,       
corporate and mortgage securities. Both Funds ordinarily maintain an average    
weighted maturity in excess of five years.                                      

  Both the Special Purpose Fund and the Core Plus Fund employ a value approach
toward fixed income investing. The Fund's investment management teams seek to   
identify relative attractiveness among corporate, mortgage and U.S. Government  
securities, and also may consider the relative attractiveness of non-dollar     
denominated issues. Fixed income securities generally represent an issuer's     
obligation to repay money that it has borrowed together with interest on the    
amount borrowed.                                                                

 Both the Special Purpose Fund and the Core Plus Fund may invest over 50% of
their assets in 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.                   

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Both the Special Purpose Fund and the Core Plus Fund invest in high yield 
securities which expose the Funds to a substantial degree of credit risk. High  
yield securities include fixed income securities rated below the four highest   
rating categories at the time of purchase and unrated securities considered my  
the management teams to be of equivalent quality. 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 experience reduced     
liquidity, and sudden and substantial decreases in price.                       

Both the Special Purpose Fund and the Core Plus Fund may take temporary   
"defensive" positions that are inconsistent with each fund's principal          
investment strategies in attempting to respond to adverse market conditions.    

Both the Special Purpose Fund and the Core Plus Fund may (i) purchase     
securities on a when-issued or delayed delivery basis, (ii) purchase or sell    
securities on a forward commitment basis, (iii) purchase municipals, (iv) enter 
into repurchase agreements subject to certain procedures designed to minimize   
risks associated with such agreements, (v) invest in zero coupon securities,    
(vi) lend their portfolio securities and (vii) enter into options and futures   
transactions.                                                                   

  The investment objectives of both the Special Purpose Fund and the Core Plus
Fund are fundamental and cannot be changed without the vote of the majority of  
the outstanding voting securities of a fund, as defined in the 1940 Act.        

The foregoing discussion is a summary of the principal differences and    
similarities between the investment policies of the Funds. For a more complete  
discussion of each Fund's policies, see the Prospectus and Statement of         
Additional Informaton for each Fund.                                            

Investment Restrictions                                                         

  The investment restrictions adopted by the Special Purpose Fund and the Core
Plus Fund as fundamental policies are identical and are summarized in the       
Trust's Statement of Additional Information.                                    

A fundamental investment restriction cannot be changed without the vote of
the majority of the outstanding voting securities of a fund, as defined in the  
1940 Act. There are no material differences between the fundamental policies of 
the Special Purpose Fund and the Core Plus Fund.                                

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ADDITIONAL INFORMATION ABOUT THE TARGET FUNDS 
AND THE ACQUIRING FUNDS 

General                                                                         

For a discussion of the organization and operation of the Funds, see "Fund
Management" and the applicable "Investment Summary" in their respective         
Prospectuses.                                                                   

Financial Information                                                           

For certain financial information about the Funds, see "Financial         
Highlights" in their respective Prospectuses.                                   

Management                                                                      

  For information about the respective Investment Adviser, and the Distributor
of the Funds, see "Fund Management" in their respective Prospectuses.           

Description of Securities and Shareholder Inquiries                             

  For a description of the nature and most significant attributes of shares of
the Funds, see "General Information" in their respective Statements of          
Additional Information.                                                         

Dividends, Distributions and Taxes                                              

For a discussion of the Funds' policies with respect to dividends,        
distributions and taxes, see "Dividends and Distributions" and "Taxes" in their 
respective Prospectuses as well as the discussion herein under "Synopsis--      
Purchases, Exchanges and Redemptions."                                          

Purchases, Repurchases and Redemptions                                          

  For a discussion of how the Funds' shares may be purchased and redeemed, see
"Shareholder Information" or "General Shareholder Information" in their         
respective Prospectuses.                                                        

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE 

  For a discussion of the Acquiring Funds' performance, and the performance of
the Special Purpose Fund, see management's letter to shareholders in the        
Trust's Annual Report for its fiscal year ended September 30, 2001 accompanying 
this Proxy Statement and Prospectus. For a discussion of the performance of the 
Fixed Income III Fund and the High Yield II Fund, see management's letter to    
Shareholders in the Company's Annual Report for its fiscal year ended December  
31, 2001.                                                                       

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FINANCIAL STATEMENTS AND EXPERTS  

The financial statements of the Fixed Income III and the High Yield II    
Funds, for the fiscal year ended December 31, 2001, that are incorporated by    
reference in the Statement of Additional Information relating to the            
Registration Statement on Form N-14 of which this Proxy Statement and           
Prospectus forms a part, have been audited by Ernst & Young LLP, independent    
accountants. The financial statements have been incorporated by reference in    
reliance upon such reports given upon the authority of Ernst & Young LLP as     
experts in accounting and auditing.                                             

The financial statements of the Special Purpose Fixed Income Portfolio and
the Acquiring Funds, for the year ended September 30, 2001, that are            
incorporated by reference in the Statement of Additional Information relating   
to the Registration Statement on Form N-14 of which this Proxy Statement and    
Prospectus forms a part, have been audited by Deloitte & Touche LLP,            
independent accountants. The financial statements have been incorporated by     
reference in reliance upon such reports given upon the authority of Deloitte &  
Touche LLP as experts in accounting and auditing.                               

LEGAL MATTERS 

Certain legal matters concerning the issuance of shares of the Acquiring  
Funds will be passed upon by Mayer, Brown, Rowe & Maw, New York, New York. Such 
firm will rely on Pennsylvania counsel as to matters of Pennsylvania law.       

AVAILABLE INFORMATION 

A copy of the Prospectus for each Acquiring Fund (and for the Special     
Purpose Fund) dated January 31, 2002, and a copy of the Annual Report for each  
Acquiring Fund (and for the Special Purpose Fund) for the fiscal year ended     
September 30, 2001 are attached as Exhibits C and D, respectively, and are      
incorporated by reference herein. A Statement of Additional Information         
relating to the Reorganizations described in this Proxy Statement and           
Prospectus dated March 25, 2002 has been filed with the Securities and Exchange 
Commission (the "SEC") and is also incorporated herein by reference. Also       
incorporated by reference herein are the Prospectuses of the Fixed Income III   
Fund and the High Yield II Fund dated May 1, 2001, and the Annual Report dated  
December 31, 2001 of the Fixed Income III Fund and the High Yield II Fund.      
Copies of such documents, including the Statement of Additional Information,    
can be obtained without charge by calling (800) 548-7786.                       

  The Company and the Trust are required by federal law to file reports, proxy
statements and other information with the SEC. The SEC maintains a website that 
contains information about the Company and the Trust. Any such reports, proxy   
material and other information can be inspected and copied at the public        
reference facilities of the SEC, 450 Fifth Street, N.W. Washington, D.C. 20549. 
Copies of such material can be obtained from the Public Reference Branch,       
Office of Consumer Affairs and Information Services of the SEC, 450 Fifth       
Street, N.W. Washington, D.C. 20549, or by electronic request at the following  
e-mail address: publicinfo@sec.gov, at prescribed rates. You may call the SEC   
at (202) 942-8090 for information on the operation of the Public Reference Room.

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OTHER BUSINESS  

Management of the Target Funds knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters not known 
at the time of the solicitation may come before the Meeting, the proxy as       
solicited confers discretionary authority with respect to such matters as       
properly come before the Meeting, including any adjournment or adjournments     
thereof, and it is the intention of the persons named as attorneys-in-fact in   
the proxy to vote this proxy in accordance with their judgment on such matters. 

                          By Order of the Boards

                  MARY E. MULLIN
             Secretary
                                      Morgan Stanley Institutional Fund,
            Inc.
                                     Morgan Stanley Institutional Fund
             Trust

March 25, 2002                                                                  

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                                                                     EXHIBIT A

FORM OF AGREEMENT AND PLAN OF REORGANIZATION  

THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of this
23rd day of January, 2002, by and between MORGAN STANLEY INSTITUTIONAL FUND     
TRUST, a Pennsylvania business trust ("the Trust") on behalf of the following   
Portfolios of the Trust:                                                        

(i) Investment Grade Fixed Income Portfolio                               

(ii) High Yield Portfolio                                                   

(iii)  Core Plus Fixed Income Portfolio (each an "Acquiring Fund") and        

(iv) Special Purpose Fixed Income (a "Target Fund") and                     

MORGAN STANLEY INSTITUTIONAL FUND, INC. (the "Company"), a Maryland       
corporation on behalf of the following Portfolios of the Company:               

(i) Fixed Income III Portfolio and                                        

(ii) High Yield II Portfolio (each a "Target Fund")                         

Where appropriate, references to the Acquiring Fund mean to the Trust, on 
behalf of the Acquiring Fund and references to the Target Fund mean the         
Company, on behalf of the Fixed Income III Portfolio or High Yield II Portfolio 
or the Trust, on behalf of the Special Purpose Fixed Income Portfolio.          

This Agreement is intended to be and is adopted as a "plan of             
reorganization" within the meaning of Treasury Regulations Section 1.368-2(g),  
for a reorganization under Section 368(a)(1) of the Internal Revenue Code of    
1986, as amended (the "Code"). The reorganization ("Reorganization") will       
consist of the transfer to the Acquiring Fund of substantially all of the       
assets of the of the Target Fund in exchange for the assumption by the          
Acquiring Fund of all stated liabilities of the Target Fund and the issuance by 
the Acquiring Fund of shares of beneficial interest, par value $0.01 per share  
(the "Acquiring Fund Shares"), to be distributed, after the Closing Date        
hereinafter referred to, to the shareholders of the Target Fund in liquidation  
of the Target Fund as provided herein, all upon the terms and conditions        
hereinafter set forth in this Agreement.                                        

In consideration of the premises and of the covenants and agreements      
hereinafter set forth, the parties hereto covenant and agree as follows:        

1.  The Reorganization and Liquidation of the Target Fund                       

  1.1 Subject to the terms and conditions herein set forth and on the basis of
  the representations and warranties contained herein, the Target Fund
     agrees to assign, deliver and otherwise transfer the Target Fund Assets
   (as defined in paragraph 1.2) to the Acquiring Fund and the Acquiring
      Fund agrees in exchange therefor to assume all of the Target Fund stated
     liabilities on the Closing Date as set forth in paragraph 1.3(a) and to
deliver to the Target Fund the number of Acquiring Fund Shares,   
including fractional shares, determined in the manner set forth in
paragraph 2.3. Such transactions shall take place at the closing  
provided for in paragraph 3.1 ("Closing").                        

1.2 (a) The "Target Fund Assets" shall consist of all property, including   
   without limitation, all cash (other than the "Cash Reserve" (as
  defined in paragraph 1.3(b)), cash equivalents, securities and
       dividend and interest receivables owned by the Target Fund, and any
       deferred or prepaid expenses shown as an asset on the Target Funds'
books on the Valuation Date.                                

   (b) On or prior to the Valuation Date, the Target Fund will provide the
         Acquiring Fund with a list of all of assets to be assigned, delivered
     and otherwise transferred to the Acquiring Fund and of the stated
    liabilities to be assumed by the Acquiring Fund pursuant to this
Agreement. The Target                                       

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      Fund reserves the right to sell any of the securities on such list
   but will not, without the prior approval of the Acquiring Fund,
       acquire any additional securities other than securities of the type
     in which the Acquiring Fund is permitted to invest and in amounts
        agreed to in writing by the Acquiring Fund. The Acquiring Fund will,
     within a reasonable time prior to the Valuation Date, furnish the
       Target Fund with a statement of its investment objectives, policies
      and restrictions and a list of the securities, if any, on the list
   referred to in the first sentence of this paragraph that do not
      conform to the Acquiring Fund's investment objective, policies and
         restrictions. In the event that the Target Fund holds any investments
     that the Acquiring Fund is not permitted to hold, the Target Fund
         will dispose of such securities on or prior to the Valuation Date. In
        addition, if it is determined that the portfolios of the Target Fund
      and the Acquiring Fund, when aggregated, would contain investments
       exceeding certain percentage limitations imposed upon the Acquiring
       Fund with respect to such investments, the Target Fund if requested
  by the Acquiring Fund will, on or prior to the Valuation Date,
         dispose of and/or reinvest a sufficient amount of such investments as
  may be necessary to avoid violating such limitations as of the
Closing Date (as defined in paragraph 3.1).                 

 1.3 (a) The Target Fund will endeavor to discharge all of its liabilities and
     obligations on or prior to the Valuation Date. The Acquiring Fund
will assume all stated liabilities, which include, without  
         limitation, all expenses, costs, charges and reserves reflected on an
    unaudited Statement of Assets and Liabilities of the Target Fund
      prepared by the Treasurer of the [Company/Trust], on behalf of the
      Target Fund, as of the Valuation Date in accordance with generally
      accepted accounting principles consistently applied from the prior
audited period.                                             

    (b) On the Valuation Date, the Target Fund may establish a cash reserve,
       which shall not exceed 5% of the Target Funds' net assets as of the
  close of business on the Valuation Date ("Cash Reserve") to be
retained by the Target Fund and used for the payment of its 
      liabilities not discharged prior to the Valuation Date and for the
expenses of dissolution.                                    

1.4 In order for the Target Fund to comply with Section 852(a)(1) of the  
   Code and to avoid having any investment company taxable income or net
      capital gain (as defined in Sections 852(b)(2) and 1222(11) of the Code,
      respectively) in the short taxable year ending with its dissolution, the
     Target Fund will on or before the Valuation Date (a) declare a dividend
      in an amount large enough so that it will have declared dividends of all
    of its investment company taxable income and net capital gain, if any,
   for such taxable year (determined without regard to any deduction for
dividends paid) and (b) distribute such dividend.                 

1.5 On the Closing Date or as soon as practicable thereafter, the Target  
   Fund will distribute the Acquiring Fund Shares received by the Target
   Fund pursuant to paragraph 1.1 pro rata to its shareholders of record
   determined as of the close of business on the Valuation Date ("Target
     Fund Shareholders"). Class A Shareholders of Fixed Income III Portfolio
      will receive Institutional Class Shares of Investment Grade Fixed Income
      Portfolio. Class B Shareholders will receive Adviser Class Shares. Class
  A Shareholders of High Yield II Portfolio will receive Institutional
     Class Shares of High Yield Portfolio. Class B Shareholders will receive
  Adviser Class Shares. Special Purpose Fixed Income Shareholders will
     receive Institutional Class Shares of Core Plus Fixed Income Portfolio.
     Such distribution will be accomplished by an instruction, signed by the
Secretary of the Company or the Trust, as applicable, to transfer 
     Acquiring Fund Shares then credited to the Target Funds' account on the
books of the Acquiring Fund, to open accounts on the books of the 
Acquiring Fund in the names of the Target Fund Shareholders and   
      representing the respective pro rata number of Acquiring Fund Shares due
    to such Target Fund Shareholders. All issued and outstanding shares of
  the Target Fund simultaneously will be canceled on the Target Funds'
     books; however, share certificates representing interests in the Target
     Fund will represent a number of Acquiring Fund Shares after the Closing
     Date as determined in accordance with paragraph 2.3. The Acquiring Fund
will issue certificates representing the Acquiring Fund Shares in 
     connection with such exchange only upon the written request of a Target
Fund Shareholder.                                                 

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1.6 Ownership of Acquiring Fund Shares will be shown on the books of the  
Acquiring Fund's transfer agent. The Acquiring Fund Shares will be
  issued in the manner described in the Trust's current Prospectus and
Statement of Additional Information.                              

  1.7 Any transfer taxes payable upon issuance of the Acquiring Fund Shares in
     a name other than the registered holder of the Acquiring Fund Shares on
  the Target Funds' books as of the close of business on the Valuation
      Date shall, as a condition of such issuance and transfer, be paid by the
person to whom the Acquiring Fund Shares are to be issued and     
transferred.                                                      

  1.8 Any reporting responsibility of the Target Fund, is and shall remain the
     responsibility of the Target Fund up to and including the date on which
the Target Fund is dissolved pursuant to paragraph 1.9.           

1.9 Within one year after the Closing Date, the Target Fund shall pay or  
  make provision for the payment of all its liabilities and taxes, and
  distribute to the shareholders of the Target Fund as of the close of
     business on the Valuation Date any remaining amount of the Cash Reserve
    (as reduced by the estimated cost of distributing it to shareholders).
   If and to the extent that any trust, escrow account, or other similar
    entity continues after the close of such one-year period in connection
      either with making provision for payment of liabilities or taxes or with
 distributions to shareholders of the Target Fund, such entity shall
      either (i) qualify as a liquidating trust under Section 7701 of the Code
    (and applicable Treasury Regulations thereunder) or other entity which
      does not constitute a continuation of the Target Fund for federal income
tax purposes, or (ii) be subject to a waiver under Section        
  368(a)(2)(G)(ii) of the complete distribution requirement of Section
  368(a)(2)(G)(i) of the Code. The Target Fund shall be dissolved as a
      portfolio of the Company or the Trust, as applicable, promptly following
    the making of all distributions pursuant to paragraph 1.5 (and, in any
event, within one year after the Closing Date).                   

1.10 Copies of all books and records maintained on behalf of the Target Fund in 
           connection with its obligations under the Investment Company Act of
           1940, as amended (the "1940 Act"), the Code, state blue sky laws or
           otherwise in connection with this Agreement will promptly after the
       Closing be delivered to officers of the Acquiring Fund or their
         designee and the Acquiring Fund or its designee shall comply with
         applicable record retention requirements to which the Target Fund
is subject under the 1940 Act.                          

2.  Valuation                                                                   

2.1 The value of the Target Fund Assets shall be the value of such assets 
  computed as of 4:00 p.m. on the New York Stock Exchange on the third
business day following the receipt of the requisite approval by   
  shareholders of the Target Fund of this Agreement or at such time on
      such earlier or later date after such approval as may be mutually agreed
upon in writing (such time and date being hereinafter called the  
"Valuation Date"), using the valuation procedures set forth in the
      Trust's then current Prospectus and Statement of Additional Information.

2.2 The net asset value of an Acquiring Fund Share shall be the net asset 
 value per share computed on the Valuation Date, using the valuation
procedures set forth in the Trust's then current Prospectus and   
Statement of Additional Information.                              

2.3 The number of Acquiring Fund Shares (including fractional shares, if  
   any) to be issued hereunder shall be determined, with respect to each
      class, by dividing the aggregate net asset value of the applicable class
    of Target Fund shares (calculated in accordance with paragraph 2.1) by
    the net asset value per share of the applicable class of shares of the
     Acquiring Fund. For purposes of this paragraph, the aggregate net asset
    value of the shares of the Target Fund shall not include the amount of
the Cash Reserve.                                                 

  2.4 All computations of value shall be made by J.P. Morgan Investor Services
      Company in accordance with its regular practice in pricing the Acquiring
Fund. The Acquiring Fund shall cause J.P. Morgan Investor Services
Company to deliver a copy of its valuation report at the Closing. 

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3.  Closing and Closing Date                                                    

3.1 The Closing shall take place on the next business day following the   
  Valuation Date (the "Closing Date"). The Closing shall be held as of
     5:00 p.m. Eastern time, or at such other time as the parties may agree.
The Closing shall be held in a location mutually agreeable to the 
     parties hereto. All acts taking place at the Closing shall be deemed to
   take place simultaneously as of 5:00 p.m. Eastern time on the Closing
Date unless otherwise provided.                                   

3.2 Portfolio securities held by the Target Fund and represented by a     
    certificate or other written instrument shall be presented by it or on
   its behalf to J.P. Morgan Chase & Co. (the "Custodian"), as custodian
      for the Acquiring Fund, for examination no later than five business days
    preceding the Valuation Date. Such portfolio securities (together with
    any cash or other assets) shall be delivered by the Target Fund to the
      Custodian for the account of the Acquiring Fund on or before the Closing
      Date in conformity with applicable custody provisions under the 1940 Act
   and duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of 
     brokers. The portfolio securities shall be accompanied by all necessary
    Federal and state stock transfer stamps or a check for the appropriate
 purchase price of such stamps. Portfolio securities and instruments
    deposited with a securities depository (as defined in Rule 17f-4 under
the 1940 Act) shall be delivered on or before the Closing Date by 
      book-entry in accordance with customary practices of such depository and
 the Custodian. The cash delivered shall be in the form of a Federal
     Funds wire, payable to the order of "J.P. Morgan Chase & Co., Custodian
for the Acquiring Fund."                                          

  3.3 In the event that on the Valuation Date, (a) the New York Stock Exchange
      shall be closed to trading or trading thereon shall be restricted or (b)
     trading or the reporting of trading on such Exchange or elsewhere shall
be disrupted so that, in the judgment of both the Target Fund and 
      Acquiring Fund, accurate appraisal of the value of the net assets of the
      Acquiring Fund or the Target Fund Assets is impracticable, the Valuation
     Date shall be postponed until the first business day after the day when
     trading shall have been fully resumed without restriction or disruption
and reporting shall have been restored.                           

  3.4 If requested, the Target Fund shall deliver to the Acquiring Fund or its
    designee (a) at the Closing, a list, certified by the Secretary of the
   Company or Trust, as applicable, of the names, addresses and taxpayer
   identification numbers of the Target Fund Shareholders and the number
      and percentage ownership of outstanding Target Fund shares owned by each
    such Target Fund Shareholder, all as of the Valuation Date, and (b) as
soon as practicable after the Closing, all original documentation 
     (including Internal Revenue Service forms, certificates, certifications
and correspondence) relating to the Target Funds' taxpayer        
      identification numbers and their liability for or exemption from back-up
withholding. The Acquiring Fund shall issue and deliver to such   
      Secretary a confirmation evidencing delivery of Acquiring Fund Shares to
    be credited on the Closing Date to the Target Fund or provide evidence
  satisfactory to the Target Fund that such Acquiring Fund Shares have
      been credited to the Target Funds' account on the books of the Acquiring
    Fund. At the Closing, each party shall deliver to the other such bills
   of sale, checks, assignments, share certificates, if any, receipts or
other documents as such other party or its counsel may reasonably 
request.                                                          

4.   Covenants of the Target Fund and Acquiring Fund                            

  4.1 Except as otherwise expressly provided herein with respect to the Target
Fund, the Acquiring Fund and the Target Fund each will operate its
     business in the ordinary course between the date hereof and the Closing
  Date, it being understood that such ordinary course of business will
include customary dividends and other distributions.              

4.2 The Trust, will prepare and file with the Securities and Exchange     
   Commission ("Commission") a registration statement on Form N-14 under
  the Securities Act of 1933, as amended ("1933 Act"), relating to the
Acquiring Shares ("Registration Statement"). The Target Fund will 
provide the Trust                                                 

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with the Proxy Materials as described in paragraph 4.3 below, for 
   inclusion in the Registration Statement. The Target Fund will further
     provide the Trust with such other information and documents relating to
    the Target Fund as are reasonably necessary for the preparation of the
Registration Statement.                                           

4.3 The Target Fund will call a meeting of the Target Fund shareholders to
consider and act upon this Agreement and to take all other action 
   necessary to obtain approval of the transactions contemplated herein.
   The Target Fund will prepare the notice of meeting, form of proxy and
proxy statement (collectively, "Proxy Materials") to be used in   
    connection with such meeting; provided that the Trust will furnish the
      Target Fund with its currently effective prospectus for inclusion in the
Proxy Materials and with such other information relating to the   
  Acquiring Fund as is reasonably necessary for the preparation of the
Proxy Materials.                                                  

4.4 The Target Fund will assist the Acquiring Fund in obtaining such      
  information as the Acquiring Fund reasonably requests concerning the
beneficial ownership of Target Fund Shares.                       

4.5 Subject to the provisions of this Agreement, the Target Fund and the  
     Acquiring Fund will each take, or cause to be taken, all action, and do
or cause to be done, all things reasonably necessary, proper or   
      advisable to consummate and make effective the transactions contemplated
by this Agreement.                                                

 4.6 The Target Fund shall furnish or cause to be furnished to the Acquiring
  Fund within 30 days after the Closing Date a statement of the Target
   Funds' assets and liabilities as of the Closing Date, which statement
shall be certified by the Treasurer of the Company or Trust, as   
applicable, and shall be in accordance with generally accepted    
     accounting principles consistently applied. As promptly as practicable,
    but in any case within 60 days after the Closing Date, the Target Fund
shall furnish the Acquiring Fund, in such form as is reasonably   
satisfactory to the Acquiring Fund, a statement certified by the  
Treasurer of the Company or Trust, as applicable, of earnings and 
     profits of the Target Fund for Federal income tax purposes that will be
     carried over to the Acquiring Fund pursuant to Section 381 of the Code.

 4.7 As soon after the Closing Date as is reasonably practicable, the Target
   Fund (a) shall prepare and file all Federal and other tax returns and
    reports of the Target Fund required by law to be filed with respect to
  all periods ending on or before the Closing Date but not theretofore
      filed and (b) shall pay all Federal and other taxes shown as due thereon
   and/or all Federal and other taxes that were unpaid as of the Closing
   Date, including without limitation, all taxes for which the provision
      for payment was made as of the Closing Date (as represented in paragraph
5.2(k)).                                                          

4.8 The Trust agrees to use all reasonable efforts to obtain the approvals
      and authorizations required by the 1933 Act and the 1940 Act and to make
   such filings required by the state Blue Sky and securities laws as it
may deem appropriate in order to continue its operations after the
Closing Date.                                                     

5.   Representations and Warranties                                             

5.1 The Trust represents and warrants to the applicable Target Fund, on   
behalf of the applicable Acquiring Fund, as follows:              

     (a) The Trust is a validly existing Pennsylvania business trust with full
power to carry on its business as presently conducted;      

(b) The Trust is a duly registered, open-end, management investment 
      company, and its registration with the Commission as an investment
       company under the 1940 Act and the registration of its shares under
the 1933 Act are in full force and effect;                  

   (c) All of the issued and outstanding shares of the Acquiring Fund have
     been offered and sold in compliance in all material respects with
  applicable registration requirements of the 1933 Act and state
       securities laws. Shares of the Acquiring Fund are registered in all
jurisdictions in which they                                 

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       are required to be registered under state securities laws and other
   laws, and said registrations, including any periodic reports or
        supplemental filings, are complete and current, all fees required to
        be paid have been paid, and the Acquiring Fund is not subject to any
         stop order and is fully qualified to sell its shares in each state in
which its shares have been registered;                      

     (d) The current Prospectus and Statement of Additional Information of the
Trust conforms in all material respects to the applicable   
     requirements of the 1933 Act and the 1940 Act and the regulations
         thereunder and do not include any untrue statement of a material fact
       or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the   
circumstances under which they were made, not misleading;   

   (e) The Trust is not in, and the execution, delivery and performance of
 this Agreement will not result in a material violation of any
      provision of the Trust's Declaration of Trust or By-Laws or of any
agreement, indenture, instrument, contract, lease or other  
      undertaking to which the Trust is a party or by which it is bound;

 (f) No litigation or administrative proceeding or investigation of or
         before any court or governmental body is presently pending or, to its
  knowledge, threatened against the Acquiring Fund or any of its
         properties or assets which, if adversely determined, would materially
      and adversely affect its financial condition or the conduct of its
       business; and the Trust knows of no facts that might form the basis
    for the institution of such proceedings and is not a party to or
     subject to the provisions of any order, decree or judgment of any
         court or governmental body which materially and adversely affects, or
         is reasonably likely to materially and adversely effect, its business
      or its ability to consummate the transactions herein contemplated;

 (g) The Statement of Assets and Liabilities, Statement of Operations,
       Statement of Changes in Net Assets and Financial Highlights for the
     year ended September 30, 2001, of the Trust audited by Deloitte &
       Touche LLP (copies of which have been furnished to the Target Fund)
  fairly present, in all material respects, the Acquiring Fund's
    financial condition as of such date in accordance with generally
       accepted accounting principles, and its results of such operations,
       changes in its net assets and financial highlights for such period,
        and as of such date there were no known liabilities of the Acquiring
      Fund (contingent or otherwise) not disclosed therein that would be
        required in accordance with generally accepted accounting principles
to be disclosed therein;                                    

(h) All issued and outstanding Acquiring Fund Shares are, and at the
        Closing Date will be, duly and validly issued and outstanding, fully
      paid and nonassessable with no personal liability attaching to the
 ownership thereof, except as set forth in the Trust's current
       Prospectus incorporated by reference in the Registration Statement.
         The Acquiring Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any of its shares;

   (i) The execution, delivery and performance of this Agreement have been
         duly authorized by all necessary action on the part of the Trust, and
    this Agreement constitutes a valid and binding obligation of the
 Trust enforceable in accordance with its terms, subject as to
      enforcement, to bankruptcy, insolvency, reorganization, moratorium
    and other laws relating to or affecting creditors' rights and to
   general equity principles. No other consents, authorizations or
         approvals are necessary in connection with the Trust's performance of
this Agreement;                                             

  (j) The Acquiring Fund Shares to be issued and delivered to the Target
      Fund, for the account of the Target Fund Shareholders, pursuant to
       the terms of this Agreement will at the Closing Date have been duly
  authorized and, when so issued and delivered, will be duly and
    validly issued Acquiring Fund Shares, and will be fully paid and
        non-assessable with no personal liability attaching to the ownership
    thereof, except as set forth in the Trust's current Statement of
        Additional Information incorporated by reference in the Statement of
Additional Information to this Registration Statement;      

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   (k) All material Federal and other tax returns and reports of the Trust
       required by law to be filed on or before the Closing Date have been
       filed and are correct, and all Federal and other taxes shown as due
        or required to be shown as due on said returns and reports have been
       paid or provision has been made for the payment thereof, and to the
    best of the Trust's knowledge, no such return is currently under
      audit and no assessment has been asserted with respect to any such
return;                                                     

(l) For each taxable year since its inception, the Trust has met the
  requirements of Subchapter M of the Code for qualification and
 treatment as a "regulated investment company" and neither the
         execution or delivery of nor the performance of its obligations under
 this Agreement will adversely affect, and no other events are
         reasonably likely to occur which will adversely affect the ability of
         the Trust to continue to meet the requirements of Subchapter M of the
Code;                                                       

(m) Since its inception there has been no change by the Trust in    
 accounting methods, principles, or practices, including those
required by generally accepted accounting principles;       

    (n) The information furnished or to be furnished by the Trust for use in
      registration statements, proxy materials and other documents which
     may be necessary in connection with the transactions contemplated
      hereby shall be accurate and complete in all material respects and
     shall comply in all material respects with Federal securities and
other laws and regulations applicable thereto; and          

(o) The Proxy Materials to be included in the Registration Statement
    (only insofar as they relate to the Acquiring Fund) will, on the
         effective date of the Registration Statement and on the Closing Date,
        not contain any untrue statement of a material fact or omit to state
      a material fact required to be stated therein or necessary to make
     the statements therein, in light of the circumstances under which
such statements were made, not materially misleading.       

 5.2 The Company, on behalf of the Fixed Income III Portfolio and High Yield
II Portfolio and the Trust, on behalf of the Special Purpose Fixed
      Income Fund represents and warrants to the applicable Acquiring Fund, as
follows:                                                          

  (a) The [Company] [Trust] is a validly existing [Maryland corporation]
 [Pennsylvania business trust] with full power to carry on its
business as presently conducted;                            

(b) The [Company] [Trust] is a duly registered, open-end, management
      investment company, and its registration with the Commission as an
     investment company under the 1940 Act and the registration of its
shares under the 1933 Act are in full force and effect;     

  (c) All of the issued and outstanding shares of beneficial interest of
   the Target Fund have been offered and sold in compliance in all
      material respects with applicable requirements of the 1933 Act and
      state securities laws. Shares of the Target Fund are registered in
     all jurisdictions in which they are required to be registered and
      said registrations, including any periodic reports or supplemental
        filings, are complete and current, all fees required to be paid have
       been paid, and the Target Fund is not subject to any stop order and
    is fully qualified to sell its shares in each state in which its
shares have been registered;                                

     (d) The current Prospectus and Statement of Additional Information of the
        [Company] [Trust] conform in all material respects to the applicable
     requirements of the 1933 Act and the 1940 Act and the regulations
         thereunder and do not include any untrue statement of a material fact
       or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the   
circumstances under which they were made, not misleading;   

(e) The [Company] [Trust] is not, and the execution, delivery and   
performance of this Agreement will not result, in a material
        violation of any provision of the [Company's] [Trust's] [Articles of
         Incorporation] [Declaration of Trust] or By-Laws or of any agreement,
        indenture, instrument, contract, lease or other undertaking to which
the [Company] [Trust] is a party or by which it is bound;   

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 (f) No litigation or administrative proceeding or investigation of or
         before any court or governmental body is presently pending or, to its
knowledge, threatened against the Target Fund or any of its 
         properties or assets which, if adversely determined, would materially
      and adversely affect its financial condition or the conduct of its
         business; and the [Company] [Trust] knows of no facts that might form
        the basis for the institution of such proceedings and is not a party
       to or subject to the provisions of any order, decree or judgment of
 any court or governmental body which materially and adversely
        affects, or is reasonably likely to materially and adversely effect,
     its business or its ability to consummate the transactions herein
contemplated;                                               

 (g) The Statement of Assets and Liabilities, Statement of Operations,
      Statement of Changes in Net Assets and Financial Highlights of the
    [Company for the year ended December 31, 2001 audited by Ernst &
      Young LLP] [Trust for the year ended September 30, 2001 audited by
 Deloitte & Touche LLP,] (copies of which have been or will be
         furnished to the Trust) fairly present, in all material respects, the
         Target Funds' financial condition as of such date, and its results of
      operations, changes in its net assets and financial highlights for
such period in accordance with generally accepted accounting
      principles, and as of such date there were no known liabilities of
        the Target Fund (contingent or otherwise) not disclosed therein that
      would be required in accordance with generally accepted accounting
principles to be disclosed therein;                         

    (h) The [Company] [Trust] has no material contracts or other commitments
         (other than this Agreement) that will be terminated with liability to
it prior to the Closing Date;                               

    (i) All issued and outstanding shares of the Target Fund are, and at the
        Closing Date will be, duly and validly issued and outstanding, fully
      paid and nonassessable with no personal liability attaching to the
         ownership thereof, except in the case of Special Purpose Fixed Income
as set forth in the Trust's current Statement of Additional 
        Information incorporated by reference in the Statement of Additional
        Information to this Registration Statement. The Target Fund does not
       have outstanding any options, warrants or other rights to subscribe
   for or purchase any of its shares, nor is there outstanding any
       security convertible to any of its shares. All such shares will, at
      the time of Closing, be held by the persons and in the amounts set
     forth in the list of shareholders submitted to the Acquiring Fund
pursuant to paragraph 3.4;                                  

   (j) The execution, delivery and performance of this Agreement will have
   been duly authorized prior to the Closing Date by all necessary
   action on the part of the [Company] [Trust], and subject to the
approval of the Target Funds' shareholders, this Agreement  
        constitutes a valid and binding obligation of the [Company] [Trust],
       enforceable in accordance with its terms, subject as to enforcement
        to bankruptcy, insolvency, reorganization, moratorium and other laws
    relating to or affecting creditors' rights and to general equity
  principles. No other consents, authorizations or approvals are
         necessary in connection with the [Company's] [Trust's] performance of
this Agreement;                                             

(k) All material Federal and other tax returns and reports of the   
  [Company] [Trust] required by law to be filed on or before the
      Closing Date shall have been filed and are correct and all Federal
       and other taxes shown as due or required to be shown as due on said
         returns and reports have been paid or provision has been made for the
 payment thereof, and to the best of the [Company's] [Trust's]
        knowledge, no such return is currently under audit and no assessment
has been asserted with respect to any such return;          

     (l) For each taxable year since its inception, the [Company] [Trust], has
met all the requirements of Subchapter M of the Code for    
       qualification and treatment as a "regulated investment company" and
   neither the execution or delivery of nor the performance of its
        obligations under this Agreement will adversely affect, and no other
      events are reasonably likely to occur which will adversely affect,
the ability of the [Company] [Trust] to continue to meet the
requirements of Subchapter M of the Code;                   

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   (m) At the Closing Date, the [Company] [Trust] will have good and valid
        title to the Target Fund Assets, subject to no liens (other than the
         obligation, if any, to pay the purchase price of portfolio securities
    purchased by the Target Fund which have not settled prior to the
     Closing Date), security interests or other encumbrances, and full
        right, power and authority to assign, deliver and otherwise transfer
         such assets hereunder, and upon delivery and payment for such assets,
      the Acquiring Fund will acquire good and marketable title thereto,
      subject to no restrictions on the full transfer thereof, including
any restrictions as might arise under the 1933 Act;         

   (n) On the effective date of the Registration Statement, at the time of
    the meeting of the Target Funds' shareholders and on the Closing
         Date, the Proxy Materials (exclusive of the currently effective Trust
 Prospectus contained therein) will (i) comply in all material
         respects with the provisions of the 1933 Act, the Securities Exchange
 Act of 1934, as amended ("1934 Act") and the 1940 Act and the
         regulations thereunder and (ii) not contain any untrue statement of a
        material fact or omit to state a material fact required to be stated
       therein or necessary to make the statements therein not misleading.
       Any other information furnished by the [Company] [Trust] for use in
 the Registration Statement or in any other manner that may be
     necessary in connection with the transactions contemplated hereby
   shall be accurate and complete and shall comply in all material
  respects with applicable Federal securities and other laws and
regulations thereunder;                                     

    (o) The Target Fund will, on or prior to the Valuation Date, declare one
  or more dividends or other distributions to shareholders that,
   together with all previous dividends and other distributions to
shareholders, shall have the effect of distributing to the  
     shareholders all of its investment company taxable income and net
      capital gain, if any, through the Valuation Date (computed without
regard to any deduction for dividends paid);                

   (p) The [Company] [Trust] has maintained or has caused to be maintained
    on its behalf all books and accounts as required of a registered
        investment company in compliance with the requirements of Section 31
of the 1940 Act and the Rules thereunder; and               

(q) The Target Fund is not acquiring the Acquiring Fund Shares to be
       issued hereunder for the purpose of making any distribution thereof
other than in accordance with the terms of this Agreement.  

