December 31 of that year or on the date of a final distribution made in accordance with Section The taxable year of the Trust will end on December 31 of each year, or on any other date designated by the Special Shareholder that is a permitted taxable year-end for tax purposes, and need not be the same as the Fiscal Year. Number and Qualification. Prior to a public offering of Shares there may be a sole Trustee. Thereafter, the number of Trustees shall be determined by a written instrument signed by a majority of the Trustees then office, provided that the number of Trustees shall be no less than two or more than thirteen.
No reduction in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his term. An individual nominated as a Trustee shall be at least 21 years of age and not older than 72 years of age at the time of nomination and not under legal disability. Trustees need not own Shares and may succeed themselves in office. Term and Election. The term of office of a Trustee shall continue until death, resignation, removal, bankruptcy, adjudicated incompetence or other incapacity to perform the duties of the office, or removal, of a Trustee.
Subject to the provisions of the Act, the Trustees at any time may elect Trustees to fill vacancies in the number of Trustees. Each Trustee elected shall hold office until his or her successor shall have been elected and shall have qualified. Resignation and Removal. Any of the Trustees may resign their trust without need for prior or subsequent accounting by an instrument in writing signed by such Trustee and delivered or mailed to the Trustees or the Chairman, if any, the President or the Secretary and such resignation shall be effective upon such delivery, or at a later date according to the terms of the instrument.
Any of the Trustees may be removed provided the aggregate number of Trustees after such removal shall not be less than the minimum number required by Section 2. Upon the resignation or removal of a Trustee, each such resigning or removed Trustee shall execute and deliver such documents as the remaining Trustees shall require for the purpose of conveying to the Trust or the remaining Trustees any Trust Property held in the name of such resigning or removed Trustee.
Whenever a vacancy in the Board of Trustees shall occur, the remaining Trustees may fill such vacancy by appointing an individual having the qualifications described in this Article by a written instrument signed by a majority of the Trustees then in office or may leave such. Any vacancy created by an increase in Trustees may be filled by the appointment of an individual having the qualifications described in this Article made by a written instrument signed by a majority of the Trustees then in office.
No vacancy shall operate to annul this Declaration or to revoke any existing agency created pursuant to the terms of this Declaration. Whenever a vacancy in the number of Trustees shall occur, until such vacancy is filled as provided herein, the Trustees in office, regardless of their number, shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by this Declaration.
Meetings of the Trustees shall be held from time to time upon the call of the Chairman, if any, or the President or any two Trustees. Regular meetings of the Trustees may be held without call or notice at a time and place fixed by the By-Laws or by resolution of the Trustees. Notice of any other meeting shall be given by the Secretary and shall be delivered to the Trustees orally not less than 24 hours, or in writing not less than 72 hours, before the meeting, but may be waived in writing by any Trustee either before or after such meeting.
The attendance of a Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Trustee attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been properly called or convened. Any time there is more than one Trustee, a quorum for all meetings of the Trustees shall be one-third, but not less than two, of the Trustees.
Unless provided otherwise in this Declaration and except as required under the Act, any action of the Trustees may be taken at a meeting by vote of a majority of the Trustees present a quorum being present or without a meeting by written consent of a majority of the Trustees.
Any committee of the Trustees, including an executive committee, if any, may act with or without a meeting. A quorum for all meetings of any such committee shall be one-third, but not less than two, of the members thereof. Unless provided otherwise in this Declaration, any action of any such committee may be taken at a meeting by vote of a majority of the members present a quorum being present or without a meeting by written consent of all of the members.
With respect to actions of the Trustees and any committee of the Trustees, Trustees who are Interested Persons in any action to be taken may be counted for quorum purposes under this Section and shall be entitled to vote to the extent not prohibited by the Act. All or any one or more Trustees may participate in a meeting of the Trustees or any committee thereof by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other; participation in a meeting pursuant to any such communications system shall constitute presence in person at such meeting.
Trustee Action by Written Consent. Any action which may be taken by Trustees by vote may be taken without a meeting if that number of the Trustees, or members of a committee, as the case may be, required for approval of such action at a meeting of the Trustees or of such committee consent to the action in writing and the written consents are filed with the records of the meetings of Trustees.
Such consent shall be treated for all purposes as a vote taken at a meeting of Trustees. The Trustees shall elect a President, a Secretary and a Treasurer and may elect a Chairman who shall serve at the pleasure of the Trustees or until their successors are elected. The Trustees may elect or appoint or may authorize the Chairman, if any, or President to appoint such other officers or agents with such powers as the Trustees may deem to be advisable. The Trustees shall owe to the Trust and its Shareholders the same fiduciary duties as owed by directors of corporations to such corporations and their stockholders under the Delaware General Corporation Law.
The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right, but with such powers of delegation as may be permitted by this Declaration. The Trustees may perform such acts as in their sole discretion are proper for conducting the business of the Trust. The enumeration of any specific power herein shall not be construed as limiting the aforesaid power.
