<DOCUMENT>
<TYPE>N-30D
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<FILENAME>a2111917zn-30d.txt
<DESCRIPTION>N-30D
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<Page>
Morgan Stanley Convertible Securities Trust
LETTER TO THE SHAREHOLDERS / / MARCH 31, 2003
Dear Shareholder:
During the six-month period ended March 31, 2003, equity market sentiment was
dominated by fear of war with Iraq and then with the progress of the war. The
first few days of the conflict in mid March fostered expectations that the
geopolitical fears overhanging the economy would soon pass, leading to an equity
market rally.
Overall, the market was strong during the period as anticipation of further
monetary and fiscal stimuli brightened the economic outlook. Consumers helped
lead the rebound, as low interest rates allowed them to continue to refinance
their mortgages or purchase a new home. The one negative came from rising oil
prices.
Despite a continued reduction in initial public offerings and secondary market
activities, the convertible market remained an attractive financing vehicle for
companies to meet their fiscal needs. During the period under review, the bond
market helped support convertibles, especially the high-yield market, where
credit spreads narrowed appreciably.
Performance and Portfolio Strategy
For the six-month period ended March 31, 2003, Morgan Stanley Convertible
Securities Trust's Class A, B, C and D shares posted total returns of 7.08
percent, 6.59 percent, 6.63 percent and 7.12 percent, respectively. For the same
period, the Merrill Lynch All Convertible Securities Index(1) returned 12.12
percent, the Goldman Sachs Convertible 100 Index(2) returned 12.18 percent and
the Lipper Convertible Securities Fund Index(3) returned 7.21 percent. THE
PERFORMANCE OF THE FUND'S FOUR SHARE CLASSES VARIES BECAUSE EACH HAS DIFFERENT
EXPENSES. THE FUND'S TOTAL RETURN FIGURES ASSUME THE REINVESTMENT OF ALL
DISTRIBUTIONS BUT DO NOT REFLECT THE DEDUCTION OF ANY APPLICABLE SALES CHARGES.
SUCH COSTS WOULD LOWER PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS.
The Fund has lagged its benchmark indexes because of its emphasis on higher
credit quality names. During the period under review, lower credit quality names
outperformed their higher credit quality counterparts. Credit spreads have
tightened due to investors' perception that the worst is over. Despite this
optimistic view, however, we have seen little if any signs of improvement from a
fundamental perspective. While the Fund continues to raise its equity profile by
shifting to more equity-sensitive names, we do not intend to
----------------
(1) The Merrill Lynch All Convertible Securities Index is a
market-capitalization-weighted index of domestic corporate convertible
securities. In order to be included in the index, bonds and preferred stocks
must be convertible only to common stock and have a market value or original par
value of at least $50 million. The index does not include any expenses, fees or
charges. The index is unmanaged and should not be considered an investment.
(2) The Goldman Sachs Convertible 100 Index tracks the performance of 100
equally weighted convertible issues, each with a market capitalization of at
least $100 million. The index does not include any expenses, fees or charges.
The index is unmanaged and should not be considered an investment.
(3) The Lipper Convertible Securities Fund Index is an equally weighted
performance index of the largest qualifying funds (based on net assets) in the
Lipper Covertible Securities Funds classification. The Index, which is adjusted
for capital gains distributions and income dividends, is unmanaged and should
not be considered an investment. There are currently 30 funds represented in
this Index.
<Page>
Morgan Stanley Convertible Securities Trust
LETTER TO THE SHAREHOLDERS / / MARCH 31, 2003 CONTINUED
chase the lower credit names unless we have reason to believe that there are
fundamental changes to the credit story rather than just a change in sentiment.
The Fund utilizes a growth-oriented, bottom-up approach to evaluate companies
and determine their investment merits, seeking to identify companies and sectors
with strong underlying fundamentals and solid long-term growth potential. The
Fund has repositioned its sector weightings to better reflect the composition of
the convertible universe, maintaining overweighted and underweighted positions
based on our outlook for various industries. The inclusion of high-quality,
large-cap issues in the Fund's portfolio has improved the Fund's credit profile
while offering significant equity participation.
In an attempt to control volatility, the Fund generally focuses on issues with
shorter maturities while diversifying its assets across a wide range of
industries. The Fund also searches for convertibles we believe offer good
risk/reward characteristics. These traits include a relatively high yield, to
support the convertible if the underlying stock declines, and reasonable
conversion premiums to help ensure participation in any appreciation of the
underlying stock.
Looking Ahead
We believe that as the situation in Iraq settles, the economic recovery will
start to gain traction. Consumer spending has held up and we expect it to remain
at healthy levels, aided by lower inflation and continued low mortgage rates
that should help the refinancing boom continue. While we expect that a stimulus
package, which includes some dividend tax relief, will be passed, we believe
that the final size of that package may be the subject of a long political
debate. Against this background, we believe that the equity markets will remain
volatile and the convertible market attractive from a risk/reward perspective.
We appreciate your ongoing support of Morgan Stanley Convertible Securities
Trust and look forward to continuing to serve your investment needs.
