Morgan Stanley Investment Funds - stockselection

More documents

Recommendations

Info

177 Morgan Stanley Investment Funds 30 June 2009 Notes to the financial statements (continued) As at 30 June 2009 • On 6 March 2009, the Eurozone Equity Opportunities Fund changed its name to Eurozone Equity Alpha Fund. • On 20 March 2009, the Global Convertible Bond (USD) Fund changed its name to Global Convertible Bond Fund. Changes in Directors/Dirigeants • On 27 February 2009, Mr Andrew Mack was appointed as a Director of the Subsidiary. • On 9 March 2009, Mr James Dilworth resigned as a Director of the Company. • On 7 April 2009, Mr. Andrew Mack was appointed as a Director of the Company. 2 SIGNIFICANT ACCOUNTING POLICIES The financial statements are presented in accordance with generally accepted accounting principles applicable to UCITS investment funds in Luxembourg and require management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. a) Valuation of securities Securities listed on a recognised stock exchange or dealt in on any other regulated market are valued at their last available prices at the valuation point, or, in the event that there should be several such markets, on the basis of their last available prices on the main market for the relevant security. In the event that the last available price does not truly reflect the fair market value of the relevant securities, the value of such securities will be based on the reasonably foreseeable sales price determined prudently and in good faith pursuant to procedures established by the Directors. Securities not listed or traded on a stock exchange or not dealt on another regulated market are valued on the basis of the reasonably foreseeable sales price determined prudently and in good faith pursuant to procedures established by the Directors. Securities with a known short-term maturity date, are valued using an amortised cost method. This involves valuing an investment at its cost and thereafter assuming a constant amortisation to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the investments. Events may occur between the determination of an investment’s last available price and the determination of the Fund’s Net Asset Value per Share at the valuation point that may, in the opinion of the Directors, mean that the last available price does not reflect the fair market value of the investment. In such circumstances the price of such investment shall be adjusted in accordance with the procedures adopted from time to time by the Directors in their discretion. As at the date of this annual report, certain securities were fair valued in accordance with these procedures. If since the time of determination of the net asset value there has been a material change in the quotations in the markets on which a substantial portion of the investments attributable to the relevant class of shares are dealt in or quoted, the Company may, in order to safeguard the interests of the shareholders and the Company, cancel the first valuation and carry out further valuations as appropriate. b) Valuation of Interest rate swaps An Interest Rate Swap (“IRS”) is a bilateral agreement in which each of the parties agree to exchange a series of interest payments (usually fixed/floating) based on a notional amount that serves as a computation basis and that is usually not exchanged. IRS contracts are valued by reference to the net present value of the underlying future cash flows. These market values are recorded under “Unrealised gain/loss on interest rate swap contracts” in the Combined statement of assets and liabilities. The changes in such amounts are recorded under “Net change in unrealised appreciation/(depreciation) on interest rate swap contracts” and the realised gain/loss under “Net realised gain/(loss) on interest rate swap contracts” in the Combined statement of operations and changes in net assets. c) Valuation of Credit default swaps A Credit Default Swap (“CDS”) is a transaction in which two parties enter into an agreement, whereby the buyer pays the seller a periodic payment for the specified life of the agreement. The seller makes no payments unless a credit event, relating to a predetermined reference asset, occurs. If such an event does occur, the seller will then make a payment to the buyer, and the swap contract will terminate. CDS contracts are valued by reference to the net present value of the underlying future cash flows together with the probability of default of the underlying asset. These market values are recorded under “Unrealised gain/loss on credit default swap contracts” in the Combined statement of assets and liabilities. The changes in such amounts are recorded under “Net change in unrealised appreciation/(depreciation) on credit default swap contracts” and the realised gain/loss under “Net realised gain/(loss) on credit default swap contracts” in the Combined statement of operations and changes in net assets. d) Valuation of Total return swaps A Total Return Swap (“TRS”) is a transaction in which the buyer receives the performance of an underlying asset and in return the buyer pays funding costs and generally, an arrangement fee. The underlying asset may be, but not limited to, a specific security, basket of securities, other instruments and index.
