federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities. Forward contracts are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are recorded as unrealized foreign currency gain or loss. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery.
Pursuant to an Investment Management Agreement, the Fund pays the Investment Manager a management fee, accrued daily and payable monthly, by applying the annual rate of 0.40% to the net assets of the Fund determined as of the close of each business day.
Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A – up to 0.25% of the average daily net
Morgan Stanley Flexible Income Trust
Notes to Financial Statements ▪ April 30, 2003 (unaudited) continued
assets of Class A; (ii) Class B – 0.85% of the lesser of: (a) the average daily aggregate gross sales of the Class B shares since the inception of the Fund (not including reinvestment of dividend or capital gain distributions) less the average daily aggregate net asset value of the Class B shares redeemed since the Fund's inception upon which a contingent deferred sales charge has been imposed or waived; or (b) the average daily net assets of Class B; and (iii) Class C – up to 0.85% of the average daily net assets of Class C.
In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $18,580,382 at April 30, 2003.
In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 0.85% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the six months ended April 30, 2003, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.14% and 0.85%, respectively.
The Distributor has informed the Fund that for the six months ended April 30, 2003, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $1,512, $408,689 and $2,950, respectively and received $40,876 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges which are not an expense of the Fund.
4. Security Transactions and Transactions with Affiliates
The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended April 30, 2003 aggregated $511,139,248 and $412,319,966, respectively. Included in the aforementioned are purchases and sales of U.S. Government securities of $389,782,619 and $282,884,135, respectively.
Morgan Stanley Trust, an affiliate of the Investment Manager and Distributor, is the Fund's transfer agent. At April 30, 2003, the Fund had transfer agent fees and expenses payable of approximately $8,100.
36
Morgan Stanley Flexible Income Trust
Notes to Financial Statements ▪ April 30, 2003 (unaudited) continued
The Fund has an unfunded noncontributory defined benefit pension plan covering all independent Trustees of the Fund who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on years of service and compensation during the last five years of service. Aggregate pension costs for the six months ended April 30, 2003 included in Trustees' fees and expenses in the Statement of Operations amounted to $5,904. At April 30, 2003, the Fund had an accrued pension liability of $93,533 which is included in accrued expenses in the Statement of Assets and Liabilities.
5. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:
| | | | | | | | | | | | | | | | | | |
| | | FOR THE SIX
MONTHS ENDED
APRIL 30, 2003 | | FOR THE YEAR
ENDED
OCTOBER 31, 2002 | |
| | | (unaudited) | |
| | | SHARES | | AMOUNT | | SHARES | | AMOUNT |
| CLASS A SHARES | | | | |
| Sold | | | 6,529,533 | | | $ | 40,437,448 | | | | 6,743,411 | | | $ | 39,924,775 | |
| Reinvestment of dividends and distributions | | | 58,098 | | | | 355,335 | | | | 135,295 | | | | 793,669 | |
| Redeemed | | | (5,661,274 | ) | | | (35,088,522 | ) | | | (6,769,778 | ) | | | (40,024,679 | ) |
| Net increase – Class A | | | 926,357 | | | | 5,704,261 | | | | 108,928 | | | | 693,765 | |