6.  CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGET FUND                      

The obligations of the Target Fund to consummate the transactions provided
for herein shall be subject, at its election, to the performance by the Trust   
on behalf of the applicable Acquiring Fund of all the obligations to be         
performed by it hereunder on or before the Closing Date and, in addition        
thereto, the following conditions:                                              

6.1 All representations and warranties of the Trust contained in this     
    Agreement shall be true and correct in all material respects as of the
 date hereof and, except as they may be affected by the transactions
  contemplated by this Agreement, as of the Closing Date with the same
force and effect as if made on and as of the Closing Date;        

 6.2 The Trust shall have delivered to the Target Fund, a certificate of its
      President and Treasurer, in a form reasonably satisfactory to the Target
Fund and dated as of the Closing Date, to the effect that the     
    representations and warranties of the Trust made in this Agreement are
   true and correct at and as of the Closing Date, except as they may be
    affected by the transactions contemplated by this Agreement, and as to
such other matters as the Target Fund shall reasonably request;   

6.3 The Target Fund, shall have received a favorable opinion from Mayer,  
    Brown, Rowe & Maw, counsel to the Trust, dated as of the Closing Date,
to the effect that:                                               

    (a) The Trust is a validly existing Pennsylvania business trust, and has
         the power to own all of its properties and assets and to carry on its
       business as presently conducted (Pennsylvania counsel may be relied
upon in delivering such opinion);                           

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(b) the Trust is a duly registered, open-end, management investment 
      company, and its registration with the Commission as an investment
company under the 1940 Act is in full force and effect;     

  (c) this Agreement has been duly authorized, executed and delivered by
         the Trust and, assuming that the Registration Statement complies with
the 1933 Act, the 1934 Act and the 1940 Act and regulations 
        thereunder and assuming due authorization, execution and delivery of
   this Agreement by the [Company] [Trust], is a valid and binding
       obligation of the Trust enforceable against the Trust in accordance
         with its terms, subject as to enforcement, to bankruptcy, insolvency,
      reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;         

(d) the Acquiring Fund Shares to be issued to the Target Fund       
      Shareholders as provided by this Agreement are duly authorized and
upon such delivery will be validly issued, fully paid and   
   non-assessable (except as set forth in the Trust's Statement of
    Additional Information), and no shareholder of the Trust has any
    preemptive rights to subscription or purchase in respect thereof
         (Pennsylvania counsel may be relied upon in delivering such opinion);

(e) the execution and delivery of this Agreement did not, and the   
  consummation of the transactions contemplated hereby will not,
     violate the Trust's Declaration of Trust or By-Laws (Pennsylvania
counsel may be relied upon in delivering such opinion); and 

     (f) to the knowledge of such counsel, no consent, approval, authorization
        or order of any court or governmental authority of the United States
 or any state is required for the consummation by Trust of the
       transactions contemplated herein, except such as have been obtained
        under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities laws; and                   

 6.4 As of the Closing Date, there shall have been no material change in the
applicable Acquiring Fund's investment objective, policies and    
  restrictions nor any increase in the investment management fees from
  those described in the Trust's Prospectus dated January 31, 2001 and
Statement of Additional Information dated January 31, 2001.       

7.  Conditions Precedent to Obligations of the Acquiring Fund                   

The obligations of an Acquiring Fund to complete the transactions provided
for herein shall be subject, at its election, to the performance by [Company]   
[Trust], on behalf of the applicable Target Fund, of all the obligations to be  
performed by it hereunder on or before the Closing Date and, in addition        
thereto, the following conditions:                                              

  7.1 All representations and warranties of the [Company] [Trust] contained in
     this Agreement shall be true and correct in all material respects as of
     the date hereof and, except as they may be affected by the transactions
  contemplated by this Agreement, as of the Closing Date with the same
force and effect as if made on and as of the Closing Date;        

 7.2 The [Company] [Trust] shall have delivered to the Acquiring Fund at the
   Closing a certificate of its President and its Treasurer, in form and
      substance satisfactory to the Acquiring Fund and dated as of the Closing
Date, to the effect that the representations and warranties of the
     [Company] [Trust] made in this Agreement are true and correct at and as
     of the Closing Date, except as they may be affected by the transactions
 contemplated by this Agreement, and as to such other matters as the
Trust shall reasonably request;                                   

 7.3 The Target Fund shall have delivered to the Acquiring Fund, a statement
    of the Target Fund Assets and its liabilities, together with a list of
 the Target Funds' portfolio securities and other assets showing the
  respective adjusted bases and holding periods thereof for income tax
 purposes, as of the Closing Date, certified by the Treasurer of the
[Company] [Trust];                                                

 7.4 The Target Fund shall have delivered to the Trust within three business
  days after the Closing a letter from [Ernst & Young LLP] [Deloitte &
Touche LLP] dated as of the Closing Date stating that (a) such    

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     firm has performed a limited review of the Federal and state income tax
   returns of [Company] [Trust] for each of the last three taxable years
     and, based on such limited review, nothing came to their attention that
   caused them to believe that such returns did not properly reflect, in
    all material respects, the Federal and state income tax liabilities of
      the Target Fund for the periods covered thereby, (b) for the period from
_____________200_ to and including the Closing Date, such firm has
performed a limited review (based on unaudited financial data) to 
   ascertain the amount of applicable Federal, state and local taxes and
  has determined that same either have been paid or reserves have been
established for payment of such taxes, and, based on such limited 
      review, nothing came to their attention that caused them to believe that
     the taxes paid or reserves set aside for payment of such taxes were not
    adequate in all material respects for the satisfaction of all Federal,
      state and local tax liabilities for the period from ____________ 200_ to
   and including the Closing Date and (c) based on such limited reviews,
  nothing came to their attention that caused them to believe that the
   [Company] [Trust] would not qualify as a regulated investment company
for Federal income tax purposes for any such year or period;      

7.5 The Trust shall have received at the Closing a favorable opinion from 
     Mayer, Brown, Rowe & Maw, counsel to the [Company] [Trust], dated as of
the Closing Date to the effect that:                              

  (a) The [Company] [Trust] is a validly existing [Maryland corporation]
     [Pennsylvania business trust] and has the power to own all of its
   properties and assets and to carry on its business as presently
      conducted ([Maryland] [Pennsylvania] counsel may be relied upon in
delivering such opinion);                                   

(b) the [Company] [Trust] is a duly registered, open-end, management
        investment company under the 1940 Act, and its registration with the
     Commission as an investment company under the 1940 Act is in full
force and effect;                                           

  (c) this Agreement has been duly authorized, executed and delivered by
        the [Company] [Trust], and, assuming that the Registration Statement
     complies with the 1933 Act, the 1934 Act and the 1940 Act and the
        regulations thereunder and assuming due authorization, execution and
   delivery of this Agreement by the Trust, is a valid and binding
         obligation of the [Company] [Trust] enforceable against the [Company]
       [Trust] in accordance with its terms, subject as to enforcement, to
     bankruptcy, insolvency, reorganization, moratorium and other laws
    relating to or affecting creditors' rights and to general equity
principles;                                                 

(d) the execution and delivery of this Agreement did not, and the   
  consummation of the transactions contemplated hereby will not,
 violate the [Company's] [Trust's] [Articles of Incorporation]
        [Declaration of Trust] or By-Laws ([Maryland] [Pennsylvania] counsel
may be relied upon in delivering such opinion); and         

     (e) to the knowledge of such counsel, no consent, approval, authorization
        or order of any court or governmental authority of the United States
  or any state is required for the consummation by the [Company]
        [Trust] of the transactions contemplated herein, except such as have
       been obtained under the 1933 Act, the 1934 Act and the 1940 Act and
such as may be required under state securities laws; and    

  7.6 On the Closing Date, the Target Fund Assets shall include no assets that
    the Acquiring Fund, by reason of limitations of the fund's Declaration
of Trust or otherwise, may not properly acquire.                  

8.  Further Conditions Precedent to Obligations of the Target Fund and the      
Acquiring Fund                                                                  

The obligations of the [Company] [Trust], on behalf of a Target Fund, and 
the Trust on behalf of the applicable Acquiring Fund, hereunder are each        
subject to the further conditions that on or before the Closing Date:           

 8.1 This Agreement and the transactions contemplated herein shall have been
     approved by the requisite vote of the holders of the outstanding shares
of the Target Fund in accordance with the provisions of           

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   the [Company's] [Trust's] [Articles of Incorporation] [Declaration of
      Trust], and certified copies of the resolutions evidencing such approval
shall have been delivered to the Trust;                           

8.2 On the Closing Date, no action, suit or other proceeding shall be     
      pending before any court or governmental agency in which it is sought to
   restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated herein;     

  8.3 All consents of other parties and all other consents, orders and permits
    of Federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities,  
including "no-action" positions of and exemptive orders from such 
Federal and state authorities) deemed necessary by Target Fund or 
     Acquiring Fund to permit consummation, in all material respects, of the
     transactions contemplated herein shall have been obtained, except where
   failure to obtain any such consent, order or permit would not involve
  risk of a material adverse effect on the assets or properties of the
Trust or the Target Fund or Acquiring Fund;                       

8.4 The Registration Statement shall have become effective under the 1933 
      Act, no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no       
     investigation or proceeding for that purpose shall have been instituted
or be pending, threatened or contemplated under the 1933 Act;     

8.5 The Target Fund shall have declared and paid a dividend or dividends  
and/or other distribution or distributions that, together with all
previous such dividends or distributions, shall have the effect of
   distributing to the Target Fund Shareholders all of the Target Funds'
investment company taxable income (computed without regard to any 
  deduction for dividends paid) and all of its net capital gain (after
      reduction for any capital loss carry-forward and computed without regard
     to any deduction for dividends paid) for all taxable years ending on or
before the Closing Date; and                                      

8.6 The parties shall have received the opinion of the law firm of Mayer, 
     Brown, Rowe & Maw (based on such representations as such law firm shall
    reasonably request), addressed to the Trust on behalf of the Acquiring
Fund and the [Company/Trust], on behalf of the Target Fund, which 
opinion may be relied upon by the shareholders of the Target Fund,
substantially to the effect that, for Federal income tax purposes:

(a) The transfer of the Target Funds' assets in exchange for the    
     Acquiring Fund Shares and the assumption by the Acquiring Fund of
 certain stated liabilities of the Target Fund followed by the
   distribution by the Target Fund of Acquiring Fund Shares to the
     Target Fund Shareholders in exchange for their Target Fund Shares
      pursuant to and in accordance with the terms of the Reorganization
      Agreement will constitute a "reorganization" within the meaning of
     Section 368(a)(1)(C) of the Code, and the Trust and the [Company]
         [Trust] will each be a "party to a reorganization" within the meaning
of Section 368(b) of the Code;                              

 (b) No gain or loss will be recognized by the Acquiring Fund upon the
       receipt of the assets of the Target Fund solely in exchange for the
         Acquiring Fund Shares and the assumption by the Acquiring Fund of the
stated liabilities of the Target Fund;                      

(c) No gain or loss will be recognized by the Target Fund upon the  
      transfer of the assets of the Target Fund to the Acquiring Fund in
    exchange for the Acquiring Fund Shares and the assumption by the
        Acquiring Fund of the stated liabilities or upon the distribution of
         the Acquiring Fund Shares to the Target Fund Shareholders in exchange
for their Target Fund Shares;                               

  (d) No gain or loss will be recognized by the Target Fund Shareholders
          upon the exchange of the Target Fund Shares for Acquiring Fund Shares;

  (e) The aggregate tax basis for Acquiring Fund Shares received by each
      Target Fund Shareholder pursuant to the reorganization will be the
     same as the aggregate tax basis of the Target Fund Shares held by
each such Target Fund Shareholder immediately prior to the  
Reorganization;                                             

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  (f) The holding period of Acquiring Fund Shares to be received by each
    Target Fund Shareholder will include the period during which the
 Target Fund Shares surrendered in exchange therefor were held
        (provided such Target Fund Shares were held as capital assets on the
date of the Reorganization);                                

    (g) The tax basis of the assets of Target Fund acquired by the Acquiring
       Fund will be the same as the tax basis of such assets to the Target
Fund immediately prior to the Reorganization; and           

   (h) The holding period of the assets of the Target Fund in the hands of
        the Acquiring Fund will include the period during which those assets
were held by the Acquiring Fund.                            

(i) Notwithstanding anything herein to the contrary, neither the    
         Acquiring Fund nor the Target Fund may waive the conditions set forth
in this paragraph 8.6.                                      

9.  Fees and Expenses                                                           

9.1 (a) The Target Funds shall equally bear all of the expenses of proxy    
      solicitation including the cost of preparing and mailing the Proxy
      Statement and Prospectus. The Target Funds and the Acquiring Funds
will each bear all of their respective expenses incurred in 
connection with the entering into, and carrying out of, the 
         provisions of this Agreement, including legal, accounting, Commission
       registration fees and Blue Sky expenses, legal and accounting fees,
       filing and portfolio transfer taxes (if any) incurred in connection
  with the consummation of the transactions contemplated herein.

     (b) In the event the transactions contemplated herein are not consummated
       by reason of the Target Fund being either unwilling or unable to go
         forward (other than by reason of the nonfulfillment or failure of any
condition to the Target Funds' obligations specified in this
       Agreement), the Target Funds' only obligation hereunder shall be to
      reimburse the Acquiring Fund for all reasonable out-of-pocket fees
        and expenses incurred by the Acquiring Fund in connection with those
transactions.                                               

     (c) In the event the transactions contemplated herein are not consummated
       by reason of the Acquiring Fund being either unwilling or unable to
        go forward (other than by reason of the nonfulfillment or failure of
       any condition to the Acquiring Fund's obligations specified in this
       Agreement), the Acquiring Fund's only obligation hereunder shall be
      to reimburse the Target Fund for all reasonable out-of-pocket fees
     and expenses incurred by the Target Fund in connection with those
transactions.                                               

10.  Entire Agreement; Survival of Warranties                                   

 10.1 This Agreement constitutes the entire agreement between the parties.

10.2 The representations, warranties and covenants contained in this    
Agreement or in any document delivered pursuant hereto or in  
        connection herewith shall survive the consummation of the transactions
      contemplated herein, except that the representations, warranties and
    covenants of the [Company] [Trust] hereunder shall not survive the
       dissolution and complete liquidation of the Target Fund in accordance
with Section 1.9.                                             

11.  Termination                                                                

11.1 This Agreement may be terminated and the transactions contemplated 
hereby may be abandoned at any time prior to the Closing:     

(a) by the mutual written consent of the Target Fund, and the 
Acquiring Fund;                                       

     (b) by either, the Target Fund, or the Acquiring Fund, by notice to
          the other, without liability to the terminating party on account
     of such termination (providing the terminating party is not

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           otherwise in material default or breach of this Agreement) if the
          Closing shall not have occurred on or before August 15, 2002; or

  (c) by either the Target Fund, or the Acquiring Fund, in writing
       without liability to the terminating party on account of such
         termination (provided the terminating party is not otherwise in
         material default or breach of this Agreement), if (i) the other
            party shall fail to perform in any material respect its agreements
      contained herein required to be performed on or prior to the
           Closing Date, (ii) the other party materially breaches any of its
          representations, warranties or covenants contained herein, (iii)
            the Target Fund shareholders fail to approve this Agreement at any
          meeting called for such purpose at which a quorum was present or
          (iv) any other condition herein expressed to be precedent to the
      obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met. 

11.2 (a) Termination of this Agreement pursuant to paragraphs 11.1(a) or
          (b) shall terminate all obligations of the parties hereunder and
    there shall be no liability for damages on the part of the
            [Company] [Trust] or the Trust, or the trustees or officers of the
            [Company] [Trust] or the Trust, to any other party or its trustees
or officers.                                          

       (b) Termination of this Agreement pursuant to paragraph 11.1(c) shall
            terminate all obligations of the parties hereunder and there shall
          be no liability for damages on the part of the [Company] [Trust]
            or the Trust, or the trustees or officers of the [Company] [Trust]
         or the Trust, except that any party in breach of this Agreement
       shall, upon demand, reimburse the non-breaching party for all
           reasonable out-of-pocket fees and expenses incurred in connection
         with the transactions contemplated by this Agreement, including
legal, accounting and filing fees.                    

12.  Amendments                                                                 

This Agreement may be amended, modified or supplemented in such manner as 
may be mutually agreed upon in writing by the parties.                          

13.  Miscellaneous                                                              

   13.1 The article and paragraph headings contained in this Agreement are for
        reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.                             

  13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.                            

 13.3 This Agreement shall be governed by and construed in accordance with
the laws of Pennsylvania.                                     

13.4 This Agreement shall bind and inure to the benefit of the parties  
       hereto and their respective successors and assigns, but no assignment
       or transfer hereof or of any rights or obligations hereunder shall be
   made by any party without the written consent of the other party.
       Nothing herein expressed or implied is intended or shall be construed
        to confer upon or give any person, firm or corporation, other than the
        parties hereto and their respective successors and assigns, any rights
or remedies under or by reason of this Agreement.             

13.5 The obligations and liabilities of the Trust hereunder are solely  
 those of the Trust. It is expressly agreed that no shareholder,
     nominee, trustee, officer, agent, or employee of the Trust shall be
 personally liable hereunder. The execution and delivery of this
        Agreement have been authorized by the trustees of the Trust and signed
      by authorized officers of the Trust acting as such, and neither such
        authorization by such trustees nor such execution and delivery by such
        officers shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally.         

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 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by a duly authorized officer.                                       

                                     MORGAN STANLEY INSTITUTIONAL FUND
                                        TRUST on behalf of THE ACQUIRING
                                       FUNDS and SPECIAL PURPOSE FIXED
                        INCOME PORTFOLIO

                                       By: _______________________________
                                 Name:  Mary E. Mullin
                             Title:  Secretary

                                      MORGAN STANLEY INSTITUTIONAL FUND,
                                          INC. on behalf of FIXED INCOME III
                                   PORTFOLIO and HIGH YIELD II
                 PORTFOLIO

                                       By: _______________________________
                                 Name:  Mary E. Mullin
                             Title:  Secretary

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                                                                     EXHIBIT B

BENEFICIAL OWNERS 

To the knowledge of MSIM on behalf of the Fixed Income III Fund and High  
Yield II Fund, and MSI on behalf of the Acquiring Funds and the Special Purpose 
Fund, the following were beneficial owners of more than 5% of the outstanding   
shares of the relevant classes of each Target Fund and each Acquiring Fund.     
Those persons who own beneficially 25% or more of the voting securities of the  
Funds are deemed to be control persons ("Control Persons"). Control Persons may 
have the ability to effect the outcome of this solicitation.                    

                                                        [Enlarge/Download Table]

                                                                          Percent held
                                                                           as of the  
                                                            Number of     Record Date 
   Title of Portfolio/Class         Name and Address         Shares        (2/19/02)  
------------------------------  -------------------------  -------------  ------------
                                                                                      
Fixed Income III Fund, Class A  MAC & Co. A/C MSWF1000052  7,953,097.226     36.19%   
                                Mutual Funds Operations                               
                                PO Box 3198                                           
                                Pittsburgh, PA 15230-3198                             

                                MAC & Co. A/C MSWF1000052  2,324,119.482     10.57%   
                                Mutual Funds Operations                               
                                PO Box 3198                                           
                                Pittsburgh, PA 15230-3198                             

                                Fleet National Bank        2,012,404.181      9.16%   
                                FBO St Raymonds Parish                                
                                Attn 0001396250                                       
                                PO Box 92800                                          
                                Rochester, NY 14692-8900                              

Fixed Income III Fund, Class B  Morgan Stanley Co             37,844.770     16.88%   
                                FBO Burton D. Cohen                                   
                                3912 Zenith Ave South                                 
                                Minneapolis, MN 55410                                 

                                Morgan Stanley Co             37,287.208     16.63%   
                                FBO Carolyn S. Young                                  
                                514 Chestertown Street                                
                                Gaithersburg, MD 20878                                

                                Morgan Stanley Co             20,478.076      9.14%   
                                FBO C. Marks Hinton Jr.                               
                                49 Briar Hollow Lane 1705                             
                                Houston, TX 77027                                     

                                Morgan Stanley Co             18,238.635      8.14%   
                                FBO Leonard M. Landsbaum                              
                                8024 Clayton Lane Court                               
                                Saint Louis, MO 63105                                 

                                Morgan Stanley Co             14,678.991      6.55%   
                                FBO Annmarie DeMartino                                
                                420 Avenue L                                          
                                Brooklyn, NY 11230                                    

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                                                                                    Percent held
                                                                                     as of the  
                                                                        Number of   Record Date 
  Title of Portfolio/Class               Name and Address                Shares      (2/19/02)  
---------------------------- ---------------------------------------- ------------- ------------
                                                                                                
                             Morgan Stanley Co                           12,227.580     5.45%   
                             FBO Joan H. Gilblichman                                            
                             3860 Mission Hills Road S                                          
                             Northbrook, IL 60062                                               

High Yield II Fund, Class A  MAC & Co. A/C MSWF1000132                5,260,912.789    34.21%   
                             Mutual Funds Operation                                             
                             PO Box 3198                                                        
                             Pittsburgh, PA 15230-3198                                          

                             MAC & Co. A/C MSWF4000132                2,446,498.100    15.91%   
                             Mutual Funds Operations                                            
                             PO Box 3198                                                        
                             Pittsburgh, PA 15230-3198                                          

                             Morgan Stanley Co                        1,231,713.432     8.01%   
                             FBO Janx Partners LP, II                                           
                             1 Gateway Center                                                   
                             Suite 900                                                          
                             Newark, NJ 07102                                                   

                             Morgan Stanley Co FBO                    1,053,037.798    55.48%   
                             Universal Computer Consulting                                      
                             Holding Inc.                                                       
                             300 Delaware Ave Ste 1704                                          
                             Wilmington, DE 19801                                               

High Yield II Fund, Class B  Morgan Stanley Co                          126,747.047     6.68%   
                             FBO Joseph Mansour                                                 
                             PO Box 160834                                                      
                             Austin, TX 78716                                                   

Core Plus Fixed Income Fund, Fidelity Investments Institutional       5,938,825.641    39.06%   
Adviser Class                Operations Co FIIOC as Agent For Certain                           
                             EE Benefits Plans                                                  
                             100 Magellan Way KW1C                                              
                             Covington, KY 41015                                                

                             Transco & Co                             2,253,024.446    14.82%   
                             Attn Wealth Management 10 th Floor                                 
                             PO Box 48698                                                       
                             Wichita, KS 67201                                                  

                             Transco & Co                             1,943,206.843    12.78%   
                             Attn Wealth Management 10 th Floor                                 
                             PO Box 48698                                                       
                             Wichita, KS 67201                                                  

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                                                                                   Percent held
                                                                                    as of the  
                                                                      Number of    Record Date 
  Title of Portfolio/Class              Name and Address                Shares      (2/19/02)  
---------------------------- -------------------------------------- -------------- ------------
                                                                                               
                             Wendel & Co A/C 295773                  1,273,695.423     8.38%   
                             c/o The Bank of New York                                          
                             PO Box 1066 Wall Street Station                                   
                             New York, NY 10286                                                

                             Fidelity Management Trust Company       1,171,190.295     7.70%   
                             Attn Ben Branham                                                  
                             Mail Zone H10C                                                    
                             82 Devonshire St                                                  
                             Boston, MA 02109                                                  

                             Pan-American Life Insurance Company     1,004,619.137     6.61%   
                             Separate Account VII                                              
                             14th Floor                                                        
                             601 Poydras St                                                    
                             New Orleans, LA 70130                                             

                             Resources Trust Co                        882,757.399     5.81%   
                             For the Exclusive Benefit of                                      
                             Various IMS Customers                                             
                             PO Box 3865                                                       
                             Englewood, CO 80155-3865                                          

Core Plus Income Fund,       MAC & Co A/C MSWF 1000302              42,626,450.639    12.78%   
Institutional Class          PO Box 3198                                                       
                             Pittsburgh, PA 15230-3198                                         

Core Plus Fixed Income Fund, MSDW Stable Value Plan-SEI Trustee      4,106,440.950    60.18%   
Investment Class             Attn Jeff Ryan                                                    
                             530 E Swedesford Road                                             
                             Wayne, PA 19087-1693                                              

                             Morgan Stanley Co                         594,737.225     8.72%   
                             FBO Ecological Trust Fund of Panama GP                            
                             The Nature Conservancy                                            
                             4245 North Fairfax Drive 100                                      
                             Arlington, VA 22203                                               

                             Zoological Society of Philadelphia        372,514.246     5.46%   
                             Endowment                                                         
                             Attn Joe Steuer                                                   
                             3400 West Girard Ave                                              
                             Philadelphia, PA 19104-1196                                       

                             Testa And Co                              371,794.678     5.45%   
                             c/o Chase Manhattan Bank                                          
                             Attn Mutual Fund Dept                                             
                             PO Box 31412                                                      
                             Rochester, NY 14603-1412                                          

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                                                                                       Percent held
                                                                                        as of the  
                                                                          Number of    Record Date 
   Title of Portfolio/Class                Name and Address                Shares       (2/19/02)  
------------------------------ ---------------------------------------- -------------- ------------
                                                                                                   
High Yield Fund, Adviser Class National Financial Services Corporation  16,792,866.634    87.23%   
                               For Exclusive Benefit of our Customers                              
                               One World Financial Center                                          
                               New York, NY 10281                                                  

                               Fidelity Investments Institutional        1,378,503.409     7.16%   
                               Operations Co FIIOC as Agent for Certain                            
                               EE Benefit Plans                                                    
                               100 Magellan Way KW1C                                               
                               Covington, KY 41015                                                 

High Yield Fund, Institutional Charles Schwab & Co Inc                  13,659,666.580    14.80%   
Class                          Special Custody Account for the                                     
                               Exclusive Benefit of Customers                                      
                               Attn Mutual Funds                                                   
                               101 Montgomery St                                                   
                               San Francisco, CA 94104                                             

                               Minnesota Life Insurance Company         11,430,067.903    12.39%   
                               Attn Administration Department                                      
                               c/o Advantus Capital Management Inc                                 
                               Station 16-4202                                                     
                               400 Robert St                                                       
                               St Paul, MN 55101                                                   

                               PFPC                                      6,305,893.646     6.83%   
                               FBO LPL Supermarket Program                                         
                               Attn KOP-LPL                                                        
                               211 South Gulph Road                                                
                               King of Prussia, PA 19406                                           

                               Michelin North America Inc                5,408,863.654     5.86%   
                               Attn Kris Kapoor                                                    
                               One Parkway South                                                   
                               PO Box 19001                                                        
                               Greenville, SC 29602                                                

High Yield Fund, Investment    Boston & Co 10113608004                     474,898.236    27.65%   
Class                          PO Box 534005                                                       
                               Pittsburgh, PA 15253-40005                                          

                               First Union National Bank                   428,749.060    24.96%   
                               FBO No American Van Lines Retirement                                
                               Plan                                                                
                               1524 West WT Harris Blvd-NC1151                                     
                               Charlotte, NC 28288-1151                                            

                               The Philadelphia Foundation                 334,712.305    19.49%   
                               Attn Julia R Dutton                                                 
                               1234 Market St Suite 1900                                           
                               Philadelphia, PA 19102                                              

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                                                                                      Percent held
                                                                                       as of the  
                                                                          Number of   Record Date 
  Title of Portfolio/Class                Name and Address                 Shares      (2/19/02)  
-----------------------------  ---------------------------------------  ------------- ------------
                                                                                                  
                               EAMCO-910004035                            127,055.880     7.40%   
                               c/o Riggs Bank NA                                                  
                               Mutual Fund Desk RS 300                                            
                               PO Box 96211                                                       
                               Washington, DC 20090-6211                                          

                               Northern Trust Company as Custodian        120,743.345     7.03%   
                               For Noblehouse International Ltd                                   
                               PO Box 92956                                                       
                               Chicago, IL 60675                                                  

                               EAMCO                                       86,536.201     5.04%   
                               FBO Loudoun Health Care                                            
                               Attn Mutual Fund Desk RS300                                        
                               PO Box 96211                                                       
                               Washington, DC 20090-6211                                          

Investment Grade Fixed Income  HUBCO                                    4,205,038.092    16.20%   
Fund                           Regions Financial Corporation                                      
                               PO Box 10247                                                       
                               Birmingham, AL 35202                                               

                               First Union National Bank                3,051,549.263    11.75%   
                               FBO Diocese of Camden Trust Inc                                    
                               CMG 3C4 NC 1151                                                    
                               1525 W WT Harris Blvd                                              
                               Charlotte, NC 28288                                                

                               Mercantile Safe Deposit & Trust Company  3,047,342.329    11.74%   
                               Trustee for JHU Pension 2750                                       
                               Attn Mutual Funds                                                  
                               766 Old Hammonds Ferry Rd                                          
                               Linthicum, MD 21090                                                

                               JHU Retiree Medical Benefits Trust       1,706,896.596     6.57%   
                               Johns Hopkins University                                           
                               Attn Harriet Olsen 3400 Charles St                                 
                               Baltimore, MD 21218                                                

                               Amsouth Bank as Trustee Infirmary        1,540,594.501     5.93%   
                               Health Systems Inc                                                 
                               Attn Mutual Fund Team                                              
                               PO Box 11426                                                       
                               Birmingham, AL 35202                                               

                               University of Illinois                   1,302,667.918     5.02%   
                               Director Cash Management & Investments                             
                               506 South Wright Street MC-363 Urbana,                             
                               IL 61801-3620                                                      

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                                                                         Percent held
                                                                          as of the  
                                                             Number of   Record Date 
Title of Portfolio/Class         Name and Address             Shares      (2/19/02)  
------------------------ --------------------------------- ------------- ------------
                                                                                     
  Special Purpose Fund   Robertson Research Fund           3,252,319.084    13.94%   
                         Cold Spring Harbor Laboratory                               
                         Attn Alison McDermott                                       
                         PO Box 100                                                  
                         Cold Spring Harbor, NY 11724-0100                           

                         The Cold Spring Harbor Fund       2,617,969.026    11.22%   
                         Attn Alison McDermott                                       
                         PO Box 100 Burgtown Road                                    
                         Cold Springs Harbor, NY 11724                               

                         Fleet National Bank               2,289,764.149     9.81%   
                         FBO Hartford Hospital                                       
                         PO Box 92800                                                
                         Rochester, NY 14692-8900                                    

OWNERSHIP OF THE OFFICERS AND DIRECTORS/TRUSTEES  

As of the Record Date, to the knowledge of MSIM, on behalf of the Fixed   
Income III Fund and High Yield II Fund, and MSI, on behalf of the Acquiring     
Funds and the Special Purpose Fund, the officers and Directors/Trustees of the  
High Yield II Fund and the Acquiring Funds, as a group, owned beneficially less 
than 1% of the outstanding shares of those Funds, and the officers and          
Directors/Trustees owned beneficially 1.52% of the outstanding Class A shares   
of the Fixed Income III Fund.                                                   

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 MORGAN STANLEY INSTITUTIONAL FUND TRUST
 Investment Grade Fixed Income Portfolio
High Yield Portfolio
Core Plus Fixed Income Portfolio

PART B

 STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information relates to the shares of     
Investment Grade Fixed Income Portfolio, High Yield Portfolio, and Core Plus    
Fixed Income Portfolio (the "Portfolios"), each a portfolio of Morgan Stanley   
Institutional Fund Trust (the "Trust"), to be issued pursuant to an Agreement   
and Plan of Reorganization for each Portfolio, dated January 23, 2002 between   
the Trust, on behalf of each Portfolio, and Morgan Stanley Institutional Fund,  
Inc. (the "Company"), on behalf of Fixed Income III Portfolio and High Yield II 
Portfolio (each a "Target Fund"), and the Trust, on behalf of Special Purpose   
Fixed Income Portfolio (a "Target Fund"), in connection with the acquisition by 
Investment Grade Fixed Income Portfolio, High Yield Portfolio, and Core Plus    
Fixed Income Portfolio of substantially all of the assets, subject to stated    
liabilities, of the Fixed Income III Portfolio, High Yield II Portfolio, and    
Special Purpose Fixed Income Portfolio, respectively. This Statement of         
Additional Information does not constitute a prospectus. This Statement of      
Additional Information does not include all information that a shareholder      
should consider before voting on the proposal contained in the Proxy Statement  
and Prospectus that relates to their Portfolio, and, therefore, should be read  
in conjunction with the related Proxy Statement and Prospectus, dated March 25  
2002. A copy of the Proxy Statement and Prospectus may be obtained without      
charge by calling (800) 548-7786. Please retain this document forfuture         
reference.                                                                      

         The date of this Statement of Additional Information is dated March 25,
2002.                                                                           

 TABLE OF CONTENTS

                                                            Page
                                                            ----

-------------------------------------------------------------------------       
INTRODUCTION                                                       B-2          

-------------------------------------------------------------------------       
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS                        B-2          

-------------------------------------------------------------------------       
FINANCIAL STATEMENTS                                               B-3          

-------------------------------------------------------------------------       

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INTRODUCTION

This Statement of Additional Information is intended to supplement the
information provided in the Proxy Statement and Prospectus dated March 25, 2002 
(the "Proxy Statement and Prospectus"). The Proxy Statement and Prospectus has  
been sent to the Target Fund shareholders in connection with the solicitation of
proxies by the Board of Directors/Trustees of the Target Funds to be voted at   
the Special Joint Meeting of Shareholders of the Target Funds to be held on May 
15, 2002. This Statement of Additional Information incorporates by reference the
Statement of Additional Information of the Portfolios and Special Purpose Fixed 
Income Portfolio dated January 31, 2002, and the Statement of Additional        
Information of Fixed Income III Portfolio and High Yield II Portfolio dated     
May 1, 2001, as supplemented on November 27, 2001.                              

 ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS

Investment Objectives and Policies                            

    For additional information about the Portfolios' investment objectives and
policies, see "The Portfolios' Investments and Strategies" in the Portfolios'   
Statement of Additional Information.                                            

Management                                                    

For additional information about the Board of Trustees, officers and  
management personnel of the Portfolios, see "Management of the Fund" in the     
Portfolios' Statement of Additional Information.                                

Investment Advisory and Other Services                        

  For additional information about the Portfolios' investment adviser, see
"Investment Adviser" in the Portfolios' Statement of Additional Information. For
additional information about the Portfolios' independent auditors, see "Other   
Service Providers" in the Portfolios' Statement of Additional Information. For  
additional information about other services provided to the Portfolios, see     
"Fund Administration", and "Other Service Providers" in the Portfolios'         
Statement of Additional Information.                                            

Portfolio Transactions and Brokerage                          

For additional information about brokerage allocation practices, see  
"Transactions with Broker/Dealers" and "Brokerage Transactions" in the          
Portfolios' Statement of Additional Information.                                

Description of Fund Shares                                    

For additional information about the voting rights and other          
characteristics of the shares of the Portfolios, see "General Information" in   
the Portfolios' Statement of Additional Information.                            

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Purchase, Redemption and Pricing of Shares                    

For additional information about the purchase and redemption of the   
Portfolios' shares and the determination of net asset value, see "Purchase of   
Shares", "Redemption of Shares", and "Valuation of Shares" in the Portfolios'   
Statement of Additional Information.                                            

Dividends, Distributions and Tax Status                       

For additional information about the Portfolios policies regarding    
dividends and distributions and tax matters affecting the Portfolios and their  
shareholders, see "General Information" and "Tax Considerations" in the         
Portfolios' Statement of Additional Information.                                

Distribution of Shares                                        

For additional information about the Portfolios' distributor and the  
distribution agreement between the Portfolios and the distributor, see          
"Distribution of Shares" and "Principal Underwriter" in the Portfolios'         
Statement of Additional Information.                                            

Performance Data                                              

For additional information about the Portfolios' performance, see     
"Performance Information" in the Portfolios' Statement of Additional            
Information.                                                                    

FINANCIAL STATEMENTS

The Portfolios, and the Special Purpose Fixed Income Portfolios', most
recent audited financial statements are set forth in their Annual Report for the
fiscal year ended September 30, 2001. A copy of the Annual Report accompanies,  
and is incorporated by reference in, the Proxy Statement and Prospectus. The    
Fixed Income III Portfolio's and the High Yield II Portfolio's most recent      
audited financial statements are set forth in their Annual Report for the fiscal
year ended December 31, 2001, which is incorporated by reference in the Proxy   
Statement and Prospectus.                                                       

The following unaudited pro-forma financial information combines the  
Schedules of Portfolio Investments, the Statements of Assets and Liabilities,   
and the Statements of Operations, as of December 31, 2001, of the Fixed Income  
III Portfolio and High Yield II Portfolio to reflect the reorganization of the  
Fixed Income III Portfolio and High Yield II Portfolio into the Investment Grade
Fixed Income Portfolio and High Yield Portfolio, respectively. The pro-forma    
financial information shows the expected effect of the reorganization           
transactions on the Fixed Income III Portfolio and High Yield II Portfolio.     
Pursuant to Rule 11-01 of Regulation S-X, the pro-forma financial information   
for the Special Purpose Fixed Income Portfolio need not be shown because the net
asset value of the Special Purpose Fixed Income Portfolio does not exceed ten   
percent of the net asset value of the Core Plus Fixed Income Portfolio.         