Very truly yours,
[/S/ CHARLES A. FIUMEFREDDO] [/S/ MITCHELL M. MERIN]
Charles A. Fiumefreddo Mitchell M. Merin
CHAIRMAN OF THE BOARD PRESIDENT AND CEO
2
<Page>
Morgan Stanley Convertible Securities Trust
FUND PERFORMANCE / / MARCH 31, 2003
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS -- PERIOD ENDED MARCH 31, 2003
-----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES* CLASS B SHARES**
---------------------------------------------------------------- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year (5.79)%(1) (10.74)%(2) 1 Year (6.53)%(1) (11.05)%(2)
5 Years 2.23%(1) 1.13%(2) 5 Years 1.42%(1) 1.09%(2)
Since Inception (7/28/97) 3.77%(1) 2.79%(2) 10 Years 7.18%(1) 7.18%(2)
</Table>
<Table>
<Caption>
CLASS C SHARES+ CLASS D SHARES++
---------------------------------------------------------------- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year (6.48)%(1) (7.39)%(2) 1 Year (5.57)%(1)
5 Years 1.46%(1) 1.46%(2) 5 Years 2.46%(1)
Since Inception (7/28/97) 2.98%(1) 2.98%(2) Since Inception (7/28/97) 3.99%(1)
</Table>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH
LESS THAN THEIR ORIGINAL COST. THE TABLE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES. PERFORMANCE FOR CLASS A, CLASS B, CLASS C, AND CLASS D SHARES WILL VARY
DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.
---------------------
(1) FIGURE SHOWN ASSUMES REINVESTMENT OF ALL DISTRIBUTIONS AND DOES NOT REFLECT
THE DEDUCTION OF ANY SALES CHARGES.
(2) FIGURE SHOWN ASSUMES REINVESTMENT OF ALL DISTRIBUTIONS AND THE DEDUCTION OF
THE MAXIMUM APPLICABLE SALES CHARGE. SEE THE FUND'S CURRENT PROSPECTUS FOR
COMPLETE DETAILS ON FEES AND SALES CHARGES.
* THE MAXIMUM FRONT-END SALES CHARGE FOR CLASS A IS 5.25%.
** THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR CLASS B IS 5.0%.
THE CDSC DECLINES TO 0% AFTER SIX YEARS.
+ THE MAXIMUM CDSC FOR CLASS C IS 1.0% FOR SHARES REDEEMED WITHIN ONE YEAR OF
PURCHASE.
++ CLASS D HAS NO SALES CHARGE.
3
<Page>
Morgan Stanley Convertible Securities Trust
PORTFOLIO OF INVESTMENTS / / MARCH 31, 2003 (UNAUDITED)
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
<C> <S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
Convertible Bonds (69.9%)
ADVERTISING/MARKETING SERVICES (2.6%)
$ 2,000 Doubleclick Inc................................... 4.75% 03/15/06 $ 1,932,500
1,750 Interpublic Group of Companies, Inc. - 144A**..... 4.50 03/15/23 2,032,187
2,000 Lamar Advertising Co.............................. 5.25 09/15/06 2,012,500
------------
5,977,187
------------
AEROSPACE & DEFENSE (1.0%)
1,000 Edo Corp.......................................... 5.25 04/15/07 1,013,750
1,000 L-3 Communications Holdings, Inc.................. 5.25 06/01/09 1,186,250
------------
2,200,000
------------
AIR FREIGHT/COURIERS (1.4%)
3,000 United Parcel Service of America, Inc............. 1.75 09/27/07 3,063,750
------------
AIRLINES (0.4%)
2,500 Continental Airlines Inc.......................... 4.50 02/01/07 965,625
------------
APPAREL/FOOTWEAR RETAIL (0.8%)
1,500 Gap, Inc.......................................... 5.75 03/15/09 1,835,625
------------
BIOTECHNOLOGY (8.3%)
2,500 Affymetrix Inc.................................... 5.00 10/01/06 2,446,875
3,000 Amgen, Inc........................................ 0.00 03/01/32 2,283,750
2,000 Aviron............................................ 5.25 02/01/08 2,070,000
1,500 Cephalon, Inc..................................... 2.50 12/15/06 1,351,875
2,500 Enzon, Inc........................................ 4.50 07/01/08 1,953,125
1,500 Genzyme Corp...................................... 3.00 05/15/21 1,462,500
1,500 Gilead Sciences, Inc. - 144A**.................... 2.00 12/15/07 1,721,250
1,000 Human Genome Sciences, Inc........................ 3.75 03/15/07 753,750
3,500 IDEC Pharmaceuticals Corp......................... 0.00 04/29/32 2,008,125
2,500 Invitrogen, Inc................................... 2.25 12/15/06 2,178,125
1,000 OSI Pharmaceuticals, Inc. - 144A**................ 4.00 02/01/09 762,500
------------
18,991,875
------------
BROADCASTING (1.1%)
2,500 Scandinavian Broadcasting System SA
(Luxembourg)..................................... 7.00 12/01/04 2,440,625
------------
CABLE/SATELLITE TV (2.7%)
3,000 EchoStar Communications Corp...................... 4.875 01/01/07 2,906,250
3,500 Liberty Media Corp................................ 3.25 03/15/31 3,259,375
------------
6,165,625
------------
COMPUTER COMMUNICATIONS (0.2%)
1,415 Redback Networks, Inc............................. 5.00 04/01/07 405,044
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
4
<Page>
Morgan Stanley Convertible Securities Trust
PORTFOLIO OF INVESTMENTS / / MARCH 31, 2003 (UNAUDITED) CONTINUED
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
<C> <S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
CONTRACT DRILLING (1.1%)
$ 5,000 Pride International, Inc.......................... 0.00% 04/24/18 $ 2,462,500
------------
DATA PROCESSING SERVICES (0.9%)
1,000 Affiliated Computer Services, Inc................. 3.50 02/15/06 1,216,250
750 CheckFree Holdings Corp........................... 6.50 12/01/06 744,375
------------
1,960,625
------------
DEPARTMENT STORES (1.3%)
3,000 Penney (J.C.) Co., Inc............................ 5.00 10/15/08 3,030,000