| CLASS B SHARES |
| Sold | | | 6,029,013 | | | | 37,124,308 | | | | 7,904,269 | | | | 47,035,881 | |
| Reinvestment of dividends and distributions | | | 624,335 | | | | 3,820,080 | | | | 1,649,222 | | | | 9,685,697 | |
| Redeemed | | | (9,365,507 | ) | | | (57,420,803 | ) | | | (24,449,603 | ) | | | (144,513,621 | ) |
| Net decrease – Class B | | | (2,712,159 | ) | | | (16,476,415 | ) | | | (14,896,112 | ) | | | (87,792,043 | ) |
| CLASS C SHARES |
| Sold | | | 708,329 | | | | 4,352,338 | | | | 2,398,597 | | | | 14,226,173 | |
| Reinvestment of dividends and distributions | | | 31,211 | | | | 190,944 | | | | 66,934 | | | | 392,893 | |
| Redeemed | | | (527,337 | ) | | | (3,237,620 | ) | | | (2,452,842 | ) | | | (14,520,213 | ) |
| Net increase – Class C | | | 212,203 | | | | 1,305,662 | | | | 12,689 | | | | 98,853 | |
| CLASS D SHARES |
| Sold | | | 2,204,293 | | | | 13,518,742 | | | | 3,031,912 | | | | 18,040,251 | |
| Reinvestment of dividends and distributions | | | 59,403 | | | | 364,616 | | | | 55,298 | | | | 325,744 | |
| Redeemed | | | (1,511,133 | ) | | | (9,220,461 | ) | | | (1,647,051 | ) | | | (9,857,397 | ) |
| Net increase – Class D | | | 752,563 | | | | 4,662,897 | | | | 1,440,159 | | | | 8,508,598 | |
| Net decrease in Fund | | | (821,036 | ) | | $ | (4,803,595 | ) | | | (13,334,336 | ) | | $ | (78,490,827 | ) |
|
37
Morgan Stanley Flexible Income Trust
Notes to Financial Statements ▪ April 30, 2003 (unaudited) continued
6. Federal Income Tax Status
At October 31, 2002, the Fund had a net capital loss carryover of approximately $149,868,000, which may be used to offset future capital gains to the extent provided by regulations, which is available through October 31 of the following years:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AMOUNT IN THOUSANDS | |
| 2003 | | 2004 | | 2005 | | 2006 | | 2007 | | 2008 | | 2009 | | 2010 |
| $3,892 | | $ | 2,953 | | | $ | 7,131 | | | $ | 7,532 | | | $ | 10,929 | | | $ | 18,698 | | | $ | 39,098 | | | $ | 59,635 | |
|
As of October 31, 2002, the Fund had temporary book/tax differences primarily attributable to book amortization of discount on debt securities, mark-to-market of open futures and forward foreign currency exchange contracts and interest on bonds in default.
7. Purpose of and Risks Relating to Certain Financial Instruments
The Fund may enter into forward contracts to facilitate settlement of foreign currency denominated portfolio transactions or to manage its foreign currency exposure or to sell, for a fixed amount of U.S. dollars or other currency, the amount of foreign currency approximating the value of some or all of its holdings denominated in such foreign currency or an amount of foreign currency other than the currency in which the securities to be hedged are denominated approximating the value of some or all of its holdings to be hedged. Additionally, when the Investment Manager anticipates purchasing securities at some time in the future, the Fund may enter into a forward contract to purchase an amount of currency equal to some or all the value of the anticipated purchase for a fixed amount of U.S. dollars or other currency.
To hedge against adverse interest rate, foreign currency and market risks, the Fund may enter into interest rate futures contracts ("futures contracts").
Forward contracts and futures contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the value of the underlying securities or in the foreign exchange rates underlying the forward contracts. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.
At April 30, 2003, there were outstanding forward and futures contracts.