B-3 

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Morgan Stanley Institutional Fund Trust/Morgan Stanley Institutional Fund, Inc. 
Pro-Forma Combined Portfolio of Investments                                     
Acquiring Portfolio: MSIFT, Inc. -- Investment Grade Fixed Income Portfolio     
(formerly known as Fixed Income II Portfolio)                               
Target Portfolio: MSIF, Inc. -- Fixed Income III Portfolio                      
As Of December 31, 2001 (Unaudited)                                             

                                                        [Enlarge/Download Table]

===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           --------------------          ---------------------    ------------------      ----------------         
                                                                                                                                   
00184AAB1 0000000000       AOL TIME WARNER INC NT              610,000.000                 0.000           610,000.000             
00184AAC9 0000000000       AOL TIME WARNER INC DEB             235,000.000           700,000.000           935,000.000             
001957AZ2 0000000000       AT&T CORP USD SR NT 14              120,000.000           135,000.000           255,000.000             
001957BA6 0000000000       AT&T CORP USD SR NT 144A            850,000.000           955,000.000         1,805,000.000             
00209AAC0 0000000000       AT&T WIRELESS SVCS INC                    0.000           865,000.000           865,000.000             
00209AAE6 0000000000       AT&T WIRELESS SVCS INC              615,000.000                 0.000           615,000.000             
00817YAB4 0000000000       AETNA INC NEW SR NT                 840,000.000         1,090,000.000         1,930,000.000             
008685AB5 0000000000       AHOLD FIN U S A INC NT            1,050,000.000           525,000.000         1,575,000.000             
008685AC3 0000000000       AHOLD FIN U S A INC GTD N                 0.000           140,000.000           140,000.000             
01F060618 0000000000       TBA FNMA SF 6.00  30 YRS         19,200,000.000        20,950,000.000        40,150,000.000             
01F060626 0000000000       TBA FNMA SF 6.00  30 YRS          1,000,000.000         1,750,000.000         2,750,000.000             
01F062614 0000000000       TBA FNMA SF 6.50  30 YRS          8,200,000.000        25,000,000.000        33,200,000.000             
01F070419 0000000000       TBA FNMA SF 7.00  15 YRS                  0.000         1,600,000.000         1,600,000.000             
01F080616 0000000000       TBA FNMA SF 8.00  30 YRS         19,000,000.000         7,750,000.000        26,750,000.000             
01N070618 0000000000       TBA GNMA I SF  .       YR                 0.000        18,950,000.000        18,950,000.000             
023654BJ4 0000000000       AMERICAL WEST AIRLINES              860,032.850                 0.000           860,032.850             
026351AU0 0000000000       AMERICAN GEN CORP NT                      0.000           545,000.000           545,000.000             
02970KAC1 0000000000       AMERICAN SOUTHWEST FINL S                 0.000           611,077.870           611,077.870             
02970KAF4 0000000000       AMERICAN SOUTHWEST FINL S                 0.000         7,282,185.770         7,282,185.770             
02R062619 0000000000       TBA FHLMC GOLD SF 6.50  3                 0.000         3,000,000.000         3,000,000.000             
02R070612 0000000000       TBA FHLMC GOLD SF 7.00  3        24,500,000.000        11,600,000.000        36,100,000.000             
02R072618 0000000000       TBA FHLMC GOLD SF 7.50  3                 0.000         8,300,000.000         8,300,000.000             
036734AA9 0000000000       ANTHEM INS COS INC SURPLU           285,000.000           895,000.000         1,180,000.000             
036734AC5 0000000000       ANTHEM INS COS INC SURPLU           250,000.000                 0.000           250,000.000             
039006AJ0 0000000000       ARCADIA AUTOMOBILE REC.                   0.000                 0.020                 0.020             
039006AN1 0000000000       ADCADIA AUTOMOBILE RECEIV                 0.000            40,909.600            40,909.600             
045424FJ2 0000000000       ASSET SECURITIZATION CORP                 0.000         5,770,897.680         5,770,897.680             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
00184AAB1 0000000000       AOL TIME WARNER INC NT          625,095.67                0.00           625,095.67           0.12%     
00184AAC9 0000000000       AOL TIME WARNER INC DEB         248,576.42          734,437.90           983,014.32           0.19%     
001957AZ2 0000000000       AT&T CORP USD SR NT 14          123,308.40          137,498.04           260,806.44           0.05%     
001957BA6 0000000000       AT&T CORP USD SR NT 144A        892,704.00          988,628.42         1,881,332.42           0.36%     
00209AAC0 0000000000       AT&T WIRELESS SVCS INC                0.00          972,843.88           972,843.88           0.19%     
00209AAE6 0000000000       AT&T WIRELESS SVCS INC          657,440.54                0.00           657,440.54           0.13%     
00817YAB4 0000000000       AETNA INC NEW SR NT             827,295.84        1,068,234.88         1,895,530.72           0.37%     
008685AB5 0000000000       AHOLD FIN U S A INC NT        1,009,497.30          497,717.33         1,507,214.63           0.29%     
008685AC3 0000000000       AHOLD FIN U S A INC GTD N             0.00          153,352.78           153,352.78           0.03%     
01F060618 0000000000       TBA FNMA SF 6.00  30 YRS      8,773,952.00       20,354,182.00        39,128,134.00           7.59%     
01F060626 0000000000       TBA FNMA SF 6.00  30 YRS        973,440.00                0.00           973,440.00           0.19%     
01F062614 0000000000       TBA FNMA SF 6.50  30 YRS      8,200,000.00       24,875,000.00        33,075,000.00           6.41%     
01F070419 0000000000       TBA FNMA SF 7.00  15 YRS              0.00        1,650,496.00         1,650,496.00           0.32%     
01F080616 0000000000       TBA FNMA SF 8.00  30 YRS      9,900,410.00        8,102,315.00        28,002,725.00           5.43%     
01N070618 0000000000       TBA GNMA I SF  .       YR             0.00       19,275,750.50        19,275,750.50           3.74%     
023654BJ4 0000000000       AMERICAL WEST AIRLINES          861,970.42                0.00           861,970.42           0.17%     
026351AU0 0000000000       AMERICAN GEN CORP NT                  0.00          589,758.67           589,758.67           0.11%     
02970KAC1 0000000000       AMERICAN SOUTHWEST FINL S             0.00          629,764.63           629,764.63           0.12%     
02970KAF4 0000000000       AMERICAN SOUTHWEST FINL S             0.00          142,730.84           142,730.84           0.03%     
02R062619 0000000000       TBA FHLMC GOLD SF 6.50  3             0.00        2,987,340.00         2,987,340.00           0.58%     
02R070612 0000000000       TBA FHLMC GOLD SF 7.00  3     4,965,745.00       11,775,740.00        36,741,485.00           7.12%     
02R072618 0000000000       TBA FHLMC GOLD SF 7.50  3             0.00        8,534,724.00         8,534,724.00           1.65%     
036734AA9 0000000000       ANTHEM INS COS INC SURPLU       286,860.77          893,449.86         1,180,310.63           0.23%     
036734AC5 0000000000       ANTHEM INS COS INC SURPLU       268,654.25                0.00           268,654.25           0.05%     
039006AJ0 0000000000       ARCADIA AUTOMOBILE REC.               0.00                0.02                 0.02           0.00%     
039006AN1 0000000000       ADCADIA AUTOMOBILE RECEIV             0.00           41,006.18            41,006.18           0.01%     
045424FJ2 0000000000       ASSET SECURITIZATION CORP             0.00          409,329.77           409,329.77           0.08%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           --------------------          ---------------------    ------------------      ----------------         
                                                                                                                                   
055240AE5 0000000000       BA MTG SECS INC 1997-1 MT                 0.000             6,895.960             6,895.960             
055959AH3 0000000000       BMW VEH OWNER TR 2000 A             482,891.930           765,338.130         1,248,230.060             
058919AA9 0000000000       BANC ONE FINL SVCS HOME E                 0.000             2,898.250             2,898.250             
060506PL0 0000000000       BANK AMER MTG SECS INC MT           312,826.010                 0.000           312,826.010             
0609902B3 0000000000       BANK OF AMERICA SWAP/CMBS*                0.000         2,100,000.000         2,100,000.000             
0609902C1 0000000000       BANK OF AMERICA SWAP/CMBS*                0.000        (2,100,000.000)       (2,100,000.000)            
0639902G9 0000000000       BOA SWAP/LONG/CMBS INDEX*                 0.000         3,200,000.000         3,200,000.000             
0639902K0 0000000000       BOA CMBS SWAP LONG*                       0.000           625,000.000           625,000.000             
0639902L8 0000000000       BOA CMBS SWAP SHORT*                      0.000          (625,000.000)         (625,000.000)            
0639902M6 0000000000       BOA CMBS SWAP LONG*                       0.000           630,000.000           630,000.000             
0639902N4 0000000000       BOA CMBS SWAP SHORT*                      0.000          (630,000.000)         (630,000.000)            
06422QAA7 0000000000       BANK ONE CORP MEDIUM*                     0.000         1,120,000.000         1,120,000.000             
0649902M5 0000000000       SWAP BOA CMBS LONG*                       0.000         1,500,000.000         1,500,000.000             
0649902N3 0000000000       SWAP BOA CMBS SHORT LIBOR*                0.000        (1,500,000.000)       (1,500,000.000)            
0649902T0 0000000000       BOA CMBS LONG*                            0.000         1,250,000.000         1,250,000.000             
0649902U7 0000000000       BOA CMBS LIBOR SHORT*                     0.000        (1,250,000.000)       (1,250,000.000)            
0649902V5 0000000000       BOA CMBS LONG*                            0.000           590,000.000           590,000.000             
0649902W3 0000000000       BOA CMBS LIBOR SHORT*                     0.000          (590,000.000)         (590,000.000)            
0699902P3 0000000000       BOA SWAP/SHORT/CMBS INDEX*                0.000        (3,200,000.000)       (3,200,000.000)            
079867AW7 0000000000       BELLSOUTH TELECOMMUNICATI                 0.000           885,000.000           885,000.000             
087858AA4 0000000000       BEVERLY FIN 144A                          0.000           675,000.000           675,000.000             
097014AG9 0000000000       BOEING CAP CORP SR NT               620,000.000           735,000.000         1,355,000.000             
110122AG3 0000000000       BRISTOL MYERS SQUIBB CO           1,775,000.000                 0.000         1,775,000.000             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
055240AE5 0000000000       BA MTG SECS INC 1997-1 MT             0.00            6,896.10             6,896.10           0.00%     
055959AH3 0000000000       BMW VEH OWNER TR 2000 A         486,012.57          770,574.50         1,256,587.07           0.24%     
058919AA9 0000000000       BANC ONE FINL SVCS HOME E             0.00            2,894.45             2,894.45           0.00%     
060506PL0 0000000000       BANK AMER MTG SECS INC MT       314,155.52                0.00           314,155.52           0.06%     
0609902B3 0000000000       BANK OF AMERICA SWAP/CMBS*            0.00        2,113,398.00         2,113,398.00           0.41%     
0609902C1 0000000000       BANK OF AMERICA SWAP/CMBS*            0.00       (2,100,021.00)       (2,100,021.00)         -0.41%     
0639902G9 0000000000       BOA SWAP/LONG/CMBS INDEX*             0.00        3,247,488.00         3,247,488.00           0.63%     
0639902K0 0000000000       BOA CMBS SWAP LONG*                   0.00          623,318.75           623,318.75           0.12%     
0639902L8 0000000000       BOA CMBS SWAP SHORT*                  0.00         (625,006.25)         (625,006.25)         -0.12%     
0639902M6 0000000000       BOA CMBS SWAP LONG*                   0.00          628,305.30           628,305.30           0.12%     
0639902N4 0000000000       BOA CMBS SWAP SHORT*                  0.00         (630,006.30)         (630,006.30)         -0.12%     
06422QAA7 0000000000       BANK ONE CORP MEDIUM*                 0.00        1,100,086.40         1,100,086.40           0.21%     
0649902M5 0000000000       SWAP BOA CMBS LONG*                   0.00        1,480,665.00         1,480,665.00           0.29%     
0649902N3 0000000000       SWAP BOA CMBS SHORT LIBOR*            0.00       (1,500,015.00)       (1,500,015.00)         -0.29%     
0649902T0 0000000000       BOA CMBS LONG*                        0.00        1,226,725.00         1,226,725.00           0.24%     
0649902U7 0000000000       BOA CMBS LIBOR SHORT*                 0.00       (1,250,012.50)       (1,250,012.50)         -0.24%     
0649902V5 0000000000       BOA CMBS LONG*                        0.00          579,621.90           579,621.90           0.11%     
0649902W3 0000000000       BOA CMBS LIBOR SHORT*                 0.00         (590,005.90)         (590,005.90)         -0.11%     
0699902P3 0000000000       BOA SWAP/SHORT/CMBS INDEX*            0.00       (3,200,032.00)       (3,200,032.00)         -0.62%     
079867AW7 0000000000       BELLSOUTH TELECOMMUNICATI             0.00          834,116.04           834,116.04           0.16%     
087858AA4 0000000000       BEVERLY FIN 144A                      0.00          717,747.75           717,747.75           0.14%     
097014AG9 0000000000       BOEING CAP CORP SR NT           616,983.08          720,565.34         1,337,548.42           0.26%     
110122AG3 0000000000       BRISTOL MYERS SQUIBB CO       1,758,270.63                0.00         1,758,270.63           0.34%     

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=================================================================================================================================== 
                                                                                  MSIFT Investment                                  
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma               
                                                               Portfolio             Portfolio               Combined               
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value           
    ------------           --------------------          ---------------------    ------------------      ----------------          
                                                                                                                                    
125509BF5 0000000000       CIGNA CORP SR NT                    235,000.000           375,000.000           610,000.000              
125509BG3 0000000000       CIGNA CORPORATION                   330,000.000           280,000.000           610,000.000              
12589YAD1 0000000000       CMS PANHANDLE HLDG CO NT            540,000.000                 0.000           540,000.000              
12589YAF6 0000000000       CMS PANHANDLE HLDG CO NT                  0.000         1,240,000.000         1,240,000.000              
125924AU4 0000000000       CPS AUTO GRANTOR TR 1997-                 0.000            21,474.710            21,474.710              
126650AD2 0000000000       CVS CORP NT                         860,000.000                 0.000           860,000.000              
12669BTH5 0000000000       CWMBS INC PASS THRU CTFS            592,775.040                 0.000           592,775.040              
130209QT9 0000000000       CALIFORNIA FED BK A FED S                 0.000            22,608.760            22,608.760              
14426EAC0 0000000000       CAROUSEL CTR FIN INC MTG                  0.000         1,400,000.000         1,400,000.000              
152312AG9 0000000000       CENTEX CORP SR NT                   435,000.000           590,000.000         1,025,000.000              
152314DV9 0000000000       CENTEX HOME EQUITY LN TR                  0.000         1,068,376.870         1,068,376.870              
161505DJ8 0000000000       CHASE COML MTG SECS CORP            959,393.734                 0.000           959,393.734              
161505DK5 0000000000       CHASE COML MTG SECS CORP                  0.000         2,275,000.000         2,275,000.000              
16151RAX1 0000000000       CHASE CR CARD OWNER TR            1,045,000.000                 0.000         1,045,000.000              
161581BW2 0000000000       CHASE MANHATTAN AUTO OWN                  0.000         2,000,000.000         2,000,000.000              
16161ABU1 0000000000       CHASE MANHATTAN CORP NEW          1,000,000.000                 0.000         1,000,000.000              
166778AH3 0000000000       CHEVY CHASE AUTO RECEIVAB                 0.000            75,170.020            75,170.020              
1689902A6 0000000000       CSFB SHORT FIXED SWAP*                   0.000        (1,250,000.000)       (1,250,000.000)              
17303MJC4 0000000000       CITICORP MEDIUM TERM SUB                  0.000         1,455,000.000         1,455,000.000              
17305EAC9 0000000000       CITIBANK CR CARD ISSUANCE           500,000.000           840,000.000         1,340,000.000              
17305EAE5 0000000000       CITIBANK CR CARD ISSUANCE         1,805,000.000                 0.000         1,805,000.000              
184502AK8 0000000000       CLEAR CHANNEL COMMUNICATI           490,000.000           885,000.000         1,375,000.000              
20029PAF6 0000000000       COMCAST CABLE COMMUNICATI           410,000.000           320,000.000           730,000.000              
20029PAL3 0000000000       COMCAST CABLE COMMUNICATI           360,000.000           555,000.000           915,000.000              


=================================================================================================================================== 
                                                          MSIF Fixed      MSIFT Investment                                          
                                                          Income III     Grade Fixed Income                                         
                                                          Portfolio            Portfolio       Pro-Forma Combined                   
    Cusip Number           Security Description (f)       Market Value        Market Value          Market Value     % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   --------------- 
                                                                                                                                    
125509BF5 0000000000       CIGNA CORP SR NT                240,736.59          382,211.25           622,947.84           0.12%      
125509BG3 0000000000       CIGNA CORPORATION               324,036.24          273,434.28           597,470.52           0.12%      
12589YAD1 0000000000       CMS PANHANDLE HLDG CO NT        508,486.68                0.00           508,486.68           0.10%      
12589YAF6 0000000000       CMS PANHANDLE HLDG CO NT              0.00        1,038,157.76         1,038,157.76           0.20%      
125924AU4 0000000000       CPS AUTO GRANTOR TR 1997-             0.00           21,504.44            21,504.44           0.00%      
126650AD2 0000000000       CVS CORP NT                     866,161.04                0.00           866,161.04           0.17%      
12669BTH5 0000000000       CWMBS INC PASS THRU CTFS        594,162.13                0.00           594,162.13           0.12%      
130209QT9 0000000000       CALIFORNIA FED BK A FED S             0.00           22,608.76            22,608.76           0.00%      
14426EAC0 0000000000       CAROUSEL CTR FIN INC MTG              0.00        1,422,890.00         1,422,890.00           0.28%      
152312AG9 0000000000       CENTEX CORP SR NT               443,156.69          598,125.48         1,041,282.17           0.20%      
152314DV9 0000000000       CENTEX HOME EQUITY LN TR              0.00        1,069,798.24         1,069,798.24           0.21%      
161505DJ8 0000000000       CHASE COML MTG SECS CORP      1,010,999.52                0.00         1,010,999.52           0.20%      
161505DK5 0000000000       CHASE COML MTG SECS CORP              0.00        2,382,744.00         2,382,744.00           0.46%      
16151RAX1 0000000000       CHASE CR CARD OWNER TR        1,064,124.96                0.00         1,064,124.96           0.21%      
161581BW2 0000000000       CHASE MANHATTAN AUTO OWN              0.00        1,993,562.40         1,993,562.40           0.39%      
16161ABU1 0000000000       CHASE MANHATTAN CORP NEW        996,033.00                0.00           996,033.00           0.19%      
166778AH3 0000000000       CHEVY CHASE AUTO RECEIVAB             0.00           75,553.62            75,553.62           0.01%      
1689902A6 0000000000       CSFB SHORT FIXED SWAP*                0.00       (1,186,775.00)       (1,186,775.00)         -0.23%      
17303MJC4 0000000000       CITICORP MEDIUM TERM SUB              0.00        1,469,391.41         1,469,391.41           0.28%      
17305EAC9 0000000000       CITIBANK CR CARD ISSUANCE       529,861.95          888,036.66         1,417,898.61           0.27%      
17305EAE5 0000000000       CITIBANK CR CARD ISSUANCE     1,932,220.55                0.00         1,932,220.55           0.37%      
184502AK8 0000000000       CLEAR CHANNEL COMMUNICATI       506,150.40          909,733.98         1,415,884.38           0.27%      
20029PAF6 0000000000       COMCAST CABLE COMMUNICATI       452,064.77          350,713.60           802,778.37           0.16%      
20029PAL3 0000000000       COMCAST CABLE COMMUNICATI       361,565.64          554,549.90           916,115.54           0.18%      

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           --------------------          ---------------------    ------------------      ----------------         
                                                                                                                                   
207678AE3 0000000000       CONNECTICUT RRB SPL PURP            836,803.750         1,300,000.000         2,136,803.750             
208251AE8 0000000000       CONOCO INC NT                     1,180,000.000         1,335,000.000         2,515,000.000             
209615BX0 0000000000       CONSOLIDATED NAT GAS CO             260,000.000           300,000.000           560,000.000             
210805BU0 0000000000       CONTINENTAL AIRLS PASS              708,046.940                 0.000           708,046.940             
210805CB1 0000000000       CONTINENTAL AIRLS PASS TH                 0.000           627,674.900           627,674.900             
210805CQ8 0000000000       CONTINENTAL AIRLS PASS TH                 0.000           383,025.610           383,025.610             
224044AY3 0000000000       COX COMMUNICATIONS INC              525,000.000           670,000.000         1,195,000.000             
225516AB9 0000000000       CREEKWOOD CAP CORP COLL N                 0.000           670,562.240           670,562.240             
2259902A7 0000000000       CREDIT SUISSE FIRST BOSTO                 0.000         1,375,000.000         1,375,000.000             
2259902B5 0000000000       CREDIT SUISSE FIRST BOSTO                 0.000        (1,375,000.000)       (1,375,000.000)            
2259902C3 0000000000       CSFB LONG LIBOR SWAP*                     0.000         1,250,000.000         1,250,000.000             
2259902D1 0000000000       CSFB CMBS SWAP LONG*                      0.000         1,500,000.000         1,500,000.000             
2259902E9 0000000000       CSFB SMBS CWAP SHORT*                     0.000        (1,500,000.000)       (1,500,000.000)            
229396AA4 0000000000       CRYSTAL RUN PPTY INC MTG                  0.000         1,100,000.000         1,100,000.000             
233331AE7 0000000000       DTE ENERGY CO NT                    310,000.000           435,000.000           745,000.000             
233835AK3 0000000000       DAIMLER CHRYSLER NORTH AM           315,000.000                 0.000           315,000.000             
233835AP2 0000000000       DAIMLER CHRYSLER NORTH AM           440,000.000                 0.000           440,000.000             
233835AQ0 0000000000       DAIMLER CHRYSLER NORTH AM           130,000.000           730,000.000           860,000.000             
23383VAK6 0000000000       DAIMLERCHRYSLER AUTO TR 2         1,310,000.000                 0.000         1,310,000.000             
23383VAQ3 0000000000       DAIMLERCHRYSLER AUTO TR                   0.000           947,300.140           947,300.140             
23383VBC3 0000000000       DAIMLERCHRYSLER AUTO TR                   0.000         2,100,000.000         2,100,000.000             
239753DJ2 0000000000       DAYTON HUDSON CORP DEB                    0.000           950,000.000           950,000.000             
247126AC9 0000000000       DELPHI AUTOMOTIVE SYS COR           185,000.000           355,000.000           540,000.000             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
207678AE3 0000000000       CONNECTICUT RRB SPL PURP        849,339.07        1,314,209.00         2,163,548.07           0.42%     
208251AE8 0000000000       CONOCO INC NT                 1,199,904.24        1,343,047.38         2,542,951.62           0.49%     
209615BX0 0000000000       CONSOLIDATED NAT GAS CO         252,746.00          291,966.60           544,712.60           0.11%     
210805BU0 0000000000       CONTINENTAL AIRLS PASS          622,306.49                0.00           622,306.49           0.12%     
210805CB1 0000000000       CONTINENTAL AIRLS PASS TH             0.00          545,525.81           545,525.81           0.11%     
210805CQ8 0000000000       CONTINENTAL AIRLS PASS TH             0.00          326,744.90           326,744.90           0.06%     
224044AY3 0000000000       COX COMMUNICATIONS INC          560,607.08          711,937.31         1,272,544.39           0.25%     
225516AB9 0000000000       CREEKWOOD CAP CORP COLL N             0.00          717,407.72           717,407.72           0.14%     
2259902A7 0000000000       CREDIT SUISSE FIRST BOSTO             0.00        1,387,883.75         1,387,883.75           0.27%     
2259902B5 0000000000       CREDIT SUISSE FIRST BOSTO             0.00       (1,375,013.75)       (1,375,013.75)         -0.27%     
2259902C3 0000000000       CSFB LONG LIBOR SWAP*                 0.00        1,250,012.50         1,250,012.50           0.24%     
2259902D1 0000000000       CSFB CMBS SWAP LONG*                  0.00        1,456,830.00         1,456,830.00           0.28%     
2259902E9 0000000000       CSFB SMBS CWAP SHORT*                 0.00       (1,500,015.00)       (1,500,015.00)         -0.29%     
229396AA4 0000000000       CRYSTAL RUN PPTY INC MTG              0.00        1,121,197.00         1,121,197.00           0.22%     
233331AE7 0000000000       DTE ENERGY CO NT                319,905.43          446,530.55           766,435.98           0.15%     
233835AK3 0000000000       DAIMLER CHRYSLER NORTH AM       330,223.64                0.00           330,223.64           0.06%     
233835AP2 0000000000       DAIMLER CHRYSLER NORTH AM       456,536.96                0.00           456,536.96           0.09%     
233835AQ0 0000000000       DAIMLER CHRYSLER NORTH AM       138,776.43          773,467.85           912,244.28           0.18%     
23383VAK6 0000000000       DAIMLERCHRYSLER AUTO TR 2     1,357,107.21                0.00         1,357,107.21           0.26%     
23383VAQ3 0000000000       DAIMLERCHRYSLER AUTO TR               0.00          963,292.27           963,292.27           0.19%     
23383VBC3 0000000000       DAIMLERCHRYSLER AUTO TR               0.00        2,118,730.53         2,118,730.53           0.41%     
239753DJ2 0000000000       DAYTON HUDSON CORP DEB                0.00          949,727.35           949,727.35           0.18%     
247126AC9 0000000000       DELPHI AUTOMOTIVE SYS COR       166,776.02          314,083.06           480,859.08           0.09%     

4 

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           --------------------          ---------------------    ------------------      ----------------         
                                                                                                                                   
250847DS6 0000000000       DETROIT EDISON CO                   120,000.000                 0.000           120,000.000             
250854AE6 0000000000       DETROIT EDISON                      685,000.000         1,035,000.000         1,720,000.000             
25156PAB9 0000000000       DEUTSCHE TELEKOM INT FIN            555,000.000                 0.000           555,000.000             
25156PAC7 0000000000       DEUTSCHE TELEKOM INTL FIN                 0.000           270,000.000           270,000.000             
268766BH4 0000000000       EOP OPER LTD PARTNERSHIP                  0.000           865,000.000           865,000.000             
268917FP1 0000000000       EQCC HOME EQUITY LN TR                    0.000            24,786.400            24,786.400             
29444GAH0 0000000000       EQUITABLE COS INC NT                      0.000           760,000.000           760,000.000             
309588AC5 0000000000       FARMERS EXCH CAP                  2,500,000.000         1,045,000.000         3,545,000.000             
309601AA0 0000000000       FARMERS INS EXCHANGE SURP                 0.000           975,000.000           975,000.000             
31282YC80 0000000000       FHLMC CORP PC ST GROUP NO                 0.000         4,180,927.430         4,180,927.430             
31282YCD9 0000000000       FHLMC CORP PC ST GROUP NO                 0.000         1,393,919.170         1,393,919.170             
31283HNJ0 0000000000       FHLMC GOLD PC GROUP NO:                   0.000         1,067,123.590         1,067,123.590             
31290K2Q1 0000000000       FHLMC CORP PC GROUP NO:                   0.000           210,032.820           210,032.820             
31290K3A5 0000000000       FHLMC CORP PC GROUP NO:                   0.000            90,625.500            90,625.500             
31292HCH5 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           566,566.590           566,566.590             
31292HCV4 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           467,617.970           467,617.970             
31292HGQ1 0000000000       FHLMC GOLD PC GROUP NO:                   0.000         2,629,334.210         2,629,334.210             
31292HLY8 0000000000       FHLMC GOLD PC GROUP NO:              74,410.370                 0.000            74,410.370             
31292HMB7 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           207,726.110           207,726.110             
31292HMX9 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           255,867.840           255,867.840             
31293XWZ7 0000000000       FHLMC GOLD PC GROUP NO:             197,473.370                 0.000           197,473.370             
31293YGX8 0000000000       FHLMC GOLD PC GROUP NO:              52,333.330                 0.000            52,333.330             
31294GCC6 0000000000       FHLMC GOLD PC GROUP NO:             432,267.600                 0.000           432,267.600             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
250847DS6 0000000000       DETROIT EDISON CO               117,855.60                0.00           117,855.60           0.02%     
250854AE6 0000000000       DETROIT EDISON                  688,846.14        1,033,160.91         1,722,007.05           0.33%     
25156PAB9 0000000000       DEUTSCHE TELEKOM INT FIN        607,385.90                0.00           607,385.90           0.12%     
25156PAC7 0000000000       DEUTSCHE TELEKOM INTL FIN             0.00          297,327.24           297,327.24           0.06%     
268766BH4 0000000000       EOP OPER LTD PARTNERSHIP              0.00          821,405.73           821,405.73           0.16%     
268917FP1 0000000000       EQCC HOME EQUITY LN TR                0.00           24,786.40            24,786.40           0.00%     
29444GAH0 0000000000       EQUITABLE COS INC NT                  0.00          773,454.28           773,454.28           0.15%     
309588AC5 0000000000       FARMERS EXCH CAP              1,985,835.00          824,338.85         2,810,173.85           0.54%     
309601AA0 0000000000       FARMERS INS EXCHANGE SURP             0.00          926,788.20           926,788.20           0.18%     
31282YC80 0000000000       FHLMC CORP PC ST GROUP NO             0.00          779,324.87           779,324.87           0.15%     
31282YCD9 0000000000       FHLMC CORP PC ST GROUP NO             0.00          295,984.80           295,984.80           0.06%     
31283HNJ0 0000000000       FHLMC GOLD PC GROUP NO:               0.00        1,116,049.07         1,116,049.07           0.22%     
31290K2Q1 0000000000       FHLMC CORP PC GROUP NO:               0.00          231,262.94           231,262.94           0.04%     
31290K3A5 0000000000       FHLMC CORP PC GROUP NO:               0.00          100,040.58           100,040.58           0.02%     
31292HCH5 0000000000       FHLMC GOLD PC GROUP NO:               0.00          592,542.54           592,542.54           0.11%     
31292HCV4 0000000000       FHLMC GOLD PC GROUP NO:               0.00          489,057.32           489,057.32           0.09%     
31292HGQ1 0000000000       FHLMC GOLD PC GROUP NO:               0.00        2,779,700.57         2,779,700.57           0.54%     
31292HLY8 0000000000       FHLMC GOLD PC GROUP NO:          78,037.88                0.00            78,037.88           0.02%     
31292HMB7 0000000000       FHLMC GOLD PC GROUP NO:               0.00          217,249.94           217,249.94           0.04%     
31292HMX9 0000000000       FHLMC GOLD PC GROUP NO:               0.00          267,598.87           267,598.87           0.05%     
31293XWZ7 0000000000       FHLMC GOLD PC GROUP NO:         207,100.20                0.00           207,100.20           0.04%     
31293YGX8 0000000000       FHLMC GOLD PC GROUP NO:          54,796.24                0.00            54,796.24           0.01%     
31294GCC6 0000000000       FHLMC GOLD PC GROUP NO:         453,340.65                0.00           453,340.65           0.09%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           --------------------          ---------------------    ------------------      ----------------         
                                                                                                                                   
31294GNH3 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           903,313.810           903,313.810             
31294GSZ8 0000000000       FHLMC GOLD PC GROUP NO:                   0.000            53,874.690            53,874.690             
31295VLV0 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           311,478.290           311,478.290             
31295W7B8 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           342,617.570           342,617.570             
31295WUQ9 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           233,671.350           233,671.350             
31297YVY5 0000000000       FHLMC GOLD PC GROUP NO:             662,950.210                 0.000           662,950.210             
31297YWY4 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           570,139.070           570,139.070             
31298AWH2 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           876,133.670           876,133.670             
31298CNT2 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           850,626.770           850,626.770             
31298D2H9 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           737,797.120           737,797.120             
31298D3H8 0000000000       FHLMC GOLD PC GROUP NO:              21,442.940                 0.000            21,442.940             
31298D4E4 0000000000       FHLMC GOLD PC GROUP NO:              23,616.990                 0.000            23,616.990             
31298DZ83 0000000000       FHLMC GOLD PC GROUP NO:              76,502.830                 0.000            76,502.830             
31298EK53 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           720,024.840           720,024.840             
31298FR53 0000000000       FHLMC GOLD PC GROUP NO:                   0.000            46,736.810            46,736.810             
31298G5X4 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           619,552.500           619,552.500             
31298HYL6 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           324,346.360           324,346.360             
31298LFA2 0000000000       FHLMC GOLD PC GROUP NO:              42,053.640                 0.000            42,053.640             
31298P7G9 0000000000       FHLMC GOLD PC GROUP NO:             849,198.340                 0.000           849,198.340             
31298PCK4 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           708,283.540           708,283.540             
31298PXH8 0000000000       FHLMC GOLD PC GROUP NO:             905,601.100                 0.000           905,601.100             
31298PXJ4 0000000000       FHLMC GOLD PC GROUP NO:             643,368.430                 0.000           643,368.430             
31298RTY2 0000000000       FHLMC GOLD PC GROUP NO:                   0.000         1,861,606.980         1,861,606.980             
31298UD55 0000000000       FHLMC GOLD PC GROUP NO:                   0.000           227,415.310           227,415.310             
313385RJ7 0000000000       FEDERAL HOME LN BK CONS D        12,000,000.000        10,000,000.000        22,000,000.000             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)     Market Value        Market Value          Market Value     % of Net Assets 
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
31294GNH3 0000000000       FHLMC GOLD PC GROUP NO:               0.00          944,728.94           944,728.94           0.18%     
31294GSZ8 0000000000       FHLMC GOLD PC GROUP NO:               0.00           56,344.74            56,344.74           0.01%     
31295VLV0 0000000000       FHLMC GOLD PC GROUP NO:               0.00          348,251.42           348,251.42           0.07%     
31295W7B8 0000000000       FHLMC GOLD PC GROUP NO:               0.00          379,884.08           379,884.08           0.07%     
31295WUQ9 0000000000       FHLMC GOLD PC GROUP NO:               0.00          259,090.12           259,090.12           0.05%     
31297YVY5 0000000000       FHLMC GOLD PC GROUP NO:         694,149.97                0.00           694,149.97           0.13%     
31297YWY4 0000000000       FHLMC GOLD PC GROUP NO:               0.00          596,278.81           596,278.81           0.12%     
31298AWH2 0000000000       FHLMC GOLD PC GROUP NO:               0.00          916,302.65           916,302.65           0.18%     
31298CNT2 0000000000       FHLMC GOLD PC GROUP NO:               0.00          889,626.31           889,626.31           0.17%     
31298D2H9 0000000000       FHLMC GOLD PC GROUP NO:               0.00          771,623.64           771,623.64           0.15%     
31298D3H8 0000000000       FHLMC GOLD PC GROUP NO:          22,488.28                0.00            22,488.28           0.00%     
31298D4E4 0000000000       FHLMC GOLD PC GROUP NO:          24,768.32                0.00            24,768.32           0.00%     
31298DZ83 0000000000       FHLMC GOLD PC GROUP NO:          80,232.34                0.00            80,232.34           0.02%     
31298EK53 0000000000       FHLMC GOLD PC GROUP NO:               0.00          753,036.54           753,036.54           0.15%     
31298FR53 0000000000       FHLMC GOLD PC GROUP NO:               0.00           48,879.60            48,879.60           0.01%     
31298G5X4 0000000000       FHLMC GOLD PC GROUP NO:               0.00          647,957.74           647,957.74           0.13%     
31298HYL6 0000000000       FHLMC GOLD PC GROUP NO:               0.00          339,216.99           339,216.99           0.07%     
31298LFA2 0000000000       FHLMC GOLD PC GROUP NO:          44,032.77                0.00            44,032.77           0.01%     
31298P7G9 0000000000       FHLMC GOLD PC GROUP NO:         889,163.31                0.00           889,163.31           0.17%     
31298PCK4 0000000000       FHLMC GOLD PC GROUP NO:               0.00          740,756.92           740,756.92           0.14%     
31298PXH8 0000000000       FHLMC GOLD PC GROUP NO:         948,220.50                0.00           948,220.50           0.18%     
31298PXJ4 0000000000       FHLMC GOLD PC GROUP NO:         673,646.64                0.00           673,646.64           0.13%     
31298RTY2 0000000000       FHLMC GOLD PC GROUP NO:               0.00        1,946,957.94         1,946,957.94           0.38%     
31298UD55 0000000000       FHLMC GOLD PC GROUP NO:               0.00          237,841.85           237,841.85           0.05%     
313385RJ7 0000000000       FEDERAL HOME LN BK CONS D    11,997,980.00        9,998,558.33        21,996,538.33           4.26%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           --------------------          ---------------------    ------------------      ----------------         
                                                                                                                                   