------------
ELECTRONIC COMPONENTS (1.4%)
1,000 Hutchinson Technology Inc. - 144A**............... 2.25 03/15/10 1,101,250
2,250 Jabil Circuit Inc................................. 1.75 05/15/21 2,176,875
------------
3,278,125
------------
ELECTRONIC EQUIPMENT/INSTRUMENTS (1.2%)
3,000 Agilent Tech, Inc................................. 3.00 12/01/21 2,737,500
------------
ELECTRONIC PRODUCTION EQUIPMENT (1.9%)
1,000 Advanced Energy Industries, Inc................... 5.25 11/15/06 792,500
1,000 Axcelis Tech, Inc................................. 4.25 01/15/07 822,500
2,000 Cymer, Inc........................................ 3.50 02/15/09 1,810,000
1,000 Teradyne Inc...................................... 3.75 10/15/06 917,500
------------
4,342,500
------------
FOOD: MAJOR DIVERSIFIED (1.0%)
3,300 General Mills Inc. - 144A**....................... 0.00 10/28/22 2,351,250
------------
HOSPITAL/NURSING MANAGEMENT (0.9%)
2,000 Community Health Systems.......................... 4.25 10/15/08 1,977,500
------------
HOTELS/RESORTS/CRUISELINES (0.7%)
5,500 Four Seasons Hotels, Inc.......................... 0.00 09/23/29 1,670,625
------------
INDUSTRIAL CONGLOMERATES (3.2%)
3,000 3M Co. - 144A**................................... 0.00 11/21/32 2,576,250
2,000 Hutchison Whampoa International - 144A**.......... 2.875 09/15/03 1,988,750
1,500 Tyco International Group SA - 144A**
(Luxembourg)..................................... 2.75 01/15/18 1,387,500
1,500 Tyco International Group SA - 144A**
(Luxembourg)..................................... 3.125 01/15/23 1,335,000
------------
7,287,500
------------
INFORMATION TECHNOLOGY SERVICES (0.8%)
2,000 Documentum Inc. - 144A**.......................... 4.50 04/01/07 1,857,500
------------
INTERNET SOFTWARE/SERVICES (1.0%)
2,500 BEA Systems, Inc.................................. 4.00 12/15/06 2,312,500
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
5
<Page>
Morgan Stanley Convertible Securities Trust
PORTFOLIO OF INVESTMENTS / / MARCH 31, 2003 (UNAUDITED) CONTINUED
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
<C> <S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
INVESTMENT BANKS/BROKERS (1.3%)
$ 5,500 Merrill Lynch & Co................................ 0.00% 05/23/31 $ 2,921,875
------------
MAJOR TELECOMMUNICATIONS (2.1%)
4,690 Bell Atlantic Financial Service (exchangeable into
Telecom Corporation of New Zealand common
stock)........................................... 5.75 04/01/03 4,690,000
------------
MEDIA CONGLOMERATES (1.0%)
4,000 America Online, Inc............................... 0.00 12/06/19 2,325,000
------------
MULTI-LINE INSURANCE (1.2%)
3,000 American International Group, Inc................. 0.50 05/15/07 2,756,250
------------
OIL & GAS PRODUCTION (2.2%)
1,500 Devon Energy Corp................................. 4.95 08/15/08 1,533,750
2,500 Devon Energy Corp................................. 0.00 06/27/20 1,334,375
2,000 Kerr-McGee Corp................................... 5.25 02/15/10 2,120,000
------------
4,988,125
------------
OILFIELD SERVICES/EQUIPMENT (1.1%)
3,800 Weatherford International, Inc.................... 0.00 06/30/20 2,408,250
------------
PACKAGED SOFTWARE (4.9%)
2,000 Computer Associates Inc. - 144A**................. 5.00 03/15/07 2,100,000
1,000 Computer Associates Inc. - 144A**................. 1.625 12/15/09 1,041,250
1,500 i2 Technologies, Inc.............................. 5.25 12/15/06 988,125
3,425 Mercury Interactive Corp.......................... 4.75 07/01/07 3,215,219
1,200 Symantec Corp..................................... 3.00 11/01/06 1,627,500
2,500 Veritas Software Corp............................. 1.856 08/13/06 2,218,750
------------
11,190,844
------------
PHARMACEUTICALS: GENERIC DRUGS (1.7%)
2,500 IVAX Corp......................................... 5.50 05/15/07 2,381,250
1,500 Watson Pharmaceutical Inc. - 144A**............... 1.75 03/15/23 1,520,625
------------
3,901,875
------------
PHARMACEUTICALS: MAJOR (1.1%)
3,500 Roche Holdings Inc. - 144A**...................... 0.00 01/19/15 2,541,875
------------
PHARMACEUTICALS: OTHER (3.3%)
1,500 Axcan Pharmaceuticals Inc. - 144A** (Canada)...... 4.25 04/15/08 1,588,125
2,500 Elan Finance Corp., Ltd. (Brunei)................. 0.00 12/14/18 1,200,000
2,000 Medicis Pharmaceutical............................ 2.50 06/04/32 2,395,000
2,000 Teva Pharmaceutical Finance - 144A** (Andorra).... 0.375 11/15/22 2,250,000
------------
7,433,125
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
6
<Page>
Morgan Stanley Convertible Securities Trust
PORTFOLIO OF INVESTMENTS / / MARCH 31, 2003 (UNAUDITED) CONTINUED
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
<C> <S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
PRECIOUS METALS (1.3%)
$ 2,050 Freeport-McMoran C & G, Inc....................... 8.25% 01/31/06 $ 2,875,125
------------
REAL ESTATE INVESTMENT TRUSTS (1.2%)
2,500 EOP Operating LP.................................. 7.25 11/15/08 2,612,500
------------
SEMICONDUCTORS (7.3%)
1,000 Advanced Micro Devices............................ 4.50 12/01/07 1,123,750
3,500 Analog Devices, Inc............................... 4.75 10/01/05 3,535,000
2,000 ASM Lithography Holding N.V. - 144A**
(Netherlands).................................... 4.25 11/30/04 1,832,600