38
Morgan Stanley Flexible Income Trust
Financial Highlights
Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FOR THE SIX
MONTHS ENDED
APRIL 30, 2003 | | FOR THE YEAR ENDED OCTOBER 31, | |
| 2002 | | 2001 | | 2000 | | 1999 | | 1998 |
| | | (unaudited) |
| Class A Shares |
| Selected Per Share Data: |
| Net asset value, beginning of period | | $ | 5.95 | | | $ | 6.10 | | | $ | 6.97 | | | $ | 8.16 | | | $ | 9.01 | | | $ | 9.46 | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
| Net investment income‡ | | | 0.16 | | | | 0.42 | | | | 0.56 | | | | 0.72 | | | | 0.74 | | | | 0.74 | |
| Net realized and unrealized gain (loss) | | | 0.32 | | | | (0.18 | ) | | | (0.88 | ) | | | (1.23 | ) | | | (0.87 | ) | | | (0.46 | ) |
| Total income (loss) from investment operations | | | 0.48 | | | | 0.24 | | | | (0.32 | ) | | | (0.51 | ) | | | (0.13 | ) | | | 0.28 | |
| Less dividends and distributions from: | | | | | | | | | | | | |
| Net investment income | | | (0.18 | ) | | | (0.38 | ) | | | (0.32 | ) | | | (0.62 | ) | | | (0.63 | ) | | | (0.70 | ) |
| Paid-in-capital | | | — | | | | (0.01 | ) | | | (0.23 | ) | | | (0.06 | ) | | | (0.09 | ) | | | (0.03 | ) |
| Total dividends and distributions | | | (0.18 | ) | | | (0.39 | ) | | | (0.55 | ) | | | (0.68 | ) | | | (0.72 | ) | | | (0.73 | ) |
| Net asset value, end of period | | $ | 6.25 | | | $ | 5.95 | | | $ | 6.10 | | | $ | 6.97 | | | $ | 8.16 | | | $ | 9.01 | |
| Total Return† | | | 8.18 | % (1) | | | 4.25 | % | | | (4.62 | )% | | | (6.66 | )% | | | (1.61 | )% | | | 2.86 | % |
| Ratios to Average Net Assets(3): | | | | | | | | |
| Expenses | | | 0.77 | % (2) | | | 0.81 | % | | | 0.76 | %(4) | | | 0.73 | % | | | 0.72 | % | | | 0.77 | % |
| Net investment income | | | 5.14 | % (2) | | | 7.13 | % | | | 8.78 | %(4) | | | 9.28 | % | | | 8.56 | % | | | 7.94 | % |
| Supplemental Data: | | | | | | | | |
| Net assets, end of period, in thousands | | | $37,001 | | | | $29,701 | | | | $29,769 | | | | $13,318 | | | | $21,828 | | | | $15,130 | |
| Portfolio turnover rate | | | 106 | % | | | 82 | % | | | 110 | % | | | 40 | % | | | 71 | % | | | 130 | % |
|
|
|
| ‡ | The per share amounts were computed using an average number of shares outstanding during the period. |
| † | Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. |
| (3) | Reflects overall Fund ratios for investment income and non-class specific expenses. |
| (4) | If the Fund had borne all expenses that were waived by the Investment Manager, the expense and net investment income ratios would have been 0.78% and 8.76%, respectively. |
See Notes to Financial Statements
39
Morgan Stanley Flexible Income Trust
Financial Highlights continued
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FOR THE SIX
MONTHS ENDED
APRIL 30, 2003 | | FOR THE YEAR ENDED OCTOBER 31, | |
| 2002 | | 2001 | | 2000 | | 1999 | | 1998 |
| | | (unaudited) |
| Class B Shares | | | | | | | | | | | | | | | | |
| Selected Per Share Data: | | | | |
| Net asset value, beginning of period | | $ | 5.96 | | | $ | 6.10 | | | $ | 6.98 | | | $ | 8.16 | | | $ | 9.01 | | | $ | 9.46 | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
| Net investment income‡ | | | 0.13 | | | | 0.38 | | | | 0.53 | | | | 0.67 | | | | 0.68 | | | | 0.68 | |
| Net realized and unrealized gain (loss) | | | 0.33 | | | | (0.17 | ) | | | (0.90 | ) | | | (1.22 | ) | | | (0.87 | ) | | | (0.46 | ) |
| Total income (loss) from investment operations | | | 0.46 | | | | 0.21 | | | | (0.37 | ) | | | (0.55 | ) | | | (0.19 | ) | | | 0.22 | |