Such powers of the Trustees may be exercised without order of or resort to any court. The Trustees shall have power, subject to the Fundamental Policies in effect from time to time with respect to the Trust to:. The Trustees shall not be limited by any law limiting the investments which may be made by fiduciaries. Legal Title. Legal title to all the Trust Property shall be vested in the Trust except that the Trustees shall have power to cause legal title to any Trust Property to be held by or in the name of one or more of the Trustees, or in the name of any other Person as nominee, custodian or pledgee, on such terms as the Trustees may determine, provided that the interest of the Trust therein is appropriately protected.
The right, title and interest of the Trustees in the Trust Property shall vest automatically in each person who may hereafter become a Trustee upon his due election and qualification. Upon the ceasing of any person to be a Trustee for any reason, such person shall automatically cease to have any right, title or interest in any of the Trust Property, and the right, title and interest of such Trustee in the Trust Property shall vest automatically in the remaining Trustees.
Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. Issuance and Repurchase of Shares. The Trustees shall have the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in, Shares, including Shares in fractional denominations, and, subject to the more detailed provisions set forth in Articles VIII and IX, to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares any funds or property whether capital or surplus or otherwise, to the full extent now or hereafter permitted corporations formed under the Delaware General Corporation Law.
Borrow Money or Utilize Leverage. Subject to the Fundamental Policies in effect from time to time with respect to the Trust, the Trustees shall have the power to borrow money or otherwise. Delegation; Committees. The Trustees shall have the power, consistent with their continuing exclusive authority over the management of the Trust and the Trust Property, to delegate from time to time to such of their number or to officers, employees or agents of the Trust the doing of such things, including any matters set forth in this Declaration, and the execution of such instruments either in the name of the Trust or the names of the Trustees or otherwise as the Trustees may deem expedient.
The Trustees may designate one or more committees which shall have all or such lesser portion of the authority of the entire Board of Trustees as the Trustees shall determine from time to time except to the extent action by the entire Board of Trustees or particular Trustees is required by the Act.
Collection and Payment. The Trustees shall have power to collect all property due to the Trust; to pay all claims, including taxes, against the Trust Property or the Trust, the Trustees or any officer, employee or agent of the Trust; to prosecute, defend, compromise or abandon any claims relating to the Trust Property or the Trust, or the Trustees or any officer, employee or agent of the Trust; to foreclose any security interest securing any obligations, by virtue of which any property is owed to the Trust; and to enter into releases, agreements and other instruments.
Except to the extent required for a corporation formed under the Delaware General Corporation Law, the Shareholders shall have no power to vote as to whether or not a court action, legal proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders.
The Trustees shall have power to incur and pay out of the assets or income of the Trust any expenses which in the opinion of the Trustees are necessary or incidental to carry out any of the purposes of this Declaration, and the business of the Trust, and to pay reasonable compensation from the funds of the Trust to themselves as Trustees. The Trustees shall fix the compensation of all officers, employees and Trustees. The Trustees may pay themselves such compensation for special services, including legal, underwriting, syndicating and brokerage services, as they in good faith may deem reasonable and reimbursement for expenses reasonably incurred by themselves on behalf of the Trust.
The Trustees shall have the exclusive authority to adopt and from time to time amend or repeal By-Laws for the conduct of the business of the Trust. Miscellaneous Powers. The Trustees shall have the power to: a employ or contract with such Persons as the Trustees may deem desirable for the transaction of the business of the Trust; b enter into joint ventures, partnerships and any other combinations or associations; c purchase, and pay for out of Trust Property, insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisors, distributors, selected dealers or independent contractors of the Trust against all claims arising by reason of holding any such position or by reason of any action taken or omitted by any such Person in such capacity, whether or not constituting negligence, or whether or not the Trust would have the power to indemnify such Person against such liability; d establish pension, profit-.
Further Powers. The Trustees shall have the power to conduct the business of the Trust and carry on its operations in any and all of its branches and maintain offices both within and without the State of Delaware, in any and all states of the United States of America, in the District of Columbia, and in any and all commonwealths, territories, dependencies, colonies, possessions, agencies or instrumentalities of the United States of America and of foreign governments, and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust although such things are not herein specifically mentioned.
Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this Declaration, the presumption shall be in favor of a grant of power to the Trustees. The Trustees will not be required to obtain any court order to deal with the Trust Property. Advisory and Management Arrangements. Subject to the requirements of applicable law as in effect from time to time, the Trustees may in their discretion from time to time enter into advisory, administration or management contracts including, in each case, one or more sub-advisory, sub-administration or sub-management contracts whereby the other party to any such contract shall undertake to furnish such advisory, administrative and management services with respect to the Trust as the Trustees shall from time to time consider desirable and all upon such terms and conditions as the Trustees may in their discretion determine.
Notwithstanding any provisions of this Declaration, the Trustees may authorize any advisor, administrator or manager subject to such general or specific instructions as the Trustees may from time to time adopt to exercise any of the powers of the Trustees, including to effect investment transactions with respect to the assets on behalf of the Trust to the full extent of the power of the Trustees to effect such transactions or may authorize any officer, employee or Trustee to effect such transactions pursuant to recommendations of any such advisor, administrator or manager and all without further action by the Trustees.
Any such investment transaction shall be deemed to have been authorized by all of the Trustees. Distribution Arrangements. The Trustees may in their discretion from time to time enter into one or more contracts, providing for the sale of securities of the Trust, whereby the Trust may either agree to sell such securities to the other party to the contract or appoint such other party its sales agent for such securities.