2,500 Cypress Semiconductor Corp........................ 4.00 02/01/05 2,221,875
2,000 Lattice Semiconductors Corp....................... 4.75 11/01/06 1,857,500
3,000 LSI Logic Corp.................................... 4.00 11/01/06 2,568,750
1,000 PMC Sierra Inc.................................... 3.75 08/15/06 857,500
3,000 RF Micro Devices, Inc............................. 3.75 08/15/05 2,700,000
------------
16,696,975
------------
SERVICES TO THE HEALTH INDUSTRY (1.1%)
2,500 Omnicare Inc...................................... 5.00 12/01/07 2,496,875
------------
SPECIALTY INSURANCE (2.3%)
2,000 First American Corp............................... 4.50 04/15/08 2,205,000
3,000 PMI Group Inc..................................... 2.50 07/15/21 3,063,750
------------
5,268,750
------------
SPECIALTY TELECOMMUNICATIONS (1.1%)
2,250 CenturyTel, Inc. - 144A**......................... 4.75 08/01/32 2,545,312
------------
TELECOMMUNICATION EQUIPMENT (1.0%)
3,000 Nortel Networks Corp. (Canada).................... 4.25 09/01/08 2,205,000
------------
WHOLESALE DISTRIBUTORS (0.8%)
2,000 School Specialty Inc.............................. 6.00 08/01/08 1,882,500
------------
Total Convertible Bonds
(COST $163,886,171)......................................................... 159,053,737
------------
</Table>
<Table>
<Caption>
NUMBER OF
SHARES
---------
<C> <S> <C>
Convertible Preferred Stocks (23.4%)
AEROSPACE & DEFENSE (0.6%)
25,000 Raytheon Co. $8.25...................... 1,281,500
------------
CABLE/SATELLITE TV (0.4%)
45,000 Equity Secs Trust I $2.343.............. 988,650
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
7
<Page>
Morgan Stanley Convertible Securities Trust
PORTFOLIO OF INVESTMENTS / / MARCH 31, 2003 (UNAUDITED) CONTINUED
<Table>
<Caption>
NUMBER OF
SHARES VALUE
<C> <S> <C>
-----------------------------------------------------------------
COAL (0.4%)
15,000 Arch Coal $2.50......................... $ 875,625
------------
CONTAINERS/PACKAGING (1.0%)
50,000 Sealed Air Corp. (Series A) $2.00....... 2,299,000
------------
ELECTRIC UTILITIES (1.5%)
40,000 DTE Energy Company $2.1875.............. 954,800
45,000 FPL Group, Inc.......................... 2,472,750
------------
3,427,550
------------
FINANCIAL CONGLOMERATES (1.7%)
40,000 Prudential Financial Inc $2.1375........ 2,058,000
10,000 State Street Corp. (Units) +............ 1,772,500
------------
3,830,500
------------
HOME FURNISHINGS (0.9%)
45,000 Newell Financial Trust I $2.63.......... 2,120,625
------------
MAJOR BANKS (1.3%)
80,950 National Australia Bank, Ltd. $1.969
(Australia) (Units) +.................. 2,845,393
------------
MAJOR TELECOMMUNICATIONS (0.9%)
45,000 ALLTEL Corp. $1.9375.................... 2,115,450
------------
MANAGED HEALTH CARE (0.9%)
25,000 Anthem Inc. $3.433...................... 2,045,000
------------
MEDICAL DISTRIBUTORS (0.9%)
45,000 McKesson Financing Trust $2.50.......... 2,137,500
------------
MEDICAL SPECIALTIES (1.0%)
60,000 Baxter International $3.50.............. 2,310,600
------------
MOTOR VEHICLES (2.0%)
30,000 Ford Cap Trust II $2.708................ 1,069,200
40,000 General Motors Corp. $1.125............. 958,000
110,000 General Motors Corp. $1.3125............ 2,497,000
------------
4,524,200
------------
MULTI-LINE INSURANCE (0.6%)
35,000 Hartford Financial Services Group, Inc.
$1.50.................................. 1,456,700
------------
OIL & GAS PRODUCTION (1.1%)
30,000 Kerr-McGee Corp. $1.825................. 1,322,100
21,500 Newfield Financial Trust I $3.25........ 1,154,550
------------
2,476,650
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
8
<Page>
Morgan Stanley Convertible Securities Trust
PORTFOLIO OF INVESTMENTS / / MARCH 31, 2003 (UNAUDITED) CONTINUED
<Table>
<Caption>
NUMBER OF
SHARES VALUE
<C> <S> <C>
-----------------------------------------------------------------
PROPERTY - CASUALTY INSURERS (2.0%)
125,000 Chubb Corp. $1.75....................... $ 2,675,000
80,000 Travelers Property Casualty $1.125...... 1,792,000
------------
4,467,000
------------
PULP & PAPER (1.1%)
51,500 International Paper Capital Trust
$2.625................................. 2,472,000
------------
RAILROADS (1.4%)
60,000 Union Pacific Capital Trust $3.13....... 3,060,000
------------
REGIONAL BANKS (0.9%)
40,000 Commerce Capital Trust II $1.4875....... 2,145,000
------------
SAVINGS BANKS (2.0%)
25,000 NY Community Capital Trust $3.00........ 1,303,125
60,000 Washington Mutual Inc. $2.6875.......... 3,157,500
------------
4,460,625
------------
TRUCKS/CONSTRUCTION/FARM
MACHINERY (0.8%)
42,500 Cummins Capital Trust I $3.50........... 1,870,000
------------
Total Convertible Preferred Stocks
(COST $55,219,167)..................... 53,209,568
------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE
--------- ------ --------
<C> <S> <C> <C> <C>
Short-Term Investment (7.5%)
Repurchase Agreement
$17,184 Joint repurchase agreement account (dated
03/31/03; proceeds $17,184,642) (a)
(COST $17,184,000)................................ 1.36% 04/01/03 17,184,000
-----------
</Table>
<Table>
<S> <C> <C> <C>
Total Investments
(COST $236,289,338) (b).......................... 100.8% 229,447,305
Liabilities in Excess of Other Assets............. (0.8) (1,748,375)
