Morgan Stanley Investment Funds Semi-Annual Report 2012

INVESTMENT MANAGEMENT Morgan Stanley Investment Funds Société d’Investissement à Capital Variable incorporated under the laws of Luxembourg Semi-Annual Report June 30, 2012 R.C.S. Luxembourg: B-29.192 Morgan Stanley Investment Funds 30 June 2012 Table of contents 1 Shareholders’ information 75 82 Euro Strategic Bond Fund European Currencies High Yield Bond Fund STATEMENT OF INVESTMENTS Equity Funds 2 Asian Equity Fund 5 Asia-Pacific Equity Fund 8 Asian Property Fund 10 Emerging Europe, Middle East and Africa Equity Fund 12 Emerging Markets Equity Fund 15 European Equity Alpha Fund 17 European Property Fund 19 European Small Cap Value Fund 21 Eurozone Equity Alpha Fund 23 Global Brands Fund 25 Global Equity Allocation Fund 86 Global Bond Fund 94 Global Convertible Bond Fund 98 Global Fixed Income Opportunities Fund 103 Global High Yield Bond Fund 106 Short Maturity Euro Bond Fund Liquidity Funds 110 Euro Liquidity Fund 112 US Dollar Liquidity Fund Asset Allocation Funds 114 Diversified Alpha Plus Fund 123 Global Balanced Risk Control Fund of Funds Alternative Investment Funds 125 Absolute Return Currency Fund 32 Global Infrastructure Fund 34 Global Opportunity Fund STATEMENTS AND NOTES 36 Global Property Fund 39 Indian Equity Fund 41 Japanese Equity Fund 43 Latin American Equity Fund 45 US Advantage Fund 47 US Growth Fund 127 Statement of assets and liabilities 137 Statement of changes in number of shares 143 Statement of operations and changes in net assets 153 Statement of share and net assets statistics 160 Notes to the financial statements 50 US Property Fund OTHER INFORMATION Bond Funds 170 Directors and service providers 52 Emerging Markets Corporate Debt Fund 55 Emerging Markets Debt Fund 58 Emerging Markets Domestic Debt Fund 61 Euro Bond Fund 66 Euro Corporate Bond (ex Financials) Fund 70 Euro Corporate Bond Fund 172 Paying and information agents 173 Appendix 1: Fund expense ratios 175 Appendix 2: Portfolio turnover rate 176 Appendix 3: Sub-Advisers 177 Appendix 4: Hedged Share Classes 1 Morgan Stanley Investment Funds 30 June 2012 Shareholders’ information The annual general meeting of shareholders of the Company is held at the registered office of the Company and will be held on the second Tuesday of the month of May at 10.30 am, or if such day is not a bank business day on the following bank business day. A list of purchases and sales (securities transactions) carried out by the Company during the reporting period may be obtained free of charge from the representative in Switzerland. The investment aims set out in this annual report are summaries only. The complete investment objectives and policies for each Fund are set out in the Company’s current prospectus. Notices of all general meetings are sent by mail to all registered shareholders at their registered address at least 8 days prior to the meeting. Such notices will indicate the time and place of the meeting as well as the conditions of admission thereto. Said notices will also contain the agenda and requirements of Luxembourg law with regard to the necessary quorum and majorities at the meeting. To the extent required by law, further notices will be published in the Mémorial C, Recueil des Sociétés et Associations du Journal Officiel du Grand-Duché de Luxembourg and in one Luxembourg newspaper. Audited financial statements in respect of the preceding financial period are made available at the registered office of the Company and are available to shareholders upon request. In addition, unaudited semi-annual reports are also made available at the registered offi ce. The Company’s financial year end is 31 December. Any other notices relevant to the Company are also published in a Luxembourg newspaper or mailed to affected shareholders. The net asset value per share of each Class of Share is available on each dealing day during Luxembourg business hours at the registered office of the Company. Net asset value per share information is also available from market information providers, such