313385TZ9 0000000000       FHLB DISC NT                              0.000         8,525,000.000         8,525,000.000             
313397RG8 0000000000       FEDERAL HOME LN MTG CORP          9,000,000.000                 0.000         9,000,000.000             
313397RN3 0000000000       FEDERAL HOME LN MTG CORP         12,000,000.000                 0.000        12,000,000.000             
3133T4M78 0000000000       FEDERAL HOME LN MTG CORP          1,617,974.960                 0.000         1,617,974.960             
3133T5AK9 0000000000       FEDERAL HOME LN MTG CORP                  0.000           408,636.900           408,636.900             
3133T87K7 0000000000       FEDERAL HOME LN MTG CORP                  0.000         2,550,000.000         2,550,000.000             
3133TAF72 0000000000       FEDERAL HOME LN MTG CORP                  0.000         5,749,174.390         5,749,174.390             
3133TKH94 0000000000       FEDERAL HOME LN MTG CORP          2,187,125.080                 0.000         2,187,125.080             
3133TP4U0 0000000000       FEDERAL HOME LN MTG CORP                  0.000         3,314,347.190         3,314,347.190             
3134014H1 0000000000       FHLMC CORP PC GROUP NO:                   0.000           101,032.830           101,032.830             
313401DV0 0000000000       FHLMC CORP PC GROUP NO:                   0.000            24,323.402            24,323.402             
313401GP0 0000000000       FHLMC CORP PC GROUP NO:                   0.000            70,265.280            70,265.280             
313401JZ5 0000000000       FHLMC CORP PC GROUP NO:               3,413.440                 0.000             3,413.440             
31340AFR7 0000000000       FHLMC CORP PC GROUP NO:                   0.000            17,035.830            17,035.830             
31340VVZ5 0000000000       FHLMC CORP PC GROUP NO:                   0.000            40,055.180            40,055.180             
31340YRF8 0000000000       FEDERAL HOME LN MTG CORP                  0.000           130,745.240           130,745.240             
313421EC9 0000000000       FHLMC CORP PC GROUP NO:                   0.000               974.090               974.090             
31344WP37 0000000000       FHLMC CORP PC GROUP NO:                   0.000            58,413.800            58,413.800             
31353WHS9 0000000000       FHLMC CORP PC GROUP NO:                   0.000            46,607.610            46,607.610             
313589TY9 0000000000       FEDERAL NATL MTG ASSN DIS         9,600,000.000                 0.000         9,600,000.000             
31358MJY1 0000000000       FEDERAL NATL MTG ASSN GTD                 0.000            78,655.510            78,655.510             
31358SSW2 0000000000       FEDERAL NATL MTG ASSN GTD         3,927,590.160                 0.000         3,927,590.160             
31359KAD9 0000000000       FEDERAL HOME LOAN MORTGAG                 0.000            40,453.240            40,453.240             
31359MFP3 0000000000       FEDERAL NATL MTG ASSN CON                 0.000         2,625,000.000         2,625,000.000             
31359MGK3 0000000000       FEDERAL NATL MTG ASSN                     0.000         1,250,000.000         1,250,000.000             
31359QYV0 0000000000       FEDERAL NATL MTG ASSN GTD         4,168,550.270                 0.000         4,168,550.270             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
313385TZ9 0000000000       FHLB DISC NT                          0.00        8,498,430.42         8,498,430.42           1.65%     
313397RG8 0000000000       FEDERAL HOME LN MTG CORP      8,999,490.00                0.00         8,999,490.00           1.74%     
313397RN3 0000000000       FEDERAL HOME LN MTG CORP     11,995,566.67                0.00        11,995,566.67           2.33%     
3133T4M78 0000000000       FEDERAL HOME LN MTG CORP        230,723.23                0.00           230,723.23           0.04%     
3133T5AK9 0000000000       FEDERAL HOME LN MTG CORP              0.00          408,461.19           408,461.19           0.08%     
3133T87K7 0000000000       FEDERAL HOME LN MTG CORP              0.00        1,044,480.00         1,044,480.00           0.20%     
3133TAF72 0000000000       FEDERAL HOME LN MTG CORP              0.00          168,450.81           168,450.81           0.03%     
3133TKH94 0000000000       FEDERAL HOME LN MTG CORP        250,863.25                0.00           250,863.25           0.05%     
3133TP4U0 0000000000       FEDERAL HOME LN MTG CORP              0.00          173,340.36           173,340.36           0.03%     
3134014H1 0000000000       FHLMC CORP PC GROUP NO:               0.00          113,227.49           113,227.49           0.02%     
313401DV0 0000000000       FHLMC CORP PC GROUP NO:               0.00           25,534.97            25,534.97           0.00%     
313401GP0 0000000000       FHLMC CORP PC GROUP NO:               0.00           77,572.87            77,572.87           0.02%     
313401JZ5 0000000000       FHLMC CORP PC GROUP NO:           3,923.95                0.00             3,923.95           0.00%     
31340AFR7 0000000000       FHLMC CORP PC GROUP NO:               0.00           19,087.28            19,087.28           0.00%     
31340VVZ5 0000000000       FHLMC CORP PC GROUP NO:               0.00           44,848.98            44,848.98           0.01%     
31340YRF8 0000000000       FEDERAL HOME LN MTG CORP              0.00          137,810.71           137,810.71           0.03%     
313421EC9 0000000000       FHLMC CORP PC GROUP NO:               0.00            1,088.92             1,088.92           0.00%     
31344WP37 0000000000       FHLMC CORP PC GROUP NO:               0.00           65,404.76            65,404.76           0.01%     
31353WHS9 0000000000       FHLMC CORP PC GROUP NO:               0.00           51,449.67            51,449.67           0.01%     
313589TY9 0000000000       FEDERAL NATL MTG ASSN DIS     9,571,008.00                0.00         9,571,008.00           1.86%     
31358MJY1 0000000000       FEDERAL NATL MTG ASSN GTD             0.00           78,605.96            78,605.96           0.02%     
31358SSW2 0000000000       FEDERAL NATL MTG ASSN GTD       264,719.58                0.00           264,719.58           0.05%     
31359KAD9 0000000000       FEDERAL HOME LOAN MORTGAG             0.00           30,793.01            30,793.01           0.01%     
31359MFP3 0000000000       FEDERAL NATL MTG ASSN CON             0.00        2,929,752.00         2,929,752.00           0.57%     
31359MGK3 0000000000       FEDERAL NATL MTG ASSN                 0.00        1,288,898.75         1,288,898.75           0.25%     
31359QYV0 0000000000       FEDERAL NATL MTG ASSN GTD       355,577.34                0.00           355,577.34           0.07%     

7 

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           --------------------          ---------------------    ------------------      ----------------         
                                                                                                                                   
31359S5K2 0000000000       FNRA CL024FA R01F024                      0.000            90,017.670            90,017.670             
31359WPN5 0000000000       FEDERAL NATL MTG ASSN GTD                 0.000         5,836,356.950         5,836,356.950             
313606UE3 0000000000       FNMA PASS THRU CTF POOL N                 0.000            65,038.260            65,038.260             
313608FP1 0000000000       FNMA PASS THRU CTF POOL N                 0.000            19,913.240            19,913.240             
3136185V8 0000000000       FNMA PASS THRU CTF POOL N                 0.000            24,630.410            24,630.410             
31362TBU6 0000000000       FNMA PASS THRU CTF POOL N                 0.000           488,925.180           488,925.180             
31364HN86 0000000000       FNMA PASS THRU CTF ST POO                 0.000           801,583.190           801,583.190             
31364HS65 0000000000       FEDERAL NATL MTG ASSN STR                 0.000         1,744,829.640         1,744,829.640             
31364JN82 0000000000       FEDERAL NATL MTG ASSN STR                 0.000         4,710,579.710         4,710,579.710             
31364JT29 0000000000       FNMA STRIPPED MTG BACKED                  0.000           755,156.290           755,156.290             
31369JX52 0000000000       FNMA PASS THRU CTF POOL N                 0.000            19,741.950            19,741.950             
3136FAEN6 0000000000       FNMA PASS THRU CTF ST             7,434,531.790         7,403,628.140        14,838,159.930             
3136FAEP1 0000000000       FNMA PASS THRU CTF ST             8,321,185.640         7,403,628.140        15,724,813.780             
31371J6H2 0000000000       FNMA PASS THRU CTF POOL N                 0.000           388,357.650           388,357.650             
31371JJL9 0000000000       FNMA PASS THRU CTF POOL N                 0.000         1,102,001.580         1,102,001.580             
31371JNQ3 0000000000       FNMA PASS THRU CTF POOL N            55,629.240         2,187,897.250         2,243,526.490             
31371JSE5 0000000000       FNMA PASS THRU CTF POOL N                 0.000           195,910.550           195,910.550             
31371JUX0 0000000000       FNMA PASS THRU CTF POOL N                 0.000           455,978.490           455,978.490             
31371JYS7 0000000000       FNMA PASS THRU CTF POOL N                 0.000         1,253,853.080         1,253,853.080             
31371KBQ3 0000000000       FNMA PASS THRU CTF POOL N         2,247,879.940                 0.000         2,247,879.940             
31371KEZ0 0000000000       FNMA PASS THRU CTF POOL N                 0.000            82,239.860            82,239.860             
31373TWS5 0000000000       FNMA PASS THRU CTF POOL N                 0.000           205,317.920           205,317.920             
31373UE37 0000000000       FNMA PASS THRU CTF POOL N                 0.000           209,279.230           209,279.230             
31374GC96 0000000000       FNMA PASS THRU CTF POOL N         1,052,319.277                 0.000         1,052,319.277             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
31359S5K2 0000000000       FNRA CL024FA R01F024                  0.00           89,888.94            89,888.94           0.02%     
31359WPN5 0000000000       FEDERAL NATL MTG ASSN GTD             0.00          469,243.10           469,243.10           0.09%     
313606UE3 0000000000       FNMA PASS THRU CTF POOL N             0.00           74,048.01            74,048.01           0.01%     
313608FP1 0000000000       FNMA PASS THRU CTF POOL N             0.00           22,701.69            22,701.69           0.00%     
3136185V8 0000000000       FNMA PASS THRU CTF POOL N             0.00           27,917.83            27,917.83           0.01%     
31362TBU6 0000000000       FNMA PASS THRU CTF POOL N             0.00          519,024.39           519,024.39           0.10%     
31364HN86 0000000000       FNMA PASS THRU CTF ST POO             0.00          177,350.28           177,350.28           0.03%     
31364HS65 0000000000       FEDERAL NATL MTG ASSN STR             0.00          396,669.57           396,669.57           0.08%     
31364JN82 0000000000       FEDERAL NATL MTG ASSN STR             0.00          886,907.95           886,907.95           0.17%     
31364JT29 0000000000       FNMA STRIPPED MTG BACKED              0.00          141,236.88           141,236.88           0.03%     
31369JX52 0000000000       FNMA PASS THRU CTF POOL N             0.00           22,149.28            22,149.28           0.00%     
3136FAEN6 0000000000       FNMA PASS THRU CTF ST         6,513,318.96        6,368,230.74        12,881,549.70           2.50%     
3136FAEP1 0000000000       FNMA PASS THRU CTF ST         1,452,296.53                0.00         1,452,296.53           0.28%     
31371J6H2 0000000000       FNMA PASS THRU CTF POOL N             0.00          411,294.83           411,294.83           0.08%     
31371JJL9 0000000000       FNMA PASS THRU CTF POOL N             0.00        1,167,088.00         1,167,088.00           0.23%     
31371JNQ3 0000000000       FNMA PASS THRU CTF POOL N        58,966.99        2,317,118.84         2,376,085.83           0.46%     
31371JSE5 0000000000       FNMA PASS THRU CTF POOL N             0.00          207,481.42           207,481.42           0.04%     
31371JUX0 0000000000       FNMA PASS THRU CTF POOL N             0.00          482,909.49           482,909.49           0.09%     
31371JYS7 0000000000       FNMA PASS THRU CTF POOL N             0.00        1,327,908.15         1,327,908.15           0.26%     
31371KBQ3 0000000000       FNMA PASS THRU CTF POOL N     2,353,109.94                0.00         2,353,109.94           0.46%     
31371KEZ0 0000000000       FNMA PASS THRU CTF POOL N             0.00           84,633.62            84,633.62           0.02%     
31373TWS5 0000000000       FNMA PASS THRU CTF POOL N             0.00          227,580.54           227,580.54           0.04%     
31373UE37 0000000000       FNMA PASS THRU CTF POOL N             0.00          240,719.25           240,719.25           0.05%     
31374GC96 0000000000       FNMA PASS THRU CTF POOL N     1,104,079.71                0.00         1,104,079.71           0.21%     

8 

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value        Shares/Par Value         
    ------------           --------------------          ---------------------   ------------------       ----------------         
                                                                                                                                   
31374S2E0 0000000000       FNMA PASS THRU CTF POOL N                 0.000           136,556.320           136,556.320             
31374S6B2 0000000000       FNMA PASS THRU CTF POOL N                 0.000           998,783.700           998,783.700             
31374TBA6 0000000000       FNMA PASS THRU CTF POOL N                 0.000           644,930.390           644,930.390             
31376MJE3 0000000000       FNMA PASS THRU CTF POOL N                 0.000           189,725.140           189,725.140             
31378S2M8 0000000000       FNMA PASS THRU CTF POOL N                 0.000            47,328.950            47,328.950             
31379BZB2 0000000000       FNMA PASS THRU CTF POOL N            22,137.516                 0.000            22,137.516             
31379RFR4 0000000000       FNMA PASS THRU CTF POOL N                 0.000           773,864.790           773,864.790             
31384NEC0 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31384NUW8 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31384TAQ0 0000000000       FNMA PASS THRU CTF POOL N                 0.000           440,902.880           440,902.880             
31384TSM0 0000000000       FNMA PASS THRU CTF POOL N           116,971.780                 0.000           116,971.780             
31384V2V3 0000000000       FNMA PASS THRU CTF POOL N                 0.000           715,725.180           715,725.180             
31384VNL2 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31384VT36 0000000000       FNMA PASS THRU CTF POOL N           485,838.055                 0.000           485,838.055             
31384VVZ2 0000000000       FNMA PASS THRU CTF POOL N         3,401,900.421           131,744.830         3,533,645.251             
31384VY89 0000000000       FNMA PASS THRU CTF POOL N                 0.000           316,652.930           316,652.930             
31384VZD7 0000000000       FNMA PASS THRU CTF POOL N         1,919,379.693                 0.000         1,919,379.693             
31384WD72 0000000000       FNMA PASS THRU CTF POOL N                 0.000           499,444.260           499,444.260             
31384WLA6 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31384WXN5 0000000000       FNMA PASS THRU CTF POOL N                 0.000            12,679.740            12,679.740             
31384XN46 0000000000       FNMA PASS THRU CTF POOL N            35,481.738                 0.000            35,481.738             
31384XZK7 0000000000       FNMA PASS THRU CTF POOL N            24,044.184                 0.000            24,044.184             
31384YLS3 0000000000       FNMA PASS THRU CTF POOL N            52,205.133                 0.000            52,205.133             
31384YPR1 0000000000       FNMA PASS THRU CTF POOL N            14,207.038                 0.000            14,207.038             
31384YQV1 0000000000       FNMA PASS THRU CTF POOL N            47,718.593                 0.000            47,718.593             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio           Portfolio        Pro-Forma Combined                  
    Cusip Number           Security Description (f)       Market Value      Market Value          Market Value      % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
31374S2E0 0000000000       FNMA PASS THRU CTF POOL N             0.00          153,422.39           153,422.39           0.03%     
31374S6B2 0000000000       FNMA PASS THRU CTF POOL N             0.00        1,093,108.83         1,093,108.83           0.21%     
31374TBA6 0000000000       FNMA PASS THRU CTF POOL N             0.00          714,666.71           714,666.71           0.14%     
31376MJE3 0000000000       FNMA PASS THRU CTF POOL N             0.00          213,169.48           213,169.48           0.04%     
31378S2M8 0000000000       FNMA PASS THRU CTF POOL N             0.00           52,471.24            52,471.24           0.01%     
31379BZB2 0000000000       FNMA PASS THRU CTF POOL N        23,465.77                0.00            23,465.77           0.00%     
31379RFR4 0000000000       FNMA PASS THRU CTF POOL N             0.00          879,334.82           879,334.82           0.17%     
31384NEC0 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31384NUW8 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31384TAQ0 0000000000       FNMA PASS THRU CTF POOL N             0.00          466,943.49           466,943.49           0.09%     
31384TSM0 0000000000       FNMA PASS THRU CTF POOL N       122,447.58                0.00           122,447.58           0.02%     
31384V2V3 0000000000       FNMA PASS THRU CTF POOL N             0.00          757,997.34           757,997.34           0.15%     
31384VNL2 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31384VT36 0000000000       FNMA PASS THRU CTF POOL N       514,988.34                0.00           514,988.34           0.10%     
31384VVZ2 0000000000       FNMA PASS THRU CTF POOL N     3,606,014.45          139,525.94         3,745,540.39           0.73%     
31384VY89 0000000000       FNMA PASS THRU CTF POOL N             0.00          335,355.09           335,355.09           0.07%     
31384VZD7 0000000000       FNMA PASS THRU CTF POOL N     2,034,542.47                0.00         2,034,542.47           0.39%     
31384WD72 0000000000       FNMA PASS THRU CTF POOL N             0.00          528,942.44           528,942.44           0.10%     
31384WLA6 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31384WXN5 0000000000       FNMA PASS THRU CTF POOL N             0.00           13,428.63            13,428.63           0.00%     
31384XN46 0000000000       FNMA PASS THRU CTF POOL N        37,610.64                0.00            37,610.64           0.01%     
31384XZK7 0000000000       FNMA PASS THRU CTF POOL N        25,486.84                0.00            25,486.84           0.00%     
31384YLS3 0000000000       FNMA PASS THRU CTF POOL N        55,337.44                0.00            55,337.44           0.01%     
31384YPR1 0000000000       FNMA PASS THRU CTF POOL N        15,059.46                0.00            15,059.46           0.00%     
31384YQV1 0000000000       FNMA PASS THRU CTF POOL N        50,581.71                0.00            50,581.71           0.01%     

9 

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)        Shares/Par Value       Shares/Par Value        Shares/Par Value         
    ------------           --------------------          ---------------------    ------------------      ----------------         
                                                                                                                                   
31385AGE1 0000000000       FNMA PASS THRU CTF POOL N             7,780.600                 0.000             7,780.600             
31385AJZ1 0000000000       FNMA PASS THRU CTF POOL N                 0.000            39,212.990            39,212.990             
31385AUL9 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31385AUM7 0000000000       FNMA PASS THRU CTF POOL N                 0.000           114,100.570           114,100.570             
31385AZK6 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31385DL25 0000000000       FNMA PASS THRU CTF POOL N            13,202.058                 0.000            13,202.058             
31385DNE7 0000000000       FNMA PASS THRU CTF POOL N            18,588.483                 0.000            18,588.483             
31385DQM6 0000000000       FNMA PASS THRU CTF POOL N            30,780.036                 0.000            30,780.036             
31385E6G9 0000000000       FNMA PASS THRU CTF POOL N            12,768.520                 0.000            12,768.520             
31385EPT0 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31385ERN1 0000000000       FNMA PASS THRU CTF POOL N           104,410.440                 0.000           104,410.440             
31385F4N3 0000000000       FNMA PASS THRU CTF POOL N           117,482.450                 0.000           117,482.450             
31385F5T9 0000000000       FNMA PASS THRU CTF POOL N                 0.000            42,178.210            42,178.210             
31385FGV2 0000000000       FNMA PASS THRU CTF POOL N            22,823.403                 0.000            22,823.403             
31385FLP9 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31385FLV6 0000000000       FNMA PASS THRU CTF POOL N            30,550.506                 0.000            30,550.506             
31385GFR0 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31385GNB6 0000000000       FNMA PASS THRU CTF POOL N                 0.000           433,325.310           433,325.310             
31385GX74 0000000000       FNMA PASS THRU CTF POOL              27,045.792                 0.000            27,045.792             
31385HLQ3 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31385HLW0 0000000000       FNMA PASS THRU CTF POOL N                 0.000            80,292.480            80,292.480             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio           Portfolio        Pro-Forma Combined                  
    Cusip Number           Security Description (f)       Market Value       Market Value         Market Value      % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
31385AGE1 0000000000       FNMA PASS THRU CTF POOL N         8,247.44                0.00             8,247.44           0.00%     
31385AJZ1 0000000000       FNMA PASS THRU CTF POOL N             0.00           41,528.99            41,528.99           0.01%     
31385AUL9 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31385AUM7 0000000000       FNMA PASS THRU CTF POOL N             0.00          120,839.58           120,839.58           0.02%     
31385AZK6 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31385DL25 0000000000       FNMA PASS THRU CTF POOL N        13,994.18                0.00            13,994.18           0.00%     
31385DNE7 0000000000       FNMA PASS THRU CTF POOL N        19,703.79                0.00            19,703.79           0.00%     
31385DQM6 0000000000       FNMA PASS THRU CTF POOL N        32,626.84                0.00            32,626.84           0.01%     
31385E6G9 0000000000       FNMA PASS THRU CTF POOL N        13,534.63                0.00            13,534.63           0.00%     
31385EPT0 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31385ERN1 0000000000       FNMA PASS THRU CTF POOL N       110,675.07                0.00           110,675.07           0.02%     
31385F4N3 0000000000       FNMA PASS THRU CTF POOL N       122,982.16                0.00           122,982.16           0.02%     
31385F5T9 0000000000       FNMA PASS THRU CTF POOL N             0.00           44,669.34            44,669.34           0.01%     
31385FGV2 0000000000       FNMA PASS THRU CTF POOL N        24,192.81                0.00            24,192.81           0.00%     
31385FLP9 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31385FLV6 0000000000       FNMA PASS THRU CTF POOL N        32,383.54                0.00            32,383.54           0.01%     
31385GFR0 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31385GNB6 0000000000       FNMA PASS THRU CTF POOL N             0.00          458,918.37           458,918.37           0.09%     
31385GX74 0000000000       FNMA PASS THRU CTF POOL          28,668.54                0.00            28,668.54           0.01%     
31385HLQ3 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31385HLW0 0000000000       FNMA PASS THRU CTF POOL N             0.00           85,034.71            85,034.71           0.02%     

10

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value        Shares/Par Value         
    ------------           --------------------          ---------------------   ------------------       ----------------         
                                                                                                                                   
31385HV82 0000000000       FNMA PASS THRU CTF POOL N           991,670.230                 0.000           991,670.230             
31385JUW6 0000000000       FNMA PASS THRU CTF POOL N            18,660.487                 0.000            18,660.487             
31385K3Q6 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31385KF83 0000000000       FNMA PASS THRU CTF POOL N                 0.000           117,424.930           117,424.930             
31385KGQ2 0000000000       FNMA PASS THRU CTF POOL N                 0.000           165,964.870           165,964.870             
31385KKK0 0000000000       FNMA PASS THRU CTF POOL N                 0.000           297,060.450           297,060.450             
31385KPS8 0000000000       FNMA PASS THRU CTF POOL N                 0.000            40,761.640            40,761.640             
31385NFP9 0000000000       FNMA PASS THRU CTF POOL N                 0.000            78,673.080            78,673.080             
31385P5Y6 0000000000       FNMA PASS THRU CTF POOL N         1,451,626.160           569,994.440         2,021,620.600             
31385PS96 0000000000       FNMA PASS THRU CTF POOL N                 0.000           844,148.140           844,148.140             
31385QDE9 0000000000       FNMA PASS THRU CTF POOL N            30,457.390                 0.000            30,457.390             
31385RFN5 0000000000       FNMA PASS THRU CTF POOL N            28,128.910                 0.000            28,128.910             
31385UE90 0000000000       FNMA PASS THRU CTF POOL N                 0.000           909,466.610           909,466.610             
31385VBN0 0000000000       FNMA PASS THRU CTF POOL N                 0.000           738,986.230           738,986.230             
31385XVG9 0000000000       FNMA PASS THRU CTF POOL N                 0.000           300,509.400           300,509.400             
31385YG66 0000000000       FNMA PASS THRU CTF POOL N                 0.000           166,193.900           166,193.900             
31385YJJ5 0000000000       FNMA PASS THRU CTF POOL N                 0.000           132,345.450           132,345.450             
31386DUY4 0000000000       FNMA PASS THRU CTF POOL N                 0.000           133,535.140           133,535.140             
31386EG85 0000000000       FNMA PASS THRU CTF POOL N                 0.000           456,376.670           456,376.670             
31386EPR3 0000000000       FNMA PASS THRU CTF POOL N                 0.000           909,338.670           909,338.670             
31386GB85 0000000000       FNMA PASS THRU CTF POOL N                 0.000           407,685.320           407,685.320             
31386GBX0 0000000000       FNMA PASS THRU CTF POOL N                 0.000           953,663.470           953,663.470             
31386HCY5 0000000000       FNMA PASS THRU CTF POOL N                 0.000                 0.010                 0.010             
31386HKM2 0000000000       FNMA PASS THRU CTF POOL N                 0.000           770,393.420           770,393.420             
31386HPU9 0000000000       FNMA PASS THRU CTF POOL N                 0.000           473,505.360           473,505.360             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)       Market Value        Market Value         Market Value     % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
31385HV82 0000000000       FNMA PASS THRU CTF POOL N     1,038,093.29                0.00         1,038,093.29           0.20%     
31385JUW6 0000000000       FNMA PASS THRU CTF POOL N        19,780.12                0.00            19,780.12           0.00%     
31385K3Q6 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31385KF83 0000000000       FNMA PASS THRU CTF POOL N             0.00          124,360.28           124,360.28           0.02%     
31385KGQ2 0000000000       FNMA PASS THRU CTF POOL N             0.00          175,767.09           175,767.09           0.03%     
31385KKK0 0000000000       FNMA PASS THRU CTF POOL N             0.00          314,605.43           314,605.43           0.06%     
31385KPS8 0000000000       FNMA PASS THRU CTF POOL N             0.00           43,169.10            43,169.10           0.01%     
31385NFP9 0000000000       FNMA PASS THRU CTF POOL N             0.00           83,319.67            83,319.67           0.02%     
31385P5Y6 0000000000       FNMA PASS THRU CTF POOL N     1,451,626.16          690,757.02         2,142,383.18           0.42%     
31385PS96 0000000000       FNMA PASS THRU CTF POOL N             0.00          894,005.22           894,005.22           0.17%     
31385QDE9 0000000000       FNMA PASS THRU CTF POOL N        32,284.83                0.00            32,284.83           0.01%     
31385RFN5 0000000000       FNMA PASS THRU CTF POOL N        29,816.64                0.00            29,816.64           0.01%     
31385UE90 0000000000       FNMA PASS THRU CTF POOL N             0.00          963,181.53           963,181.53           0.19%     
31385VBN0 0000000000       FNMA PASS THRU CTF POOL N             0.00          782,632.23           782,632.23           0.15%     
31385XVG9 0000000000       FNMA PASS THRU CTF POOL N             0.00          318,258.09           318,258.09           0.06%     
31385YG66 0000000000       FNMA PASS THRU CTF POOL N             0.00          176,009.64           176,009.64           0.03%     
31385YJJ5 0000000000       FNMA PASS THRU CTF POOL N             0.00          140,162.04           140,162.04           0.03%     
31386DUY4 0000000000       FNMA PASS THRU CTF POOL N             0.00          141,421.99           141,421.99           0.03%     
31386EG85 0000000000       FNMA PASS THRU CTF POOL N             0.00          483,331.19           483,331.19           0.09%     
31386EPR3 0000000000       FNMA PASS THRU CTF POOL N             0.00          950,786.33           950,786.33           0.18%     
31386GB85 0000000000       FNMA PASS THRU CTF POOL N             0.00          419,551.82           419,551.82           0.08%     
31386GBX0 0000000000       FNMA PASS THRU CTF POOL N             0.00          997,131.45           997,131.45           0.19%     
31386HCY5 0000000000       FNMA PASS THRU CTF POOL N             0.00                0.01                 0.01           0.00%     
31386HKM2 0000000000       FNMA PASS THRU CTF POOL N             0.00          805,507.95           805,507.95           0.16%     
31386HPU9 0000000000       FNMA PASS THRU CTF POOL N             0.00          501,471.53           501,471.53           0.10%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           --------------------          ---------------------    ------------------      ----------------         
                                                                                                                                   
31386JUS4 0000000000       FNMA PASS THRU CTF POOL N                 0.000            40,358.000            40,358.000             
31386M3U2 0000000000       FNMA PASS THRU CTF POOL N                 0.000           729,844.020           729,844.020             
31386MEF3 0000000000       FNMA PASS THRU CTF POOL N                 0.000           311,685.430           311,685.430             
31386NDF2 0000000000       FNMA PASS THRU CTF POOL N                 0.000            20,634.730            20,634.730             
31386PQA4 0000000000       FNMA PASS THRU CTF POOL N                 0.000         1,921,782.050         1,921,782.050             
31386QDD0 0000000000       FNMA PASS THRU CTF POOL N           427,735.140                 0.000           427,735.140             
31386SUU9 0000000000       FNMA PASS THRU CTF POOL N                 0.000           597,393.790           597,393.790             
31386UL91 0000000000       FNMA PASS THRU CTF POOL N                 0.000         2,691,470.620         2,691,470.620             
31386XAD8 0000000000       FNMA PASS THRU CTF POOL N                 0.000           647,246.780           647,246.780             
31386XBP0 0000000000       FNMA PASS THRU CTF POOL N                 0.000            72,399.070            72,399.070             
31386XH33 0000000000       FNMA PASS THRU CTF POOL N                 0.000           907,481.790           907,481.790             
31387F3U6 0000000000       FNMA PASS THRU CTF POOL N                 0.000           611,453.690           611,453.690             
31387H2J8 0000000000       FNMA PASS THRU CTF POOL N                 0.000           537,288.440           537,288.440             
31387NRJ8 0000000000       FNMA PASS THRU CTF POOL N                 0.000           430,685.180           430,685.180             
31387QRH5 0000000000       FNMA PASS THRU CTF POOL N                 0.000           331,327.700           331,327.700             
31387XN76 0000000000       FNMA PASS THRU CTF POOL N                 0.000           595,360.120           595,360.120             
31388A4W1 0000000000       FNMA PASS THRU CTF POOL N           109,835.510                 0.000           109,835.510             
31388CZZ6 0000000000       FNMA PASS THRU CTF POOL N                 0.000           289,715.400           289,715.400             
31388JTE5 0000000000       FNMA PASS THRU CTF POOL N                 0.000           350,861.980           350,861.980             
31388JZ73 0000000000       FNMA PASS THRU CTF POOL N                 0.000           483,858.030           483,858.030             
31410HAK7 0000000000       FEDERATED DEPT STORES INC                 0.000           170,000.000           170,000.000             
31410HAP6 0000000000       CREDIT SUISSE FIRST BOSTO           585,000.000                 0.000           585,000.000             
31410HAQ4 0000000000       FEDERATED DEPT STORES INC                 0.000           950,000.000           950,000.000             
31410HAT8 0000000000       FEDERATED DEPT STORES               215,000.000                 0.000           215,000.000             
320185AA9 0000000000       FIRST FED SVGS & LN ASSN                  0.000            (3,327.390)           (3,327.390)            
320500AA9 0000000000       FIRST HAWAIIAN BK SECD NT                 0.000         1,650,000.000         1,650,000.000             
336211AG2 0000000000       FIRST SEC AUTO GRANTOR TR                 0.000           170,291.920           170,291.920             
337366AB4 0000000000       FIRST UN NATL BANK CHASE                  0.000         1,750,000.000         1,750,000.000             
338915AL5 0000000000       FLEET FINL GROUP INC NEW          1,000,000.000                 0.000         1,000,000.000             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)       Market Value        Market Value         Market Value     % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
31386JUS4 0000000000       FNMA PASS THRU CTF POOL N             0.00           41,532.70            41,532.70           0.01%     
31386M3U2 0000000000       FNMA PASS THRU CTF POOL N             0.00          772,950.07           772,950.07           0.15%     
31386MEF3 0000000000       FNMA PASS THRU CTF POOL N             0.00          330,094.19           330,094.19           0.06%     
31386NDF2 0000000000       FNMA PASS THRU CTF POOL N             0.00           21,235.35            21,235.35           0.00%     
31386PQA4 0000000000       FNMA PASS THRU CTF POOL N             0.00        2,035,286.34         2,035,286.34           0.39%     
31386QDD0 0000000000       FNMA PASS THRU CTF POOL N       453,399.25                0.00           453,399.25           0.09%     
31386SUU9 0000000000       FNMA PASS THRU CTF POOL N             0.00          614,782.13           614,782.13           0.12%     
31386UL91 0000000000       FNMA PASS THRU CTF POOL N             0.00        2,850,434.26         2,850,434.26           0.55%     
31386XAD8 0000000000       FNMA PASS THRU CTF POOL N             0.00          666,086.19           666,086.19           0.13%     
31386XBP0 0000000000       FNMA PASS THRU CTF POOL N             0.00           76,675.10            76,675.10           0.01%     
31386XH33 0000000000       FNMA PASS THRU CTF POOL N             0.00          933,895.86           933,895.86           0.18%     
31387F3U6 0000000000       FNMA PASS THRU CTF POOL N             0.00          629,251.27           629,251.27           0.12%     
31387H2J8 0000000000       FNMA PASS THRU CTF POOL N             0.00          561,778.05           561,778.05           0.11%     
31387NRJ8 0000000000       FNMA PASS THRU CTF POOL N             0.00          443,221.13           443,221.13           0.09%     
31387QRH5 0000000000       FNMA PASS THRU CTF POOL N             0.00          340,971.66           340,971.66           0.07%     
31387XN76 0000000000       FNMA PASS THRU CTF POOL N             0.00          612,689.27           612,689.27           0.12%     
31388A4W1 0000000000       FNMA PASS THRU CTF POOL N       114,977.24                0.00           114,977.24           0.02%     
31388CZZ6 0000000000       FNMA PASS THRU CTF POOL N             0.00          298,148.15           298,148.15           0.06%     
31388JTE5 0000000000       FNMA PASS THRU CTF POOL N             0.00          361,074.52           361,074.52           0.07%     
31388JZ73 0000000000       FNMA PASS THRU CTF POOL N             0.00          497,941.69           497,941.69           0.10%     
31410HAK7 0000000000       FEDERATED DEPT STORES INC             0.00          158,697.89           158,697.89           0.03%     
31410HAP6 0000000000       CREDIT SUISSE FIRST BOSTO       570,142.17                0.00           570,142.17           0.11%     
31410HAQ4 0000000000       FEDERATED DEPT STORES INC             0.00          875,204.60           875,204.60           0.17%     
31410HAT8 0000000000       FEDERATED DEPT STORES           214,294.80                0.00           214,294.80           0.04%     
320185AA9 0000000000       FIRST FED SVGS & LN ASSN              0.00           (3,327.39)           (3,327.39)          0.00%     
320500AA9 0000000000       FIRST HAWAIIAN BK SECD NT             0.00        1,723,824.30         1,723,824.30           0.33%     
336211AG2 0000000000       FIRST SEC AUTO GRANTOR TR             0.00          170,612.44           170,612.44           0.03%     
337366AB4 0000000000       FIRST UN NATL BANK CHASE              0.00        1,784,930.00         1,784,930.00           0.35%     
338915AL5 0000000000       FLEET FINL GROUP INC NEW      1,012,925.00                0.00         1,012,925.00           0.20%     

12

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           ------------------------      ---------------------   ------------------      ----------------          
                                                                                                                                   
340903AD5 0000000000       FLORIDA RESIDENTIAL PPTY                  0.000           900,000.000           900,000.000             
343254AJ7 0000000000       FLORIDA WINDSTORM UNDERWR           600,000.000         1,720,000.000         2,320,000.000             
34527REL3 0000000000       FORD CR AUTO OWNER TR 200         1,310,000.000         2,000,000.000         3,310,000.000             
345370BY5 0000000000       FORD MTR CO DEL DEB                       0.000         1,105,000.000         1,105,000.000             
345370BZ2 0000000000       FORD MTR CO DEL BD                1,470,000.000                 0.000         1,470,000.000             
345397SM6 0000000000       FORD MOTOR CREDIT CO NOTE           555,000.000                 0.000           555,000.000             
361849AB8 0000000000       GMAC COML MTG SEC INC                     0.000         2,083,344.120         2,083,344.120             
361849DY5 0000000000       GMAC COML MTG SEC INC MTG                 0.000         2,525,000.000         2,525,000.000             
36185NDD9 0000000000       GMACM MTG LN TR 2000-J              109,866.700                 0.000           109,866.700             
36202BAL9 0000000000       GOVT NATL MTG ASSN II JUM                 0.000             5,335.660             5,335.660             
36202KR56 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           376,636.877           376,636.877             
36202KR80 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           283,285.730           283,285.730             
36202KRQ0 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           977,417.600           977,417.600             
36202KRU1 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           161,394.850           161,394.850             
36202KS89 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           297,828.410           297,828.410             
36202KS97 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           280,901.010           280,901.010             
36202KSG1 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           148,314.880           148,314.880             
36202KSJ5 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           147,233.330           147,233.330             
36202KSL0 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           427,185.440           427,185.440             
36202KSR7 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           157,892.870           157,892.870             
36202KSU0 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           524,201.970           524,201.970             
36202KSW6 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           143,290.690           143,290.690             
36202KSX4 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           132,470.780           132,470.780             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio           Portfolio        Pro-Forma Combined                  
    Cusip Number           Security Description (f)       Market Value       Market Value          Market Value     % of Net Assets
    ------------           ------------------------      ------------    ------------------    ------------------   ---------------
                                                                                                                                   
340903AD5 0000000000       FLORIDA RESIDENTIAL PPTY              0.00          950,487.30           950,487.30           0.18%     
343254AJ7 0000000000       FLORIDA WINDSTORM UNDERWR       615,241.80        1,751,981.68         2,367,223.48           0.46%     
34527REL3 0000000000       FORD CR AUTO OWNER TR 200     1,353,432.00        2,065,602.40         3,419,034.40           0.66%     
345370BY5 0000000000       FORD MTR CO DEL DEB                   0.00          909,716.67           909,716.67           0.18%     
345370BZ2 0000000000       FORD MTR CO DEL BD            1,179,733.80                0.00         1,179,733.80           0.23%     
345397SM6 0000000000       FORD MOTOR CREDIT CO NOTE       546,628.94                0.00           546,628.94           0.11%     
361849AB8 0000000000       GMAC COML MTG SEC INC                 0.00          113,563.09           113,563.09           0.02%     
361849DY5 0000000000       GMAC COML MTG SEC INC MTG             0.00        2,568,076.50         2,568,076.50           0.50%     
36185NDD9 0000000000       GMACM MTG LN TR 2000-J          109,873.29                0.00           109,873.29           0.02%     
36202BAL9 0000000000       GOVT NATL MTG ASSN II JUM             0.00            6,059.39             6,059.39           0.00%     
36202KR56 0000000000       GOVT NATL MTG ASSN II JUM             0.00          382,241.23           382,241.23           0.07%     
36202KR80 0000000000       GOVT NATL MTG ASSN II JUM             0.00          287,634.17           287,634.17           0.06%     
36202KRQ0 0000000000       GOVT NTL MTG ASSN POOL NO             0.00          991,961.57           991,961.57           0.19%     
36202KRU1 0000000000       GOVT NTL MTG ASSN POOL NO             0.00          163,864.19           163,864.19           0.03%     
36202KS89 0000000000       GOVT NATL MTG ASSN II JUM             0.00          303,001.69           303,001.69           0.06%     
36202KS97 0000000000       GOVT NATL MTG ASSN II JUM             0.00          285,839.25           285,839.25           0.06%     
36202KSG1 0000000000       GOVT NATL MTG ASSN II JUM             0.00          150,830.30           150,830.30           0.03%     
36202KSJ5 0000000000       GOVT NATL MTG ASSN II JUM             0.00          149,790.77           149,790.77           0.03%     
36202KSL0 0000000000       GOVT NATL MTG ASSN II JUM             0.00          434,695.36           434,695.36           0.08%     
36202KSR7 0000000000       GOVT NATL MTG ASSN II JUM             0.00          160,570.73           160,570.73           0.03%     
36202KSU0 0000000000       GOVT NATL MTG ASSN II JUM             0.00          533,307.36           533,307.36           0.10%     
36202KSW6 0000000000       GOVT NATL MTG ASSN II JUM             0.00          145,809.74           145,809.74           0.03%     
36202KSX4 0000000000       GOVT NATL MTG ASSN II JUM             0.00          134,778.42           134,778.42           0.03%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           ------------------------      ---------------------   ------------------      ----------------          
                                                                                                                                   