In either case, the contract shall be on such terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Article IV or the By-Laws; and such contract may also provide for the repurchase or sale of securities of the Trust by such other party as principal or as agent of the Trust and may provide that such other party may enter into selected dealer agreements with registered securities dealers and brokers and servicing and similar agreements with persons who are not registered securities dealers to further the purposes of the distribution or repurchase of the securities of the Trust.
Parties to Contract. Any contract of the character described in Sections 4. The same Person may be the other party to contracts entered into pursuant to Sections 4. No Personal Liability of Shareholders, Trustees, etc.
No Shareholder of the Trust shall be subject in such capacity to any personal liability whatsoever to any Person in connection with Trust Property or the acts, obligations or affairs of the Trust. Shareholders shall have the same limitation of personal liability as is extended to stockholders of a private corporation for profit incorporated under the Delaware General Corporation Law.
No Trustee or officer of the Trust shall be subject in such capacity to any personal liability whatsoever to any Person, save only liability to the Trust or its Shareholders arising from bad faith, willful misfeasance, gross negligence or reckless disregard for his duty to such Person; and, subject to the foregoing exception, all such Persons shall look solely to the Trust Property for satisfaction of claims of any nature arising in connection with the affairs of the Trust.
If any Shareholder, Trustee or officer, as such, of the Trust, is made a party to any suit or proceeding to enforce any such liability, subject to the foregoing exception, he shall not, on account thereof, be held to any personal liability. Any repeal or modification of this Section 5. Mandatory Indemnification. Notwithstanding the foregoing, with respect to any action, suit or other proceeding voluntarily prosecuted by any indemnitee as plaintiff, indemnification shall be mandatory only if the prosecution of such action, suit or other proceeding by such indemnitee 1 was authorized by a majority of the Trustees or 2 was instituted by the indemnitee to enforce his or her rights to indemnification hereunder in a case in which the indemnitee is found to be entitled to such indemnification.
The rights to indemnification set forth in this Declaration shall continue. No amendment or restatement of this Declaration or repeal of any of its provisions shall limit or eliminate any of the benefits provided to any person who at any time is or was a Trustee or officer of the Trust or otherwise entitled to indemnification hereunder in respect of any act or omission that occurred prior to such amendment, restatement or repeal.
All determinations to make advance payments in connection with the expense of defending any proceeding shall be authorized and made in accordance with the immediately succeeding paragraph c below. In addition, at least one of the following conditions must be met: i the indemnitee shall provide adequate security for his undertaking, ii the Trust shall be insured against losses arising by reason of any lawful advances, or iii a majority of a quorum of the Disinterested Non-Party Trustees, or if a majority vote of such quorum so direct, independent legal counsel in a written opinion, shall conclude, based on a review of readily available facts as opposed to a full trial-type inquiry , that there is substantial reason to believe that the indemnitee ultimately will be found entitled to indemnification.
No Bond Required of Trustees. No Trustee shall, as such, be obligated to give any bond or other security for the performance of any of his duties hereunder. No purchaser, lender, transfer agent or other person dealing with the Trustees or with any officer, employee or agent of the Trust shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the Trustees or of said officer, employee or agent.
The Trustees may maintain insurance for the protection of the Trust Property, the Shareholders, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible tort liability, and such other insurance as the Trustees in their sole judgment shall deem advisable or is required by the Act. Reliance on Experts, etc. Beneficial Interest. All Shares issued in accordance with the terms hereof, including, without limitation, Shares issued in connection with a dividend or distribution in Shares or a split of Shares, shall be fully paid and, except as provided in the last sentence of Section 3.
Other Securities. The Trustees may, subject to the Fundamental Policies and the requirements of the Act, authorize and issue such other securities of the Trust as they determine to be necessary, desirable or appropriate, having such terms, rights, preferences, privileges, limitations and restrictions as the Trustees see fit, including preferred interests, debt securities or other senior securities.
The Trustees are also authorized to take such actions and retain such persons as they see fit to offer and sell such securities. Rights of Shareholders. The Shares shall be personal property giving only the rights in this Declaration specifically set forth. The ownership of the Trust Property of every description and the right to conduct any business hereinbefore described are vested exclusively in the Trustees on behalf of the Trust, and the Shareholders shall have no interest therein other than the beneficial interest conferred by their Shares, and they shall have no right to call for any partition or division of any property, profits, rights or interests of the Trust nor can they be called upon to share or assume any losses of the Trust or, subject to the right of the Trustees to charge certain expenses directly to Shareholders, as provided in the last sentence of Section 3.
The Shares shall not entitle the holder to preference, preemptive, appraisal, conversion or exchange rights. Trust Only. It is the intention of the Trustees to create only the relationship of Trustee and beneficiary between the Trustees and each Shareholder from time to time.
