Morgan Stanley
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The Fund and Objective

The International Equity Portfolio is an open-ended mutual fund, which was started in August 1989. This fund seeks long-term capital appreciation by investing primarily in the common stocks of non-United States issuers. The goal of the fund is capital appreciation; and the investment objective is to earn an annualized return above the Europe, Asia, and Far East developed country equity index (EAFE).

This institutional mutual fund is available to all accounts at Legacy Trust Company.

The Advisor

Morgan Stanley Dean Witter Investment Management, Inc., is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Company, one of the world's leading investment banking firms. The Investment Management subsidiary was formed in 1975 and now offers investment management services to a wide variety of institutional and private clients on a worldwide basis. Asset management and research activities are conducted out of offices in New York, London, Singapore, Tokyo, Philadelphia and San Francisco. The firm has been a leader in the expansion from domestic markets into international investments and the development of emerging market investment products. Morgan Stanley was selected by Legacy Trust to be the advisor on international investments because of their worldwide presence, expertise and management depth, as well as their solid historical performance record. Morgan Stanley is currently not accepting new clients in this investment discipline.

Investment Style

The advisor's London-based investment approach for international equities is value-driven and oriented to individual stock selection. Their analysis focuses on finding securities undervalued relative to their book value and cash flow. Securities that qualify from this screening are reviewed individually and forecasts are made to evaluate each purchase candidate by a dividend discount model. The resulting portfolio tends to hold about 100 stocks to avoid any concentrated holdings, and the portfolio is actively managed with turnover averaging 20% to 30% a year. The currency risks of international investments are assessed separately, again, on a value basis; and they undertake hedging programs against certain holdings to reduce the risk of currency exposure.

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