as Bloomberg and Morningstar, as well as being available at www.morganstanleyinvestmentfunds.com. No subscriptions can be received on the basis of financial reports alone. Subscriptions are only valid if made on the basis of the current prospectus and the latest Key Investor Information Document if applicable, the latest annual report and the most recent semi-annual report, if published thereafter. Morgan Stanley & Co. International plc, London, Zurich Branch, Bahnhofstrasse 92, 8001 Zurich, is the representative in Switzerland and RBC Dexia Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Badenerstrasse 567, 8048 Zurich, is the paying agent in Switzerland. The Prospectus, the latest Key Investor Information Document, the Articles and the annual and semi-annual reports of the Company may be obtained free of charge from the representative in Switzerland. Morgan Stanley Investment Funds 30 June 2012 2 Asian Equity Fund INVESTMENT AIM To seek long-term capital appreciation, measured in US dollars, through investment STATEMENT OF INVESTMENTS Transferable securities and money market instruments admitted to official exchange listing or dealt in on another regulated market. As at 30 June 2012, expressed in US dollars. primarily in the equity securities of companies domiciled in or exercising the predominant part of their economic activity in Asia, excluding Japan, thereby taking advantage Investments Equities South Korea Samsung Electronics Hyundai Motor Holdings 13,152 32,041 Market % of net value assets 13,810,922 6.69 6,513,537 3.16 of the dynamic economic growth capabilities of the region. Nexon (Japan) (1) Samsung Electronics Pfd NCSoft Hyundai Heavy Industries Shinhan Financial Group SK Hynix Woongjin Coway Samsung Fire & Marine Insurance KB Financial Group LG Chem Hyundai Engineering & Construction NHN SK C&C Kolao Holdings (Cayman Islands) (1) Cheil Worldwide Cheil Industries Samsung Life Insurance POSCO Korea Kumho Petrochemical Amorepacific Korean Air Lines Korea Aerospace Industries (2) YG Entertainment Mando GS Retail Orion SSCP E-Mart Hyundai Steel 212,700 4,421 11,428 10,758 65,563 101,470 66,594 10,408 56,288 6,797 30,050 7,716 16,652 116,900 85,655 14,892 13,159 3,084 9,106 1,023 21,434 31,130 12,704 3,790 25,800 405 82,187 841 790 4,144,896 2.01 2,895,278 1.40 2,727,852 1.32 2,422,126 1.17 2,275,816 1.10 2,115,992 1.02 2,072,874 1.00 2,056,665 1.00 1,816,059 0.88 1,735,354 0.84 1,707,834 0.83 1,686,631 0.82 1,550,615 0.75 1,420,748 0.69 1,363,051 0.66 1,300,788 0.63 1,071,175 0.52 980,182 0.47 955,425 0.46 951,711 0.46 942,669 0.46 800,229 0.39 582,049 0.28 560,033 0.27 539,145 0.26 335,700 0.16 243,248 0.12 183,833 0.09 58,022 0.03 Total for South Korea 29.94 China Tencent Holdings (Cayman Islands) (1) China Mengniu Dairy (Cayman Islands) (1) PetroChina ‘H’ China Construction Bank ‘H’ Ping An Insurance Group ‘H’ AIA Group (Hong Kong) (1) China Pacific Insurance Group ‘H’ China Telecom ‘H’ 209,700 1,689,000 3,192,000 5,412,400 459,000 1,048,200 1,115,000 6,090,000 6,110,219 2.96 4,431,431 2.15 4,094,830 1.98 3,691,437 1.79 3,651,302 1.77 3,581,293 1.73 3,579,514 1.73 2,646,044 1.28 Hengan International Group (Cayman Islands) (1) 267,000 2,580,078 1.25 Belle International Holdings (Cayman Islands) (1) Tsingtao Brewery ‘H’ (2) Shanghai Pharmaceuticals Holding ‘H’ 1,205,000 234,000 964,200 2,038,312 0.99 1,328,959 0.64 1,202,108 0.58 China Resources Enterprises (Hong Kong) (1) (2) Tingyi Cayman Islands Holding (Cayman Islands) (1) 390,000 444,000 1,153,977 0.56 1,134,584 0.55 Trinity (Bermuda) (1) Chow Tai Fook Jewellery Group (Cayman Islands) (1) (2) Ajisen China Holdings (Cayman Islands) (1) (2) 1,408,000 617,600 1,013,000 884,059 0.43 764,414 0.37 696,124 0.34 Total for China 21.10 Taiwan Taiwan Semiconductor Manufacturing Uni-President Enterprises Hon Hai Precision Industry Asustek Computer Fubon Financial Holding Taiwan Cement Please refer to the full prospectus for the Fund’s investment objective and policy. 1,635,362 2,240,206 1,048,641 249,355 2,081,054 1,277,000 ... - tailieumienphi.vn