36202KTU9 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           126,595.390           126,595.390             
36202KTV7 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           166,936.210           166,936.210             
36202KWQ4 0000000000       GOVT NATL MTG ASSN POOL N                 0.000         1,198,933.540         1,198,933.540             
362065GX6 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             4,387.780             4,387.780             
362066AP7 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             7,025.590             7,025.590             
362066X23 0000000000       GOVT NATL MTG ASSN POOL N                 0.000           196,239.298           196,239.298             
362067PL8 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            14,835.040            14,835.040             
362067YK0 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             4,176.510             4,176.510             
362068VT2 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            19,735.770            19,735.770             
362069E85 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             1,405.140             1,405.140             
362073NH7 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             1,522.260             1,522.260             
3620785Q6 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            21,219.750            21,219.750             
36208V4C6 0000000000       GOVT NATL MTG ASSN POOL N                 0.000           659,243.950           659,243.950             
36208VZT5 0000000000       GOVT NATL MTG ASSN POOL N                 0.000           820,124.280           820,124.280             
362101BX4 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            11,298.390            11,298.390             
362101VE4 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            23,445.230            23,445.230             
362105L97 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             4,859.660             4,859.660             
36212WK97 0000000000       GOVT NTL MTG ASSN POOL NO         7,645,858.330                 0.000         7,645,858.330             
36213BT85 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           867,821.320           867,821.320             
36213BYM8 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           334,490.080           334,490.080             
36213HVQ9 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000         3,396,202.190         3,396,202.190             
36213KC26 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           852,750.850           852,750.850             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio          Portfolio         Pro-Forma Combined                  
    Cusip Number           Security Description (f)       Market Value      Market Value          Market Value      % of Net Assets
    ------------           ------------------------      ------------    ------------------    ------------------   ---------------
                                                                                                                                   
36202KTU9 0000000000       GOVT NATL MTG ASSN II JUM             0.00          129,504.55           129,504.55           0.03%     
36202KTV7 0000000000       GOVT NATL MTG ASSN II JUM             0.00          170,780.75           170,780.75           0.03%     
36202KWQ4 0000000000       GOVT NATL MTG ASSN POOL N             0.00        1,227,600.04         1,227,600.04           0.24%     
362065GX6 0000000000       GOVT NATL MTG ASSN POOL N             0.00            4,882.24             4,882.24           0.00%     
362066AP7 0000000000       GOVT NATL MTG ASSN POOL N             0.00            7,817.30             7,817.30           0.00%     
362066X23 0000000000       GOVT NATL MTG ASSN POOL N             0.00          218,353.50           218,353.50           0.04%     
362067PL8 0000000000       GOVT NATL MTG ASSN POOL N             0.00           16,506.80            16,506.80           0.00%     
362067YK0 0000000000       GOVT NATL MTG ASSN POOL N             0.00            4,647.16             4,647.16           0.00%     
362068VT2 0000000000       GOVT NATL MTG ASSN POOL N             0.00           22,505.29            22,505.29           0.00%     
362069E85 0000000000       GOVT NATL MTG ASSN POOL N             0.00            1,602.32             1,602.32           0.00%     
362073NH7 0000000000       GOVT NATL MTG ASSN POOL N             0.00            1,735.88             1,735.88           0.00%     
3620785Q6 0000000000       GOVT NATL MTG ASSN POOL N             0.00           23,629.04            23,629.04           0.00%     
36208V4C6 0000000000       GOVT NATL MTG ASSN POOL N             0.00          671,222.41           671,222.41           0.13%     
36208VZT5 0000000000       GOVT NATL MTG ASSN POOL N             0.00          835,025.94           835,025.94           0.16%     
362101BX4 0000000000       GOVT NATL MTG ASSN POOL N             0.00           12,889.88            12,889.88           0.00%     
362101VE4 0000000000       GOVT NATL MTG ASSN POOL N             0.00           26,747.73            26,747.73           0.01%     
362105L97 0000000000       GOVT NATL MTG ASSN POOL N             0.00            5,544.19             5,544.19           0.00%     
36212WK97 0000000000       GOVT NTL MTG ASSN POOL NO     7,808,332.82                0.00         7,808,332.82           1.51%     
36213BT85 0000000000       GOVT NTL MTG ASSN POOL NO             0.00          883,589.63           883,589.63           0.17%     
36213BYM8 0000000000       GOVT NTL MTG ASSN POOL NO             0.00          340,567.76           340,567.76           0.07%     
36213HVQ9 0000000000       GOVT NTL MTG ASSN POOL NO             0.00        3,457,911.18         3,457,911.18           0.67%     
36213KC26 0000000000       GOVT NTL MTG ASSN POOL NO             0.00          868,245.33           868,245.33           0.17%     

14

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           ------------------------      ---------------------   ------------------      ----------------          
                                                                                                                                   
36213KGC0 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           757,385.810           757,385.810             
36213RGX9 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           497,730.770           497,730.770             
36214JRZ9 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            55,696.260            55,696.260             
36214PAZ3 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            52,980.590            52,980.590             
3621503U6 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            56,365.360            56,365.360             
362150MD3 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            27,810.180            27,810.180             
362150VB7 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             3,460.870             3,460.870             
3621512Y7 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            15,138.380            15,138.380             
362152DS6 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             5,478.820             5,478.820             
362153NA2 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             4,081.740             4,081.740             
362155J79 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             2,251.770             2,251.770             
362155V83 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             6,020.290             6,020.290             
362157LH0 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            32,950.830            32,950.830             
362159J97 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             4,045.800             4,045.800             
362159TC9 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             3,239.000             3,239.000             
36215ALX8 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             3,122.630             3,122.630             
36215BH60 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            11,365.650            11,365.650             
36215EMV3 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             1,890.630             1,890.630             
36215GWU9 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             1,950.880             1,950.880             
36215HP43 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            75,135.190            75,135.190             
36215MTJ5 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            37,900.170            37,900.170             
36215NPA6 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             6,365.210             6,365.210             
36215RAQ8 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            69,199.570            69,199.570             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio           Portfolio        Pro-Forma Combined                  
    Cusip Number           Security Description (f)       Market Value       Market Value         Market Value      % of Net Assets
    ------------           ------------------------       ------------   ------------------    ------------------   ---------------
                                                                                                                                   
36213KGC0 0000000000       GOVT NTL MTG ASSN POOL NO             0.00          771,147.51           771,147.51           0.15%     
36213RGX9 0000000000       GOVT NTL MTG ASSN POOL NO             0.00          506,774.54           506,774.54           0.10%     
36214JRZ9 0000000000       GOVT NATL MTG ASSN POOL N             0.00           62,036.17            62,036.17           0.01%     
36214PAZ3 0000000000       GOVT NATL MTG ASSN POOL N             0.00           60,455.09            60,455.09           0.01%     
3621503U6 0000000000       GOVT NATL MTG ASSN POOL N             0.00           62,692.94            62,692.94           0.01%     
362150MD3 0000000000       GOVT NATL MTG ASSN POOL N             0.00           30,932.15            30,932.15           0.01%     
362150VB7 0000000000       GOVT NATL MTG ASSN POOL N             0.00            3,849.39             3,849.39           0.00%     
3621512Y7 0000000000       GOVT NATL MTG ASSN POOL N             0.00           16,837.81            16,837.81           0.00%     
362152DS6 0000000000       GOVT NATL MTG ASSN POOL N             0.00            6,093.87             6,093.87           0.00%     
362153NA2 0000000000       GOVT NATL MTG ASSN POOL N             0.00            4,539.47             4,539.47           0.00%     
362155J79 0000000000       GOVT NATL MTG ASSN POOL N             0.00            2,504.55             2,504.55           0.00%     
362155V83 0000000000       GOVT NATL MTG ASSN POOL N             0.00            6,696.13             6,696.13           0.00%     
362157LH0 0000000000       GOVT NATL MTG ASSN POOL N             0.00           36,649.89            36,649.89           0.01%     
362159J97 0000000000       GOVT NATL MTG ASSN POOL N             0.00            4,499.98             4,499.98           0.00%     
362159TC9 0000000000       GOVT NATL MTG ASSN POOL N             0.00            3,602.61             3,602.61           0.00%     
36215ALX8 0000000000       GOVT NATL MTG ASSN POOL N             0.00            3,562.48             3,562.48           0.00%     
36215BH60 0000000000       GOVT NATL MTG ASSN POOL N             0.00           12,966.62            12,966.62           0.00%     
36215EMV3 0000000000       GOVT NATL MTG ASSN POOL N             0.00            2,156.94             2,156.94           0.00%     
36215GWU9 0000000000       GOVT NATL MTG ASSN POOL N             0.00            2,225.68             2,225.68           0.00%     
36215HP43 0000000000       GOVT NATL MTG ASSN POOL N             0.00           85,718.73            85,718.73           0.02%     
36215MTJ5 0000000000       GOVT NATL MTG ASSN POOL N             0.00           43,238.79            43,238.79           0.01%     
36215NPA6 0000000000       GOVT NATL MTG ASSN POOL N             0.00            7,261.81             7,261.81           0.00%     
36215RAQ8 0000000000       GOVT NATL MTG ASSN POOL N             0.00           78,947.02            78,947.02           0.02%     

15

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           --------------------          ---------------------   ------------------      ----------------          
                                                                                                                                   
36215S5Y5 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            64,422.250            64,422.250             
36215UCX4 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            72,283.140            72,283.140             
36215VBG0 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             2,995.620             2,995.620             
36215WH80 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             1,012.130             1,012.130             
36215XAN2 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            92,122.080            92,122.080             
36215XPU0 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             5,837.830             5,837.830             
362160MX8 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             9,779.690             9,779.690             
362163ZU4 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            57,928.700            57,928.700             
36216NVG5 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            10,708.860            10,708.860             
36216T4P2 0000000000       GOVT NATL MTG ASSN POOL N                 0.000           144,281.120           144,281.120             
362184BE2 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             6,729.430             6,729.430             
362184KT9 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             6,044.920             6,044.920             
36218JF54 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             2,280.970             2,280.970             
36218PJN7 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             7,885.260             7,885.260             
36218PUT1 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            47,187.700            47,187.700             
36218QCU6 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             8,804.240             8,804.240             
36218SDX5 0000000000       GOVT NATL MTG ASSN POOL                   0.000             6,803.840             6,803.840             
36218TLJ5 0000000000       GOVT NATL MTG ASSN POOL N                 0.000            19,877.510            19,877.510             
36218UKG9 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             7,834.690             7,834.690             
36218ULS2 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             1,627.930             1,627.930             
36218WYM7 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             2,634.800             2,634.800             
362191R26 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             6,982.560             6,982.560             
362193UA0 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000             2,033.980             2,033.980             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio           Portfolio        Pro-Forma Combined                  
    Cusip Number           Security Description (f)       Market Value       Market Value         Market Value      % of Net Assets
    ------------           --------------------          ------------    ------------------    ------------------   ---------------
                                                                                                                                   
36215S5Y5 0000000000       GOVT NATL MTG ASSN POOL N             0.00           73,496.77            73,496.77           0.01%     
36215UCX4 0000000000       GOVT NATL MTG ASSN POOL N             0.00           80,397.65            80,397.65           0.02%     
36215VBG0 0000000000       GOVT NATL MTG ASSN POOL N             0.00            3,331.91             3,331.91           0.00%     
36215WH80 0000000000       GOVT NATL MTG ASSN POOL N             0.00            1,153.42             1,153.42           0.00%     
36215XAN2 0000000000       GOVT NATL MTG ASSN POOL N             0.00          102,463.70           102,463.70           0.02%     
36215XPU0 0000000000       GOVT NATL MTG ASSN POOL N             0.00            6,491.90             6,491.90           0.00%     
362160MX8 0000000000       GOVT NATL MTG ASSN POOL N             0.00           10,877.56            10,877.56           0.00%     
362163ZU4 0000000000       GOVT NATL MTG ASSN POOL N             0.00           64,434.09            64,434.09           0.01%     
36216NVG5 0000000000       GOVT NATL MTG ASSN POOL N             0.00           11,911.04            11,911.04           0.00%     
36216T4P2 0000000000       GOVT NATL MTG ASSN POOL N             0.00          160,478.12           160,478.12           0.03%     
362184BE2 0000000000       GOVT NATL MTG ASSN POOL N             0.00            7,484.07             7,484.07           0.00%     
362184KT9 0000000000       GOVT NATL MTG ASSN POOL N             0.00            6,722.80             6,722.80           0.00%     
36218JF54 0000000000       GOVT NATL MTG ASSN POOL N             0.00            2,536.76             2,536.76           0.00%     
36218PJN7 0000000000       GOVT NATL MTG ASSN POOL N             0.00            8,772.51             8,772.51           0.00%     
36218PUT1 0000000000       GOVT NATL MTG ASSN POOL N             0.00           53,173.93            53,173.93           0.01%     
36218QCU6 0000000000       GOVT NATL MTG ASSN POOL N             0.00            9,794.89             9,794.89           0.00%     
36218SDX5 0000000000       GOVT NATL MTG ASSN POOL               0.00            7,567.91             7,567.91           0.00%     
36218TLJ5 0000000000       GOVT NATL MTG ASSN POOL N             0.00           22,109.75            22,109.75           0.00%     
36218UKG9 0000000000       GOVT NATL MTG ASSN POOL N             0.00            8,713.27             8,713.27           0.00%     
36218ULS2 0000000000       GOVT NATL MTG ASSN POOL N             0.00            1,811.10             1,811.10           0.00%     
36218WYM7 0000000000       GOVT NATL MTG ASSN POOL N             0.00            2,930.27             2,930.27           0.00%     
362191R26 0000000000       GOVT NATL MTG ASSN POOL N             0.00            7,868.37             7,868.37           0.00%     
362193UA0 0000000000       GOVT NTL MTG ASSN POOL NO             0.00            2,318.68             2,318.68           0.00%     

16

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           ------------------------      ---------------------    ------------------      ----------------         
                                                                                                                                   
36219LG65 0000000000       GOVT NATL MTG ASSN POOL N                 0.000             7,440.590             7,440.590             
36225A2Q2 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           563,933.140           563,933.140             
36225A2R0 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000            81,462.710            81,462.710             
36225A3M0 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000         1,109,411.560         1,109,411.560             
36225A5X4 0000000000       GOVT NATL MTG ASSN POOL N                 0.000         1,142,983.270         1,142,983.270             
36225ACS7 0000000000       GOVT NATL MTG ASSN POOL N                 0.000           618,362.220           618,362.220             
36225AEN6 0000000000       GOVT NATL MTG ASSN POOL N                 0.000           387,481.670           387,481.670             
36225AFD7 0000000000       GOVT NATL MTG ASSN POOL N                 0.000         1,096,157.010         1,096,157.010             
36225AFL9 0000000000       GOVT NATL MTG ASSN POOL N                 0.000         1,251,659.940         1,251,659.940             
36225ASC5 0000000000       GOVT NATL MTG ASSN POOL N                 0.000           994,875.030           994,875.030             
36225AVA5 0000000000       GOVT NATL MTG ASSN POOL N                 0.000           316,670.050           316,670.050             
36225AX47 0000000000       GOVT NATL MTG ASSN POOL N                 0.000           528,681.350           528,681.350             
36225AZ52 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000         1,139,037.020         1,139,037.020             
36225AZV5 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000         1,069,891.930         1,069,891.930             
36225BAG3 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           916,817.330           916,817.330             
36225BJV1 0000000000       GOVT NTL MTG ASSN POOL NO         8,661,503.160                 0.000         8,661,503.160             
36225BJV1 0000000000       GOVT NTL MTG ASSN POOL NO                 0.000           963,671.380           963,671.380             
36225CD52 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           789,769.480           789,769.480             
36225CE69 0000000000       GOVT NATL MTG ASSN II CUS                 0.000           237,783.240           237,783.240             
36225CEK8 0000000000       GOVT NATL MTG ASSN II JUM                 0.000           857,754.210           857,754.210             
36225CET9 0000000000       GOVT NATL MTG ASSN II CUS                 0.000           219,052.210           219,052.210             
36228CAY9 0000000000       GS MTG SECS CORP II                       0.000         2,368,238.360         2,368,238.360             
362320BA0 0000000000       GTE CORP                            480,000.000         1,475,000.000         1,955,000.000             
370425RX0 0000000000       GENERAL MOTORS ACCEPTANCE                 0.000           570,000.000           570,000.000             
370425RZ5 0000000000       GENERAL MTRS ACCEP CORP N           500,000.000           565,000.000         1,065,000.000             
38141MMN8 0000000000       GOLDMAN SACHS GROUP L P M         1,250,000.000                 0.000         1,250,000.000             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           ------------------------      ------------    ------------------    ------------------   ---------------
                                                                                                                                   
36219LG65 0000000000       GOVT NATL MTG ASSN POOL N             0.00            8,274.98             8,274.98           0.00%     
36225A2Q2 0000000000       GOVT NTL MTG ASSN POOL NO             0.00          625,198.84           625,198.84           0.12%     
36225A2R0 0000000000       GOVT NTL MTG ASSN POOL NO             0.00           90,620.75            90,620.75           0.02%     
36225A3M0 0000000000       GOVT NTL MTG ASSN POOL NO             0.00        1,233,820.97         1,233,820.97           0.24%     
36225A5X4 0000000000       GOVT NATL MTG ASSN POOL N             0.00        1,267,156.97         1,267,156.97           0.25%     
36225ACS7 0000000000       GOVT NATL MTG ASSN POOL N             0.00          687,705.36           687,705.36           0.13%     
36225AEN6 0000000000       GOVT NATL MTG ASSN POOL N             0.00          431,022.99           431,022.99           0.08%     
36225AFD7 0000000000       GOVT NATL MTG ASSN POOL N             0.00        1,219,211.60         1,219,211.60           0.24%     
36225AFL9 0000000000       GOVT NATL MTG ASSN POOL N             0.00        1,369,034.18         1,369,034.18           0.27%     
36225ASC5 0000000000       GOVT NATL MTG ASSN POOL N             0.00        1,103,137.33         1,103,137.33           0.21%     
36225AVA5 0000000000       GOVT NATL MTG ASSN POOL N             0.00          351,041.42           351,041.42           0.07%     
36225AX47 0000000000       GOVT NATL MTG ASSN POOL N             0.00          586,117.29           586,117.29           0.11%     
36225AZ52 0000000000       GOVT NTL MTG ASSN POOL NO             0.00        1,266,768.63         1,266,768.63           0.25%     
36225AZV5 0000000000       GOVT NTL MTG ASSN POOL NO             0.00        1,189,869.61         1,189,869.61           0.23%     
36225BAG3 0000000000       GOVT NTL MTG ASSN POOL NO             0.00        1,016,567.06         1,016,567.06           0.20%     
36225BJV1 0000000000       GOVT NTL MTG ASSN POOL NO     8,858,552.36                0.00         8,858,552.36           1.72%     
36225BJV1 0000000000       GOVT NTL MTG ASSN POOL NO             0.00          981,181.29           981,181.29           0.19%     
36225CD52 0000000000       GOVT NATL MTG ASSN II JUM             0.00          807,341.85           807,341.85           0.16%     
36225CE69 0000000000       GOVT NATL MTG ASSN II CUS             0.00          240,434.52           240,434.52           0.05%     
36225CEK8 0000000000       GOVT NATL MTG ASSN II JUM             0.00          876,839.24           876,839.24           0.17%     
36225CET9 0000000000       GOVT NATL MTG ASSN II CUS             0.00          223,926.12           223,926.12           0.04%     
36228CAY9 0000000000       GS MTG SECS CORP II                   0.00           73,391.71            73,391.71           0.01%     
362320BA0 0000000000       GTE CORP                        476,154.24        1,451,513.58         1,927,667.82           0.37%     
370425RX0 0000000000       GENERAL MOTORS ACCEPTANCE             0.00          552,593.34           552,593.34           0.11%     
370425RZ5 0000000000       GENERAL MTRS ACCEP CORP N       508,892.50          568,595.10         1,077,487.60           0.21%     
38141MMN8 0000000000       GOLDMAN SACHS GROUP L P M     1,275,896.25                0.00         1,275,896.25           0.25%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           ------------------------      ---------------------    ------------------      ----------------         
                                                                                                                                   
3837H2B24 0000000000       GOVERNMENT NATL MTG ASSN                  0.000         5,137,510.500         5,137,510.500             
3837H2L56 0000000000       GOVERNMENT NATL MTG ASSN                  0.000         4,036,654.440         4,036,654.440             
3837H2WC9 0000000000       GOVT NATL MTG ASSN GTD                    0.000         3,650,852.270         3,650,852.270             
41020VAA9 0000000000       HANCOCK JOHN MUT LIFE INS         1,050,000.000         1,305,000.000         2,355,000.000             
416515AD6 0000000000       HARTFORD FINL SVCS GROUP            655,000.000                 0.000           655,000.000             
416515AE4 0000000000       HARTFORD FINL SVCS GROUP            125,000.000                 0.000           125,000.000             
416592AC7 0000000000       HARTFORD LIFE INC DEB                     0.000           970,000.000           970,000.000             
428040BN8 0000000000       HERTZ CORP NOTES                          0.000           865,000.000           865,000.000             
4319902C3 0000000000       CSFB/SWAP/LONG/LB AAA *                   0.000           750,000.000           750,000.000             
4319902D1 0000000000       CSFB/SWAP/SHORT *                         0.000          (750,000.000)         (750,000.000)            
437296205 0000000000       HOME OWNERSHIP FDG SER 19                 0.000             4,350.000             4,350.000             
43811RAC3 0000000000       HONDA AUTO RECEIVABLES              865,000.000                 0.000           865,000.000             
43811YAB0 0000000000       HONDA AUTO RECEIVABLES OW                 0.000         1,800,000.000         1,800,000.000             
438516AN6 0000000000       HONEYWELL INTL INC NT DTD           755,000.000           880,000.000         1,635,000.000             
441812FY5 0000000000       HOUSEHOLD FIN CORP SR UNS           165,000.000           285,000.000           450,000.000             
441812GE8 0000000000       HOUSEHOLD FIN CORP SR UNS         1,020,000.000                 0.000         1,020,000.000             
441812GM0 0000000000       HOUSEHOLD FIN CORP NT                     0.000           955,000.000           955,000.000             
4429902B2 0000000000       MERRILL CMBS SWAP LONG *                  0.000         2,200,000.000         2,200,000.000             
4429902C0 0000000000       MERRILL CMBS SWAP SHORT *                 0.000        (2,200,000.000)       (2,200,000.000)            
448414AC6 0000000000       HUTCHISON WHAMPOA FIN                     0.000           905,000.000           905,000.000             
448414AE2 0000000000       HUTCHISON WHAMPOA FIN C I           525,000.000                 0.000           525,000.000             
44856LAF3 0000000000       HYATT EQUITIES LLC MEDIUM                 0.000         1,045,000.000         1,045,000.000             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           ------------------------      ------------    ------------------    ------------------   ---------------
                                                                                                                                   
3837H2B24 0000000000       GOVERNMENT NATL MTG ASSN              0.00          393,019.55           393,019.55           0.08%     
3837H2L56 0000000000       GOVERNMENT NATL MTG ASSN              0.00          278,529.16           278,529.16           0.05%     
3837H2WC9 0000000000       GOVT NATL MTG ASSN GTD                0.00          336,608.58           336,608.58           0.07%     
41020VAA9 0000000000       HANCOCK JOHN MUT LIFE INS     1,050,217.35        1,294,869.29         2,345,086.64           0.45%     
416515AD6 0000000000       HARTFORD FINL SVCS GROUP        702,085.33                0.00           702,085.33           0.14%     
416515AE4 0000000000       HARTFORD FINL SVCS GROUP        136,819.13                0.00           136,819.13           0.03%     
416592AC7 0000000000       HARTFORD LIFE INC DEB                 0.00        1,025,327.83         1,025,327.83           0.20%     
428040BN8 0000000000       HERTZ CORP NOTES                      0.00          875,239.01           875,239.01           0.17%     
4319902C3 0000000000       CSFB/SWAP/LONG/LB AAA *               0.00          769,627.50           769,627.50           0.15%     
4319902D1 0000000000       CSFB/SWAP/SHORT *                     0.00         (750,007.50)         (750,007.50)         -0.15%     
437296205 0000000000       HOME OWNERSHIP FDG SER 19             0.00        3,104,155.65         3,104,155.65           0.60%     
43811RAC3 0000000000       HONDA AUTO RECEIVABLES          891,606.36                0.00           891,606.36           0.17%     
43811YAB0 0000000000       HONDA AUTO RECEIVABLES OW             0.00        1,802,260.98         1,802,260.98           0.35%     
438516AN6 0000000000       HONEYWELL INTL INC NT DTD       747,045.32          866,219.20         1,613,264.52           0.31%     
441812FY5 0000000000       HOUSEHOLD FIN CORP SR UNS       163,714.16          281,275.62           444,989.78           0.09%     
441812GE8 0000000000       HOUSEHOLD FIN CORP SR UNS       970,218.90                0.00           970,218.90           0.19%     
441812GM0 0000000000       HOUSEHOLD FIN CORP NT                 0.00        1,022,932.02         1,022,932.02           0.20%     
4429902B2 0000000000       MERRILL CMBS SWAP LONG *              0.00        2,201,936.00         2,201,936.00           0.43%     
4429902C0 0000000000       MERRILL CMBS SWAP SHORT *             0.00       (2,200,022.00)       (2,200,022.00)         -0.43%     
448414AC6 0000000000       HUTCHISON WHAMPOA FIN                 0.00          891,256.68           891,256.67           0.17%     
448414AE2 0000000000       HUTCHISON WHAMPOA FIN C I       495,358.50                0.00           495,358.50           0.10%     
44856LAF3 0000000000       HYATT EQUITIES LLC MEDIUM             0.00        1,099,476.90         1,099,476.90           0.21%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           ------------------------      ---------------------    ------------------      ----------------         
                                                                                                                                   
477122AN5 0000000000       JET EQUIP TR SER 1994-A S                 0.000         1,400,000.000         1,400,000.000             
501044BT7 0000000000       KROGER CO SR NT SER B DTD           105,000.000         1,125,000.000         1,230,000.000             
501044BV2 0000000000       KROGER CO SR DEB                    680,000.000                 0.000           680,000.000             
501044BZ3 0000000000       KROGER CO NT                        125,000.000                 0.000           125,000.000             
52108HBK9 0000000000       LB UBS COMMERCIAL MORTGAG         1,100,000.000                 0.000         1,100,000.000             
5249902A5 0000000000       LEHMAN BROTHERS CMBS LONG *               0.000           925,000.000           925,000.000             
5249902B3 0000000000       LEHMAN BROTHERS CMBS SHOR *               0.000          (925,000.000)         (925,000.000)            
52519SAA1 0000000000       LEHMAN ABS MANUFACTURED H                 0.000         1,284,311.630         1,284,311.630             
539830AF6 0000000000       LOCKHEED MARTIN CORP                415,000.000           470,000.000           885,000.000             
548661AH0 0000000000       LOWES COS INC DEB                         0.000         1,340,000.000         1,340,000.000             
548661AK3 0000000000       LOWES COS INC DEB DTD 02/         1,030,000.000                 0.000         1,030,000.000             
55262TEB5 0000000000       MBNA MASTER CR CARD TR II           760,000.000                 0.000           760,000.000             
55262TFJ7 0000000000       MBNA MASTER CR CARD TR II         1,220,000.000         1,495,000.000         2,715,000.000             
5526E0AJ2 0000000000       MBNA AMER BK NATL ASSN              345,000.000           465,000.000           810,000.000             
553083AY2 0000000000       MMCA AUTO OWNER TR 2000-1         1,080,000.000                 0.000         1,080,000.000             
5569902D0 0000000000       ML SWAP/6MO LIBOR/SHORT *                 0.000        (1,375,000.000)       (1,375,000.000)            
5599902A3 0000000000       ML SWAP LONG *                            0.000         1,375,000.000         1,375,000.000             
5685048   0000000000       FRANCE(GOVT OF)                   5,095,000.000         6,025,000.000        11,120,000.000             
571900AS8 0000000000       MARRIOTT INTL INC NT SER            910,000.000         1,170,000.000         2,080,000.000             
577778BH5 0000000000       MAY DEPT STORES CO DEB DT                 0.000         1,300,000.000         1,300,000.000             
577778BJ1 0000000000       MAT DEPT STORES CO NT DTD           635,000.000                 0.000           635,000.000             
577778BK8 0000000000       MAY DEPT STORES CO NT                     0.000           105,000.000           105,000.000             
589929QA9 0000000000       MERRILL LYNCH MTG INVS IN         1,837,134.000                 0.000         1,837,134.000             
592173AB4 0000000000       METROPOLITAN LIFE INS CO                  0.000           625,000.000           625,000.000             
592173AE8 0000000000       METROPOLITAN LIFE INS CO            775,000.000           875,000.000         1,650,000.000             
595494AE5 0000000000       MID ST TR II MTG BACKED N                 0.000           315,000.000           315,000.000             
59549PAA6 0000000000       MID ST TR IV ASSET BACKED         1,747,969.787                 0.000         1,747,969.787             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           ------------------------      ------------    ------------------    ------------------   ---------------
                                                                                                                                   
477122AN5 0000000000       JET EQUIP TR SER 1994-A S             0.00          941,234.00           941,234.00           0.18%     
501044BT7 0000000000       KROGER CO SR NT SER B DTD       112,666.47        1,193,311.13         1,305,977.60           0.25%     
501044BV2 0000000000       KROGER CO SR DEB                754,266.88                0.00           754,266.88           0.15%     
501044BZ3 0000000000       KROGER CO NT                    131,207.63                0.00           131,207.63           0.03%     
52108HBK9 0000000000       LB UBS COMMERCIAL MORTGAG     1,176,186.00                0.00         1,176,186.00           0.23%     
5249902A5 0000000000       LEHMAN BROTHERS CMBS LONG *           0.00          933,667.25           933,667.25           0.18%     
5249902B3 0000000000       LEHMAN BROTHERS CMBS SHOR *           0.00         (925,009.25)         (925,009.25)         -0.18%     
52519SAA1 0000000000       LEHMAN ABS MANUFACTURED H             0.00        1,281,222.48         1,281,222.48           0.25%     
539830AF6 0000000000       LOCKHEED MARTIN CORP            447,623.57          503,057.45           950,681.02           0.18%     
548661AH0 0000000000       LOWES COS INC DEB                     0.00        1,329,718.18         1,329,718.18           0.26%     
548661AK3 0000000000       LOWES COS INC DEB DTD 02/       995,008.84                0.00           995,008.84           0.19%     
55262TEB5 0000000000       MBNA MASTER CR CARD TR II       770,965.05                0.00           770,965.05           0.15%     
55262TFJ7 0000000000       MBNA MASTER CR CARD TR II     1,362,023.37        1,660,554.66         3,022,578.03           0.59%     
5526E0AJ2 0000000000       MBNA AMER BK NATL ASSN          338,546.78          454,367.31           792,914.09           0.15%     
553083AY2 0000000000       MMCA AUTO OWNER TR 2000-1     1,108,472.04                0.00         1,108,472.04           0.21%     
5569902D0 0000000000       ML SWAP/6MO LIBOR/SHORT *             0.00       (1,375,013.75)       (1,375,013.75)         -0.27%     
5599902A3 0000000000       ML SWAP LONG *                        0.00        1,375,412.50         1,375,412.50           0.27%     
5685048   0000000000       FRANCE(GOVT OF)               4,272,891.95        5,038,664.65         9,311,556.60           1.81%     
571900AS8 0000000000       MARRIOTT INTL INC NT SER        915,456.36        1,171,552.59         2,087,008.95           0.40%     
577778BH5 0000000000       MAY DEPT STORES CO DEB DT             0.00        1,233,956.10         1,233,956.10           0.24%     
577778BJ1 0000000000       MAT DEPT STORES CO NT DTD       637,101.22                0.00           637,101.22           0.12%     
577778BK8 0000000000       MAY DEPT STORES CO NT                 0.00          114,272.13           114,272.13           0.02%     
589929QA9 0000000000       MERRILL LYNCH MTG INVS IN     1,884,568.80                0.00         1,884,568.80           0.37%     
592173AB4 0000000000       METROPOLITAN LIFE INS CO              0.00          608,766.25           608,766.25           0.12%     
592173AE8 0000000000       METROPOLITAN LIFE INS CO        789,924.95          884,723.00         1,674,647.95           0.32%     
595494AE5 0000000000       MID ST TR II MTG BACKED N             0.00          319,690.35           319,690.35           0.06%     
59549PAA6 0000000000       MID ST TR IV ASSET BACKED     1,874,120.77                0.00         1,874,120.77           0.36%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description (f)         Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           ------------------------      ---------------------    ------------------      ----------------         
                                                                                                                                   
617440201 0000000000       MORGAN STANLEY INSTITUTIO                 0.000               228.038               228.038             
617440300 0000000000       MORGAN STANLEY INSTITUTIO                 0.000                66.139                66.139             
617440508 0000000000       MORGAN STANLEY INSTITUTIO                 0.000               289.059               289.059             
617440755 0000000000       MORGAN STANLEY INSTITUTIO                 0.000                24.294                24.294             
617440771 0000000000       MORGAN STANLEY INSTITUTIO                 0.000               330.383               330.383             
617440813 0000000000       MORGAN STANLEY INSTITUTIO                 0.000               290.715               290.715             
617440862 0000000000       MORGAN STANLEY INSTITUTIO                 0.000               300.466               300.466             
617440888 0000000000       MORGAN STANLEY INSTITUTIO                 0.000               441.081               441.081             
619087BM0 0000000000       MORSERV INC SER 96-2 MTG                  0.000           511,648.280           511,648.280             
638671AB3 0000000000       NATIONWIDE MUTUAL INS CO            345,000.000         1,245,000.000         1,590,000.000             
638671AC1 0000000000       NATIONWIDE MUTUAL INS NTS           745,000.000                 0.000           745,000.000             
652478AL2 0000000000       NEWS AMER HOLDINGS INC              850,000.000           200,000.000         1,050,000.000             
652478AR9 0000000000       NEWS AMER HLDGS INC SR DE                 0.000           550,000.000           550,000.000             
652478AU2 0000000000       NEWS AMER HLDGS INC SR DE                 0.000           565,000.000           565,000.000             
652482AU4 0000000000       NEWS AMER INC SR DEB                165,000.000                 0.000           165,000.000             
65473QAJ2 0000000000       NISOURCE FIN CORP GTD               660,000.000         1,045,000.000         1,705,000.000             
65474MAB7 0000000000       NISSAN AUTO RECEIVABLES                   0.000         1,225,208.360         1,225,208.360             
65474RAD2 0000000000       NISSAN AUTO RECEIVABLES                   0.000           750,000.000           750,000.000             
655356BK8 0000000000       NOMURA ASSET SECS CORP CO                 0.000           447,972.980           447,972.980             
666807AW2 0000000000       NORTHROP GRUMMAN CORP               270,000.000           305,000.000           575,000.000             
677871AA3 0000000000       OIL ENTERPRISES LTD GTD N         1,436,182.540         1,208,026.470         2,644,209.010             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description (f)      Market Value        Market Value          Market Value     % of Net Assets
    ------------           ------------------------      ------------    ------------------    ------------------   ---------------
                                                                                                                                   
617440201 0000000000       MORGAN STANLEY INSTITUTIO             0.00            3,520.91             3,520.91           0.00%     
617440300 0000000000       MORGAN STANLEY INSTITUTIO             0.00              764.57               764.57           0.00%     
617440508 0000000000       MORGAN STANLEY INSTITUTIO             0.00            7,333.43             7,333.43           0.00%     
617440755 0000000000       MORGAN STANLEY INSTITUTIO             0.00              958.16               958.16           0.00%     
617440771 0000000000       MORGAN STANLEY INSTITUTIO             0.00            7,017.33             7,017.33           0.00%     
617440813 0000000000       MORGAN STANLEY INSTITUTIO             0.00            2,910.06             2,910.06           0.00%     
617440862 0000000000       MORGAN STANLEY INSTITUTIO             0.00            3,112.83             3,112.83           0.00%     
617440888 0000000000       MORGAN STANLEY INSTITUTIO             0.00            3,246.36             3,246.36           0.00%     
619087BM0 0000000000       MORSERV INC SER 96-2 MTG              0.00          509,381.68           509,381.68           0.10%     
638671AB3 0000000000       NATIONWIDE MUTUAL INS CO        310,419.62        1,112,180.91         1,422,600.53           0.28%     
638671AC1 0000000000       NATIONWIDE MUTUAL INS NTS       743,391.55                0.00           743,391.55           0.14%     
652478AL2 0000000000       NEWS AMER HOLDINGS INC          919,073.55          214,800.00         1,133,873.55           0.22%     
652478AR9 0000000000       NEWS AMER HLDGS INC SR DE             0.00          531,494.15           531,494.15           0.10%     
652478AU2 0000000000       NEWS AMER HLDGS INC SR DE             0.00          545,941.42           545,941.42           0.11%     
652482AU4 0000000000       NEWS AMER INC SR DEB            153,643.05                0.00           153,643.05           0.03%     
65473QAJ2 0000000000       NISOURCE FIN CORP GTD           683,049.18        1,065,269.87         1,748,319.05           0.34%     
65474MAB7 0000000000       NISSAN AUTO RECEIVABLES               0.00        1,237,276.84         1,237,276.84           0.24%     
65474RAD2 0000000000       NISSAN AUTO RECEIVABLES         632,622.38          125,091.01           757,713.38           0.15%     
655356BK8 0000000000       NOMURA ASSET SECS CORP CO             0.00          447,972.98           447,972.98           0.09%     
666807AW2 0000000000       NORTHROP GRUMMAN CORP           292,398.66          326,832.82           619,231.48           0.12%     
677871AA3 0000000000       OIL ENTERPRISES LTD GTD N     1,470,105.17        1,231,872.91         2,701,978.08           0.52%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description(f)          Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           -----------------------       ---------------------    ------------------      ----------------         
                                                                                                                                   
