- Quarterly Schedule of Portfolio Holdings of Registered Management Investment Company (N-Q)
28 September 2012 - 6:26PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number
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811-22202
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Morgan Stanley Frontier Emerging Markets Fund, Inc.
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(Exact name of registrant as specified in charter)
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522 Fifth Avenue, New York, New York
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10036
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(Address of principal executive offices)
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(Zip code)
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Arthur Lev
522 Fifth Avenue, New York, New York 10036
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(Name and address of agent for service)
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Registrants telephone number, including area code:
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201-830-8894
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Date of fiscal year end:
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October 31, 2012
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Date of reporting period:
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July 31, 2012
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Item 1. Schedule of Investments.
The Funds schedule of investments as of the close of the reporting period prepared pursuant to Rule 12-12 of Regulation S-X is as follows:
Morgan Stanley Frontier Emerging Markets Fund, Inc.
Portfolio of Investments
Third Quarter Report
July 31, 2012 (unaudited)
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Shares
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Value
(000)
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Common Stocks (81.5%)
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Bangladesh (4.2%)
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Commercial Banks
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Islami Bank Bangladesh Ltd.
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1,767,375
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$
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866
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Pharmaceuticals
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Renata Ltd.
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102,900
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1,079
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Wireless Telecommunication Services
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GrameenPhone Ltd.
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656,672
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1,646
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3,591
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France (5.0%)
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Oil, Gas & Consumable Fuels
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Total SA ADR
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92,702
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4,260
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Kenya (3.3%)
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Beverages
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East African Breweries Ltd.
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693,532
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1,825
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Media
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Scan Group Ltd.
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1,521,000
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965
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2,790
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Kuwait (10.4%)
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Commercial Banks
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Burgan Bank SAK
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2,122,676
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3,577
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Wireless Telecommunication Services
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Mobile Telecommunications Co. KSC
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1,052,151
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2,576
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National Mobile Telecommunication Co. KSC
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351,781
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2,746
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5,322
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8,899
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Laos (1.7%)
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Automobiles
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Kolao Holdings
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104,770
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1,427
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Mongolia (1.0%)
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Metals & Mining
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Mongolian Mining Corp. (a)(b)
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1,613,400
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888
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Nigeria (17.5%)
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Beverages
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Nigerian Breweries PLC
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4,100,673
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3,066
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Commercial Banks
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First Bank of Nigeria PLC
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28,852,483
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2,053
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Guaranty Trust Bank PLC
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34,487,504
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3,714
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Zenith Bank PLC
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14,697,100
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1,317
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7,084
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Shares
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Value
(000)
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Construction Materials
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Dangote Cement PLC
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2,043,795
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$
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1,450
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Household Products
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PZ Cussons PLC
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251,942
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1,212
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Oil, Gas & Consumable Fuels
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Afren PLC (a)
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1,048,636
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2,099
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14,911
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Panama (2.5%)
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Airlines
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Copa Holdings SA, Class A
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27,900
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2,163
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Qatar (16.0%)
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Commercial Banks
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QNB Group
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93,687
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3,422
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Diversified Telecommunication Services
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Qatar Telecom Q-Tel QSC
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93,147
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2,684
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Energy Equipment & Services
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Gulf International Services OSC
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263,780
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1,887
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Industrial Conglomerates
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Industries Qatar QSC
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89,292
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3,237
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Multi-Utilities
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Qatar Electricity & Water Co.