----- ------
Net Assets........................................ 100.0% $227,698,930
===== ======
</Table>
---------------------
** RESALE IS RESTRICTED TO QUALIFIED INSTITUTIONAL INVESTORS.
+ CONSISTS OF ONE OR MORE CLASSES OF SECURITIES TRADED TOGETHER AS A UNIT;
STOCKS WITH ATTACHED WARRANTS.
(a) COLLATERALIZED BY FEDERAL AGENCY AND U.S. TREASURY OBLIGATIONS.
(b) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES APPROXIMATES THE
AGGREGATE COST FOR BOOK PURPOSES. THE AGGREGATE GROSS UNREALIZED
APPRECIATION IS $8,788,731 AND THE AGGREGATE GROSS UNREALIZED
DEPRECIATION IS $15,630,764, RESULTING IN NET UNREALIZED DEPRECIATION OF
$6,842,033.
SEE NOTES TO FINANCIAL STATEMENTS
9
<Page>
Morgan Stanley Convertible Securities Trust
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
MARCH 31, 2003 (UNAUDITED)
<Table>
<S> <C>
Assets:
Investments in securities, at value (cost
$236,289,338).................................... $229,447,305
Receivable for:
Interest........................................ 1,540,268
Shares of beneficial interest sold.............. 524,097
Investments sold................................ 317,875
Dividends....................................... 71,875
Prepaid expenses and other assets................. 82,926
-----------
Total Assets.................................. 231,984,346
-----------
Liabilities:
Payable for:
Investments purchased........................... 3,597,292
Shares of beneficial interest redeemed.......... 241,700
Distribution fee................................ 188,306
Investment management fee....................... 115,497
Accrued expenses and other payables............... 142,621
-----------
Total Liabilities............................. 4,285,416
-----------
Net Assets.................................... $227,698,930
===========
Composition of Net Assets:
Paid-in-capital................................... $291,584,628
Net unrealized depreciation....................... (6,842,033)
Accumulated undistributed net investment income... 1,599,579
Accumulated net realized loss..................... (58,643,244)
-----------
Net Assets.................................... $227,698,930
===========
Class A Shares:
Net Assets........................................ $3,237,759
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR
VALUE)........................................... 241,343
Net Asset Value Per Share..................... $ 13.42
===========
Maximum Offering Price Per Share,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET
VALUE)....................................... $ 14.16
===========
Class B Shares:
Net Assets........................................ $215,851,606
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR
VALUE)........................................... 16,095,431
Net Asset Value Per Share..................... $ 13.41
===========
Class C Shares:
Net Assets........................................ $5,885,607
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR
VALUE)........................................... 440,558
Net Asset Value Per Share..................... $ 13.36
===========
Class D Shares:
Net Assets........................................ $2,723,958
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR
VALUE)........................................... 203,089
Net Asset Value Per Share..................... $ 13.41
===========
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
10
<Page>
Morgan Stanley Convertible Securities Trust
FINANCIAL STATEMENTS CONTINUED
Statement of Operations
FOR THE SIX MONTHS ENDED MARCH 31, 2003 (UNAUDITED)
<Table>
<S> <C>
Net Investment Income:
Income
Interest.......................................... $3,946,219
Dividends......................................... 1,315,089
----------
Total Income.................................. 5,261,308
----------
Expenses
Distribution fee (Class A shares)................. 3,306
Distribution fee (Class B shares)................. 1,050,833
Distribution fee (Class C shares)................. 26,749
Investment management fee......................... 661,486
Transfer agent fees and expenses.................. 164,394
Professional fees................................. 35,396
Registration fees................................. 25,412
Shareholder reports and notices................... 24,674
Trustees' fees and expenses....................... 9,170
Custodian fees.................................... 7,258
Other............................................. 4,843
----------
Total Expenses................................ 2,013,521
----------
Net Investment Income......................... 3,247,787
----------
Net Realized and Unrealized Gain (Loss):
Net realized loss................................. (8,512,646)
Net change in unrealized depreciation............. 19,123,234
----------
Net Gain...................................... 10,610,588
----------
Net Increase...................................... $13,858,375
==========
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
11
<Page>
Morgan Stanley Convertible Securities Trust
FINANCIAL STATEMENTS CONTINUED
Statement of Changes in Net Assets
<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 2003 SEPTEMBER 30, 2002
-------------- ------------------
(UNAUDITED)
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income................... $ 3,247,787 $ 7,871,243
Net realized loss....................... (8,512,646) (31,369,633)
Net change in unrealized depreciation... 19,123,234 12,674,625
------------ ------------
Net Increase (Decrease)............. 13,858,375 (10,823,765)
------------ ------------
Dividends to Shareholders from Net
Investment Income:
Class A shares.......................... (51,961) (114,074)
Class B shares.......................... (3,013,194) (8,780,543)
Class C shares.......................... (78,488) (197,575)
Class D shares.......................... (44,051) (166,539)
------------ ------------
Total Dividends..................... (3,187,694) (9,258,731)
------------ ------------
Net increase (decrease) from
transactions in shares of beneficial
interest............................... 5,522,392 (13,142,857)
------------ ------------
Net Increase (Decrease)............. 16,193,073 (33,225,353)
Net Assets:
Beginning of period..................... 211,505,857 244,731,210
------------ ------------
End of Period
(INCLUDING ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME OF $1,599,579 AND
$1,539,486, RESPECTIVELY).............. $227,698,930 $211,505,857
============ ============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
12
<Page>
Morgan Stanley Convertible Securities Trust
NOTES TO FINANCIAL STATEMENTS / / MARCH 31, 2003 (UNAUDITED)
1. Organization and Accounting Policies
Morgan Stanley Convertible Securities Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is to
seek a high level of total return on its assets through a combination of current
income and capital appreciation. The Fund was organized as a Massachusetts
business trust on May 21, 1985 and commenced operations on October 31, 1985. On
July 28, 1997, the Fund converted to a multiple class share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- (1) an equity portfolio security listed or traded
on the New York or American Stock Exchange, Nasdaq, or other exchange is valued
at its latest sale price prior to the time when assets are valued; if there were
no sales that day, the security is valued at the latest bid price (in cases
where securities are traded on more than one exchange, the securities are valued
on the exchange designated as the primary market pursuant to procedures adopted
by the Trustees; (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest available bid
price; (3) when market quotations are not readily available, including
circumstances under which it is determined by Morgan Stanley Investment Advisors
Inc. (the "Investment Manager") that sale and bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Trustees; (4) certain portfolio securities may be valued by
an outside pricing service approved by the Trustees; and (5) short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. Accounting for Investments -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the
13
<Page>
Morgan Stanley Convertible Securities Trust
NOTES TO FINANCIAL STATEMENTS / / MARCH 31, 2003 (UNAUDITED) CONTINUED
identified cost method. Dividend income and other distributions are recorded on
the ex-dividend date. Discounts are accreted and premiums are amortized over the
life of the respective securities. Interest income is accrued daily.
C. Repurchase Agreements -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated
entities managed by the Investment Manager, may transfer uninvested cash
balances into one or more joint repurchase agreement accounts. These balances
are invested in one or more repurchase agreements and are collateralized by
cash, U.S. Treasury or federal agency obligations. The Fund may also invest
directly with institutions in repurchase agreements. The Fund's custodian
receives the collateral, which is marked-to-market daily to determine that the
value of the collateral does not decrease below the repurchase price plus
accrued interest.
D. Multiple Class Allocations -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
E. Federal Income Tax Policy -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
F. Dividends and Distributions to Shareholders -- Dividends and distributions to
shareholders are recorded on the ex-dividend date. The amount of dividends and
distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.
G. Use of Estimates -- The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates.
14
<Page>
Morgan Stanley Convertible Securities Trust
NOTES TO FINANCIAL STATEMENTS / / MARCH 31, 2003 (UNAUDITED) CONTINUED
2. Investment Management Agreement
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the Fund's net assets determined as of the close of
each business day: 0.60% to the portion of the daily net assets not exceeding
$750 million; 0.55% to the portion of the daily net assets exceeding $750
million but not exceeding $1 billion; 0.50% to the portion of daily net assets
exceeding $1 billion but not exceeding $1.5 billion; 0.475% to the portion of
daily net assets exceeding $1.5 billion but not exceeding $2 billion; 0.45% to
the portion of daily net assets exceeding $2 billion but not exceeding $3
billion; and 0.425% to the portion of daily net assets exceeding $3 billion.
3. Plan of Distribution
Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan
provides that the Fund will pay the Distributor a fee which is accrued daily and
paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the
average daily net assets of Class A; (ii) Class B -- 1.0% of the lesser of:
(a) the average daily aggregate gross sales of the Class B shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Class B
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the average daily net assets of
Class B; and (iii) Class C -- up to 1.0% of the average daily net assets of
Class C.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled
$94,647,967 at March 31, 2003.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Financial Advisors or other selected
broker-dealer representatives may
15
<Page>
Morgan Stanley Convertible Securities Trust
NOTES TO FINANCIAL STATEMENTS / / MARCH 31, 2003 (UNAUDITED) CONTINUED
be reimbursed in the subsequent calendar year. For the six months ended
March 31, 2003, the distribution fee was accrued for Class A shares and Class C
shares at the annual rate of 0.24% and 1.0%, respectively.
The Distributor has informed the Fund that for the six months ended March 31,
2003, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $176,106 and $890, respectively
and received $29,750 in front-end sales charges from sales of the Fund's
Class A shares. The respective shareholders pay such charges which are not an
expense of the Fund.
4. Security Transactions and Transactions with Affiliates
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended March 31, 2003 aggregated
$107,072,097 and $100,545,787, respectively.
At March 31, 2003, Morgan Stanley Fund of Funds -- Domestic Portfolio, an
affiliate of the Investment Manager and Distributor, held 71,603 Class D shares
of beneficial interest of the Fund.
Morgan Stanley Trust, an affiliate of the Investment Manager and Distributor, is
the Fund's transfer agent. At March 31, 2003, the Fund had transfer agent fees
and expenses payable of approximately $2,500.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the six months ended March 31, 2003
included in Trustees' fees and expenses in the Statement of Operations amounted
to $3,562. At March 31, 2003, the Fund had an accrued pension liability of
$58,288 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. Federal Income Tax Status
At September 30, 2002, the Fund had a net capital loss carryover of
approximately $22,463,000, to offset future capital gains to the extent provided
by regulations, available through September 30 of the following years:
<Table>
<Caption>
AMOUNT IN THOUSANDS
-----------------------
2007 2009 2010
------ ------ -------
<S> <C> <C>
$2,581 $3,634 $16,248
====== ====== =======
</Table>
16
<Page>
Morgan Stanley Convertible Securities Trust
NOTES TO FINANCIAL STATEMENTS / / MARCH 31, 2003 (UNAUDITED) CONTINUED
Capital losses incurred after October 31 ("post-October losses") within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $27,668,000 during fiscal 2002.
As of September 30, 2002, the Fund had temporary book/tax differences primarily
attributable to post-October losses and book amortization of discounts on debt
securities.
6. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:
<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 2003 SEPTEMBER 30, 2002
------------------------ ------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold.......................... 104,877 $ 1,402,281 92,581 $ 1,338,988
Reinvestment of dividends..... 2,803 37,454 6,339 89,078
Redeemed...................... (67,694) (911,097) (28,098) (405,072)
---------- ------------ ---------- ------------
Net increase (decrease) --
Class A...................... 39,986 528,638 70,822 1,022,994
---------- ------------ ---------- ------------
CLASS B SHARES
Sold.......................... 2,031,422 27,125,395 3,961,120 56,903,191
Reinvestment of dividends..... 180,754 2,414,868 388,725 5,634,298
Redeemed...................... (1,988,999) (26,403,470) (5,337,030) (76,104,190)
---------- ------------ ---------- ------------
Net decrease -- Class B....... 223,177 3,136,793 (987,185) (13,566,701)
---------- ------------ ---------- ------------
CLASS C SHARES
Sold.......................... 145,258 1,935,548 165,293 2,387,816
Reinvestment of dividends..... 4,860 64,688 11,741 164,546
Redeemed...................... (82,408) (1,100,041) (115,230) (1,611,329)
---------- ------------ ---------- ------------
Net increase (decrease) --
Class C...................... 67,710 900,195 61,804 941,033
---------- ------------ ---------- ------------
CLASS D SHARES
Sold.......................... 109,833 1,469,537 69,457 1,002,216
Reinvestment of dividends..... 1,152 15,406 1,075 15,865
Redeemed...................... (39,556) (528,177) (186,155) (2,558,264)
---------- ------------ ---------- ------------
Net increase (decrease) --
Class D...................... 71,429 956,766 (115,623) (1,540,183)
---------- ------------ ---------- ------------
Net increase (decrease) in
Fund......................... 402,302 $ 5,522,392 (970,182) $(13,142,857)
========== ============ ========== ============
</Table>
17
<Page>
Morgan Stanley Convertible Securities Trust
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED SEPTEMBER 30,
MONTHS ENDED ---------------------------------------------------------------
MARCH 31, 2003 2002 2001 2000 1999 1998
-------------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Class A Shares
Selected Per Share Data:
Net asset value,
beginning of
period.................. $12.76 $13.96 $17.23 $13.57 $12.45 $15.07
------ ------ ------ ------ ------ ------
Income (loss) from
investment operations:
Net investment
income++.............. 0.24 0.56 0.62 0.65 0.72 0.75
Net realized and
unrealized
gain (loss)........... 0.66 (1.11) (3.21) 3.83 1.18 (2.68)
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations... 0.90 (0.55) (2.59) 4.48 1.90 (1.93)
------ ------ ------ ------ ------ ------
Less dividends from net
investment income....... (0.24) (0.65) (0.68) (0.82) (0.78) (0.69)
------ ------ ------ ------ ------ ------
Net asset value, end of
period.................. $13.42 $12.76 $13.96 $17.23 $13.57 $12.45
====== ====== ====== ====== ====== ======
Total Return+............ 7.08%(1) (4.26)% (15.32)% 33.32% 15.64% (13.38)%
Ratios to Average Net
Assets(3):
Expenses................. 1.09%(2) 1.09 % 1.06 % 1.04% 1.06% 1.05 %
Net investment income.... 3.68%(2) 3.90 % 3.97 % 3.91% 5.31% 5.16 %
Supplemental Data:
Net assets, end of
period, in thousands.... $3,238 $2,570 $1,822 $2,538 $1,124 $963
Portfolio turnover
rate.................... 49%(1) 82 % 123 % 160% 87% 95 %
</Table>
---------------------
++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD.
+ DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE
NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
(3) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS
SPECIFIC EXPENSES.
SEE NOTES TO FINANCIAL STATEMENTS
18
<Page>
Morgan Stanley Convertible Securities Trust
FINANCIAL HIGHLIGHTS CONTINUED
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED SEPTEMBER 30,
MONTHS ENDED ---------------------------------------------------------------
MARCH 31, 2003 2002 2001 2000 1999 1998
-------------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Class B Shares
Selected Per Share Data:
Net asset value,
beginning of
period.................. $12.76 $13.95 $17.22 $13.57 $12.45 $15.07
------ ------ ------ ------ ------ ------
Income (loss) from
investment operations:
Net investment
income++.............. 0.19 0.45 0.51 0.52 0.61 0.65
Net realized and
unrealized
gain (loss)........... 0.65 (1.10) (3.22) 3.82 1.18 (2.70)
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations... 0.84 (0.65) (2.71) 4.34 1.79 (2.05)
------ ------ ------ ------ ------ ------
Less dividends from net
investment income....... (0.19) (0.54) (0.56) (0.69) (0.67) (0.57)
------ ------ ------ ------ ------ ------
Net asset value, end of
period.................. $13.41 $12.76 $13.95 $17.22 $13.57 $12.45
====== ====== ====== ====== ====== ======
Total Return+............ 6.59%(1) (5.01)% (15.91)% 32.23% 14.62% (14.01)%
Ratios to Average Net
Assets(3):
Expenses................. 1.85%(2) 1.84 % 1.81 % 1.80% 1.85% 1.81 %
Net investment income.... 2.92%(2) 3.15 % 3.22 % 3.15% 4.52% 4.40 %
Supplemental Data:
Net assets, end of
period, in thousands.... $215,852 $202,516 $235,137 $297,821 $231,510 $263,443
Portfolio turnover
rate.................... 49%(1) 82 % 123 % 160% 87% 95 %
</Table>
---------------------
++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD.
+ DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE
NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
(3) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS
SPECIFIC EXPENSES.
SEE NOTES TO FINANCIAL STATEMENTS
19
<Page>
Morgan Stanley Convertible Securities Trust
FINANCIAL HIGHLIGHTS CONTINUED
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED SEPTEMBER 30,
MONTHS ENDED ---------------------------------------------------------------
MARCH 31, 2003 2002 2001 2000 1999 1998
-------------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Class C Shares
Selected Per Share Data:
Net asset value,
beginning of period..... $12.71 $13.90 $17.17 $13.54 $12.43 $15.06
------ ------ ------ ------ ------ ------
Income (loss) from
investment operations:
Net investment
income++.............. 0.20 0.45 0.51 0.53 0.63 0.64
Net realized and
unrealized gain
(loss)................ 0.64 (1.10) (3.22) 3.80 1.17 (2.68)
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations... 0.84 (0.65) (2.71) 4.33 1.80 (2.04)
------ ------ ------ ------ ------ ------
Less dividends from net
investment income....... (0.19) (0.54) (0.56) (0.70) (0.69) (0.59)
------ ------ ------ ------ ------ ------
Net asset value, end of
period.................. $13.36 $12.71 $13.90 $17.17 $13.54 $12.43
====== ====== ====== ====== ====== ======
Total Return+............ 6.63%(1) (4.97)% (15.94)% 32.26% 14.83% (14.07)%
Ratios to Average Net
Assets(3):
Expenses................. 1.85%(2) 1.80 % 1.81 % 1.80% 1.73% 1.81 %
Net investment income.... 2.92%(2) 3.19 % 3.22 % 3.15% 4.64% 4.40 %
Supplemental Data:
Net assets, end of
period, in thousands.... $5,886 $4,740 $4,324 $5,455 $2,869 $2,390
Portfolio turnover
rate.................... 49%(1) 82 % 123 % 160% 87% 95 %
</Table>
---------------------
++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD.
+ DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE
NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
(3) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS
SPECIFIC EXPENSES.
SEE NOTES TO FINANCIAL STATEMENTS
20
<Page>
Morgan Stanley Convertible Securities Trust
FINANCIAL HIGHLIGHTS CONTINUED
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED SEPTEMBER 30,
MONTHS ENDED ---------------------------------------------------------------
MARCH 31, 2003 2002 2001 2000 1999 1998
-------------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Class D Shares
Selected Per Share Data:
Net asset value,
beginning of period..... $12.76 $13.95 $17.23 $13.57 $12.44 $15.08
------ ------ ------ ------ ------ ------
Income (loss) from
investment operations:
Net investment
income++.............. 0.26 0.59 0.67 0.74 0.79 0.79
Net realized and
unrealized gain
(loss)................ 0.65 (1.10) (3.23) 3.77 1.15 (2.71)
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations... 0.91 (0.51) (2.56) 4.51 1.94 (1.92)
------ ------ ------ ------ ------ ------
Less dividends from net
investment income....... (0.26) (0.68) (0.72) (0.85) (0.81) (0.72)
------ ------ ------ ------ ------ ------
Net asset value, end of
period.................. $13.41 $12.76 $13.95 $17.23 $13.57 $12.44
====== ====== ====== ====== ====== ======
Total Return+............ 7.12%(1) (4.03)% (15.08)% 33.68% 15.81% (13.19)%
Ratios to Average Net
Assets(3):
Expenses................. 0.85%(2) 0.84 % 0.81 % 0.80% 0.85% 0.81 %
Net investment income.... 3.92%(2) 4.15 % 4.22 % 4.15% 5.52% 5.40 %
Supplemental Data:
Net assets, end of
period, in thousands.... $2,724 $1,680 $3,449 $3,121 $18 $1,696
Portfolio turnover
rate.................... 49%(1) 82 % 123 % 160% 87% 95 %
</Table>
---------------------
++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD.
+ DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE
NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
(3) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS
SPECIFIC EXPENSES.
SEE NOTES TO FINANCIAL STATEMENTS
21
<Page>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
OFFICERS
Charles A. Fiumefreddo
Chairman of the Board
Mitchell M. Merin
President and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Joseph J. McAlinden
Vice President
Ronald E. Robison
Vice President
Thomas F. Caloia
Treasurer
Francis Smith
Vice President and Chief Financial Officer
TRANSFER AGENT
Morgan Stanley Trust
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
INVESTMENT MANAGER
Morgan Stanley Investment Advisors Inc.
1221 Avenue of the Americas
New York, New York 10020
The financial statements included herein have been taken from the records of
the Fund without examination by the independent auditors and accordingly they
do not express an opinion thereon.
This report is submitted for the general information of the shareholders of
the Fund. For more detailed information about the Fund, its fees and expenses
and other pertinent information, please read its Prospectus. The Fund's
Statement of Additional Information contains additional information about the
Fund, including its trustees. It is available, without charge, by calling
(800) 869-NEWS.
This report is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an effective Prospectus. Read the
Prospectus carefully before investing.
Investments and services offered through Morgan Stanley DW Inc., member SIPC.
Morgan Stanley Funds are distributed by Morgan Stanley Distributors Inc.
Morgan Stanley Distributors Inc., member NASD.
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37975RPT-11015E03-AP-5/03
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Morgan Stanley
Convertible
Securities Trust
SEMIANNUAL REPORT
MARCH 31, 2003
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