| Less dividends and distributions from: | | | | | | | | | | | | | | | | |
| Net investment income | | | (0.16 | ) | | | (0.34 | ) | | | (0.30 | ) | | | (0.58 | ) | | | (0.58 | ) | | | (0.65 | ) |
| Paid-in-capital | | | — | | | | (0.01 | ) | | | (0.21 | ) | | | (0.05 | ) | | | (0.08 | ) | | | (0.02 | ) |
| Total dividends and distributions | | | (0.16 | ) | | | (0.35 | ) | | | (0.51 | ) | | | (0.63 | ) | | | (0.66 | ) | | | (0.67 | ) |
| Net asset value, end of period | | $ | 6.26 | | | $ | 5.96 | | | $ | 6.10 | | | $ | 6.98 | | | $ | 8.16 | | | $ | 9.01 | |
| Total Return† | | | 7.78 | % (1) | | | 3.73 | % | | | (5.37 | )% | | | (7.24 | )% | | | (2.14 | )% | | | 2.23 | % |
| Ratios to Average Net Assets(3): | | | | | | | | | | | | | | | | |
| Expenses | | | 1.48 | % (2) | | | 1.47 | % | | | 1.41 | %(4) | | | 1.38 | % | | | 1.38 | % | | | 1.38 | % |
| Net investment income | | | 4.43 | % (2) | | | 6.47 | % | | | 8.13 | %(4) | | | 8.63 | % | | | 7.90 | % | | | 7.33 | % |
| Supplemental Data: |
| Net assets, end of period, in thousands. | | | $356,495 | | | | $355,329 | | | | $454,883 | | | | $565,493 | | | | $859,553 | | | | $1,024,021 | |
| Portfolio turnover rate | | | 106 | % | | | 82 | % | | | 110 | % | | | 40 | % | | | 71 | % | | | 130 | % |
|
|
|
| ‡ | The per share amounts were computed using an average number of shares outstanding during the period. |
| † | Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. |
| (3) | Reflects overall Fund ratios for investment income and non-class specific expenses. |
| (4) | If the Fund had borne all expenses that were waived by the Investment Manager, the expense and net investment income ratios would have been 1.43% and 8.11%, respectively. |
See Notes to Financial Statements
40
Morgan Stanley Flexible Income Trust
Financial Highlights continued
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FOR THE SIX
MONTHS ENDED
APRIL 30, 2003 | | FOR THE YEAR ENDED OCTOBER 31, | |
| 2002 | | 2001 | | 2000 | | 1999 | | 1998 |
| | | (unaudited) |
| Class C Shares |
| Selected Per Share Data: | | | | | | | | |
| Net asset value, beginning of period | | $ | 5.95 | | | $ | 6.09 | | | $ | 6.97 | | | $ | 8.15 | | | $ | 9.00 | | | $ | 9.45 | |
| Income (loss) from investment operations: |
| Net investment income‡ | | | 0.13 | | | | 0.38 | | | | 0.53 | | | | 0.67 | | | | 0.68 | | | | 0.68 | |
| Net realized and unrealized gain (loss) | | | 0.33 | | | | (0.17 | ) | | | (0.90 | ) | | | (1.22 | ) | | | (0.87 | ) | | | (0.46 | ) |
| Total income (loss) from investment operations | | | 0.46 | | | | 0.21 | | | | (0.37 | ) | | | (0.55 | ) | | | (0.19 | ) | | | 0.22 | |
| Less dividends and distributions from: | | | | | | | | |
| Net investment income | | | (0.16 | ) | | | (0.34 | ) | | | (0.30 | ) | | | (0.58 | ) | | | (0.58 | ) | | | (0.65 | ) |
| Paid-in-capital | | | — | | | | (0.01 | ) | | | (0.21 | ) | | | (0.05 | ) | | | (0.08 | ) | | | (0.02 | ) |
| Total dividends and distributions | | | (0.16 | ) | | | (0.35 | ) | | | (0.51 | ) | | | (0.63 | ) | | | (0.66 | ) | | | (0.67 | ) |
| Net asset value, end of period | | $ | 6.25 | | | $ | 5.95 | | | $ | 6.09 | | | $ | 6.97 | | | $ | 8.15 | | | $ | 9.00 | |
| Total Return† | | | 7.80 | % (1) | | | 3.74 | % | | | (5.38 | )% | | | (7.12 | )% | | | (2.25 | )% | | | 2.26 | % |
| Ratios to Average Net Assets(3): | | | | | | | | |
| Expenses | | | 1.48 | % (2) | | | 1.47 | % | | | 1.35 | %(4) | | | 1.38 | % | | | 1.38 | % | | | 1.38 | % |
| Net investment income | | | 4.43 | % (2) | | | 6.47 | % | | | 8.19 | %(4) | | | 8.63 | % | | | 7.90 | % | | | 7.33 | % |