Notes to the financial statements (continued) As at 30 June 2009 TRS contracts are valued by reference to the market value of the underlying asset together with the net present value of the funding costs and arrangement fees, if any. These market values are recorded under “Unrealised gain/loss on total return swap contracts” in the Combined statement of assets and liabilities. The changes in such amounts are recorded under “Net change in unrealised appreciation/(depreciation) on total return swap contracts” and the realised gain/loss under “Net realised gain/(loss) on total return swap contracts” in the Combined statement of operations and changes in net assets. e) Valuation of Options Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to buy or sell a specific amount of a financial instrument at a fixed price, either at a fixed future date or at any time within a specified period. Options are valued by reference to the performance of the underlying asset, the volatility of that underlying asset, the period of the contract and the strike price of the option. Options purchased are recorded as investments; Options written or sold are recorded as liabilities. When the exercise of an option results in a cash settlement, the difference between the premium paid and the settlement proceeds is accounted for as a realised gain or loss. When securities are acquired or delivered upon exercise of an option, the acquisition cost or sale proceeds are adjusted by the amount of the premium paid. When an option is closed, the difference between the premium and the cost to close the position is accounted for as a realised gain or loss. When an option expires, the premium is accounted for as a realised gain for options written or as a realised loss for options purchased. The market values of options are recorded under “Options purchased” or “Options premium received” in the Combined Statement of Net Assets. f) Valuation of Forward foreign exchange contracts A forward foreign exchange contract is an agreement between two parties to exchange one currency for another at a specific price and date in the future. Open forward contracts are valued based by reference to the last available currency rates prevailing at the relevant valuation date. These market values are recorded under “Unrealised gain/loss on open forward foreign exchange contracts” in the Combined statement of assets and liabilities. The changes in such amounts are recorded under “Net change in unrealised appreciation/(depreciation) on forward foreign exchange contracts” and the realised gain/loss under “Net realised gain/(loss) on forward foreign exchange contracts” in the Combined statement of operations and changes in net assets. Morgan Stanley Investment Funds 30 June 2009 178 g) Valuation of Futures contracts A futures contract is a contractual agreement, to buy or sell a particular commodity or financial instrument at a pre-determined price in the future. Futures contracts detail the quality and quantity of the underlying asset and they are standardised to facilitate trading on a futures exchange. Futures contracts are valued at the last available prices on the exchanges for which the contracts are traded on. These market values are recorded under “Unrealised gain/loss on open futures contracts” in the Combined statement of assets and liabilities. The changes in such amounts are recorded under “Net change in unrealised appreciation/(depreciation) on financial futures contracts” and the realised gain/loss under “Net realised gain/(loss) on financial futures contracts” in the Combined statement of operations and changes in net assets. h) Income and securities transactions Dividend income is recorded on the ex dividend date. Interest income is accrued daily. Discounts and premiums are accreted as adjustments to interest income. Income from securities lending is recorded on a cash receipts basis. Securities transactions are accounted for on the date the securities are purchased or sold. Realised gains or losses on the sale of securities are determined on the basis of the average cost method. i) Translation of foreign currencies Transactions in foreign currencies are translated into the currency of each Fund at the last available rate of exchange prevailing in a recognised market at the date of the transactions. Assets and liabilities denominated in foreign currencies are translated into the currency of each Fund at the last available rate of exchange prevailing in a recognised market at the date of the Statement of Assets and Liabilities. The combined Statement of Assets and Liabilities is presented in US dollars at the last available rate of exchange prevailing in a recognised market at the date of the Statement of Assets and Liabilities, while the combined Statement of Operations and Changes in Net Assets is presented in US dollars at the average exchange rates ruling during the period. j) Valuation of repurchase agreements Under a repurchase agreement, the Company purchases securities and agrees to re-sell them at a mutually agreed upon date and price. Repurchase agreements are valued at cost with interest accrued from the date of purchase. k) Mauritian subsidiary The Indian Equity Fund currently invests through Morgan Stanley SICAV (Mauritius) Limited (the “Subsidiary”) where the Indian Equity Fund is the sole shareholder. All assets and liabilities, income and expenses of the Subsidiary are
Page 1:
INVESTMENT MANAGEMENT Morgan Stanle
Page 4 and 5:
1 Morgan Stanley Investment Funds 3
Page 6 and 7:
Page 8 and 9:
Page 10 and 11:
Page 12 and 13:
Page 14 and 15:
11 Morgan Stanley Investment Funds
Page 16 and 17:
Page 18 and 19:
Page 20 and 21:
Page 22 and 23:
Page 24 and 25:
Page 26 and 27:
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34 and 35:
Page 36 and 37:
Page 38 and 39:
Page 40 and 41:
Page 42 and 43:
Page 44 and 45:
Page 46 and 47:
Page 48 and 49:
Page 50 and 51:
Page 52 and 53:
Page 54 and 55:
Page 56 and 57:
Page 58 and 59:
Page 60 and 61:
Page 62 and 63:
Page 64 and 65:
Page 66 and 67:
Page 68 and 69:
Page 70 and 71:
Page 72 and 73:
Page 74 and 75:
Page 76 and 77:
Page 78 and 79:
Page 80 and 81:
Page 82 and 83:
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
Page 112 and 113:
Page 114 and 115:
Page 116 and 117:
Page 118 and 119:
Page 120 and 121:
Page 122 and 123:
Page 124 and 125:
Page 126 and 127:
Page 128 and 129:
Page 130 and 131: 127 Morgan Stanley Investment Funds
Page 196: www.morganstanleyinvestmentfunds.co
show all

Morgan Stanley Investment Funds - stockselection

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?