Fund defines small cap companies as companies with market caps
not exceeding $3 billion or the highest month-end market cap value of any stock in the Russell 2000
®
Value Index for the previous 12 months, whichever is greater. The Fund may
invest up to 10% of its assets in foreign securities, including emerging markets securities. The Fund may also lend portfolio securities to earn additional income. Any income realized through securities lending may help Fund performance.
The Fund employs a
“multi-manager” strategy whereby portions of the Fund are allocated to professional money managers (each, a “Sub-adviser,” collectively, the “Sub-advisers”) who are responsible for investing the assets of the
Fund.
Principal risks of investing in the
Fund
Loss of money is a risk of investing
in the Fund.
The
Fund’s principal risks include:
➤
Market risk
, which is the risk that stock prices decline overall. Markets are volatile and can decline significantly in response to real or perceived adverse issuer, political, regulatory, market or economic
developments in the U.S. and in other countries. Market risk may affect a single company, sector of the economy or the market as a whole.
➤
Equity risk
, which is the risk that prices of equity securities rise and fall daily due to factors affecting individual companies, particular industries or the equity market as a whole.
➤
Investment style risk
, which means small cap and/or value stocks could fall out of favor with investors and trail the performance of other types of investments.
➤
Small cap risk
, which refers to the fact that historically, small cap companies tend to be more vulnerable to adverse business and economic events, have been more sensitive to changes in earnings results and
forecasts and investor expectations, and experience sharper swings in market values than larger, more established companies. At times, small cap stocks may be less liquid and harder to sell at prices the Sub-advisers believe are appropriate.
➤
Foreign investment risk
, which means risks unique to foreign securities, including less information about foreign issuers, less liquid securities markets, political instability and unfavorable changes in currency
exchange rates.
➤
Emerging markets risk
, emerging market countries generally are those countries that the International Bank for Reconstruction and Development (the World Bank) considers to be emerging or developing. In addition to
foreign investment and currency risks, emerging markets may experience rising interest rates, or, more significantly, rapid inflation or hyperinflation. Emerging market securities may present market, credit, liquidity, legal, political and other
risks different from, or greater than, the risks of investing in developed foreign countries. The Fund also could experience a loss from settlement and custody practices in some emerging markets.
➤
Securities lending risk
, which includes the potential insolvency of a borrower and losses due to the reinvestment of collateral received on loaned securities in investments that default or do not perform
well.
➤
Manager risk
, which is the risk that poor security selection by a Sub-adviser will cause the Fund to underperform. This risk is common for all actively managed funds.
➤
Multi-manager risk
, which is the risk that the investment styles of the Sub-advisers may not complement each other as expected by the Manager. The Fund may experience a higher portfolio turnover rate, which can
increase the Fund’s transaction costs and more taxable short-term gains for shareholders.
➤
Issuer risk,
which is the risk that the value of a security may decline for reasons directly related to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods
or services.
For more
information on the risks of investing in the Fund please see the “Fund details” section in the Prospectus.
Performance
The bar chart below shows how the Fund’s
investment results have varied from year to year, and the following table shows how the Fund’s annual total returns for various periods compare to those of the Fund’s benchmark index and Lipper peer group. This information provides some
indication of the risks of investing in the Fund. The Fund is available only to investors participating in Morgan Stanley-sponsored investment advisory programs. These programs charge an annual fee, which may be up to 2.50% depending on the
particular program through which you invest (see Shareholder Fees above).
The performance information in the bar chart and table below does not reflect this fee, which would reduce your return.
The Fund’s
past performance, before and after taxes, does not necessarily indicate how the Fund will perform in the future. For current performance information please see www.morganstanley.com/cgcm.
Annual total returns (%) as of December 31,
2011
Small Capitalization Value
Equity Investments
Fund’s
best and worst calendar quarters
Best:
24.90% in 3rd quarter 2009
Worst: (23.94)% in 4th quarter 2008
Year-to-date: 14.07% (through 3rd quarter 2012)
Average
Annual Total Returns (for the periods ended
December 31, 2011)
|
Inception
Date: 11/18/1991
|
1
year
|
5
years
|
10
years
|
Fund
(without advisory program fee)
|
|
|
|
Return
Before Taxes
|
(2.11)%
|
3.77%
|
8.88%
|
Return
After Taxes on Distributions
|
(2.26)%
|
2.84%
|
7.19%
|
Return
After Taxes on Distributions and Sale of Fund Shares
|
(1.18)%
|
2.96%
|
7.24%
|
Russell
2000
®
Value Index (reflects no deduction for expenses or taxes)
|
(5.50)%
|
(1.87)%
|
6.40
%
|
Lipper
Small Cap Value Funds Average
|
(5.46)%
|
0.06%
|
7.06%
|
The after-tax returns
are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an individual investor’s tax situation and may differ from
those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual