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| STUART STRAUSS
+1 212 698 3529 Direct +1 212 698 0452 Fax |
August 26, 2016
Securities and Exchange Commission
Judiciary Plaza
100 F Street, NE
Washington, D.C. 20549
Attention: Lisa Larkin, Division of Investment Management
Re: Morgan Stanley Institutional Fund Trust (the “Fund”)
(File No. 2-89729; 811-03980)
Dear Ms. Larkin:
Thank you for your telephonic comments regarding the Fund’s registration statement on Form N-1A relating to each of the Global Multi-Asset Income Portfolio’s and Global Strategist Portfolio’s (each, a “Portfolio” and together, the “Portfolios”) intention to invest in a wholly-owned subsidiary of each Portfolio organized as a company under the laws of the Cayman Islands filed with the Securities and Exchange Commission (the “Commission”) on June 27, 2016. The Fund has considered your comments and has authorized us to make responses, changes and acknowledgements discussed below relating to the Fund’s registration statement on its behalf. Below, we describe the changes made to the registration statement in response to the Commission staff’s (“Staff”) comments and provide any responses to or any supplemental explanations of such comments, as requested. These changes are expected to be reflected in Post-Effective Amendment No. 150 to the Fund’s registration statement on Form N-1A, which will be filed via EDGAR on or about August 26, 2016.
GENERAL COMMENTS TO FORM N-1A
Comment 1. Please file a letter responding to these comments from the Staff of the Commission that incorporates the “Tandy” information via EDGAR.
Response 1. This response letter, which incorporates the “Tandy” information, will be filed via EDGAR as correspondence separate from the registration statement filing.
COMMENTS TO THE PROSPECTUS
Comment 2. Consistent with the Staff’s position regarding funds with “Global” in their name, please confirm how the Portfolios determine to invest a substantial portion of their assets in the securities of issuers located in multiple countries throughout the world.
Response 2. We confirm that the Adviser takes into account the requirements of Rule 35d-1 to ensure that each Portfolio invests in a number of countries throughout the world.
Comment 3. Please state supplementally whether the Adviser’s fee waiver will continue from at least one year from the date of the Prospectus and whether the Adviser will recoup fees waived in prior years.
Response 3. We hereby confirm that the Adviser’s fee waiver will continue from at least one year from the date of the Prospectus and that the Adviser will not recoup fees waived in prior years.
Comment 4. Please confirm supplementally that acquired fund fees and expenses do not exceed 0.01 percent (one basis point) of average net assets of the Global Strategist Portfolio.
Response 4. We hereby confirm that acquired fund fees and expenses are not expected to exceed 0.01 percent (one basis point) of average net assets of the Global Strategist Portfolio and therefore the “Acquired Fund Fees and Expenses” line item has not been included.
Comment 5. The Fund discloses that the Portfolios may engage in transactions involving various types of swaps. To the extent the Portfolios engage in total return swaps they must set aside an appropriate amount of segregated assets. See generally Investment Company Act Release No. 10666 (Apr. 18, 1979). Please note that the Commission issued a concept release exploring issues relating to the use of derivatives by funds, including whether current market practices involving derivatives are consistent with the leverage provisions of the Investment Company Act of 1940, as amended (the “Investment Company Act”). See Investment Company Act Release No. 29776 (Aug. 31, 2011). Accordingly, please be aware that the Commission or its Staff could issue future guidance related to derivatives (such as total return swaps) and leverage, including guidance related to coverage requirements, which could impact the manner in which a Portfolio operates.
Response 5. We are aware that the Commission or its Staff could issue future guidance related to derivatives and leverage, including guidance related to coverage requirements, which could impact the manner in which the Portfolios operate. In addition, we hereby confirm that the Portfolios segregate/earmark the appropriate amount of assets in connection with their investments in total return swaps.
Comment 6. Please add a parenthetical immediately subsequent to the first mention of leverage
to include a plain English explanation of leverage.
Response 6. The disclosure has been revised accordingly.
Comment 7. Please consider whether, in light of the Portfolios’ investment in securities in the United Kingdom, whether to add additional risk disclosure related to “Brexit.”
Response 7. We respectfully acknowledge the comment; however, we do not believe such disclosure to be necessary to include in the Prospectuses and have instead included applicable risk disclosure in the Statement of Additional Information.
Comment 8. Please confirm that the table entitled “Annual Total Returns” has been included in the Global Strategist Portfolio’s Prospectus.
Response 8. We hereby confirm that the table entitled “Annual Total Returns has been included in the Global Strategist Portfolio’s Prospectus.
Comment 9. Pursuant to Item 4(b)(2)(ii) of Form N-1A, please include the Global Strategist Portfolio’s return as of the most recent quarter end immediately subsequent to the table entitled “Annual Total Returns.”
Response 9. The disclosure has been revised accordingly.
Comment 10. Please confirm that, if the Portfolios enter into credit default swap arrangements, the Portfolios cover the full notional amount of each swap agreement where protection is sold.
Response 10. We hereby confirm that the Portfolios cover the notional amount of each credit default swap agreement pursuant to which protection is sold.
Comment 11. Pursuant to Item 9(b) Instruction 7 of Form N-1A, please add disclosure explaining any tax consequences of increased portfolio turnover and how portfolio turnover may affect Portfolio performance generally.
Response 11. We respectfully acknowledge the comment; however, such disclosure is included in the section of each Prospectus entitled “Portfolio Summary—Portfolio Turnover.”
Comment 12. With respect to the controlled foreign corporations (“CFCs”), please (i) confirm that each CFC complies with applicable laws and regulations related to affiliated transactions and custody; (ii) identify the custodian of the CFCs; (iii) confirm that
the financial statements to be included of each CFC will be consolidated with those of the respective Portfolio; (iv) confirm that the management fee and other expenses of each CFC will be included in the fee table of each Prospectus; (v) confirm that each CFC and its Board of Directors will designate an agent for service of process; and (vi) confirm that each CFC and its Board of Directors will agree to inspections pursuant to Section 31 of the Investment Company Act and maintain books and records in compliance with applicable laws and regulations.
Response 12. We hereby confirm items (i), (iii), (iv), (v) and (vi). With respect to item (ii), each CFC’s custodian is State Street Bank and Trust Company.
Comment 13. Pursuant to Item 16 of Form N-1A, please consider whether differences in the Global Strategist Portfolio’s portfolio turnover rate over the most recent two fiscal years varies significantly. If so, please include relevant disclosure in the Prospectus.
Response 13. We respectfully acknowledge the comment; however, we believe that such variations are not significant.
Comment 14. Please specify what types of investments are included in “other related instruments and techniques” as reflected in the section of each Prospectus entitled “Portfolio Summary—Principal Investment Strategies.”
Response 14. We respectfully acknowledge the comment; however, we believe the existing disclosure to be adequate.
Comment 15. Please consider revising the risk disclosure to match the ordering of other Morgan Stanley Funds.
Response 15. We respectfully acknowledge the comment; however, we believe the existing disclosure to be appropriate.
Comment 16. Please consider adding risk disclosure related to investment in investment companies to the Global Strategist Portfolio’s Prospectus.
Response 16. The disclosure has been revised accordingly.
Comment 17. Please update the financial statements to be in compliance with Regulation S-X.
Response 17. The disclosure has been revised accordingly; specifically, we have incorporated by reference into the section entitled “Financial Statements” the Portfolio’s unaudited financial statements from its semi-annual report.
COMMENTS TO THE PART C
Comment 18. Please include each CFC’s Management Agreement as an exhibit to the Part C.
Response 18. We respectfully acknowledge the comment; however, Form N-1A Item 28(d), which relates to the filing of investment advisory contracts as exhibits to a registration statement, requires the filing of investment advisory contracts relating to the management of a fund’s assets, not a subsidiary’s assets. Furthermore, we do not believe that each CFC’s Management Agreement, nor any other subsidiary-level service provider contract, falls within the meaning of “Other Material Contracts” set forth in Form N-1A Item 28(h). Accordingly, we have not included either CFC’s Management Agreement as an exhibit to the Fund’s registration statement.
In addition, we are authorized by our client to acknowledge the following on the Fund’s behalf:
· the Fund is responsible for the adequacy and accuracy of the disclosure in the filings;
· the Staff’s comments or changes to disclosure in response to Staff comments in the filings reviewed by the Staff do not foreclose the Commission from taking any action with respect to the filings; and
· the Fund may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
If you would like to discuss any of these responses in further detail or if you have any questions, please feel free to contact me at (212) 698-3529 (tel) or (212) 698-0453 (fax). Thank you.
Best regards,
/s/ Stuart M. Strauss |
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Stuart M. Strauss |
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cc: Edward J. Meehan