It is not the intention of the Trustees to create a general partnership, limited partnership, joint stock association, corporation, bailment or any form of legal relationship other than a trust. Nothing in this Declaration shall be construed to make the Shareholders, either by themselves or with the Trustees, partners or members of a joint stock association. Issuance of Shares. The Trustees, in their discretion, may from time to time without vote of the Shareholders issue Shares in addition to the then issued and outstanding Shares and Shares held in the treasury, to such party or parties and for such amount and type of consideration, including cash or property, at such time or times, and on such terms as the Trustees may determine, and may in such manner acquire other assets including the acquisition of assets subject to, and in connection with the assumption of, liabilities and businesses.
The Trustees may from time to time divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interest in such Shares. Register of Shares. A register shall be kept at the offices of the Trust or any transfer agent duly appointed by the Trustees under the direction of the Trustees which shall contain the names and addresses of the Shareholders and the number of Shares held by them respectively and a record of all transfers thereof.
Each such register shall be conclusive as to who are the holders of the Shares and who shall be entitled to receive dividends or distributions or otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive payment of any dividend or distribution, nor to have notice given to him as herein provided, until he has given his address to a transfer agent or such other officer or agent of the Trustees as shall keep the register for entry thereon.
It is not contemplated that certificates will be issued for the Shares; however, the Trustees, in their discretion, may authorize the issuance of share certificates and promulgate appropriate fees therefore and rules and regulations as to their use.
Transfer Agent and Registrar. The Trustees shall have power to employ a transfer agent or transfer agents, and a registrar or registrars, with respect to the Shares. The transfer agent or transfer agents may keep the applicable register and record therein, the original issues and transfers, if any, of the said Shares.
Transfer of Shares. Shares shall be transferable on the records of the Trust only by the record holder thereof or by its agent thereto duly authorized in writing, upon delivery to the Trustees or a transfer agent of the Trust of a duly executed instrument of transfer, together with such evidence of the genuineness of each such execution and authorization and of other matters including compliance with any securities laws and contractual restrictions as may reasonably be required. Upon such delivery the transfer shall be recorded on the applicable register of the Trust.
Until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereof and neither the Trustees nor any transfer agent or registrar nor any officer, employee or agent of the Trust shall be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death, bankruptcy, or incompetence of any Shareholder, or otherwise by operation of law, shall be recorded on the applicable register of Shares as the holder of such Shares upon production of the proper evidence thereof to the Trustees or a transfer agent of the Trust, but until such record is made, the Shareholder of record shall be deemed to be the holder of such for all purposes hereof, and neither the Trustees nor any transfer agent or registrar nor any officer or agent of the Trust shall be affected by any notice of such death, bankruptcy or incompetence, or other operation of law.
Any and all notices to which any Shareholder hereunder may be entitled and any and all communications shall be deemed duly served or given if mailed, postage prepaid, addressed to any Shareholder of record at his last known address as recorded on the applicable register of the Trust. Contributions to Capital. The amount of the initial Capital Contribution of each Shareholder will be recorded by the Trust upon acceptance as a contribution to the capital of the Trust.
Each additional Capital Contribution made by a Shareholder other than a contribution made pursuant to Section 7. The Trust will charge each Shareholder making a Capital Contribution in Securities to the capital of the Trust an amount as may be determined by the Trust to reimburse the Trust for any costs incurred by the Trust by reason of accepting the Securities, and any charge will be due and payable by the contributing Shareholder in full at the time the Capital Contribution to which the charges relate is due.
The value of contributed Securities will be determined in accordance with Section Reductions may be applied to all investors, individual investors or to classes of investors, in each case in the sole discretion of the Trustees. Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown.
For the most recent month-end performance figures, please select the "month" timeframe or call Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost.
Please consider the investment objectives, risks, charges and expenses of the Absolute Return Fund and the Absolute Return Fund STS, as applicable, carefully before investing. The prospectus for each of the Funds contains this and other information about the relevant Fund and can be obtained by contacting your financial professional. Please read the prospectus of the relevant Fund carefully before investing.
Morgan Stanley does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U. Federal and state tax laws are complex and constantly changing.
Your clients should always consult their own legal or tax advisor for information concerning their individual situations. Morgan Stanley Distribution, Inc. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services.
Past performance is not indicative of future returns. Risk Considerations. Investors could lose all or a substantial amount of their investment. The Funds are suitable only for long-term investors willing to forgo liquidity and put capital at risk for an indefinite period of time.
The Funds are highly illiquid - there is no secondary market for the shares of these Funds, and there are restrictions on redemptions or assigning or otherwise transferring interests in these Funds. The Funds have higher fees and expenses than other investment vehicles, and such fees and expenses will lower the returns achieved by investors. Funds of funds often have a higher fee structure than single manager funds as a result of the additional layer of fees.
The underlying funds in which the Funds invest the "Underlying Funds" often engage in leverage and other speculative practices that may increase volatility and risk of loss. The Underlying Funds are often unregulated, and are not subject to the same regulatory requirements as mutual funds, and are not required to provide periodic pricing or valuation information to investors.
See Risk Factors and Other Considerations for important disclosures. Investment in the Fund involves a high degree of risk and is suitable only for investors who can bear the risks associated with limited liquidity and therefore should be viewed as a long-term investment. For a complete description of terms and conditions, fees and other expenses, see the Fund's prospectus.