677884AA6 0000000000       OIL PUR CO SR SECD NT                     0.000           157,411.280           157,411.280             
69319CAA2 0000000000       PCCW-HKTC CAP LTD GTD               645,000.000           725,000.000         1,370,000.000             
69361YAF0 0000000000       PSE&G TRANSITION FDG                575,000.000           620,000.000         1,195,000.000             
705220AF8 0000000000       PECO ENERGY TRANSITION TR         1,250,000.000                 0.000         1,250,000.000             
705220AK7 0000000000       PECO ENERGY TRANSITION                    0.000         1,225,000.000         1,225,000.000             
705220AM3 0000000000       PECO ENERGY TRANSITION              325,000.000           725,000.000         1,050,000.000             
71713UAW2 0000000000       PHARMACIA CORP DEB                        0.000           695,000.000           695,000.000             
741933AB1 0000000000       PRIME PPTY FDG II INC                     0.000         1,380,000.000         1,380,000.000             
74438GAC5 0000000000       PRUDENTIAL HLDGS LLC SER          1,775,000.000         2,040,000.000         3,815,000.000             
74438GAE1 0000000000       PRUDENTIAL HLDGS LLC S              995,000.000         1,025,000.000         2,020,000.000             
74913EAC4 0000000000       QWEST CAP FDG INC GTD               815,000.000                 0.000           815,000.000             
74913EAE0 0000000000       QWEST CAP FDG INC GTD                     0.000         1,180,000.000         1,180,000.000             
74913EAJ9 0000000000       QWEST CAP FDG INC NT                315,000.000                 0.000           315,000.000             
754052AC2 0000000000       RAS LAFFAN LIQ NAT GAS                    0.000         1,070,000.000         1,070,000.000             
755111BG5 0000000000       RAYTHEON CO NT                      680,000.000           705,000.000         1,385,000.000             
755111BH3 0000000000       RAYTHEON CO NT                      100,000.000                 0.000           100,000.000             
755111BH3 0000000000       RAYTHEON CO NT                            0.000           330,000.000           330,000.000             
758202AB1 0000000000       REED ELSEVIER CAP INC               235,000.000           150,000.000           385,000.000             
76110VEP9 0000000000       RESIDENTIAL FDG MTG SECS          1,100,000.000                 0.000         1,100,000.000             
76110WKN5 0000000000       RESIDENTIAL ASSET SECUR                   0.000           571,039.560           571,039.560             
76110YWW8 0000000000       RESIDENTIAL FDG MTG SECS            152,402.980                 0.000           152,402.980             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description(f)       Market Value        Market Value          Market Value     % of Net Assets
    ------------           -----------------------       ------------    ------------------    ------------------   ---------------
                                                                                                                                   
677884AA6 0000000000       OIL PUR CO SR SECD NT                 0.00          156,531.35           156,531.35           0.03%     
69319CAA2 0000000000       PCCW-HKTC CAP LTD GTD           637,191.63          714,618.00         1,351,809.63           0.26%     
69361YAF0 0000000000       PSE&G TRANSITION FDG            596,200.42          638,192.04         1,234,392.46           0.24%     
705220AF8 0000000000       PECO ENERGY TRANSITION TR     1,294,978.75                0.00         1,294,978.75           0.25%     
705220AK7 0000000000       PECO ENERGY TRANSITION                0.00        1,343,461.30         1,343,461.30           0.26%     
705220AM3 0000000000       PECO ENERGY TRANSITION          337,889.01          749,040.06         1,086,929.07           0.21%     
71713UAW2 0000000000       PHARMACIA CORP DEB                    0.00          696,052.93           696,052.93           0.13%     
741933AB1 0000000000       PRIME PPTY FDG II INC                 0.00        1,440,870.42         1,440,870.42           0.28%     
74438GAC5 0000000000       PRUDENTIAL HLDGS LLC SER      1,817,440.25        2,071,212.00         3,888,652.25           0.75%     
74438GAE1 0000000000       PRUDENTIAL HLDGS LLC S        1,034,969.15        1,058,589.25         2,093,558.40           0.41%     
74913EAC4 0000000000       QWEST CAP FDG INC GTD           837,959.37                0.00           837,959.37           0.16%     
74913EAE0 0000000000       QWEST CAP FDG INC GTD                 0.00        1,191,776.40         1,191,776.40           0.23%     
74913EAJ9 0000000000       QWEST CAP FDG INC NT            302,233.68                0.00           302,233.68           0.06%     
754052AC2 0000000000       RAS LAFFAN LIQ NAT GAS                0.00        1,084,712.50         1,084,712.50           0.21%     
755111BG5 0000000000       RAYTHEON CO NT                  737,068.32          761,430.32         1,498,498.64           0.29%     
755111BH3 0000000000       RAYTHEON CO NT                  110,948.20                0.00           110,948.20           0.02%     
755111BH3 0000000000       RAYTHEON CO NT                        0.00          364,455.30           364,455.30           0.07%     
758202AB1 0000000000       REED ELSEVIER CAP INC           238,381.65          151,347.60           389,729.25           0.08%     
76110VEP9 0000000000       RESIDENTIAL FDG MTG SECS      1,112,870.11                0.00         1,112,870.11           0.22%     
76110WKN5 0000000000       RESIDENTIAL ASSET SECUR               0.00          574,362.84           574,362.84           0.11%     
76110YWW8 0000000000       RESIDENTIAL FDG MTG SECS        152,412.12                0.00           152,412.12           0.03%     

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===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description(f)          Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           -----------------------       ---------------------    ------------------      ----------------         
                                                                                                                                   
783760QB0 0000000000       RYLAND ACCEP CORP FOUR CO                 0.000           347,449.886           347,449.886             
786514BC2 0000000000       SAFEWAY INC NT                      110,000.000                 0.000           110,000.000             
7959902K5 0000000000       SALOMON CMBS SWAP*                        0.000         1,500,000.000         1,500,000.000             
7959902M1 0000000000       SALOMON CMBS LIBOR SHORT*                 0.000        (1,500,000.000)       (1,500,000.000)            
7959902N9 0000000000       SALOMON CMBS SWAP LONG*                   0.000         1,700,000.000         1,700,000.000             
7959902P4 0000000000       SALOMON CMBS SWAP SHORT*                  0.000        (1,700,000.000)       (1,700,000.000)            
828807AJ6 0000000000       SIMON PPTY GROUP L P NT                   0.000           495,000.000           495,000.000             
84474QAB9 0000000000       SOUTHWEST AIRLS 2001 1              240,000.000           280,000.000           520,000.000             
866810AF1 0000000000       SUN MICROSYSTEMS INC                595,000.000           725,000.000         1,320,000.000             
87203RAA0 0000000000       SYSTEMS 2001 A T LLC A            1,552,661.210         1,815,782.370         3,368,443.580             
872287AF4 0000000000       TCI COMMUNICATIONS INC              250,000.000           270,000.000           520,000.000             
872649BL1 0000000000       TRW INC  NT                         145,000.000           230,000.000           375,000.000             
87971MAC7 0000000000       TELUS CORP NT                       160,000.000           375,000.000           535,000.000             
88033GAU4 0000000000       TENET HEALTHCARE CORP SR            715,000.000           840,000.000         1,555,000.000             
8849902C5 0000000000       SWAP LONG LEHMAN*                         0.000           650,000.000           650,000.000             
8849902D3 0000000000       SWAP SHORT LEHMAN*                        0.000          (650,000.000)         (650,000.000)            
887315BH1 0000000000       TTM TECHNOLOGIES INC COM            165,000.000                 0.000           165,000.000             
887315BN8 0000000000       TIME WARNER INC DEB DTD 1           290,000.000           970,000.000         1,260,000.000             
89232TAA7 0000000000       TOYOTA AUTO RECEIVABLE                    0.000         2,546,791.450         2,546,791.450             
902045AA1 0000000000       277 PK AVE FIN CORP COML          1,135,749.840                 0.000         1,135,749.840             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description(f)       Market Value        Market Value          Market Value     % of Net Assets
    ------------           -----------------------       ------------    ------------------    ------------------   ---------------
                                                                                                                                   
783760QB0 0000000000       RYLAND ACCEP CORP FOUR CO             0.00          355,385.64           355,385.64           0.07%     
786514BC2 0000000000       SAFEWAY INC NT                  112,160.07                0.00           112,160.07           0.02%     
7959902K5 0000000000       SALOMON CMBS SWAP*                    0.00        1,468,260.00         1,468,260.00           0.28%     
7959902M1 0000000000       SALOMON CMBS LIBOR SHORT*             0.00       (1,500,015.00)       (1,500,015.00)         -0.29%     
7959902N9 0000000000       SALOMON CMBS SWAP LONG*               0.00        1,711,016.00         1,711,016.00           0.33%     
7959902P4 0000000000       SALOMON CMBS SWAP SHORT*              0.00       (1,700,017.00)       (1,700,017.00)         -0.33%     
828807AJ6 0000000000       SIMON PPTY GROUP L P NT               0.00          481,949.33           481,949.33           0.09%     
84474QAB9 0000000000       SOUTHWEST AIRLS 2001 1          236,313.74          274,647.49           510,961.23           0.10%     
866810AF1 0000000000       SUN MICROSYSTEMS INC            607,239.15          732,199.25         1,339,438.40           0.26%     
87203RAA0 0000000000       SYSTEMS 2001 A T LLC A        1,600,738.59        1,839,750.70         3,440,489.29           0.67%     
872287AF4 0000000000       TCI COMMUNICATIONS INC          258,326.00          276,927.39           535,253.39           0.10%     
872649BL1 0000000000       TRW INC  NT                     149,335.36          236,011.97           385,347.33           0.07%     
87971MAC7 0000000000       TELUS CORP NT                   169,787.52          392,783.63           562,571.15           0.11%     
88033GAU4 0000000000       TENET HEALTHCARE CORP SR        660,345.40          766,567.20         1,426,912.60           0.28%     
8849902C5 0000000000       SWAP LONG LEHMAN*                     0.00          635,485.50           635,485.50           0.12%     
8849902D3 0000000000       SWAP SHORT LEHMAN*                    0.00         (650,006.50)         (650,006.50)         -0.13%     
887315BH1 0000000000       TTM TECHNOLOGIES INC COM        171,966.14                0.00           171,966.14           0.03%     
887315BN8 0000000000       TIME WARNER INC DEB DTD 1       271,153.19          880,166.36         1,151,319.55           0.22%     
89232TAA7 0000000000       TOYOTA AUTO RECEIVABLE                0.00        2,570,199.02         2,570,199.02           0.50%     
902045AA1 0000000000       277 PK AVE FIN CORP COML      1,209,039.78                0.00         1,209,039.78           0.23%     

22

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                                                        [Enlarge/Download Table]

===================================================================================================================================
                                                                                  MSIFT Investment                                 
                                                         MSIF Fixed Income III   Grade Fixed Income         Pro-Forma              
                                                               Portfolio             Portfolio               Combined              
    Cusip Number           Security Description(f)          Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------           -----------------------       ---------------------    ------------------      ----------------         
                                                                                                                                   
902118AC2 0000000000       TYCO INTL GROUP SA                   75,000.000           115,000.000           190,000.000             
902118AK4 0000000000       TYCO INTL GROUP S A GTD N           120,000.000                 0.000           120,000.000             
902118AY4 0000000000       TYCO INTL GROP S A GTD NT           525,000.000           825,000.000         1,350,000.000             
902118BC1 0000000000       TYCO INTL GROUP                     210,000.000           140,000.000           350,000.000             
90332UAA1 0000000000       US AWYS PASS THRU TRS SER                 0.000                 0.020                 0.020             
90332UAJ2 0000000000       US AWYS PASS THRU TRS SER                 0.000           620,236.010           620,236.010             
90332UAN3 0000000000       US AWYS PASS THRU TRS 200           933,378.100                 0.000           933,378.100             
912795JA0 0000000000       UNITED STATES TREASURY BI        10,000,000.000                 0.000        10,000,000.000             
912795JF9 0000000000       UNITED STATES TREASURY BI        30,000,000.000         5,000,000.000        35,000,000.000             
912795JQ5 0000000000       UNITED STATES TREASURY BI                 0.000         1,150,000.000         1,150,000.000             
912810EK0 0000000000       UNITED STATES TREASURY BO         3,325,000.000                 0.000         3,325,000.000             
9128276D9 0000000000       UNITED STATES TREASURY NO         9,000,000.000                 0.000         9,000,000.000             
912827T85 0000000000       UNITED STATES TREASURY NO         2,250,000.000                 0.000         2,250,000.000             
92344RAA0 0000000000       VERIZON NEW ENG INC DEB             610,000.000                 0.000           610,000.000             
92857TAG2 0000000000       VODAFONE AIRTOUCH PLC NT            715,000.000           275,000.000           990,000.000             
92857TAH0 0000000000       VODAFONE AIRTOUCH PLC NT                  0.000           600,000.000           600,000.000             
931142BN2 0000000000       WAL MART STORES SR UNSECD         1,420,000.000                 0.000         1,420,000.000             
939322AE3 0000000000       WASHINGTON MUT INC SUB NT                 0.000           365,000.000           365,000.000             
94973HAB4 0000000000       WELLPOINT HEALTH NETWORKS           310,000.000           425,000.000           735,000.000             
969457BB5 0000000000       WILLIAMS COS INC DEB SER            665,000.000           650,000.000         1,315,000.000             
969457BD1 0000000000       WILLIAMS COS INC SR NT              110,000.000           150,000.000           260,000.000             
981468AA9 0000000000       WORLD FINL PPTYS TOWER B          3,291,236.128         2,381,815.650         5,673,051.778             
98155KAJ1 0000000000       WORLDCOM INC GA NT                        0.000         1,575,000.000         1,575,000.000             
98157DAD8 0000000000       WORLDCOM INC GA NEW NT            1,750,000.000                 0.000         1,750,000.000             
98157DAK2 0000000000       WORLDCOM INC GA NEW NT                    0.000           590,000.000           590,000.000             
9900032BB 0000000000       MAR 02 TREASURY BONDS-CBT*                0.000              (156.000)             (156.000)            
9900032BE 0000000000       MAR 02 5 YEAR T NOTES-CBT*                0.000              (173.000)             (173.000)            
9900032BF 0000000000       MAR 02 10 YEAR T NOTES-CB*                0.000              (101.000)             (101.000)            
BOS161ABL 0000000000       JPM CHASE POOLED REPO             7,860,000.000                 0.000         7,860,000.000             
BOS161ABQ 0000000000       JPMC POOLED REPO(MAS)1.65                 0.000        23,723,000.000        23,723,000.000             
                                                           ---------------       ---------------       ---------------             
                           Totals                          326,952,562.242       426,887,798.168       753,840,360.410             


===================================================================================================================================
                                                          MSIF Fixed      MSIFT Investment                                         
                                                          Income III     Grade Fixed Income                                        
                                                          Portfolio            Portfolio       Pro-Forma Combined                  
    Cusip Number           Security Description(f)       Market Value        Market Value          Market Value     % of Net Assets
    ------------           -----------------------       ------------    ------------------    ------------------   ---------------
                                                                                                                                   
902118AC2 0000000000       TYCO INTL GROUP SA               72,559.80          110,377.81           182,937.61           0.04%     
902118AK4 0000000000       TYCO INTL GROUP S A GTD N       115,119.96                0.00           115,119.96           0.02%     
902118AY4 0000000000       TYCO INTL GROP S A GTD NT       527,109.45          824,051.25         1,351,160.70           0.26%     
902118BC1 0000000000       TYCO INTL GROUP                 205,154.88          136,019.52           341,174.40           0.07%     
90332UAA1 0000000000       US AWYS PASS THRU TRS SER             0.00                0.02                 0.02           0.00%     
90332UAJ2 0000000000       US AWYS PASS THRU TRS SER             0.00          639,724.63           639,724.63           0.12%     
90332UAN3 0000000000       US AWYS PASS THRU TRS 200       935,423.50                0.00           935,423.50           0.18%     
912795JA0 0000000000       UNITED STATES TREASURY BI     9,999,038.89                0.00         9,999,038.89           1.94%     
912795JF9 0000000000       UNITED STATES TREASURY BI    29,949,761.40        4,991,406.60        34,941,168.00           6.77%     
912795JQ5 0000000000       UNITED STATES TREASURY BI             0.00        1,143,885.02         1,143,885.02           0.22%     
912810EK0 0000000000       UNITED STATES TREASURY BO     4,246,656.75                0.00         4,246,656.75           0.82%     
9128276D9 0000000000       UNITED STATES TREASURY NO     9,784,710.00                0.00         9,784,710.00           1.90%     
912827T85 0000000000       UNITED STATES TREASURY NO     2,427,885.00                0.00         2,427,885.00           0.47%     
92344RAA0 0000000000       VERIZON NEW ENG INC DEB         620,183.95                0.00           620,183.95           0.12%     
92857TAG2 0000000000       VODAFONE AIRTOUCH PLC NT        785,281.64          299,539.63         1,084,821.27           0.21%     
92857TAH0 0000000000       VODAFONE AIRTOUCH PLC NT              0.00          672,229.20           672,229.20           0.13%     
931142BN2 0000000000       WAL MART STORES SR UNSECD     1,453,240.78                0.00         1,453,240.78           0.28%     
939322AE3 0000000000       WASHINGTON MUT INC SUB NT             0.00          402,082.18           402,082.18           0.08%     
94973HAB4 0000000000       WELLPOINT HEALTH NETWORKS       316,135.83          431,683.55           747,819.38           0.14%     
969457BB5 0000000000       WILLIAMS COS INC DEB SER        647,850.98          619,019.70         1,266,870.68           0.25%     
969457BD1 0000000000       WILLIAMS COS INC SR NT          110,336.82          147,087.90           257,424.72           0.05%     
981468AA9 0000000000       WORLD FINL PPTYS TOWER B      3,320,034.44        2,393,724.73         5,713,759.17           1.11%     
98155KAJ1 0000000000       WORLDCOM INC GA NT                    0.00        1,412,288.33         1,412,288.33           0.27%     
98157DAD8 0000000000       WORLDCOM INC GA NEW NT        1,881,885.25                0.00         1,881,885.25           0.36%     
98157DAK2 0000000000       WORLDCOM INC GA NEW NT                0.00          612,614.11           612,614.11           0.12%     
9900032BB 0000000000       MAR 02 TREASURY BONDS-CBT             0.00      (15,682,875.00)      (15,682,875.00)         -3.04%     
9900032BE 0000000000       MAR 02 5 YEAR T NOTES-CBT             0.00      (18,219,062.50)      (18,219,062.50)         -3.53%     
9900032BF 0000000000       MAR 02 10 YEAR T NOTES-CB             0.00      (10,557,656.25)      (10,557,656.25)         -2.05%     
BOS161ABL 0000000000       JPM CHASE POOLED REPO         7,860,000.00                0.00         7,860,000.00           1.52%     
BOS161ABQ 0000000000       JPMC POOLED REPO(MAS)1.65             0.00       23,723,000.00        23,723,000.00           4.60%     
                                                       --------------      --------------      ----------------       --------     
                           Totals                      313,006,621.93      323,958,586.86       636,965,208.868        123.501%    
                                                                                               ----------------                    
                                                       Total Net Assets                         515,758,126.58                     

*  Total Market Value denoted above is lower than the Statement of Assets and   
Liabilities due to the inclusion of derivative instruments (futures and   
swaps) held by MSIFT Investment Grade Fixed Income Portfolio.             

23

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Morgan Stanley Institutional Fund Trust                                         
Pro Forma Combined Statement of Assets & Liabilities                            
December 31, 2001 (Unaudited)                                                   

                                                        [Enlarge/Download Table]


                                                       ------------------------------------------------------------------------ 
                                                             MSIF                 MSIFT                              Pro Forma  
                                                       Fixed Income III   Investment Grade Fixed                      Combined  
                                                           Portfolio          Income Portfolio      Adjustments      Portfolio  
                                                             (000)                 (000)               (000)            (000)   
                                                       ------------------------------------------------------------------------ 
                                                                                                                                
Assets                                                                                                                          
Investments, at Cost -- see accompanying Portfolio                                                                              
of Investments                                              $311,792             $395,583               $0             $707,375 
                                                       ======================================================================== 
Investments, at Value                                        313,094              398,834                0              711,928 
Cash                                                              88                 (337)               0                 (249)
Interest Receivable                                            1,656                2,370                0                4,026 
Receivable for Investments Sold                                1,013                4,602                0                5,615 
Receivable for Portfolio Shares Sold                             115                  167                0                  282 
Receivable Due from Investment Advisor                            51                    0                0                   51 
Prepaid Expenses                                                  11                   (1)               0                   10 
                                                       ------------------------------------------------------------------------ 
Total Assets                                                 316,028              405,635                0              721,663 

Liabilities                                                                                                                     
Payable for Investments Purchased                             74,134              107,437                0              181,571 
Payable for Swaps                                                  0               23,075                0               23,075 
Payable for Futures Variation Margin                               0                  307                0                  307 
Payable for Portfolio Shares Redeemed                              0                  452                0                  452 
Payable for Merger Costs                                           0                    0               55  (h)              55 
Administrative Fees Payable                                       39                   25                0                   64 
Blue Sky Fees Payable                                              0                    8                0                    8 
Custodian Fees Payable                                             8                    6                0                   14 
Directors Compensation Payable                                    22                   30                0                   52 
Investment Advisory Fees Payable                                   0                  259                0                  259 
Other Payables                                                     1                    8                0                    9 
Professional Fees Payable                                         20                   12                0                   32 
Rule 12b-1 Fees Payable                                            1                    0                0                    1 
Shareholder Reporting Expense Payable                              5                    1                0                    6 
                                                       ------------------------------------------------------------------------ 
Total Liabilities                                             74,230              131,620               55              205,905 
                                                       ------------------------------------------------------------------------ 
Net Assets                                                  $241,798             $274,015               $0             $515,813 
                                                       ======================================================================== 
Net Assets Consist Of:                                                                                                          
Paid-In Capital                                             $240,192             $281,193               $0             $521,385 
Undistributed Net Investment Loss                               (330)                (118)             (55) (h)            (503)
Accumulated Net Realized Gain/(Loss)                             634              (10,730)               0              (10,096)
Unrealized Appreciation/(Depreciation) of Investments          1,302                3,670                0                4,972 
                                                       ------------------------------------------------------------------------ 
Net Assets                                                  $241,798             $274,015             $(55)            $515,758 
                                                       ======================================================================== 
Net Asset Value Per Share -- Institutional Class                                                                                

Net Assets -- Institutional Class                           $238,950             $274,015             $(55) (h)        $512,910 
Shares Outstanding -- Institutional Class                 21,735,416           24,617,097         (267,967) (a)      46,084,546 
                                                       ------------------------------------------------------------------------ 
Net Asset Value Per Share -- Institutional Class              $10.99               $11.13         (267,967)              $11.13 
                                                       ======================================================================== 
Net Asset Value Per Share -- Adviser Class                                                                                      

Net Assets -- Advisor Class                                   $2,848                   $0               $0               $2,848 
Shares Outstanding -- Adviser Class                          259,488                    0                0  (a)         259,488 
                                                       ------------------------------------------------------------------------ 
Net Asset Value Per Share -- Adviser Class                    $10.98                $0.00               $0               $10.98 
                                                       ======================================================================== 

See Notes to Pro Forma Combined Financial Statements

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Morgan Stanley Institutional Fund Trust                                         
Pro Forma Combined Statement of Operations                                      
December 31, 2001 (Unaudited)                                                   

                                                        [Enlarge/Download Table]


                                                     -------------------------------------------------------------------------- 
                                                          MSIF                  MSIFT                                 Pro Forma 
                                                     Fixed Income III   Investment Grade Fixed                         Combined 
                                                        Portfolio         Income Portfolio          Adjustments       Portfolio 
                                                          (000)                 (000)                   (000)           (000)   
                                                     -------------------------------------------------------------------------- 
                                                                                                                                
Investment Income                                                                                                               

Dividends                                                       $0                      $0                $0                 $0 
Interest                                                    12,368                  19,570                 0             31,938 
                                                     -------------------------------------------------------------------------- 
Total Investment Income                                     12,368                  19,570                 0             31,938 

Expenses                                                                                                                        

Investment Advisory Fees                                       766                   1,070                98   (b)        1,934 
Less: Fees Waived                                             (248)                      0               248   (g)            0 
Shareholder Reporting Fees                                      11                       9                (3)  (e)           17 
Administrative Fees                                            338                     242              (167)  (c)          413 
Professional Fees                                               31                      34               (24)  (e)           41 
Custodian Fees                                                  37                      31               (10)  (e)           58 
Directors' Fees and Expenses                                     9                       4                (6)  (e)            7 
Rule 12b-1 Fees                                                  4                       0                (0)  (d)            4 
Registration Fees                                               33                      25               (11)  (e)           47 
Merger Costs                                                     0                       0                55   (h)           55 
Other Expenses                                                  14                       7               (14)  (e)            7 
                                                     -------------------------------------------------------------------------- 
Net Expenses                                                   995                   1,422               166              2,583 
                                                     -------------------------------------------------------------------------- 

Net Investment Income                                       11,373                  18,148              (166)            29,355 

Net Realized Gain/(Loss) on:                                                                                                    

Foreign Currency                                                22                       3                 0                 25 
Futures                                                          0                  (1,301)                0             (1,301)
Investments Sold                                             4,914                   5,639                 0             10,553 
                                                     -------------------------------------------------------------------------- 

Change in Unrealized Appreciation/(Depreciation) on                                                                             
Foreign Currency and Investments                             1,926                   4,398                 0              6,324 
                                                     -------------------------------------------------------------------------- 

Net Realized Gain/(Loss) and Change in Unrealized                                                                               
Appreciation/(Depreciation)                                  6,862                  10,040                 0             16,902 
                                                     -------------------------------------------------------------------------- 

Net Increase/(Decrease) in Net Assets Resulting                                                                                 
from Operations                                            $18,235                 $28,188             $(111)           $46,312 
                                                     ========================================================================== 

See Notes to Pro Forma Combined Financial Statements

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Morgan Stanley Institutional Fund Trust                                         
Pro Forma Combined Notes to Financial Statements                                
December 31, 2001 (Unaudited)                                                   

Pro forma financial information is intended to provide shareholders of MSIF     
Fixed Income III Portfolio and MSIFT Investment Grade Fixed Income Portfolio    
with information about the impact of the proposed merger by indicating how the  
merger might have affected the information had the merger been consummated as of
December 31, 2001.                                                              

The pro forma combined statements of assets and liabilities and of operations as
of December 31, 2001 have been prepared to reflect the merger of MSIF Fixed     
Income III Portfolio and MSIFT Investment Grade Fixed Income Portfolio after    
giving effect to pro forma adjustments described in the notes below.            

(a) Acquisition by MSIFT Investment Grade Fixed Income Portfolio of MSIF Fixed  
Income III Portfolio and issuance of MSIFT Investment Grade Fixed Income        
Portfolio shares in exchange for all of the outstanding shares of MSIF Fixed    
Income III Portfolio.                                                           

(b) Investment Advisory fees were adjusted to reflect the application of the fee
structure for MSIFT Investment Grade Fixed Income Portfolio (0.375% of average  
daily net assets).                                                              

(c) Administration fees were adjusted to reflect the application of the fee     
structure for MSIFT Investment Grade Fixed Income Portfolio (0.08% of average   
daily net assets).                                                              

(d) Rule 12b-1 fees were adjusted to reflect the application of the fee         
structure for MSIFT Investment Grade Fixed Income Portfolio (0.15% of Class B   
average daily net assets).                                                      

(e) Certain pro forma basis expenses reflect actual expenses incurred by the    
individual Portfolios, adjusted to reflect estimated cost savings arising from  
the merger or, in some cases, additional costs.                                 

(f) No realignment of the portfolios is expected in connection with the merger. 

(g) Adjustment made reflects the fact that MSIFT Investment Grade Fixed Income  
Portfolio has no expense limitation.                                            

(h) Amount represents 1/3 of the total estimated costs expected to be incurred  
in connection with the merger.                                                  

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Morgan Stanley Institutional Fund Trust/Morgan Stanley Institutional Fund, Inc. 
Pro-Forma Combined Portfolio of Investments                                     
Acquiring Portfolio: MSIFT, Inc. -- High Yield Portfolio                        
Target Portfolio: MSIF, Inc. -- High Yield II Portfolio                         
As Of December 31, 2001 (Unaudited)                                             

                                                        [Enlarge/Download Table]

===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)            Shares/Par Value      Shares/Par Value       Shares/Par Value           
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
00178DAC1 0000000000    AMSC ACQUISITION INC SR N           1,090,000.000                  0.000          1,090,000.000            
00178DACA 0000000000    AMSC ACQUISITION INC SR N                   0.000          8,230,000.000          8,230,000.000            
003910AD8 0000000000    ACETEX CORP SR NT 144A                240,000.000          1,640,000.000          1,880,000.000            
006848AP0 0000000000    ADELPHIA COMMUNICATIONS               700,000.000                  0.000            700,000.000            
006848AU9 0000000000    ADELPHIA COMMUNICATIONS             1,400,000.000          7,445,000.000          8,845,000.000            
006848BC8 0000000000    ADELPHIA COMMUNICATIONS             1,035,000.000          7,400,000.000          8,435,000.000            
006848BD6 0000000000    ADELPHIA COMMUNICATIONS               365,000.000                  0.000            365,000.000            
006848BF1 0000000000    ADELPHIA COMMUNICATIONS C             350,000.000                  0.000            350,000.000            
00817YAB4 0000000000    AETNA INC NEW SR NT                 1,420,000.000          6,880,000.000          8,300,000.000            
008911AJ8 0000000000    AIR CDA INC SR NT                   1,475,000.000          8,500,000.000          9,975,000.000            
01853EAA3 0000000000    ALLIANCE ATLANTIC COMMUNI           1,200,000.000          6,850,000.000          8,050,000.000            
01958XAS6 0000000000    ALLIED WASTE NORTH AMER I           1,205,000.000          6,000,000.000          7,205,000.000            
03073QAA6 0000000000    AMERISOURCEBERGEN CORP                210,000.000                  0.000            210,000.000            
036734AC5 0000000000    ANTHEM INS COS INC SURPLU           1,245,000.000          7,560,000.000          8,805,000.000            
05329WAA0 0000000000    AUTONATION INC DEL SR                 545,000.000          2,935,000.000          3,480,000.000            
072699AA9 0000000000    BAYAN TELECOMMUNICATIONS              980,000.000          7,255,000.000          8,235,000.000            
07556QAE5 0000000000    BEAZER HOMES USA INC SR N           1,040,000.000          6,500,000.000          7,540,000.000            
080555AG0 0000000000    BELO CORP SR NT                       325,000.000          1,550,000.000          1,875,000.000            
09641PAA8 0000000000    BLUM CB CORP SR SUB NT                      0.000          4,680,000.000          4,680,000.000            
111013AB4 0000000000    BRITISH SKY BROADCASTING              220,000.000          6,410,000.000          6,630,000.000            
111013AD0 0000000000    BRITISH SKY                         2,770,000.000          5,800,000.000          8,570,000.000            
111201AB5 0000000000    BRL UNVL EQUIP 2001 A L P             700,000.000          4,735,000.000          5,435,000.000            
11161P205 0000000000    BROADWING COMMUNICATIONS                1,800.000             10,664.000             12,464.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
00178DAC1 0000000000    AMSC ACQUISITION INC SR N            337,900.00                0.00          337,900.00           0.04%    
00178DACA 0000000000    AMSC ACQUISITION INC SR N                  0.00        2,633,600.00        2,633,600.00           0.33%    
003910AD8 0000000000    ACETEX CORP SR NT 144A               240,000.00        1,640,000.00        1,880,000.00           0.24%    
006848AP0 0000000000    ADELPHIA COMMUNICATIONS              693,875.00                0.00          693,875.00           0.09%    
006848AU9 0000000000    ADELPHIA COMMUNICATIONS            1,296,750.00        6,886,625.00        8,183,375.00           1.03%    
006848BC8 0000000000    ADELPHIA COMMUNICATIONS              943,143.75        6,734,000.00        7,677,143.75           0.97%    
006848BD6 0000000000    ADELPHIA COMMUNICATIONS              334,431.25                0.00          334,431.25           0.04%    
006848BF1 0000000000    ADELPHIA COMMUNICATIONS C            357,437.50                0.00          357,437.50           0.05%    
00817YAB4 0000000000    AETNA INC NEW SR NT                1,398,523.92        6,742,620.16        8,141,144.08           1.03%    
008911AJ8 0000000000    AIR CDA INC SR NT                    942,156.25        5,429,375.00        6,371,531.25           0.80%    
01853EAA3 0000000000    ALLIANCE ATLANTIC COMMUNI          1,296,000.00        7,398,000.00        8,694,000.00           1.10%    
01958XAS6 0000000000    ALLIED WASTE NORTH AMER I          1,241,150.00        6,180,000.00        7,421,150.00           0.94%    
03073QAA6 0000000000    AMERISOURCEBERGEN CORP               215,250.00                0.00          215,250.00           0.03%    
036734AC5 0000000000    ANTHEM INS COS INC SURPLU          1,337,898.17        8,088,005.52        9,425,903.69           1.19%    
05329WAA0 0000000000    AUTONATION INC DEL SR                554,537.50        2,986,362.50        3,540,900.00           0.45%    
072699AA9 0000000000    BAYAN TELECOMMUNICATIONS             171,500.00        1,269,625.00        1,441,125.00           0.18%    
07556QAE5 0000000000    BEAZER HOMES USA INC SR N          1,073,800.00        6,711,250.00        7,785,050.00           0.98%    
080555AG0 0000000000    BELO CORP SR NT                      331,936.48        1,575,210.75        1,907,147.23           0.24%    
09641PAA8 0000000000    BLUM CB CORP SR SUB NT                     0.00        4,001,400.00        4,001,400.00           0.50%    
111013AB4 0000000000    BRITISH SKY BROADCASTING             210,704.56        6,111,050.42        6,321,754.98           0.80%    
111013AD0 0000000000    BRITISH SKY                        2,850,781.51        5,941,601.20        8,792,382.71           1.11%    
111201AB5 0000000000    BRL UNVL EQUIP 2001 A L P            728,000.00        4,924,400.00        5,652,400.00           0.71%    
11161P205 0000000000    BROADWING COMMUNICATIONS           1,143,000.00        6,931,600.00        8,074,600.00           1.02%    

1 

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)            Shares/Par Value      Shares/Par Value       Shares/Par Value           
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
12489LAB4 0000000000    CB RICHARD ELLIS SVCS                 795,000.000                  0.000            795,000.000            
125896AH3 0000000000    CMS ENERGY SENIOR NOTES                80,000.000            430,000.000            510,000.000            
126304AC8 0000000000    CSC HLDGS INC SR NT                   400,000.000                  0.000            400,000.000            
126304AN4 0000000000    CSC HLDGS INC SR NT 144A                    0.000            515,000.000            515,000.000            
126304AP9 0000000000    CSC HLDGS INC SR NT                   935,000.000                  0.000            935,000.000            
126433AB7 0000000000    CTI HLDGS S A SR DEFD CPN           1,500,000.000         11,170,000.000         12,670,000.000            
12673GAA3 0000000000    CA FM LEASE TR SR SECD NT             817,962.179          6,292,016.450          7,109,978.629            
12686NAC9 0000000000    CABLEVISION S A NT                    465,000.000          3,965,000.000          4,430,000.000            
131096AD1 0000000000    CALLAHAN NRH                        1,925,000.000         11,975,000.000         13,900,000.000            
131347AW6 0000000000    CALPINE CORP NT                     1,120,000.000          5,570,000.000          6,690,000.000            
147433AA4 0000000000    CASE CR CORP                          380,000.000          2,100,000.000          2,480,000.000            
14743RAF0 0000000000    CASE CORP                             335,000.000          1,710,000.000          2,045,000.000            
15134QAB5 0000000000    CENTENNIAL CELLULAR OPER            1,500,000.000          8,410,000.000          9,910,000.000            
152312AG9 0000000000    CENTEX CORP SR NT                   1,375,000.000          7,115,000.000          8,490,000.000            
16117PAL4 0000000000    CHARTER COMMUNICATIONS              1,660,000.000          6,545,000.000          8,205,000.000            
165167AS6 0000000000    CHESAPEAKE ENERGY CORP SR           1,860,000.000          7,100,000.000          8,960,000.000            
172921HN1 0000000000    CITICORP MTG SECS INC                       0.000            241,315.600            241,315.600            
194832AA9 0000000000    COLLINS & AIKMAN PRODS CO             135,000.000            700,000.000            835,000.000            
194832AB7 0000000000    COLLINS & AIKMAN PRODS CO             595,000.000          2,760,000.000          3,355,000.000            
195325AR6 0000000000    195325AU9REP GLOBAL BD                950,000.000          4,415,000.000          5,365,000.000            
197677AF4 0000000000    COLUMBIA / HCA HEALTHCARE             425,000.000                  0.000            425,000.000            
197677AG2 0000000000    COLUMBIA / HCA HEALTHCARE           1,800,000.000          9,535,000.000         11,335,000.000            
19767QAC9 0000000000    COLUMBIA/HCA HEALTHCARE C             895,000.000                  0.000            895,000.000            
19767QAQ8 0000000000    COLUMBIA / HCA HEALTHCARE             600,000.000            660,000.000          1,260,000.000            
219350AJ4 0000000000    CORNING INC ZERO CPN CONV             270,000.000          1,920,000.000          2,190,000.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   -----------------  ------------------  ---------------
                                                                                                                                   