| Supplemental Data: | | | | | | | | |
| Net assets, end of period, in thousands | | | $14,489 | | | | $12,524 | | | | $12,754 | | | | $14,313 | | | | $19,450 | | | | $15,659 | |
| Portfolio turnover rate | | | 106 | % | | | 82 | % | | | 110 | % | | | 40 | % | | | 71 | % | | | 130 | % |
|
|
|
| ‡ | The per share amounts were computed using an average number of shares outstanding during the period. |
| † | Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. |
| (3) | Reflects overall Fund ratios for investment income and non-class specific expenses. |
| (4) | If the Fund had borne all expenses that were waived by the Investment Manager, the expense and net investment income ratios would have been 1.37% and 8.17%, respectively. |
See Notes to Financial Statements
41
Morgan Stanley Flexible Income Trust
Financial Highlights continued
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FOR THE SIX
MONTHS ENDED
APRIL 30, 2003 | | FOR THE YEAR ENDED OCTOBER 31, | |
| 2002 | | 2001 | | 2000 | | 1999 | | 1998 |
| | | (unaudited) |
| Class D Shares | | | | | | | | | | | | |
| Selected Per Share Data: | | | | | | | | |
| Net asset value, beginning of period | | $ | 5.97 | | | $ | 6.11 | | | $ | 6.99 | | | $ | 8.15 | | | $ | 9.00 | | | $ | 9.45 | |
| Income (loss) from investment operations: | | | | | | | | |
| Net investment income‡ | | | 0.16 | | | | 0.41 | | | | 0.56 | | | | 0.72 | | | | 0.76 | | | | 0.76 | |
| Net realized and unrealized gain (loss) | | | 0.32 | | | | (0.15 | ) | | | (0.87 | ) | | | (1.19 | ) | | | (0.88 | ) | | | (0.46 | ) |
| Total income (loss) from investment operations | | | 0.48 | | | | 0.26 | | | | (0.31 | ) | | | (0.47 | ) | | | (0.12 | ) | | | 0.30 | |
| Less dividends and distributions from: | | | | | | | | |
| Net investment income | | | (0.18 | ) | | | (0.39 | ) | | | (0.33 | ) | | | (0.63 | ) | | | (0.64 | ) | | | (0.72 | ) |
| Paid-in-capital | | | — | | | | (0.01 | ) | | | (0.24 | ) | | | (0.06 | ) | | | (0.09 | ) | | | (0.03 | ) |
| Total dividends and distributions | | | (0.18 | ) | | | (0.40 | ) | | | (0.57 | ) | | | (0.69 | ) | | | (0.73 | ) | | | (0.75 | ) |
| Net asset value, end of period | | $ | 6.27 | | | $ | 5.97 | | | $ | 6.11 | | | $ | 6.99 | | | $ | 8.15 | | | $ | 9.00 | |
| Total Return† | | | 8.22 | % (1) | | | 4.61 | % | | | (4.56 | )% | | | (6.20 | )% | | | (1.42 | )% | | | 3.21 | % |
| Ratios to Average Net Assets(3): | | | | | | | | |
| Expenses | | | 0.63 | % (2) | | | 0.62 | % | | | 0.56 | %(4) | | | 0.53 | % | | | 0.53 | % | | | 0.53 | % |
| Net investment income | | | 5.28 | % (2) | | | 7.32 | % | | | 8.98 | %(4) | | | 9.48 | % | | | 8.75 | % | | | 8.18 | % |
| Supplemental Data: | | | | | | | | |
| Net assets, end of period, in thousands | | | $20,987 | | | | $15,474 | | | | $7,049 | | | | $1,493 | | | | $1,046 | | | | $740 | |
| Portfolio turnover rate | | | 106 | % | | | 82 | % | | | 110 | % | | | 40 | % | | | 71 | % | | | 130 | % |
|
|
|
| ‡ | The per share amounts were computed using an average number of shares outstanding during the period. |
| † | Calculated based on the net asset value as of the last business day of the period. |
| (3) | Reflects overall Fund ratios for investment income and non-class specific expenses. |
| (4) | If the Fund had borne all expenses that were waived by the Investment Manager, the expense and net investment income ratios would have been 0.58% and 8.96%, respectively. |
See Notes to Financial Statements
42
(This page has been left blank intentionally.)