The Fund is offering shares solely pursuant to its prospectus, and any information regarding the Fund or shares in the Fund that is not contained in the relevant prospectus shall not constitute an offering of shares in the Fund. Consequently, this material has been prepared solely for informational purposes and is not an offer, or a solicitation of an offer, to buy or sell shares of the Funds or any other security or instrument or to participate in any trading strategy.
No person or entity has been authorized in connection with this offering to give any information or make any representations other than as contained in the prospectus or in this marketing material. This does not constitute an offer to, or solicitation of, such person or entity. Fund net return is unaudited and subject to change and represents the total return based on information received from ARF's underlying managers.
The return is equal to the change in value of the Fund, including capital appreciation and income, as a percentage of the beginning value. The amount earned is the difference between the beginning and ending values, adjusted for the net of all contributions and withdrawals. The rate of return is calculated on a time-weighted basis for all investments and is net of 1 underlying manager fees; 2 broker commissions and expenses related to trading and the administration of ARF's underlying managers' funds and the Fund; 3 the reinvestment of dividends and capital gains; 4 the 1.
The operating expenses consist of management fees, administration fees, professional fees i. The information used to determine the Acquired Fund Fees and Expenses is generally based on the most recent shareholder reports received from the respective Investment Funds or, when not available, from the most recent communication from the Investment Funds. Some Investment Funds employ a pass-through expense arrangement with no stated management fee.
Fees and expenses of Investment Funds are based on historical fees and expenses. WAM is the weighted average maturity of the portfolio. The WAM calculation utilizes the interest-rate reset date, rather than a security's stated final maturity, for variable- and floating- rate securities. By looking to a portfolio's interest rate reset schedule in lieu of final maturity dates, the WAM measure effectively captures a fund's exposure to interest rate movements and the potential price impact resulting from interest rate movements.
WAL is the weighted average life of the portfolio. The WAL calculation utilizes a security's stated final maturity date or, when relevant, the date of the next demand feature when the fund may receive payment of principal and interest such as a put feature. Accordingly, WAL reflects how a portfolio would react to deteriorating credit widening spreads or tightening liquidity conditions. Tracking error and information ratio are calculated using the Portfolio's Blended Index added October 2, , as this is a better representation of the Portfolio's global multi-asset strategy.
The investment team manages the Portfolio relative to this Blended Index. Excess return versus Custom Benchmark is calculated using the Portfolio's Blended Index based on the period since it was added as a benchmark on October 2, Because the Portfolio had not commenced operations as of the most recent fiscal year end, no portfolio turnover rate is available for the Portfolio. The Reorganization occurred on January 6, The inception date reflects the inception date of the Private Fund.
Any rating below 'BBB-' rating is considered non-investment grade. Ratings are relative and subjective and are not absolute standards of quality. Ratings apply only to the underlying holdings of the portfolio and does not remove market risk. Futures are not rated. Before accessing the site, please choose from the following options. I Agree I Disagree. Toggle navigation. View All Mutual Funds. View All Alternative Investments. View All Variable Insurance Funds. View All Insights. Ideas across disciplines uncover novel insights for sharper decision-making.
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United Kingdom. Insights 0. Resources 0. Fund Facts. Investment Approach. Alternative Investment Partners Absolute Return Fund STS is a fund of hedge funds that, through its ultimate master fund, Alternative Investment Partners Absolute Return Fund "ARF" , invests substantially all its assets in private investment funds commonly referred to as hedge funds that are managed by a select group of alternative investment managers who employ different absolute return investment strategies in pursuit of attractive risk-adjusted returns returns adjusted to take into account volatility of those returns consistent with the preservation of capital and not highly correlated with fixed income or equity indices.
Past performance is not indicative of future results. Growth of investment performance is since the Fund's inception date, based on the net of fees return experience of the Fund. Fund net return is unaudited and subject to change and represents the total return for the month based on information received from underlying managers.
The amount earned is the difference between the beginning and ending values, adjusted for the net of all contributions and withdrawals cash flow. The rate of return is calculated on a time-weighted basis for all investments and is net of 1 underlying manager fees; 2 broker commissions and expenses related to trading and the administration of the underlying managers' funds and the Fund; 3 the reinvestment of dividends and capital gains; 4 the 1.
Performance links monthly performance through compound multiplication. Results are hypothetical. Average Annual Total Returns. Monthly Quarterly Calendar Year. Performance figures are not audited and subject to change. Investment returns and principal value will fluctuate and the Fund shares, when repurchased by the Fund, may be worth more or less than their original cost.
Weight Directional Portfolio Manager. Mark van der Zwan. Insight Article. Oct 29, The AIP Hedge Fund Solutions Team provides its view on recent performance of the hedge fund industry and its outlook for hedge fund strategies going forward. Apr 21, Fact Card. Semi-Annual Report. Annual Report. Fixed income net and gross exposure is duration adjusted U. Treasury Year equivalents. View All Mutual Funds U. Learn More Our monthly Global Equity Observer shares our thoughts on world events as seen through the lens of our high quality investment process.
Learn More A monthly outlook for global fixed income markets, including an in-depth review of key sectors. Learn More A timely analysis of market-changing events and their impact on the investment landscape. Learn More A comprehensive assessment of noteworthy trends shaping the global investment risk environment and our portfolio allocations. Fund Facts Asset Class:. Anticipated quarterly a.