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66,648
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2,478
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13,708
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Romania (2.6%)
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Commercial Banks
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Banca Transilvania (a)
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3,739,768
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1,003
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Diversified Financial Services
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Fondul Proprietatea SA
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8,980,552
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1,227
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2,230
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Slovenia (1.8%)
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Pharmaceuticals
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Krka dd Novo mesto
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30,300
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1,560
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Sri Lanka (4.4%)
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Commercial Banks
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Commercial Bank of Ceylon PLC
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2,532,220
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1,880
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Industrial Conglomerates
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John Keells Holdings PLC
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1,009,940
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1,409
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Wireless Telecommunication Services
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Dialog Axiata PLC
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9,417,513
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436
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3,725
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Shares
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Value
(000)
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United Arab Emirates (8.8%)
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Air Freight & Logistics
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Aramex PJSC
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5,792,259
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$
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2,760
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Commercial Banks
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First Gulf Bank PJSC
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819,000
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1,985
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Real Estate Management & Development
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Emaar Properties PJSC
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2,954,000
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2,734
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|
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7,479
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United Kingdom (2.3%)
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Pharmaceuticals
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Hikma Pharmaceuticals PLC
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180,168
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1,966
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Total Common Stocks (Cost $65,209)
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69,597
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Participation Notes (12.2%)
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Luxembourg (3.0%)
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Food Products
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Almarai Co. Ltd., expires 3/24/14 (a)
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144,126
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2,537
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|
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Saudi Arabia (7.0%)
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Commercial Banks
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Alinma Bank, expires 12/3/12 (a)
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266,314
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948
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Al Rajhi Bank, expires 2/16/15 (a)
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87,718
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1,712
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2,660
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Food & Staples Retailing
|
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Herfy Food Services Co., expires 5/17/13 (a)
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20,000
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492
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Herfy Food Services Co., expires 12/1/14 (a)
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8,477
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208
|
|
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700
|
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Wireless Telecommunication Services
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|
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Etihad Etisalat Co., expires 12/3/12 (a)
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155,059
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2,667
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|
|
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|
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6,027
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United Arab Emirates (2.2%)
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Diversified Telecommunication Services
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Emirates Telecommunications Corp., expires 4/14/14 (a)
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733,145
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1,868
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Total Participation Notes (Cost $9,339)
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10,432
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|
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Short-Term Investment (6.2%)
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Investment Company (6.2%)
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Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (c)
(Cost $5,306)
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5,306,437
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5,306
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Total Investments (99.9%) (Cost $79,854) +
|
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$
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85,335
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Other Assets in Excess of Liabilities (0.1%)
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68
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Net Assets (100.0%)
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|
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$
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85,403
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(a)
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Non-income producing security.
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(b)
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Security trades on the Hong Kong exchange.
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(c)
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The Fund invests in the Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (the Liquidity Funds), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to the advisory and administrative service fees paid by the Liquidity Funds with respect to assets invested by the Fund in the Liquidity Funds.
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+
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At July 31, 2012, the U.S. Federal income tax cost basis of investments was approximately $79,854,000 and, accordingly, net unrealized appreciation for U.S. Federal income tax purposes was approximately $5,481,000 of which approximately $10,959,000 related to appreciated securities and approximately $5,478,000 related to depreciated securities.
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ADR
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American Depositary Receipt.
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Morgan Stanley Frontier Emerging Markets Fund, Inc. (unaudited)
Notes to the Portfolio of Investments
·
July 31, 2012
Security Valuation:
Securities listed on a foreign exchange are valued at their closing price, except as noted below. Unlisted securities and listed securities not traded on the valuation date for which market quotations are readily available are valued at the mean between the last reported bid and ask prices. Equity securities listed on a U.S. exchange are valued at the latest quoted sales price on the valuation date. Equity securities listed or traded on NASDAQ, for which market quotations are available, are valued at the NASDAQ Official Closing Price. Short-term debt securities purchased with remaining maturities of 60 days or less are valued at amortized cost, unless the Funds Board of Directors (the Directors) determines such valuation does not reflect the securities fair value, in which case these securities will be valued at their fair value as determined in good faith under procedures adopted by the Directors.
Under procedures approved by the Directors, the Funds Adviser has formed a Valuation Committee. The Valuation Committee provides administration and oversight of the Funds valuation policies and procedures, which are reviewed at least annually by the Directors. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and adhoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
Most foreign markets close before the New York Stock Exchange (NYSE). Occasionally, developments that could affect the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If these developments are expected to materially affect the value of the securities, the valuations may be adjusted to reflect the estimated fair value as of the close of the NYSE, as determined in good faith under procedures established by the Directors.
Fair Value Measurement:
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosure (ASC 820), defines fair value as the value that the Funds would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entitys own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value
measurements for disclosure purposes. Various inputs are used in determining the value of the Funds investments. The inputs are summarized in the three broad levels listed below.