12489LAB4 0000000000    CB RICHARD ELLIS SVCS                679,725.00                0.00          679,725.00           0.09%    
125896AH3 0000000000    CMS ENERGY SENIOR NOTES               78,308.00          418,405.05          496,713.05           0.06%    
126304AC8 0000000000    CSC HLDGS INC SR NT                  412,164.40                0.00          412,164.40           0.05%    
126304AN4 0000000000    CSC HLDGS INC SR NT 144A                   0.00          512,460.02          512,460.02           0.06%    
126304AP9 0000000000    CSC HLDGS INC SR NT                  936,288.43                0.00          936,288.43           0.12%    
126433AB7 0000000000    CTI HLDGS S A SR DEFD CPN            150,000.00        1,117,000.00        1,267,000.00           0.16%    
12673GAA3 0000000000    CA FM LEASE TR SR SECD NT            831,335.86        6,417,856.78        7,249,192.64           0.91%    
12686NAC9 0000000000    CABLEVISION S A NT                    93,000.00          793,000.00          886,000.00           0.11%    
131096AD1 0000000000    CALLAHAN NRH                       1,270,500.00        7,903,500.00        9,174,000.00           1.16%    
131347AW6 0000000000    CALPINE CORP NT                    1,019,164.16        4,984,247.66        6,003,411.82           0.76%    
147433AA4 0000000000    CASE CR CORP                         358,218.40        1,978,863.60        2,337,082.00           0.29%    
14743RAF0 0000000000    CASE CORP                            312,137.59        1,592,328.06        1,904,465.65           0.24%    
15134QAB5 0000000000    CENTENNIAL CELLULAR OPER           1,260,000.00        7,064,400.00        8,324,400.00           1.05%    
152312AG9 0000000000    CENTEX CORP SR NT                  1,400,782.63        7,212,987.78        8,613,770.41           1.09%    
16117PAL4 0000000000    CHARTER COMMUNICATIONS             1,701,500.00        6,692,262.50        8,393,762.50           1.06%    
165167AS6 0000000000    CHESAPEAKE ENERGY CORP SR          1,804,200.00        6,887,000.00        8,691,200.00           1.10%    
172921HN1 0000000000    CITICORP MTG SECS INC                      0.00          119,774.58          119,774.58           0.02%    
194832AA9 0000000000    COLLINS & AIKMAN PRODS CO            131,625.00          682,500.00          814,125.00           0.10%    
194832AB7 0000000000    COLLINS & AIKMAN PRODS CO            597,975.00        2,766,900.00        3,364,875.00           0.42%    
195325AR6 0000000000    195325AU9REP GLOBAL BD               971,375.00        4,514,337.50        5,485,712.50           0.69%    
197677AF4 0000000000    COLUMBIA / HCA HEALTHCARE            437,213.65                0.00          437,213.65           0.06%    
197677AG2 0000000000    COLUMBIA / HCA HEALTHCARE          1,753,446.60        9,221,632.23       10,975,078.83           1.38%    
19767QAC9 0000000000    COLUMBIA/HCA HEALTHCARE C            946,674.62                0.00          946,674.62           0.12%    
19767QAQ8 0000000000    COLUMBIA / HCA HEALTHCARE            568,195.80          620,389.44        1,188,585.24           0.15%    
219350AJ4 0000000000    CORNING INC ZERO CPN CONV            139,725.00          993,600.00        1,133,325.00           0.14%    

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)            Shares/Par Value      Shares/Par Value       Shares/Par Value           
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
2322779   0000000000    HMV MEDIA GROUP                             0.000          2,875,000.000          2,875,000.000            
2324311   0000000000    NTL INC                                     0.000         14,645,000.000         14,645,000.000            
232928AA9 0000000000    DR STRUCTURED FIN CORP SE             508,839.949          2,479,312.260          2,988,152.209            
232928AC5 0000000000    DR STRUCTURED FIN CORP SE                   0.000             72,161.820             72,161.820            
232928AD3 0000000000    DR STRUCTURED FIN CORP SE             700,000.000          1,705,000.000          2,405,000.000            
23331AAD1 0000000000    D.R. HORTON INC SENIOR NO             695,000.000          4,210,000.000          4,905,000.000            
235811AN6 0000000000    DANA CORP NT 144A                     710,000.000          4,520,000.000          5,230,000.000            
256072505 0000000000    DOBSON COMMUNICATIONS COR               2,406.820             12,542.890             14,949.710            
256886AE2 0000000000    DOLPHIN TELECOM PLC SR DI           2,425,000.000                  0.000          2,425,000.000            
256886AH5 0000000000    DOLPHIN TELECOM PLC SR DI             300,000.000          4,395,000.000          4,695,000.000            
27876GAG3 0000000000    ECHOSTAR DBS CORP SR NT               500,000.000          2,790,000.000          3,290,000.000            
27876GAH1 0000000000    ECHOSTAR DBS CORP SR NT               615,000.000          2,100,000.000          2,715,000.000            
29255UAA2 0000000000    ENCOMPASS SVCS CORP SR SU             755,000.000          4,360,000.000          5,115,000.000            
29444NAF9 0000000000    EQUISTAR CHEMICALS LP                 440,000.000          2,255,000.000          2,695,000.000            
29665WAA2 0000000000    ESPRIT TELECOM PLC SR NT              600,000.000                  0.000            600,000.000            
29665WAF1 0000000000    ESPRIT TELECOM GROUP PLC              965,000.000                  0.000            965,000.000            
302088AL3 0000000000    EXODUS COMMUNICATIONS I             1,870,000.000         10,990,000.000         12,860,000.000            
303727AG6 0000000000    FAIRCHILD SEMICONDUCTO                380,000.000          1,895,000.000          2,275,000.000            
33938EAF4 0000000000    FLEXTRONICS INTL LTD US$              150,000.000            700,000.000            850,000.000            
34354PAB1 0000000000    FLOWSERVE CORP US$ SR SUB             750,000.000          5,177,000.000          5,927,000.000            
344155106 0000000000    FOCAL COMMUNICATIONS CORP             463,619.000          2,519,953.004          2,983,572.004            
344155AC0 0000000000    FOCAL COMMUNICATIONS CORP             796,000.000          4,264,000.000          5,060,000.000            
344155AE6 0000000000    FOCAL COMMUNICATIONS                1,332,000.000          7,468,000.000          8,800,000.000            
345370CA6 0000000000    FORD MTR CO DEL GLOBAL LA             900,000.000          3,460,000.000          4,360,000.000            
345397TY9 0000000000    FORD MTR CR CO                        380,000.000          1,490,000.000          1,870,000.000            
35802N303 0000000000    FRESENIUS MED CARE CAP TR           1,800,000.000          4,440,000.000          6,240,000.000            
35802QAB4 0000000000    FRESENIUS MED CARE CAP                350,000.000                  0.000            350,000.000            
35802W204 0000000000    FRESENTUS MED CARE CAP TR                   0.000          5,900,000.000          5,900,000.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
2322779   0000000000    HMV MEDIA GROUP                            0.00        3,882,821.92        3,882,821.92           0.49%    
2324311   0000000000    NTL INC                                    0.00        5,316,870.22        5,316,870.22           0.67%    
232928AA9 0000000000    DR STRUCTURED FIN CORP SE            340,159.51        1,657,990.49        1,998,150.00           0.25%    
232928AC5 0000000000    DR STRUCTURED FIN CORP SE                  0.00           56,667.23           56,667.23           0.01%    
232928AD3 0000000000    DR STRUCTURED FIN CORP SE            393,750.00          967,263.55        1,361,013.55           0.17%    
23331AAD1 0000000000    D.R. HORTON INC SENIOR NO            688,050.00        4,167,900.00        4,855,950.00           0.61%    
235811AN6 0000000000    DANA CORP NT 144A                    660,144.51        4,131,492.44        4,791,636.95           0.60%    
256072505 0000000000    DOBSON COMMUNICATIONS COR          2,346,649.50       12,229,317.75       14,575,967.25           1.84%    
256886AE2 0000000000    DOLPHIN TELECOM PLC SR DI                242.50                0.00              242.50           0.00%    
256886AH5 0000000000    DOLPHIN TELECOM PLC SR DI                 30.00              439.50              469.50           0.00%    
27876GAG3 0000000000    ECHOSTAR DBS CORP SR NT              515,000.00        2,873,700.00        3,388,700.00           0.43%    
27876GAH1 0000000000    ECHOSTAR DBS CORP SR NT              616,537.50        2,105,250.00        2,721,787.50           0.34%    
29255UAA2 0000000000    ENCOMPASS SVCS CORP SR SU            490,750.00        2,834,000.00        3,324,750.00           0.42%    
29444NAF9 0000000000    EQUISTAR CHEMICALS LP                442,200.00        2,266,275.00        2,708,475.00           0.34%    
29665WAA2 0000000000    ESPRIT TELECOM PLC SR NT               1,500.00                0.00            1,500.00           0.00%    
29665WAF1 0000000000    ESPRIT TELECOM GROUP PLC               2,412.50                0.00            2,412.50           0.00%    
302088AL3 0000000000    EXODUS COMMUNICATIONS I              336,600.00        2,088,100.00        2,424,700.00           0.31%    
303727AG6 0000000000    FAIRCHILD SEMICONDUCTO               403,750.00        2,013,437.50        2,417,187.50           0.30%    
33938EAF4 0000000000    FLEXTRONICS INTL LTD US$             157,500.00          735,000.00          892,500.00           0.11%    
34354PAB1 0000000000    FLOWSERVE CORP US$ SR SUB            836,250.00        5,772,355.00        6,608,605.00           0.83%    
344155106 0000000000    FOCAL COMMUNICATIONS CORP            282,807.59        1,511,971.80        1,794,779.39           0.23%    
344155AC0 0000000000    FOCAL COMMUNICATIONS CORP            222,880.00        1,193,920.00        1,416,800.00           0.18%    
344155AE6 0000000000    FOCAL COMMUNICATIONS                 546,120.00        3,061,880.00        3,608,000.00           0.45%    
345370CA6 0000000000    FORD MTR CO DEL GLOBAL LA            824,569.20        3,145,970.40        3,970,539.60           0.50%    
345397TY9 0000000000    FORD MTR CR CO                       369,787.88        1,442,092.03        1,811,879.91           0.23%    
35802N303 0000000000    FRESENIUS MED CARE CAP TR          1,804,500.00        4,451,100.00        6,255,600.00           0.79%    
35802QAB4 0000000000    FRESENIUS MED CARE CAP               348,250.00                0.00          348,250.00           0.04%    
35802W204 0000000000    FRESENTUS MED CARE CAP TR                  0.00        6,077,000.00        6,077,000.00           0.77%    

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)            Shares/Par Value      Shares/Par Value       Shares/Par Value           
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
361849AB8 0000000000    GMAC COML MTG SEC INC                       0.000          8,517,427.650          8,517,427.650            
36227TAM9 0000000000    GS ESCROW CORP SR NT                1,220,000.000          6,350,000.000          7,570,000.000            
362359101 0000000000    WT GT GROUP TELECOM INC E              32,000.000            200,850.000            232,850.000            
362359AC5 0000000000    GT GROUP TELECOM INC SR N           3,200,000.000         20,085,000.000         23,285,000.000            
370425RZ5 0000000000    GENERAL MTRS ACCEP CORP N             645,000.000          1,615,000.000          2,260,000.000            
378275AB7 0000000000    GLENCORE NICKEL PTY LTD S             435,000.000          3,680,000.000          4,115,000.000            
37931KABA 0000000000    GLOBAL CROSSING HLDGS LTD           1,265,000.000            280,000.000          1,545,000.000            
37931KAJA 0000000000    GLOBAL CROSSING HLDGS LTD             280,000.000         22,335,000.000         22,615,000.000            
379363AK0 0000000000    GLOBALSTAR L P / GLOBALST           1,175,000.000          7,025,000.000          8,200,000.000            
379363AR5 0000000000    GLOBALSTAR L P / GLOBALST             310,000.000                  0.000            310,000.000            
379364128 0000000000    WTS GLOBALSTAR TELECOMMUN                 600.000              4,780.000              5,380.000            
37957FAC5 0000000000    GLOBIX CORP SR NT                   1,865,000.000         11,800,000.000         13,665,000.000            
40050BAA8 0000000000    GRUPO IUSACELL S A DE C V             750,000.000          6,000,000.000          6,750,000.000            
40423QAE7 0000000000    HMH PPTYS INC SR NT SER A             675,000.000          6,385,000.000          7,060,000.000            
40423QAF4 0000000000    HMH PPTYS INC SR NT SER B             175,000.000            490,000.000            665,000.000            
404246AC4 0000000000    HMV MEDIA GROUP PLC US$ S           1,355,000.000          3,060,000.000          4,415,000.000            
41078TAA5 0000000000    HANOVER EQUIP TR 2001A                200,000.000          1,200,000.000          1,400,000.000            
41078TAC1 0000000000    HANOVER EQUIP TR 2001B SR             190,000.000          1,295,000.000          1,485,000.000            
413627AF7 0000000000    HARRAHS OPER INC GTD S                      0.000          6,220,000.000          6,220,000.000            
413627AH3 0000000000    HARRAHS OPER INC GTD S              1,965,000.000                  0.000          1,965,000.000            
4152178   0000000000    BRAZIL(FED REP OF)                  1,767,073.350          8,970,821.850         10,737,895.200            
420781ABA 0000000000    HAYES LEMMERZ INTL INC SR           2,750,000.000         13,650,000.000         16,400,000.000            
420804AG1 0000000000    HAYES WHEELS INTL INC DEL                   0.000          2,460,000.000          2,460,000.000            
42222GAC2 0000000000    HEALTH NET INC SR NT                1,275,000.000          6,000,000.000          7,275,000.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
361849AB8 0000000000    GMAC COML MTG SEC INC                      0.00          464,284.98          464,284.98           0.06%    
36227TAM9 0000000000    GS ESCROW CORP SR NT               1,223,791.76        6,347,440.95        7,571,232.71           0.95%    
362359101 0000000000    WT GT GROUP TELECOM INC E             16,000.00          100,425.00          116,425.00           0.01%    
362359AC5 0000000000    GT GROUP TELECOM INC SR N            416,000.00        2,611,050.00        3,027,050.00           0.38%    
370425RZ5 0000000000    GENERAL MTRS ACCEP CORP N            656,471.33        1,625,276.25        2,281,747.58           0.29%    
378275AB7 0000000000    GLENCORE NICKEL PTY LTD S            239,250.00        2,024,000.00        2,263,250.00           0.29%    
37931KABA 0000000000    GLOBAL CROSSING HLDGS LTD            145,475.00           30,800.00          176,275.00           0.02%    
37931KAJA 0000000000    GLOBAL CROSSING HLDGS LTD            153,900.00        1,875,400.00        2,029,300.00           0.26%    
379363AK0 0000000000    GLOBALSTAR L P / GLOBALST             82,250.00          491,750.00          574,000.00           0.07%    
379363AR5 0000000000    GLOBALSTAR L P / GLOBALST             21,700.00                0.00           21,700.00           0.00%    
379364128 0000000000    WTS GLOBALSTAR TELECOMMUN                  6.00              478.00              484.00           0.00%    
37957FAC5 0000000000    GLOBIX CORP SR NT                    373,000.00        2,242,000.00        2,615,000.00           0.33%    
40050BAA8 0000000000    GRUPO IUSACELL S A DE C V            806,250.00        6,450,000.00        7,256,250.00           0.91%    
40423QAE7 0000000000    HMH PPTYS INC SR NT SER A            641,250.00        6,065,750.00        6,707,000.00           0.85%    
40423QAF4 0000000000    HMH PPTYS INC SR NT SER B            161,437.50          452,025.00          613,462.50           0.08%    
404246AC4 0000000000    HMV MEDIA GROUP PLC US$ S          1,178,850.00        2,662,200.00        3,841,050.00           0.48%    
41078TAA5 0000000000    HANOVER EQUIP TR 2001A               208,000.00        1,248,000.00        1,456,000.00           0.18%    
41078TAC1 0000000000    HANOVER EQUIP TR 2001B SR            196,650.00        1,340,325.00        1,536,975.00           0.19%    
413627AF7 0000000000    HARRAHS OPER INC GTD S                     0.00        6,376,010.04        6,376,010.04           0.80%    
413627AH3 0000000000    HARRAHS OPER INC GTD S             2,024,174.01                0.00        2,024,174.01           0.26%    
4152178   0000000000    BRAZIL(FED REP OF)                 1,360,646.48        6,907,532.82        8,268,179.30           1.04%    
420781ABA 0000000000    HAYES LEMMERZ INTL INC SR            123,750.00          614,250.00          738,000.00           0.09%    
420804AG1 0000000000    HAYES WHEELS INTL INC DEL                  0.00          110,700.00          110,700.00           0.01%    
42222GAC2 0000000000    HEALTH NET INC SR NT               1,314,518.63        6,155,826.00        7,470,344.63           0.94%    

4 

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)            Shares/Par Value      Shares/Par Value       Shares/Par Value           
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
427516AB5 0000000000    HERMES EUROPE RAILTEL B V             900,000.000          5,210,000.000          6,110,000.000            
427516AE9 0000000000    HERMES EUROPE RAILTEL B V                   0.000          2,480,000.000          2,480,000.000            
432848AH2 0000000000    HILTON HOTELS CORP SR NT              620,000.000          3,175,000.000          3,795,000.000            
435573AA8 0000000000    HOLLINGER PARTN TR SR                 690,000.000          3,580,000.000          4,270,000.000            
44075LAH4 0000000000    HORSESHOE GAMING LLC SR S           1,825,000.000          6,450,000.000          8,275,000.000            
44108EAK4 0000000000    HOST MARRIOTT L P SR NT S             535,000.000                  0.000            535,000.000            
4430056   0000000000    VIATEL INC                                  0.000          1,687,263.208          1,687,263.208            
447012AB1 0000000000    HUNTSMAN ICI CHEMICALS LL           1,725,000.000          6,180,000.000          7,905,000.000            
448096AG2 0000000000    HUSKY OIL LTD CAP SECS              1,745,000.000          8,055,000.000          9,800,000.000            
44914KAE8 0000000000    HYPERION TELECOMMUNICATIO           1,510,000.000         11,080,000.000         12,590,000.000            
44914KAH1 0000000000    HYPERION TELECOMMUNICATIO                   0.000          1,000,000.000          1,000,000.000            
450295AC4 0000000000    ISP CHEMCO INC / ISP CHEM             425,000.000          1,935,000.000          2,360,000.000            
45337VAC4 0000000000    INDAH KIAT FIN MAURITIUS            2,350,000.000         10,750,000.000         13,100,000.000            
458801404 0000000000    INTERMEDIA COMMUNICATIONS                 643.000              3,304.000              3,947.000            
458801AL1 0000000000    INTERMEDIA COMMUNICATIONS           1,575,000.000            250,000.000          1,825,000.000            
459902AJ1 0000000000    INTERNATIONAL GAME TECHNO           1,185,000.000          6,025,000.000          7,210,000.000            
46034HAA3 0000000000    INTERNATIONAL SPECIALT                665,000.000          3,515,000.000          4,180,000.000            
46521PAA5 0000000000    ISTAR FINL INC SR NT                  630,000.000          2,990,000.000          3,620,000.000            
477122AD7 0000000000    JET EQUIP TR SER 1994-A C           1,050,000.000          3,050,000.000          4,100,000.000            
477122AT2 0000000000    JET EQUIP TR CTF 1995-A C                   0.000          2,050,000.000          2,050,000.000            
48258WAF4 0000000000    K MART FDG CORP SECD LEAS                   0.000          3,199,457.580          3,199,457.580            
546347AB1 0000000000    LOUISIANA PACIFIC RES                 265,000.000          1,665,000.000          1,930,000.000            
546347AC9 0000000000    LOUISIANA-PAC CORP SR                 810,000.000          4,330,000.000          5,140,000.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
427516AB5 0000000000    HERMES EUROPE RAILTEL B V             81,000.00          468,900.00          549,900.00           0.07%    
427516AE9 0000000000    HERMES EUROPE RAILTEL B V                  0.00          223,200.00          223,200.00           0.03%    
432848AH2 0000000000    HILTON HOTELS CORP SR NT             615,953.88        3,139,798.78        3,755,752.66           0.47%    
435573AA8 0000000000    HOLLINGER PARTN TR SR                573,562.50        2,975,875.00        3,549,437.50           0.45%    
44075LAH4 0000000000    HORSESHOE GAMING LLC SR S          1,884,312.50        6,659,625.00        8,543,937.50           1.08%    
44108EAK4 0000000000    HOST MARRIOTT L P SR NT S            514,937.50                0.00          514,937.50           0.06%    
4430056   0000000000    VIATEL INC                                 0.00              930.20              930.20           0.00%    
447012AB1 0000000000    HUNTSMAN ICI CHEMICALS LL          1,656,000.00        5,932,800.00        7,588,800.00           0.96%    
448096AG2 0000000000    HUSKY OIL LTD CAP SECS             1,821,287.91        8,202,003.75       10,023,291.66           1.26%    
44914KAE8 0000000000    HYPERION TELECOMMUNICATIO             15,100.00          110,800.00          125,900.00           0.02%    
44914KAH1 0000000000    HYPERION TELECOMMUNICATIO                  0.00          120,000.00          120,000.00           0.02%    
450295AC4 0000000000    ISP CHEMCO INC / ISP CHEM            444,125.00        2,022,075.00        2,466,200.00           0.31%    
45337VAC4 0000000000    INDAH KIAT FIN MAURITIUS             446,500.00        2,042,500.00        2,489,000.00           0.31%    
458801404 0000000000    INTERMEDIA COMMUNICATIONS            683,187.50        3,518,760.00        4,201,947.50           0.53%    
458801AL1 0000000000    INTERMEDIA COMMUNICATIONS          1,592,718.75          255,937.50        1,848,656.25           0.23%    
459902AJ1 0000000000    INTERNATIONAL GAME TECHNO          1,247,212.50        6,341,312.50        7,588,525.00           0.96%    
46034HAA3 0000000000    INTERNATIONAL SPECIALT               665,000.00        3,508,391.80        4,173,391.80           0.53%    
46521PAA5 0000000000    ISTAR FINL INC SR NT                 630,438.48        2,977,812.76        3,608,251.24           0.45%    
477122AD7 0000000000    JET EQUIP TR SER 1994-A C            682,500.00        1,837,869.00        2,520,369.00           0.32%    
477122AT2 0000000000    JET EQUIP TR CTF 1995-A C                  0.00        1,210,217.50        1,210,217.50           0.15%    
48258WAF4 0000000000    K MART FDG CORP SECD LEAS                  0.00        2,610,885.36        2,610,885.36           0.33%    
546347AB1 0000000000    LOUISIANA PACIFIC RES                256,891.80        1,606,843.22        1,863,735.02           0.23%    
546347AC9 0000000000    LOUISIANA-PAC CORP SR                777,600.00        4,178,450.00        4,956,050.00           0.62%    

5 

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)             Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
5511682   0000000000    RSL COMMUNICATIONS                          0.000          8,556,469.000          8,556,469.000            
552078AL1 0000000000    LYONDELL CHEMICAL CO SR S             805,000.000          3,920,000.000          4,725,000.000            
563571AA6 0000000000    MANITOWOC INC EURO SR S               455,000.000                  0.000            455,000.000            
5735998   0000000000    DOLPHIN TELECOM                             0.000         11,260,000.000         11,260,000.000            
57773A110 0000000000    WT MAXCOM TELECOMUNICACIO                 925.000             77,250.000             78,175.000            
57773AAC6 0000000000    MAXCOM TELECOMUNICACIONES             925,000.000          7,655,000.000          8,580,000.000            
582268AAA 0000000000    MCLEODUSA INC SR NT                 2,200,000.000         15,075,000.000         17,275,000.000            
5843396   0000000000    TELE1 EUROPE                                0.000          5,705,000.000          5,705,000.000            
591689AE4 0000000000    METROMEDIA FIBER NETWORK            2,075,000.000         12,410,000.000         14,485,000.000            
5921991   0000000000    NETIA HLDGS                                 0.000          3,910,000.000          3,910,000.000            
5923674   0000000000    HUNTSMAN ICI CHEMI                          0.000          4,285,000.000          4,285,000.000            
594079AA3 0000000000    MICHAEL FOODS INC NEW                 750,000.000          4,120,000.000          4,870,000.000            
5960671   0000000000    PTC INTL FIN II                             0.000          7,330,000.000          7,330,000.000            
5998995   0000000000    TELEWEST COMMS 9.875% BDS                   0.000         13,730,000.000         13,730,000.000            
60036NAD3 0000000000    MILLENNIUM AMER INC SR NT             250,000.000          1,600,000.000          1,850,000.000            
60467PAH7 0000000000    MIRANT AMERICAS GENERATIO             740,000.000          3,635,000.000          4,375,000.000            
617440201 0000000000    MORGAN STANLEY INSTITUTIO                   0.000                525.043                525.043            
617440300 0000000000    MORGAN STANLEY INSTITUTIO                   0.000                143.331                143.331            
617440508 0000000000    MORGAN STANLEY INSTITUTIO                   0.000                660.745                660.745            
617440755 0000000000    MORGAN STANLEY INSTITUTIO                   0.000                 71.173                 71.173            
617440771 0000000000    MORGAN STANLEY INSTITUTIO                   0.000                716.981                716.981            
617440813 0000000000    MORGAN STANLEY INSTITUTIO                   0.000                627.605                627.605            
617440862 0000000000    MORGAN STANLEY INSTITUTIO                   0.000                626.820                626.820            
617440888 0000000000    MORGAN STANLEY INSTITUTIO                   0.000              1,038.430              1,038.430            
619908114 0000000000    WTS MOTIENT CORP 144A                  18,450.000             79,050.000             97,500.000            
62719NAE1 0000000000    MURRIN MURRIN HLDGS PTY L           1,900,000.000          9,500,000.000         11,400,000.000            
62844KAC9 0000000000    MUZAK LLC / MUZAK FIN COR             445,000.000          2,195,000.000          2,640,000.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
5511682   0000000000    RSL COMMUNICATIONS                         0.00          171,189.33          171,189.33           0.02%    
552078AL1 0000000000    LYONDELL CHEMICAL CO SR S            813,050.00        3,959,200.00        4,772,250.00           0.60%    
563571AA6 0000000000    MANITOWOC INC EURO SR S              426,009.83                0.00          426,009.83           0.05%    
5735998   0000000000    DOLPHIN TELECOM                            0.00            1,001.24            1,001.24           0.00%    
57773A110 0000000000    WT MAXCOM TELECOMUNICACIO                  9.25              772.50              781.75           0.00%    
57773AAC6 0000000000    MAXCOM TELECOMUNICACIONES            185,000.00        1,531,000.00        1,716,000.00           0.22%    
582268AAA 0000000000    MCLEODUSA INC SR NT                  495,000.00        3,391,875.00        3,886,875.00           0.49%    
5843396   0000000000    TELE1 EUROPE                               0.00        1,775,510.71        1,775,510.71           0.22%    
591689AE4 0000000000    METROMEDIA FIBER NETWORK             601,750.00        3,660,950.00        4,262,700.00           0.54%    
5921991   0000000000    NETIA HLDGS                                0.00          608,435.31          608,435.31           0.08%    
5923674   0000000000    HUNTSMAN ICI CHEMI                         0.00        3,429,200.98        3,429,200.98           0.43%    
594079AA3 0000000000    MICHAEL FOODS INC NEW                810,000.00        4,449,600.00        5,259,600.00           0.66%    
5960671   0000000000    PTC INTL FIN II                            0.00        6,664,489.61        6,664,489.61           0.84%    
5998995   0000000000    TELEWEST COMMS 9.875% BDS                  0.00        8,773,035.54        8,773,035.54           1.11%    
60036NAD3 0000000000    MILLENNIUM AMER INC SR NT            255,000.00        1,632,000.00        1,887,000.00           0.24%    
60467PAH7 0000000000    MIRANT AMERICAS GENERATIO            684,436.36        3,345,872.10        4,030,308.46           0.51%    
617440201 0000000000    MORGAN STANLEY INSTITUTIO                  0.00            8,106.66            8,106.66           0.00%    
617440300 0000000000    MORGAN STANLEY INSTITUTIO                  0.00            1,656.91            1,656.91           0.00%    
617440508 0000000000    MORGAN STANLEY INSTITUTIO                  0.00           16,763.10           16,763.10           0.00%    
617440755 0000000000    MORGAN STANLEY INSTITUTIO                  0.00            2,807.06            2,807.06           0.00%    
617440771 0000000000    MORGAN STANLEY INSTITUTIO                  0.00           15,228.68           15,228.68           0.00%    
617440813 0000000000    MORGAN STANLEY INSTITUTIO                  0.00            6,282.33            6,282.33           0.00%    
617440862 0000000000    MORGAN STANLEY INSTITUTIO                  0.00            6,493.86            6,493.86           0.00%    
617440888 0000000000    MORGAN STANLEY INSTITUTIO                  0.00            7,642.84            7,642.84           0.00%    
619908114 0000000000    WTS MOTIENT CORP 144A                    369.00            1,581.00            1,950.00           0.00%    
62719NAE1 0000000000    MURRIN MURRIN HLDGS PTY L          1,387,000.00        6,935,000.00        8,322,000.00           1.05%    
62844KAC9 0000000000    MUZAK LLC / MUZAK FIN COR            391,600.00        1,931,600.00        2,323,200.00           0.29%    

6 

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)             Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
629407AF4 0000000000    NTL INC SR DEFERRED CPN             2,875,000.000                  0.000          2,875,000.000            
62940NAM4 0000000000    NTL COMMUNICATIONS CORP U           1,020,000.000          3,980,000.000          5,000,000.000            
637844AM3 0000000000    NATIONAL STL CORP                   1,300,000.000         11,450,000.000         12,750,000.000            
64114DADA 0000000000    NETIA HLDGS II B V GTD SR           1,375,000.000          1,225,000.000          2,600,000.000            
64114MADA 0000000000    NETIA HLDGS B V GTD SR NT                   0.000          2,740,000.000          2,740,000.000            
65332V400 0000000000    NEXTEL COMMUNICATIONS INC               1,209.991              5,953.000              7,162.991            
65332VAJ2 0000000000    NEXTEL COMMUNICATIONS               2,425,000.000         10,155,000.000         12,580,000.000            
65332VAV5 0000000000    NEXTEL COMMUNICATIONS INC           1,425,000.000          3,520,000.000          4,945,000.000            
65333HAG8 0000000000    NEXTLINK COMMUNICATIONS             2,575,000.000          6,615,000.000          9,190,000.000            
65333HAJ2 0000000000    NEXTLINK COMMUNICATIONS               325,000.000          4,785,000.000          5,110,000.000            
65333HAKA 0000000000    NEXTLINK COMMUNICATIONS               500,000.000          2,000,000.000          2,500,000.000            
65333HAL7 0000000000    NEXTLINK COMMUNICATIONS                     0.000          2,565,000.000          2,565,000.000            
65333HAQ6 0000000000    NEXTLINK COMMUNICATIONS I             450,000.000          4,315,000.000          4,765,000.000            
65335HAA9 0000000000    NEXTMEDIA OPER INC SR SUB             750,000.000          4,035,000.000          4,785,000.000            
65542NAC1 0000000000    NORAMPAC INC SR NT                  1,450,000.000          7,355,000.000          8,805,000.000            
65653RAA1 0000000000    NORSKE SKOG CDA LTD SR                      0.000          1,075,000.000          1,075,000.000            
67083VAC4 0000000000    OHA AUTO GRANTOR TR 1997                    0.000          2,576,087.730          2,576,087.730            
670872AA8 0000000000    OM GROUP INC SR SUB NT                290,000.000          1,550,000.000          1,840,000.000            
674608112 0000000000    WTS OCCIDENTE Y CARIBE                 95,000.000             69,370.000            164,370.000            
681904AF5 0000000000    OMNICARE INC SR SUB NT                740,000.000          4,155,000.000          4,895,000.000            
682735170 0000000000    ONO FIN PLC EQUITY VAL                    850.000              5,450.000              6,300.000            
682735AS4 0000000000    ONO FIN PLC US$ NT DTD                850,000.000          5,450,000.000          6,300,000.000            
690768BC9 0000000000    OWENS ILL INC SR NT                   575,000.000          1,020,000.000          1,595,000.000            
690768BD7 0000000000    OWENS ILL INC SR DEB                1,020,000.000          5,635,000.000          6,655,000.000            
690768BF2 0000000000    OWENS ILL INC SR DEB                  755,000.000          3,845,000.000          4,600,000.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
629407AF4 0000000000    NTL INC SR DEFERRED CPN              805,000.00                0.00          805,000.00           0.10%    
62940NAM4 0000000000    NTL COMMUNICATIONS CORP U            357,000.00        1,393,000.00        1,750,000.00           0.22%    
637844AM3 0000000000    NATIONAL STL CORP                    455,000.00        3,893,000.00        4,348,000.00           0.55%    
64114DADA 0000000000    NETIA HLDGS II B V GTD SR            220,000.00          202,125.00          422,125.00           0.05%    
64114MADA 0000000000    NETIA HLDGS B V GTD SR NT                  0.00          452,100.00          452,100.00           0.06%    
65332V400 0000000000    NEXTEL COMMUNICATIONS INC            683,644.86        3,393,210.00        4,076,854.86           0.51%    
65332VAJ2 0000000000    NEXTEL COMMUNICATIONS              1,855,125.00        7,717,800.00        9,572,925.00           1.21%    
65332VAV5 0000000000    NEXTEL COMMUNICATIONS INC          1,125,750.00        2,754,400.00        3,880,150.00           0.49%    
65333HAG8 0000000000    NEXTLINK COMMUNICATIONS              270,375.00          694,575.00          964,950.00           0.12%    
65333HAJ2 0000000000    NEXTLINK COMMUNICATIONS               39,000.00          574,200.00          613,200.00           0.08%    
65333HAKA 0000000000    NEXTLINK COMMUNICATIONS               62,500.00          250,000.00          312,500.00           0.04%    
65333HAL7 0000000000    NEXTLINK COMMUNICATIONS                    0.00          205,200.00          205,200.00           0.03%    
65333HAQ6 0000000000    NEXTLINK COMMUNICATIONS I             33,750.00          323,625.00          357,375.00           0.05%    
65335HAA9 0000000000    NEXTMEDIA OPER INC SR SUB            774,375.00        4,166,137.50        4,940,512.50           0.62%    
65542NAC1 0000000000    NORAMPAC INC SR NT                 1,515,250.00        7,685,975.00        9,201,225.00           1.16%    
65653RAA1 0000000000    NORSKE SKOG CDA LTD SR                     0.00        1,115,312.50        1,115,312.50           0.14%    
67083VAC4 0000000000    OHA AUTO GRANTOR TR 1997                   0.00        1,468,370.01        1,468,370.01           0.19%    
670872AA8 0000000000    OM GROUP INC SR SUB NT               290,000.00        1,569,850.00        1,859,850.00           0.23%    
674608112 0000000000    WTS OCCIDENTE Y CARIBE                95,000.00          693,700.00          788,700.00           0.10%    
681904AF5 0000000000    OMNICARE INC SR SUB NT               765,900.00        4,300,425.00        5,066,325.00           0.64%    
682735170 0000000000    ONO FIN PLC EQUITY VAL                 4,250.00           21,800.00           26,050.00           0.00%    
682735AS4 0000000000    ONO FIN PLC US$ NT DTD               670,437.50        4,298,687.50        4,969,125.00           0.63%    
690768BC9 0000000000    OWENS ILL INC SR NT                  520,375.00          912,900.00        1,433,275.00           0.18%    
690768BD7 0000000000    OWENS ILL INC SR DEB                 912,900.00        4,991,175.00        5,904,075.00           0.74%    
690768BF2 0000000000    OWENS ILL INC SR DEB                 653,075.00        3,302,925.00        3,956,000.00           0.50%    