Investment Approach Alternative Investment Partners Absolute Return Fund STS is a fund of hedge funds that, through its ultimate master fund, Alternative Investment Partners Absolute Return Fund "ARF" , invests substantially all its assets in private investment funds commonly referred to as hedge funds that are managed by a select group of alternative investment managers who employ different absolute return investment strategies in pursuit of attractive risk-adjusted returns returns adjusted to take into account volatility of those returns consistent with the preservation of capital and not highly correlated with fixed income or equity indices.
Growth of Investment. Other Directional. Relative Value. Statistical Arbitrage. Fixed Income Arbitrage. Mortgage Arbitrage. Volatility Arbitrage. Convertible Arbitrage. Other Arbitrage. Event Driven. Event Driven Credit. Private Placements. North America. Statement of Assets and Liabilities. Statement of Operations.
To the Shareholders and Board of Trustees of. Opinion on the Financial Statements. Basis for Opinion. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the auditor of one or more Morgan Stanley investment companies since Philadelphia, Pennsylvania.
Cash and cash equivalents. Prepaid investments in investment funds. Receivable for investments sold. Other assets. Total assets. Line of credit payable. Payable for share repurchases. Management fee payable. Withholding tax payable. Shareholder servicing fee payable. Subscriptions received in advance. Transfer agent fee payable. Accrued expenses and other liabilities.
Total liabilities. Net assets. Net assets consist of:. Net capital. Total distributable earnings loss. Net asset value per share:. The accompanying notes are an integral part of these financial statements and should be used in conjunction herewith.
Investment income. Management fees. Interest expense. Shareholder servicing fees. Professional fees. Accounting and administration fees. Custody fees. Transfer agent fees. Registration fees. Total expenses. Net investment income loss. Realized and unrealized gain loss from investments. Net realized gain loss from investments in investment funds. Net realized and unrealized gain loss from investments. Net increase decrease in net assets resulting from operations.
Net increase decrease in net assets resulting from operations:. Net realized gain loss from investments. Shareholder transactions. Subscriptions representing 3, Repurchases representing 44, Net increase decrease in net assets from shareholder transactions. Total increase decrease in net assets. Net assets, beginning of year representing , Net assets, end of year representing , Net change in unrealized appreciation depreciation on investments.
Subscriptions representing 1, Repurchases representing 33, Cash flows from operating activities. Adjustments to reconcile net increase decrease in net assets resulting from operations to net cash provided by used in operating activities:. Net change in unrealized appreciation depreciation on investments in investment funds. Purchase of investments in investment funds.
Proceeds from sale of investments in investment funds. Increase decrease in prepaid investments in investment funds. Increase decrease in receivable for investments sold. Increase decrease in other assets. Increase decrease in management fee payable. Increase decrease in withholding tax payable. Increase decrease in shareholder servicing fee payable.
Increase decrease in transfer agent fee payable. Increase decrease in accrued expenses and other liabilities. Net cash provided by used in operating activities. Cash flows from financing activities. Repayments of note payable. Proceeds from advances on line of credit. Net cash provided by used in financing activities. Net change in cash and cash equivalents. Cash and cash equivalents at beginning of year.
Cash and cash equivalents at end of year. Supplemental disclosure of cash flow information:. Note payable converted to facility. Conversion to shareholder subscriptions in of subscriptions received in advance during See discussion in Note 8 to the financial statements. Investment Funds. Commodity Trading Advisors - Managed Futures. Teza Fund V LP. Cerberus Partners, L. Total Distressed. Holocene Advisors Fund LP.
PivotBase Fund LP. Point72 Capital, L. Axon Partners, LP. Boldhaven Fund. Pleiad Asia Onshore Feeder Fund. Scopus Partners II, L. Turiya Fund LP. Valinor Capital Partners, L. Schedule of Investments continued. Investment Funds continued. Event Driven Equity. Sachem Head LP. Total Event Driven Equity.
Fixed Income Arbitrage. Total Fixed Income Arbitrage. Andurand Commodities Fund LP. Shaw Oculus Fund, L. Key Square Partners LP. Total Macro. Mortgage Arbitrage. Total Mortgage Arbitrage. Shaw Composite Fund, L. Magnetar Capital Fund, LP. Perry Partners, L. Total Multi-Strategy. Other Directional. Total Other Directional. Private Placements. Total Private Placements. Statistical Arbitrage. Shaw Valence Fund, L.
Two Sigma Spectrum U. Fund, LP. Total Statistical Arbitrage. Total Investments in Investment Funds. Liabilities in excess of Other Assets. Total Net Assets. Investment Funds are non-income producing. May represent percentage ownership of a feeder Investment Fund, which in turn invests in a master Investment Fund. May not reflect year-ended redemptions at Investment Funds.
Investments in Investment Funds may be composed of multiple tranches. Other tranches may have an available redemption date that is after the Next Available Redemption Date. Redemptions from Investment Funds may be subject to fees. Available frequency of redemptions after initial lock-up period, if any.
