Insight

Overview
Investment Approach

Overview

Strategy Facts

Capability:	Active Fundamental Equity
Team Inception:	September 2002
Benchmark:	Russell 3000� Growth Index

Strategy Facts

Capability:	Active Fundamental Equity
Team Inception:	September 2002
Benchmark:	Russell 3000� Growth Index

Summary

Morgan Stanley Insight seeks long-term capital appreciation by investing in high-quality established and emerging companies with capitalizations within the range of companies included in the Russell 3000^® Growth Index. To help achieve its objective, the investment team seeks companies with sustainable competitive advantages, strong free-cash-flow yields and favorable returns on invested capital trends. They focus on long-term growth rather than short-term events, with their stock selection informed by rigorous fundamental analysis.

Investment Approach

Philosophy

Counterpoint Global believes that it may achieve value-added investment results more consistently through bottom-up analysis and qualitative judgment rather than through top-down forecasting. Additionally, the team holds that optimal stock selection is primarily a function of making long-term investments in companies with: inherent sustainable competitive advantages (such as a patent portfolio, a network or community effect, etc.); brand-name recognition; the ability to redeploy capital at high rates of return; and strong free-cash-flow yield three to five years in the future. These characteristics, in the team’s view, provide the potential for consistent long-term growth and competitive returns.

The team believes that the development of insights is valuable to the investment process, and guiding principles combined with intellectual and process flexibility are critical to strong decision-making in pursuit of attractive investments.

Differentiators

Culture

The team’s culture is shaped by four core values that are cultivated and reinforced in many ways: intellectual curiosity and flexibility, perspective, self-awareness and partnership.

Reading Network

The team’s reading network includes more than 100 investor and non-investor participants at Morgan Stanley, leverages the distributed knowledge of the firm and encourages cross-disciplinary thinking. Each week the team circulates articles, essays and thought pieces from a wide range of sources outside mainstream Wall Street in order to help enhance its knowledge and inform investment decisions.

Value-added through focus on broader perspective

The investment team analyzes companies across the market-capitalization spectrum, and each team member typically follows more than one industry where the business models are distinctly different.

Investment Process

1	Idea Generation
	The team generates investment ideas through an ongoing set of activities: (i) involvement in contact networks across industries and in the investment management business; (ii) its reading network; (iii) its focus on Return on Invested Capital and free-cash-flow yield; (iv) Team discussions; (v) the identification of patterns; (iv) conventional-valuation and coverage biases, among others; and (vii) continual research on current company holdings.
2	Bottom-up analysis and valuation
	The team narrows its idea generation by seeking stocks that reside in the intersection between its views of a company's business quality, growth quality and risk/reward characteristics. Valuation focuses on free-cash flow yield three to five years in the future.
3	Disruptive change research
	To complement its in-depth, bottom-up research, the team's disruptive change researcher investigates big ideas and emerging themes that typically may have far-reaching consequences, such as nanotech, infrastructure and the global water shortage.
4	Portfolio construction and implementation
	The team's portfolios are actively managed and built to maximize expected value. Company weightings are primarily determined by the quality of the idea and the team's conviction. Each member of the investment team helps drive stock-picking, with at least two of the three most senior members typically involved in final construction decisions. The team expects its portfolios to be well-diversified, and reviews factor analysis on a monthly basis in order to ensure the portfolio's risk is more idiosyncratic than systematic.

RISK CONSIDERATIONS

Diversification does not protect you against a loss in a particular market; however it allows you to spread that risk across various asset classes.

Past performance is not a guarantee of future performance. There can be no assurance that the Strategy will achieve its investment objectives. Portfolios are subject to market risk, which is the possibility that the value of the investments and the income from them can go down as well as up and an investor may not get back the amount invested. Market values can change daily due to economic and other events (e.g. natural disasters, health crises, terrorism, conflicts and social unrest) that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g. portfolio liquidity) of events. Accordingly, you can lose money investing in this strategy. Please be aware that this strategy may be subject to certain additional risks. In general, equity securities’ values also fluctuate in response to activities specific to a company. Stocks of small- and medium-capitalization companies entail special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies. Investments in foreign markets entail special risks such as currency, political, economic, and market risks. The risks of investing in emerging market countries are greater than the risks generally associated with investments in foreign developed countries. Privately placed and restricted securities may be subject to resale restrictions as well as a lack of publicly available information, which will increase their illiquidity and could adversely affect the ability to value and sell them (liquidity risk).

This communication is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Past performance is no guarantee of future results.

A separately managed account may not be appropriate for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required. For important information about the investment manager, please refer to Form ADV Part 2.

Any views and opinions provided are those of the portfolio management team and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

All information provided has been prepared solely for information purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

OTHER CONSIDERATIONS

The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.

The Russell 3000^® Growth Index measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000^® Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 3000^® Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market.

The information presented represents how the portfolio management team generally implements its investment process under normal market conditions.

Morgan Stanley Investment Management is the asset management division of Morgan Stanley.