7 

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)             Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
69334TAC2 0000000000    PG&E NATL ENERGY GROUP                570,000.000          3,465,000.000          4,035,000.000            
69363VAB3 0000000000    PSI NET INC US$ SR NT                 500,000.000          5,100,000.000          5,600,000.000            
69365XAB7 0000000000    PTC INTL FINANCE BV                 1,690,000.000          1,550,000.000          3,240,000.000            
694940AC1 0000000000    PACIFICA PAPERS INC SR NT           1,240,000.000          5,085,000.000          6,325,000.000            
700690AE0 0000000000    PARK PLACE ENTERTAINMENT              600,000.000          3,445,000.000          4,045,000.000            
704231117 0000000000    WTS PAXSON COMMUNICATIONS               1,024.000             34,060.000             35,084.000            
704231505 0000000000    PAXSON COMMUNICATIONS COR                  76.040                614.949                690.989            
704231604 0000000000    PAXSON JR CRT PIK PFD                      41.700                148.310                190.010            
705904AD2 0000000000    PEGASUS COMMUNICATIONS CO             170,000.000            865,000.000          1,035,000.000            
705904AJ9 0000000000    PEGASUS COMMUNICATIONS CO              75,000.000            395,000.000            470,000.000            
706451AB7 0000000000    PEMEX PROJ FDG MASTER TR              725,000.000          4,285,000.000          5,010,000.000            
7117721   0000000000    MANITOWOC CO INC                      120,000.000          2,575,000.000          2,695,000.000            
7126017   0000000000    MESSER GRIESHAM HL                    780,000.000          4,340,000.000          5,120,000.000            
7138335   0000000000    TELE1 EUROPE B V                      500,000.000          3,000,000.000          3,500,000.000            
717265AK8 0000000000    PHELPS DODGE CORP NT                  755,000.000          4,750,000.000          5,505,000.000            
718286AP2 0000000000    PHILIPPINES REP GLOBAL BD             305,000.000          1,680,000.000          1,985,000.000            
722299AF1 0000000000    PINDO DELI FIN MAURITIUS              900,000.000         13,065,000.000         13,965,000.000            
74157K606 0000000000    PRIMEDIA INC PFD EXCHANGE               1,480.000             10,680.000             12,160.000            
74157K887 0000000000    PRIMEDIA INC PFD EXCHANGE               2,020.000             12,390.000             14,410.000            
74157KAF8 0000000000    PRIMEDIA INC SR NT                  1,235,000.000          7,695,000.000          8,930,000.000            
741929AD5 0000000000    PRIMUS TELECOMMUNICATIONS             690,000.000          1,480,000.000          2,170,000.000            
741929AF0 0000000000    PRIMUS TELECOMMUNICATIONS             365,000.000          6,305,000.000          6,670,000.000            
741929AJ2 0000000000    PRIMUS TELECOMMUNICATIONS             415,000.000          2,780,000.000          3,195,000.000            
74437CAB7 0000000000    PSINET INC SR NT                    2,500,000.000         14,205,000.000         16,705,000.000            
74819RAB2 0000000000    QUEBECOR MEDIA INC SR               1,095,000.000          6,025,000.000          7,120,000.000            
74819RADA 0000000000    QUEBECOR MEDIA INC SR                 400,000.000          1,275,000.000          1,675,000.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
69334TAC2 0000000000    PG&E NATL ENERGY GROUP               601,007.43        3,635,353.26        4,236,360.69           0.53%    
69363VAB3 0000000000    PSI NET INC US$ SR NT                 37,500.00          382,500.00          420,000.00           0.05%    
69365XAB7 0000000000    PTC INTL FINANCE BV                1,512,550.00        1,387,250.00        2,899,800.00           0.37%    
694940AC1 0000000000    PACIFICA PAPERS INC SR NT          1,333,000.00        5,466,375.00        6,799,375.00           0.86%    
700690AE0 0000000000    PARK PLACE ENTERTAINMENT             623,522.40        3,565,588.78        4,189,111.18           0.53%    
704231117 0000000000    WTS PAXSON COMMUNICATIONS                256.00            8,515.00            8,771.00           0.00%    
704231505 0000000000    PAXSON COMMUNICATIONS COR            646,340.00        5,165,571.60        5,811,911.60           0.73%    
704231604 0000000000    PAXSON JR CRT PIK PFD                354,450.00        1,275,466.00        1,629,916.00           0.21%    
705904AD2 0000000000    PEGASUS COMMUNICATIONS CO            153,000.00          778,500.00          931,500.00           0.12%    
705904AJ9 0000000000    PEGASUS COMMUNICATIONS CO             75,750.00          398,950.00          474,700.00           0.06%    
706451AB7 0000000000    PEMEX PROJ FDG MASTER TR             768,500.00        4,542,100.00        5,310,600.00           0.67%    
7117721   0000000000    MANITOWOC CO INC                     108,074.08        2,312,587.70        2,420,661.78           0.31%    
7126017   0000000000    MESSER GRIESHAM HL                   733,780.19        4,090,677.09        4,824,457.28           0.61%    
7138335   0000000000    TELE1 EUROPE B V                     156,047.56          960,336.33        1,116,383.89           0.14%    
717265AK8 0000000000    PHELPS DODGE CORP NT                 739,550.44        4,630,708.50        5,370,258.94           0.68%    
718286AP2 0000000000    PHILIPPINES REP GLOBAL BD            298,900.00        1,642,200.00        1,941,100.00           0.24%    
722299AF1 0000000000    PINDO DELI FIN MAURITIUS             135,000.00        1,959,750.00        2,094,750.00           0.26%    
74157K606 0000000000    PRIMEDIA INC PFD EXCHANGE             71,780.00          469,920.00          541,700.00           0.07%    
74157K887 0000000000    PRIMEDIA INC PFD EXCHANGE             97,970.00          545,160.00          643,130.00           0.08%    
74157KAF8 0000000000    PRIMEDIA INC SR NT                 1,111,500.00        6,925,500.00        8,037,000.00           1.01%    
741929AD5 0000000000    PRIMUS TELECOMMUNICATIONS            117,300.00          251,600.00          368,900.00           0.05%    
741929AF0 0000000000    PRIMUS TELECOMMUNICATIONS             62,050.00        1,071,850.00        1,133,900.00           0.14%    
741929AJ2 0000000000    PRIMUS TELECOMMUNICATIONS             70,550.00          472,600.00          543,150.00           0.07%    
74437CAB7 0000000000    PSINET INC SR NT                     187,500.00        1,065,375.00        1,252,875.00           0.16%    
74819RAB2 0000000000    QUEBECOR MEDIA INC SR              1,168,912.50        6,431,687.50        7,600,600.00           0.96%    
74819RADA 0000000000    QUEBECOR MEDIA INC SR                242,500.00          772,968.75        1,015,468.75           0.13%    

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)             Shares/Par Value      Shares/Par Value       Shares/Par Value          
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
749361AD3 0000000000    RCN CORP                              750,000.000         14,425,000.000         15,175,000.000            
749361AG6 0000000000    RCN CORP SR DISC NT SER             2,265,000.000          5,325,000.000          7,590,000.000            
74972EAC2 0000000000    RSL COMMUNICATIONS PLC SR           2,000,000.000          8,495,000.000         10,495,000.000            
74972EAD0 0000000000    RSL COMMUNICATIONS PLC SR           1,440,000.000          9,280,000.000         10,720,000.000            
74972EAH1 0000000000    RSL COMMUNICATIONS PLC SR             200,000.000          3,945,000.000          4,145,000.000            
74972EAK4 0000000000    RSL COMMUNICATIONS PLC                      0.000          4,225,000.000          4,225,000.000            
75040PAF5 0000000000    RADIO ONE INC SR SUB                  485,000.000          2,700,000.000          3,185,000.000            
760805119 0000000000    WTS REPUBLIC TECHNOLOGIES               1,010.000             51,700.000             52,710.000            
760809AF0 0000000000    REPUBLIC TECHNOLOGIES INT           1,010,000.000          5,170,000.000          6,180,000.000            
762430AC0 0000000000    RHYTHMS NETCONNECTIONS IN           3,610,000.000         10,720,000.000         14,330,000.000            
762430AE6 0000000000    RHYTHMS NETCONNECTIONS IN                   0.000            500,000.000            500,000.000            
762430AG1 0000000000    RHYTHMS NETCONNECTIONS IN             415,000.000         12,115,000.000         12,530,000.000            
769507AJ3 0000000000    RIVERWOOD INTL CORP SR SU             360,000.000          1,775,000.000          2,135,000.000            
781076AC8 0000000000    RSL COMMUNICATIONS LTD /              241,000.000            970,000.000          1,211,000.000            
79409PAA3 0000000000    SALEM COMMUNICATIONS HLDG             925,000.000          5,445,000.000          6,370,000.000            
803895AB7 0000000000    SATELITES MEXICANOS S A D           1,440,000.000          7,970,000.000          9,410,000.000            
808188AE6 0000000000    SCHULER HOMES INC SR NT               945,000.000          6,000,000.000          6,945,000.000            
808188AG1 0000000000    SCHULER HOMES INC SR SUB               65,000.000            355,000.000            420,000.000            
832248AC2 0000000000    SMITHFIELD FOODS INC SR S           1,580,000.000          7,100,000.000          8,680,000.000            
83544Q101 0000000000    SONG NETWORKS HLDG AKTIEB              18,052.000            107,400.000            125,452.000            
857689AF0 0000000000    STATION CASINOS INC SR SU             947,625.000            500,000.000          1,447,625.000            
857689AH6 0000000000    STATION CASINOS INC SR SU                   0.000          3,055,000.000          3,055,000.000            
857689AK9 0000000000    STATION CASINOS INC SR SU             525,000.000          3,750,000.000          4,275,000.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
749361AD3 0000000000    RCN CORP                             221,250.00        4,255,375.00        4,476,625.00           0.56%    
749361AG6 0000000000    RCN CORP SR DISC NT SER              611,550.00        1,437,750.00        2,049,300.00           0.26%    
74972EAC2 0000000000    RSL COMMUNICATIONS PLC SR             80,000.00          339,800.00          419,800.00           0.05%    
74972EAD0 0000000000    RSL COMMUNICATIONS PLC SR             50,400.00          324,800.00          375,200.00           0.05%    
74972EAH1 0000000000    RSL COMMUNICATIONS PLC SR              8,000.00          157,800.00          165,800.00           0.02%    
74972EAK4 0000000000    RSL COMMUNICATIONS PLC                     0.00          169,000.00          169,000.00           0.02%    
75040PAF5 0000000000    RADIO ONE INC SR SUB                 500,762.50        2,787,750.00        3,288,512.50           0.41%    
760805119 0000000000    WTS REPUBLIC TECHNOLOGIES                 10.10              517.00              527.10           0.00%    
760809AF0 0000000000    REPUBLIC TECHNOLOGIES INT             65,650.00          336,050.00          401,700.00           0.05%    
762430AC0 0000000000    RHYTHMS NETCONNECTIONS IN            433,200.00        1,179,200.00        1,612,400.00           0.20%    
762430AE6 0000000000    RHYTHMS NETCONNECTIONS IN                  0.00           75,000.00           75,000.00           0.01%    
762430AG1 0000000000    RHYTHMS NETCONNECTIONS IN             33,200.00          787,475.00          820,675.00           0.10%    
769507AJ3 0000000000    RIVERWOOD INTL CORP SR SU            365,400.00        1,801,625.00        2,167,025.00           0.27%    
781076AC8 0000000000    RSL COMMUNICATIONS LTD /               9,640.00           38,800.00           48,440.00           0.01%    
79409PAA3 0000000000    SALEM COMMUNICATIONS HLDG            956,218.75        5,628,768.75        6,584,987.50           0.83%    
803895AB7 0000000000    SATELITES MEXICANOS S A D            817,200.00        4,522,975.00        5,340,175.00           0.67%    
808188AE6 0000000000    SCHULER HOMES INC SR NT              978,075.00        6,210,000.00        7,188,075.00           0.91%    
808188AG1 0000000000    SCHULER HOMES INC SR SUB              67,762.50          370,087.50          437,850.00           0.06%    
832248AC2 0000000000    SMITHFIELD FOODS INC SR S          1,548,400.00        6,958,000.00        8,506,400.00           1.07%    
83544Q101 0000000000    SONG NETWORKS HLDG AKTIEB             14,802.64           82,698.00           97,500.64           0.01%    
857689AF0 0000000000    STATION CASINOS INC SR SU            964,208.44          490,000.00        1,454,208.44           0.18%    
857689AH6 0000000000    STATION CASINOS INC SR SU            490,000.00        2,503,900.00        2,993,900.00           0.38%    
857689AK9 0000000000    STATION CASINOS INC SR SU            533,531.25        3,810,937.50        4,344,468.75           0.55%    

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)            Shares/Par Value      Shares/Par Value       Shares/Par Value           
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
861642AD8 0000000000    STONE ENERGY CORP SR S                455,000.000          2,250,000.000          2,705,000.000            
863572HU0 0000000000    STRUCTURED ASSET SECS                       0.000          6,200,207.370          6,200,207.370            
863572HV8 0000000000    STRUCTURED ASSET SECS                       0.000            610,459.130            610,459.130            
863572HW6 0000000000    STRUCTURED ASSET SECS                       0.000          1,168,825.560          1,168,825.560            
872594114 0000000000    WTS TNP ENTERPRISES INC                 1,075.000              6,945.000              8,020.000            
872594403 0000000000    TNP ENTERPRISES INC PFD R               1,211.560              7,791.000              9,002.560            
872649BL1 0000000000    TRW INC  NT                           320,000.000          1,975,000.000          2,295,000.000            
87944KAC5 0000000000    TELE1 EUROPE B V US                 1,325,000.000          2,105,000.000          3,430,000.000            
87944KAJ0 0000000000    TELE1 EUROPE B V EURO SR                    0.000          1,390,000.000          1,390,000.000            
87956PAL9 0000000000    TELEWEST COMMUNICATIONS             3,100,000.000          3,170,000.000          6,270,000.000            
87971KAC1 0000000000    TEMBEC INDS INC GTD SR              1,460,000.000          7,210,000.000          8,670,000.000            
889478AC7 0000000000    TOLL BROS INC SR SUB N              1,475,000.000          7,110,000.000          8,585,000.000            
901145AF9 0000000000    TV AZTECA S A DE C V GTD            1,125,000.000          5,290,000.000          6,415,000.000            
902917AD5 0000000000    USA WASTE SVCS INC SR NT                    0.000          2,385,000.000          2,385,000.000            
902917AF0 0000000000    USA WASTE SVCS INC                    400,000.000          1,545,000.000          1,945,000.000            
91086QAF5 0000000000    UNITED MEXICAN STS MED                475,000.000          2,870,000.000          3,345,000.000            
911300AC5 0000000000    UNITED PAN EUROPE CUMMUNI           1,720,000.000          7,935,000.000          9,655,000.000            
912795JC6 0000000000    UNITED STATES TREASURY BI             200,000.000          1,000,000.000          1,200,000.000            
925529AW9 0000000000    VIATEL INC SR STEP CPN BD           1,930,000.000         13,095,000.000         15,025,000.000            
927460AB1 0000000000    VINTAGE PETE INC SR SUB N             425,000.000          5,355,000.000          5,780,000.000            
927460AD7 0000000000    VINTAGE PETE INC SR SUB               380,000.000            820,000.000          1,200,000.000            
927460AF2 0000000000    VINTAGE PETE INC SR SUB               700,000.000                  0.000            700,000.000            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
861642AD8 0000000000    STONE ENERGY CORP SR S               461,825.00        2,283,750.00        2,745,575.00           0.35%    
863572HU0 0000000000    STRUCTURED ASSET SECS                      0.00          366,680.26          366,680.26           0.05%    
863572HV8 0000000000    STRUCTURED ASSET SECS                      0.00              360.17              360.17           0.00%    
863572HW6 0000000000    STRUCTURED ASSET SECS                      0.00           12,296.04           12,296.04           0.00%    
872594114 0000000000    WTS TNP ENTERPRISES INC               32,250.00          208,350.00          240,600.00           0.03%    
872594403 0000000000    TNP ENTERPRISES INC PFD R          1,326,658.20        8,336,370.00        9,663,028.20           1.22%    
872649BL1 0000000000    TRW INC  NT                          329,567.68        2,026,624.53        2,356,192.21           0.30%    
87944KAC5 0000000000    TELE1 EUROPE B V US                  477,000.00          757,800.00        1,234,800.00           0.16%    
87944KAJ0 0000000000    TELE1 EUROPE B V EURO SR                   0.00          420,236.06          420,236.06           0.05%    
87956PAL9 0000000000    TELEWEST COMMUNICATIONS            1,367,875.00        1,394,800.00        2,762,675.00           0.35%    
87971KAC1 0000000000    TEMBEC INDS INC GTD SR             1,511,100.00        7,426,300.00        8,937,400.00           1.13%    
889478AC7 0000000000    TOLL BROS INC SR SUB N             1,460,250.00        7,038,900.00        8,499,150.00           1.07%    
901145AF9 0000000000    TV AZTECA S A DE C V GTD           1,094,062.50        5,144,525.00        6,238,587.50           0.79%    
902917AD5 0000000000    USA WASTE SVCS INC SR NT                   0.00        2,424,464.60        2,424,464.60           0.31%    
902917AF0 0000000000    USA WASTE SVCS INC                   379,284.80        1,454,872.43        1,834,157.23           0.23%    
91086QAF5 0000000000    UNITED MEXICAN STS MED               492,812.50        2,976,190.00        3,469,002.50           0.44%    
911300AC5 0000000000    UNITED PAN EUROPE CUMMUNI            223,600.00        1,031,550.00        1,255,150.00           0.16%    
912795JC6 0000000000    UNITED STATES TREASURY BI            198,988.00          999,031.11        1,198,019.11           0.15%    
925529AW9 0000000000    VIATEL INC SR STEP CPN BD              2,412.50           16,368.75           18,781.25           0.00%    
927460AB1 0000000000    VINTAGE PETE INC SR SUB N            431,375.00        5,435,325.00        5,866,700.00           0.74%    
927460AD7 0000000000    VINTAGE PETE INC SR SUB              400,900.00          865,100.00        1,266,000.00           0.16%    
927460AF2 0000000000    VINTAGE PETE INC SR SUB              686,000.00                0.00          686,000.00           0.09%    

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===================================================================================================================================
                                                          MSIF High Yield II     MSIFT High Yield                                  
                                                              Portfolio             Portfolio         Pro-Forma Combined           
    Cusip Number        Security Description(f)            Shares/Par Value      Shares/Par Value       Shares/Par Value           
    ------------        -----------------------           ------------------     ----------------     ------------------           
                                                                                                                                   
92929QAR8 0000000000    WMX TECHNOLOGIES INC                  800,000.000                  0.000            800,000.000            
94106LAE9 0000000000    WASTE MANAGEMENT INC                1,100,000.000          1,200,000.000          2,300,000.000            
94106LAK5 0000000000    WASTE MGMT INC DEL SR NT            1,200,000.000          3,640,000.000          4,840,000.000            
975515AX5 0000000000    WINSTAR COMMUNICATIONS IN             500,000.000          2,000,000.000          2,500,000.000            
975515AZ0 0000000000    WINSTAR COMMUNICATIONS IN           9,510,000.000         58,455,000.000         67,965,000.000            
98375Y114 0000000000    WTS XM SATELLITE RADIO                  8,200.000              4,965.000             13,165.000            
98375YAC0 0000000000    XM SATELLITE RADIO INC SR             415,000.000          2,695,000.000          3,110,000.000            
983764408 0000000000    XO COMMUNICATIONS INC SR               10,967.005             74,943.245             85,910.250            
983764705 0000000000    XO COMMUNICATIONS INC SR                1,580.604              8,878.540             10,459.144            
987434AM9 0000000000    YOUNG BROADCASTING INC                850,000.000          4,650,000.000          5,500,000.000            
9900032BE 0000000000    MAR 02 5 YEAR T NOTES-CBT*                 20.000               (240.000)              (220.000)           
9900032BF 0000000000    MAR 02 10 YEAR T NOTES-CB*               (107.000)              (313.000)              (420.000)           
9900091CF 0000000000    SEP 01 10 YEAR T NOTES-CB*                 0.000                105.000                105.000             
B238110   0000000000    ESPRIT TELECOM GRP                          0.000          3,265,000.000          3,265,000.000            
B238581   0000000000    ESPRIT TELECOM GRP                          0.000          2,607,587.700          2,607,587.700            
B285068   0000000000    DANA CORP                             450,000.000          1,125,000.000          1,575,000.000            
BOS161ABL 0000000000    JPM CHASE POOLED REPO               2,591,000.000                  0.000          2,591,000.000            
BOS161ABQ 0000000000    JPMC POOLED REPO(MAS)1.65                   0.000          5,366,000.000          5,366,000.000            
                                                          ---------------      -----------------      -----------------            
                        Total Fund                        196,905,655.198      1,085,683,057.974      1,282,588,713.172            


===================================================================================================================================
                                                        MSIF High Yield II   MSIFT High Yield                                      
                                                            Portfolio           Portfolio       Pro-Forma Combined                 
    Cusip Number        Security Description(f)            Market Value        Market Value        Market Value     % of Net Assets
    ------------        -----------------------         ------------------   ----------------   ------------------  ---------------
                                                                                                                                   
92929QAR8 0000000000    WMX TECHNOLOGIES INC                 822,232.80                0.00          822,232.80           0.10%    
94106LAE9 0000000000    WASTE MANAGEMENT INC               1,108,137.80        1,202,412.00        2,310,549.80           0.29%    
94106LAK5 0000000000    WASTE MGMT INC DEL SR NT           1,227,016.80        3,703,889.28        4,930,906.08           0.62%    
975515AX5 0000000000    WINSTAR COMMUNICATIONS IN                625.00            2,500.00            3,125.00           0.00%    
975515AZ0 0000000000    WINSTAR COMMUNICATIONS IN             11,887.50           73,068.75           84,956.25           0.01%    
98375Y114 0000000000    WTS XM SATELLITE RADIO                24,600.00            9,930.00           34,530.00           0.00%    
98375YAC0 0000000000    XM SATELLITE RADIO INC SR            328,368.75        2,132,418.75        2,460,787.50           0.31%    
983764408 0000000000    XO COMMUNICATIONS INC SR               1,096.70           11,241.49           12,338.19           0.00%    
983764705 0000000000    XO COMMUNICATIONS INC SR               1,580.60           13,317.81           14,898.41           0.00%    
987434AM9 0000000000    YOUNG BROADCASTING INC               790,500.00        4,324,500.00        5,115,000.00           0.64%    
9900032BE 0000000000    MAR 02 5 YEAR T NOTES-CBT*         2,116,562.50      (25,275,000.00)     (23,158,437.50)         -2.92%    
9900032BF 0000000000    MAR 02 10 YEAR T NOTES-CB*                 0.00      (43,968,328.13)     (43,968,328.13)         -5.54%    
9900091CF 0000000000    SEP 01 10 YEAR T NOTES-CB*                 0.00       11,156,250.00       11,156,250.00           1.41%    
B238110   0000000000    ESPRIT TELECOM GRP                         0.00           14,844.03           14,844.03           0.00%    
B238581   0000000000    ESPRIT TELECOM GRP                         0.00           23,186.68           23,186.68           0.00%    
B285068   0000000000    DANA CORP                            367,157.61          920,322.32        1,287,479.93           0.16%    
BOS161ABL 0000000000    JPM CHASE POOLED REPO              2,591,000.00                0.00        2,591,000.00           0.33%    
BOS161ABQ 0000000000    JPMC POOLED REPO(MAS)1.65                  0.00        5,366,000.00        5,366,000.00           0.68%    
                                                         --------------      --------------     ----------------         ------    
                        Total Fund                       132,695,681.52      578,317,130.42      711,012,811.976         89.64%    
                                                                                                ----------------                   
                                                         Total Net Assets                        793,175,829.62                    

*  Total Market Value denoted above is lower than the Statement of Assets and   
Liabilities due to the inclusion of derivative instruments (futures and   
swaps) held by MSIFT High Yield Portfolio and the High Yield II Portfolio.

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Morgan Stanley Institutional Fund Trust                                         
Pro Forma Combined Statement of Assets & Liabilities                            
December 31, 2001 (Unaudited)                                                   

                                                        [Enlarge/Download Table]

                                                                   ---------------------------------------------------------
                                                                        MSIF          MSIFT                       Pro Forma 
                                                                   High Yield II   High Yield                     Combined  
                                                                     Portfolio      Portfolio     Adjustments     Portfolio 
                                                                       (000)          (000)          (000)          (000)   
                                                                   ---------------------------------------------------------
                                                                                                                            
Assets                                                                                                                      
Investments, at Cost -- see accompanying Portfolio of Investments    $185,356       $982,266           $0        $1,167,622 
                                                                   =========================================================
Investments, at Value                                                 130,870        636,935            0           767,805 
Cash                                                                       31           (226)           0              (195)
Interest Receivable                                                     3,657         19,583            0            23,240 
Receivable for Investments Sold                                             0          2,911            0             2,911 
Receivable for Portfolio Shares Sold                                       (8)         1,001            0               993 
Unrealized Appreciation on Forward Foreign Currency Contracts               7            279                            286 
Receivable Due from Investment Advisor                                      0              0            0                 0 
Prepaid Expenses                                                            6              6                             12 
Other Assets                                                              134           (18)            0               116 
                                                                   ---------------------------------------------------------
Total Assets                                                          134,697        660,471            0           795,168 

Liabilities                                                                                                                 
Payable for Investments Purchased                                           0              0            0                 0 
Payable for Futures Variation Margin                                       47            315            0               362 
Payable for Portfolio Shares Redeemed                                     303              3            0               306 
Payable for Merger Costs                                                    0              0           55  (g)           55 
Administrative Fees Payable                                                24            146            0               170 
Blue Sky Fees Payable                                                       0              2            0                 2 
Custodian Fees Payable                                                      5              0            0                 5 
Directors Compensation Payable                                             17             61            0                78 
Investment Advisory Fees Payable                                          123            778            0               901 
Other Payables                                                              1             48            0                49 
Professional Fees Payable                                                  23              2            0                25 
Rule 12b-1 Fees Payable                                                     7             21            0                28 
Shareholder Servicing Fees Payable                                          0              6            0                 6 
Shareholder Reporting Expense Payable                                      19            (14)           0                 5 
                                                                   ---------------------------------------------------------
Total Liabilities                                                         569          1,368           55             1,992 
                                                                   ---------------------------------------------------------
Net Assets                                                           $134,128       $659,103         ($55)         $793,176 
                                                                   =========================================================
Net Assets Consist Of:                                                                                                      
Paid-In Capital                                                      $205,080     $1,073,826           $0        $1,278,906 
Undistributed Net Investment Gain/(Loss)                                 (479)           555          (55)               21 
Accumulated Net Realized Gain/(Loss)                                  (16,083)       (70,540)           0           (86,623)
Unrealized Appreciation/(Depreciation) of Investments                 (54,390)      (344,738)           0          (399,128)
                                                                   ---------------------------------------------------------
Net Assets                                                           $134,128       $659,103           $0          $793,176 
                                                                   =========================================================
Net Asset Value Per Share -- Institutional Class                                                                            
Net Assets -- Institutional Class                                    $120,127       $544,947         ($45) (g)     $665,029 
Shares Outstanding -- Institutional Class                          16,601,877     96,791,538    4,734,889  (a)  118,128,304 
                                                                   ---------------------------------------------------------
Net Asset Value Per Share -- Institutional Class                        $7.24          $5.63            0             $5.63 
                                                                   =========================================================
Net Asset Value Per Share -- Investment Class                                                                               
Net Assets -- Investment Class                                             $0       $ 10,153      $    (1) (g)     $ 10,152 
Shares Outstanding -- Investment Class                                      0      1,800,758            0         1,800,758 
Net Asset Value Per Share -- Investment Class                      ---------------------------------------------------------
                                                                        $0.00          $5.64            0             $5.64 
Net Asset Value Per Share -- Adviser Class                         =========================================================
Net Assets -- Adviser Class                                           $14,002       $104,002           (9) (g)     $117,995 
Shares Outstanding -- Adviser Class                                 1,949,223     18,538,414      546,686  (a)   21,034,323 
                                                                   ---------------------------------------------------------
Net Asset Value Per Share -- Adviser Class                              $7.18          $5.61           $0             $5.61 
                                                                   =========================================================

See Notes to Pro Forma Combined Financial Statements                          

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Morgan Stanley Institutional Fund Trust                                         
Pro Forma Combined Statement of Operations                                      
December 31, 2001 (Unaudited)                                                   

                                                        [Enlarge/Download Table]


                                                                      -----------------------------------------------------
                                                                           MSIF         MSIFT                     Pro Forma
                                                                      High Yield II   High Yield                   Combined
                                                                        Portfolio     Portfolio     Adjustments   Portfolio
                                                                          (000)         (000)           (000)        (000) 
                                                                      -----------------------------------------------------
                                                                                                                           
Investment Income                                                                                                          
Dividends                                                                  $254        $1,905             $0        $2,159 
Interest                                                                 15,972       102,085              0       118,057 
                                                                      -----------------------------------------------------
Total Investment Income                                                  16,226       103,990              0       120,216 
Expenses                                                                                                                   
Investment Advisory Fees                                                    552         3,943           (926) (b)    3,569 
Less: Fees Waived                                                             0             0              0             0 
Shareholder Reporting Fees                                                   68            34            (61) (e)       41 
Administrative Fees                                                         228           829           (423) (c)      634 
Professional Fees                                                            36            59            (31) (e)       64 
Custodian Fees                                                               20             0            (20) (e)        0 
Directors' Fees and Expenses                                                  4            14             (1) (e)       17 
Rule 12b-1 Fees                                                              48           155             92  (d)      295 
Sharehlder Servicing Fees                                                     0            15              0            15 
Registration Fees                                                            36            87            (18) (e)      105 
Merger Costs                                                                  0             0             55  (g)       55 
Other Expenses                                                               10            22            (10) (e)       22 
                                                                      -----------------------------------------------------
Net Expenses                                                              1,002         5,158         (1,343)        4,817 
                                                                      -----------------------------------------------------
Net Investment Income                                                    15,224        98,832          1,343       115,399 

Net Realized Gain/(Loss) on:                                                                                               
Foreign Currency                                                             (6)       (2,113)             0        (2,119)
Futures                                                                    (110)        1,287              0         1,177 
Investments Sold                                                         (3,501)      (27,246)             0       (30,747)
                                                                      -----------------------------------------------------
Change in Unrealized Appreciation/(Depreciation) on Foreign Currency                                                       
and Investments                                                         (21,470)     (128,834)             0      (150,304)
                                                                      -----------------------------------------------------
Net Realized Gain/(Loss) and Change in Unrealized                                                                          
Appreciation/(Depreciation)                                             (24,977)     (158,193)             0      (183,170)
                                                                      -----------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting from Operations         ($9,753)     ($59,361)        $1,343      ($67,771)
                                                                      =====================================================

See Notes to Pro Forma Combined Financial Statements

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Morgan Stanley Institutional Fund Trust                                         
Pro Forma Combined Notes to Financial Statements                                
December 31, 2001 (Unaudited)                                                   

Pro forma financial information is intended to provide shareholders of MSIF High
Yield II Portfolio and MSIFT High Yield Portfolio with information about the    
impact of the proposed merger by indicating how the merger might have affected  
the information had the merger been consummated as of December 31, 2001.        

The pro forma combined statements of assets and liabilities and of operations as
of December 31, 2001 have been prepared to reflect the merger of MSIF High Yield
II Portfolio and MSIFT High Yield Portfolio after giving effect to pro forma    
adjustments described in the notes below.                                       

(a) Acquisition by MSIFT High Yield Portfolio of MSIF High Yield II Portfolio   
and issuance of MSIFT High Yield Portfolio shares in exchange for all of the    
outstanding shares of MSIF High Yield II Portfolio.                             

(b) Investment Advisory fees were adjusted to reflect the application of the fee
structure for MSIFT High Yield Portfolio (0.45% of average daily net assets).   

(c) Administration fees were adjusted to reflect the application of the fee     
structure for MSIFT High Yield Portfolio (0.08% of average daily net assets).   

(d) Rule 12b-1 fees were adjusted to reflect the application of the fee         
structure for MSIFT High Yield Portfolio (0.25% of Class B average daily net    
assets).                                                                        

(e) Certain pro forma basis expenses reflect actual expenses incurred by the    
individual Portfolios, adjusted to reflect estimated cost savings arising from  
the merger or, in some cases, additional costs.                                 

(f) No realignment of the portfolio is expected in connection with the merger.  

(g) Amount represents 1/3 of the total estimated costs expected to be incurred  
in connection with the merger.                                                  

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PROXY CARD  

MORGAN STANLEY INSTITUTIONAL FUND, INC. 
FIXED INCOME III PORTFOLIO  

c/o MORGAN STANLEY INVESTMENT MANAGEMENT INC.                                   
1221 AVENUE OF THE AMERICAS                                                     
NEW YORK, NEW YORK 10020                                                        

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS                     

The undersigned hereby constitutes and appoints RONALD E. ROBISON, STEFANIE V.  
CHANG and MARY E. MULLIN, and each of them, as proxies for the undersigned,     
with full power of substitution and resubstitution, and hereby authorizes said  
proxies, and each of them, to represent and vote, as designated on the reverse  
side, all stock of the Fixed Income III Portfolio held of record by the         
undersigned on February 19, 2002 at the Special Meeting of Shareholders to be   
held on May 15, 2002, and at any adjournment thereof. The undersigned hereby    
revokes any and all proxies with respect to such stock heretofore given by the  
undersigned. The undersigned acknowledges receipt of the Proxy Statement and    
Prospectus dated March 25, 2002.                                                

(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.) 

SEE REVERSE SIDE  

[X] Please mark your votes as in this sample.                                   

1. Approval of an Agreement and Plan of Reorganization pursuant to which        
substantially all of the assets of the Fixed Income III Portfolio will be 
combined with the assets of the Invesment Grade Fixed Income Portfolio of 
Morgan Stanley Institutional Fund Trust, in exchange for shares of the    
Investment Grade Fixed Income Portfolio.                                  

FOR  AGAINST ABSTAIN
[  ]  [  ]    [  ]  

THIS PROXY CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED     
HEREIN BY THE UNDERSIGNED SHAREHOLDER, AND IN THE DISCRETION OF SUCH PROXIES,   
UPON ANY AND ALL OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY  
ADJOURNMENT THEREOF. IF NO DIRECTION IS MADE, THIS PROXY CARD WILL BE VOTED FOR 
APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION FOR THE PORTFOLIO AS SET   
FORTH ABOVE.                                                                    

PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY JOINT         
TENANTS, EACH JOINT TENANT MUST SIGN.                                           

SIGNATURE(S): _______________________..   _____________________________________ 

DATE: _____________________________________________________________, 2002       

When signing as attorney, executor, administrator, trustee, guardian or         
custodian, please sign full title as such. If a corporation, please sign full   
corporate name by authorized officer and indicate the signer's office. If a     
partnership, please sign in partnership name.                                   

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED  
ENVELOPE.                                                                       

MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [      ]                            

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PROXY CARD  

MORGAN STANLEY INSTITUTIONAL FUND, INC. 
HIGH YIELD II PORTFOLIO 

c/o MORGAN STANLEY INVESTMENT MANAGEMENT INC.                                   
1221 AVENUE OF THE AMERICAS                                                     
NEW YORK, NEW YORK 10020                                                        

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS                     

The undersigned hereby constitutes and appoints RONALD E. ROBISON, STEFANIE V.  
CHANG and MARY E. MULLIN, and each of them, as proxies for the undersigned,     
with full power of substitution and resubstitution, and hereby authorizes said  
proxies, and each of them, to represent and vote, as designated on the reverse  
side, all stock of the High Yield II Portfolio held of record by the            
undersigned on February 19, 2002 at the Special Meeting of Shareholders to be   
held on May 15, 2002, and at any adjournment thereof. The undersigned hereby    
revokes any and all proxies with respect to such stock heretofore given by the  
undersigned. The undersigned acknowledges receipt of the Proxy Statement and    
Prospectus dated March 25, 2002.                                                

(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.) 

SEE REVERSE SIDE  

[X] Please mark your votes as in this sample.                                   

1. Approval of an Agreement and Plan of Reorganization pursuant to which        
substantially all of the assets of the High Yield II Portfolio will be    
combined with the assets of the High Yield Portfolio of Morgan Stanley    
   Institutional Fund Trust, in exchange for shares of the High Yield Portfolio.

FOR  AGAINST ABSTAIN
[  ]  [  ]    [  ]  

THIS PROXY CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED     
HEREIN BY THE UNDERSIGNED SHAREHOLDER, AND IN THE DISCRETION OF SUCH PROXIES,   
UPON ANY AND ALL OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY  
ADJOURNMENT THEREOF. IF NO DIRECTION IS MADE, THIS PROXY CARD WILL BE VOTED FOR 
APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION FOR THE PORTFOLIO AS SET   
FORTH ABOVE.                                                                    

PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY JOINT         
TENANTS, EACH JOINT TENANT MUST SIGN.                                           

SIGNATURE(S): _______________________..   _____________________________________ 

DATE: _____________________________________________________________, 2002       

When signing as attorney, executor, administrator, trustee, guardian or         
custodian, please sign full title as such. If a corporation, please sign full   
corporate name by authorized officer and indicate the signer's office. If a     
partnership, please sign in partnership name.                                   

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED  
ENVELOPE.                                                                       

MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [  ]                                

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PROXY CARD  

MORGAN STANLEY INSTITUTIONAL FUND TRUST 
SPECIAL PURPOSE FIXED INCOME PORTFOLIO  

c/o MORGAN STANLEY INVESTMENTS LP                                               
100 Front Street,                                                               
Suite 1100, P.O. Box 868                                                        
West Conshohocken, PA                                                           
19428-0868                                                                      

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES                      

The undersigned hereby constitutes and appoints RONALD E. ROBISON, STEFANIE V.  
CHANG and MARY E. MULLIN, and each of them, as proxies for the undersigned,     
with full power of substitution and resubstitution, and hereby authorizes said  
proxies, and each of them, to represent and vote, as designated on the reverse  
side, all shares of beneficial interest of the Special Purpose Fixed Income     
Portfolio held of record by the undersigned on February 19, 2002 at the Special 
Meeting of Shareholders to be held on May 15, 2002, and at any adjournment      
thereof. The undersigned hereby revokes any and all proxies with respect to     
such shares of beneficial interest heretofore given by the undersigned. The     
undersigned acknowledges receipt of the Proxy Statement and Prospectus dated    
March 25, 2002.                                                                 

(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.) 

SEE REVERSE SIDE  

[X] Please mark your votes as in this sample.                                   

1. Approval of an Agreement and Plan of Reorganization pursuant to which        
substantially all of the assets of the Special Purpose Fixed Income       
Portfolio will be combined with the assets of the Core Plus Fixed Income  
  Portfolio of Morgan Stanley Institutional Fund Trust, in exchange for shares
of the Core Plus Fixed Income Portfolio.                                  

FOR  AGAINST ABSTAIN
[  ]  [  ]    [  ]  

THIS PROXY CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED     
HEREIN BY THE UNDERSIGNED SHAREHOLDER, AND IN THE DISCRETION OF SUCH PROXIES,   
UPON ANY AND ALL OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY  
ADJOURNMENT THEREOF. IF NO DIRECTION IS MADE, THIS PROXY CARD WILL BE VOTED FOR 
APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION FOR THE PORTFOLIO SET      
FORTH ABOVE.                                                                    

PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY JOINT         
TENANTS, EACH JOINT TENANT MUST SIGN.                                           

SIGNATURE(S): _______________________     _____________________________________ 

DATE: _____________________________________________________________, 2002       

When signing as attorney, executor, administrator, trustee, guardian or         
custodian, please sign full title as such. If a corporation, please sign full   
corporate name by authorized officer and indicate the signer's office. If a     
partnership, please sign in partnership name.                                   

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED  
ENVELOPE.                                                                       

MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [  ]