Different tranches may have different liquidity terms. In addition to any redemption proceeds that may have already been received, the Fund will continue to receive proceeds periodically as the Investment Fund is able to liquidate underlying investments. The Investment Fund contains capital commitments. The general partner of the Investment Fund may call or distribute capital on a periodic basis.
Strategy Allocation. The Fund is registered under the U. The Fund may seek to gain investment exposure to certain Investment Funds or to adjust market or risk exposure by entering into derivative transactions, such as total return swaps, options and futures. Each of the Investment Adviser and Sub-Adviser is an affiliate of Morgan Stanley and is registered as an investment adviser under the U. The Distributor may.
Notes to Financial Statements continued. Organization continued. Securities Act of , as amended. The minimum initial and additional investments may be reduced by the Fund with respect to certain Shareholders. Repurchases are made at such times, in such amounts and on such terms as may be determined by the Board, in its sole discretion.
In determining whether the Fund should offer to repurchase Shares or portions of them from Shareholders, the Board will consider the recommendations of the Adviser as to the timing of such an offer, as well as a variety of operational, business and economic factors. Significant Accounting Policies. The following significant accounting policies are in conformity with U.
Such policies are consistently followed by the Fund in preparation of its financial statements. Actual results could differ from those estimates. Significant Accounting Policies continued. Portfolio Valuation. The net asset value of the Fund is determined as of the close of business at the end of any fiscal period, generally monthly, in accordance with the valuation principles set forth below or as may be determined from time to time pursuant to policies established by the Board. The Investment Funds value their underlying investments in accordance with policies established by each Investment Fund, as described in each of their financial statements or offering memoranda.
Should the Fund seek to liquidate its investment in an Investment Fund that maintains these side pockets, the Fund might not be able to fully liquidate its investment without delay, which could be considerable. The Adviser has designed ongoing due diligence processes with respect to Investment Funds and their investment managers, which assist the Adviser in assessing the quality of information provided by, or on behalf of, each Investment Fund and in determining whether such information continues to be reliable or whether further investigation is necessary.
Where no value is readily available from an Investment Fund or where a value supplied by an Investment Fund is deemed by the Adviser not to be indicative of its fair value, the Adviser will determine the fair value of the Investment Fund. Portfolio Valuation continued. A member of the portfolio management team may attend each Valuation Committee meeting to provide knowledge, insight, and recommendations on valuation issues.
The portfolio management team will recommend to the Valuation Committee a fair value for an investment using valuation techniques such as a market approach or income approach. The Valuation Committee shall meet at least annually to analyze changes in fair value measurements. Cash and Cash Equivalents. Cash and cash equivalents consist of cash held on deposit and short term highly liquid investments that are readily convertible to known amounts of cash and have maturities of three months or less.
Income Recognition and Expenses. The Fund recognizes income and expenses on an accrual basis. Income, expenses and realized and unrealized gains and losses are recorded monthly. Realized gain loss from investments in Investment Funds is calculated using specific identification. Income and Withholding Taxes. No provision for federal, state, or local income taxes is required in the financial statements. In accordance with the U. The Fund files tax returns with the U. Internal Revenue Service and various states.
The Fund expects to be treated as a partnership for U. Income and Withholding Taxes continued. Internal Revenue Service on behalf of the non-U. The rate of withholding is generally the rate at which the particular non-U. Shareholder is subject to U.
The non-U. Shareholders are obligated to indemnify the Fund for any taxes that the Fund is required to withhold as well as any interest or penalties. Withholding taxes result in a repurchase of Shares from the Fund for any non-U. Shareholders who incur the withholding. The Special Shareholder made no contributions to the capital of the Fund for U. Federal income tax purposes during this period. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statement of Operations.
In the normal course of business, the Investment Funds in which the Fund invests may trade various financial instruments and enter into various investment activities with off-balance sheet risk. These include, but are not limited to, short selling activities, written option contracts, and swaps. Fair Value of Financial Instruments. Fair value is defined as the price that the Fund 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.
Various inputs are used in determining the fair value of the. Fair Value of Financial Instruments continued. The inputs are summarized in the three broad levels listed below:. The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments.
The units of account that are valued by the Fund are its interests in the Investment Funds or other financial instruments and not the underlying holdings of such Investment Funds or other financial instruments. Thus, the inputs used by the Fund to value its investments in each of the Investment Funds or other financial instruments may differ from the inputs used to value the underlying holdings of such Investment Funds or other financial instruments.
Investments in Investment Funds. Commodity Trading Advisors. Distressed b. Event Driven Equity e. Fixed Income Arbitrage f. Macro g. Mortgage Arbitrage i. Multi-Strategy j. Other Directional k. Private Placement l. Statistical Arbitrage m. Total Investment Funds. Investment Funds in this strategy invest in a variety of futures contracts, including currencies, interest rates, stocks, stock market indexes, derivatives, and commodities.
These Investment Funds build quantitative models to price futures and then take long and short positions in the futures. Investment Fund tranches representing 3. The Fund estimates the remaining restriction period for such Investment Fund tranches to be 2 years. Investment Funds in this strategy seek to profit by exploiting pricing inefficiencies between related equity securities, neutralizing exposure to market risk by combining long and short positions. Investment Funds in this strategy consist of a core holding of long equities hedged at all times with short sales of stocks or stock index options.