·
Level 1 unadjusted quoted prices in active markets for identical investments
·
Level 2 other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
·
Level 3 significant unobservable inputs including the Funds own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuers financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.
The following is a summary of the inputs used to value the Funds investments as of July 31, 2012.
Investment Type
|
|
Level 1
Unadjusted
quoted
prices
(000)
|
|
Level 2
Other
significant
observable
inputs
(000)
|
|
Level 3
Significant
unobservable
inputs
(000)
|
|
Total
(000)
|
|
Assets:
|
|
|
|
|
|
|
|
|
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Common Stocks
|
|
|
|
|
|
|
|
|
|
Air Freight & Logistics
|
|
$
|
2,760
|
|
$
|
|
|
$
|
|
|
$
|
2,760
|
|
Airlines
|
|
2,163
|
|
|
|
|
|
2,163
|
|
Automobiles
|
|
1,427
|
|
|
|
|
|
1,427
|
|
Beverages
|
|
4,891
|
|
|
|
|
|
4,891
|
|
Commercial Banks
|
|
19,817
|
|
|
|
|
|
19,817
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|
Construction Materials
|
|
1,450
|
|
|
|
|
|
1,450
|
|
Diversified Financial Services
|
|
1,227
|
|
|
|
|
|
1,227
|
|
Diversified Telecommunication Services
|
|
2,684
|
|
|
|
|
|
2,684
|
|
Energy Equipment & Services
|
|
1,887
|
|
|
|
|
|
1,887
|
|
Household Products
|
|
1,212
|
|
|
|
|
|
1,212
|
|
Industrial Conglomerates
|
|
4,646
|
|
|
|
|
|
4,646
|
|
Media
|
|
965
|
|
|
|
|
|
965
|
|
Metals & Mining
|
|
888
|
|
|
|
|
|
888
|
|
Multi-Utilities
|
|
2,478
|
|
|
|
|
|
2,478
|
|
Oil, Gas & Consumable Fuels
|
|
6,359
|
|
|
|
|
|
6,359
|
|
Pharmaceuticals
|
|
4,605
|
|
|
|
|
|
4,605
|
|
Real Estate Management & Development
|
|
2,734
|
|
|
|
|
|
2,734
|
|
Wireless Telecommunication Services
|
|
4,658
|
|
2,746
|
|
|
|
7,404
|
|
Total Common Stocks
|
|
66,851
|
|
2,746
|
|
|
|
69,597
|
|
Participation Notes
|
|
|
|
10,432
|
|
|
|
10,432
|
|
Short-Term Investment
- Investment Company
|
|
5,306
|
|
|
|
|
|
5,306
|
|
Total Assets
|
|
$
|
72,157
|
|
$
|
13,178
|
|
$
|
|
|
$
|
85,335
|
|
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investments valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of July 31, 2012, securities with a total value of approximately $40,746,000 transferred from Level 2 to Level 1. At October 31, 2011, the fair market value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification. As of July 31, 2012, securities with a total value of approximately $4,535,000 transferred from Level 1 to Level 2. At July 31, 2012, the fair market value of certain securities were adjusted due a change in pricing methodology which resulted in their Level 2 classification.
Item 2. Controls and Procedures.
(a) The Funds principal executive officer and principal financial officer have concluded that the Funds disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-Q was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, based upon such officers evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.
(b) There were no changes in the Funds internal control over financial reporting that occurred during the registrants fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Funds internal control over financial reporting.
Item 3. Exhibits.
(a) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Morgan Stanley Frontier Emerging Markets Fund, Inc.
|
|
|
|
/s/ Arthur Lev
|
|
Arthur Lev
|
|
Principal Executive Officer
|
|
September 19, 2012
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Arthur Lev
|
|
Arthur Lev
|
|
Principal Executive Officer
|
|
September 19, 2012
|
|
|
|
/s/ Francis Smith
|
|
Francis Smith
|
|
Principal Financial Officer
|
|
September 19, 2012
|
|
Morgan Stanley Frontier Emerging Markets Fund, (NYSE:FFD)
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