Investment Fund tranches representing 0. The Fund estimates the remaining restriction period for such Investment Fund tranches to be 6 years. Investment Funds in this strategy invest in restructuring companies that are undergoing significant corporate events such as spin-offs, recapitalizations, litigation events, strategic realignment, and other major changes.
The Investment Fund in this strategy seeks to profit by exploiting pricing differences between related fixed income securities and their derivatives, neutralizing exposure to market risk by combining long and short positions. Investments in Investment Funds continued. Investment Funds in this strategy invest by making leveraged bets on anticipated price movements of stock markets, interest rates, foreign exchange and physical commodities. Investment Funds in this strategy involves investing in securities of companies that are the subject of some form of extraordinary corporate transactions, including acquisition or merger proposals, exchange offers, cash tender offers and leveraged buy-outs.
Investment Funds in this strategy seek to exploit pricing differentials between various issues of mortgage-related bonds. Investment Funds in this strategy tactically allocate capital to various hedge fund strategies based on their perceived risk and return profiles. The Fund estimates the remaining restriction period for such Investment Fund tranches to range from 2 to 4 years. Portfolio Investments in this strategy invest in a broad group of directional strategies, often with little hedging.
Investment Fund tranches representing 1. The remaining restriction period for such Investment Fund tranches is unknown. Investment Funds in this strategy invest primarily in private non-public securities with limited liquidity. The Fund estimates the remaining restriction period for such Investment Fund tranches to be 4 years. Investment Funds in this strategy profit from temporary pricing discrepancies between related securities.
This irregularity offers an opportunity to go long the cheaper security and to short the more expensive one in an attempt to profit as the prices of the two revert to their norm, or mean. The cost of investments for federal income tax purposes is adjusted for items of taxable income or loss allocated to the Fund from the Investment Funds. The allocated taxable income or loss is reported to the Fund by the Investment Funds on Schedules K Investment Receivables and Prepaid Investments.
Substantially all of the receivable balance was collected subsequent to the balance sheet date. In consideration of the advisory and other services provided by the Investment Adviser to the Fund, the Fund pays the Investment Adviser a monthly management fee of 0. The management fee is in addition to the asset-based fees and incentive fees or allocations charged by the underlying Investment Funds and indirectly borne by Shareholders in the Fund.
The Investment Adviser pays the Sub-Adviser a portion of the management fees the Investment Adviser receives from the Fund on a monthly basis. The Distributor or a Selling Agent may, in its discretion, waive the sales load for certain investors. Under an administrative services agreement, State Street is paid an administrative fee, computed and payable monthly at an annual rate ranging from 0. Under a custody services agreement, State Street is paid a custody fee monthly at an annual rate of 0.
The Fund is charged directly for certain reasonable out-of-pocket expenses related to the accounting, administrative and custodial services provided by State Street to the Fund. Each eligible member of the Board generally may elect to have the deferred amounts invested in the DC Plan in order to earn a return equal to the total return on one or more of the Morgan Stanley products that are offered as investment options under the DC Plan.
The Fund was charged a minimum interest rate of 1. The Fund had the option to reduce the minimum borrowing at any time. On the 15th day of each month, any unpaid accrued interest expense was automatically rolled over into the principal amount of the borrowings.
Borrowings are secured by investments in Investment Funds. Detailed below is summary information concerning the borrowings:. The annual interest rate on borrowings is the greater. Borrowings continued. Of the Federal Funds Rate plus 1. Contractual Obligations. The Fund enters into contracts that contain a variety of indemnifications. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
Financial Highlights. The following represents per Share data, ratios to average net assets and other financial highlights information for Shareholders. For a Share outstanding throughout the year:. Net asset value, beginning of year. Net investment income loss a. Net increase decrease resulting from operations.
Net asset value, end of year. Total return b. Ratio of total expenses c. Ratio of net investment income loss d. Portfolio turnover. Net assets, end of year s. Calculated based on the average shares outstanding methodology. Total return assumes a subscription of a Share in the Fund at the beginning of the year indicated and a repurchase of the Share on the last day of the year, and does not reflect the impact of the sales load, if any, incurred when subscribing to the Fund.
Financial Highlights continued. The above ratios and total returns have been calculated for the Shareholders taken as a whole. Subsequent Events. Unless otherwise stated throughout the Notes to Financial Statements, the Fund noted no subsequent events that require disclosure in or adjustment to the financial statements. Once filed, the most recent Form N-Q will be available without charge, upon request, by calling the Fund at This privacy notice describes the U.
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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. The rates of return are used only to illustrate the effects of the compound growth rate and are not intended to reflect future values or returns on investment in an investment fund.
MRFPs can be found within the Documents tab. This information on this document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or an offer or a solicitation to buy or sell securities. Every effort has been made to ensure that the material contained herein is accurate at the time of publication. Market conditions may change which may impact the information contained in this document.
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Investment Offering. Open-end Structure. Investment Team. Olivier joined the firm in September as Analyst, Private Wealth. He then evolved in the Fixed Income field to finally assume the full responsibility for all bonds and money market strategies in Nabil has over 10 years of experience as a Derivatives Trader at leading proprietary trading firms based in Canada, the U.
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