Item 9 - Controls and Procedures
The Trust's Principal executive officer and Principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's 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.
There were no significant changes or corrective actions with regard to
siginficant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation.
II-1
Item 10b Exhibits
A separate certification for each principal executive officer and principal
financial officer of the registrant are attached hereto as part of EX-99.CERT.
Items 2 - 8 and Item 10a are not applicable
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 Flexible Income Trust
Ronald E. Robison
Principal Executive Officer
June 20, 2003
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.
Ronald E. Robison
Principal Executive Officer
June 20, 2003
Francis Smith
Principal Financial Officer
June 20, 2003
II-2
EXHIBIT B1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
CERTIFICATIONS
--------------
I, Ronald E. Robison, certify that:
1. I have reviewed this report on Form N-CSR of Morgan Stanley
Flexible Income Trust;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in
light of the circumstances under which such statements were
made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly
present in all material respects the financial condition,
results of operations, changes in net assets, and cash
flows (if the financial statements are required to include
a statement of cash flows) of the registrant as of, and
for, the periods presented in this report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Rule 30a-2(c) under
the Investment Company Act of 1940) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the
period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this report (the "Evaluation Date");
and
c) presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize, and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this report whether or not there were
significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: June 20, 2003
Ronald E. Robison
Principal Executive Officer
EXHIBIT B2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
CERTIFICATIONS
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I, Francis Smith, certify that:
1. I have reviewed this report on Form N-CSR of Morgan Stanley
Flexible Income Trust;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in
light of the circumstances under which such statements were
made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly
present in all material respects the financial condition,
results of operations, changes in net assets, and cash
flows (if the financial statements are required to include
a statement of cash flows) of the registrant as of, and
for, the periods presented in this report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Rule 30a-2(c) under
the Investment Company Act of 1940) for the registrant and
have:
(i) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this report is
being prepared;
(ii) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this report (the
"Evaluation Date");
and
(iii) presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize, and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this report whether or not there were
significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: June 20, 2003
Francis Smith
Principal Financial Officer
SECTION 906 CERTIFICATION
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Morgan Stanley Flexible Income Trust
In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended April 30, 2003 that is accompanied by
this certification, the undersigned hereby certifies that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Issuer.
Date: June 20, 2003 Ronald E. Robison
Principal Executive Officer
A signed original of this written statement required by Section 906 has been
provided to Morgan Stanley Flexible Income Trust and will be retained by Morgan
Stanley Flexible Income Trust and furnished to the Securities and Exchange
Commission or its staff upon request.
SECTION 906 CERTIFICATION
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Morgan Stanley Flexible Income Trust
In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended April 30, 2003 that is accompanied by
this certification, the undersigned hereby certifies that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Issuer.
Date: June 20, 2003 Francis Smith
Principal Financial Officer
A signed original of this written statement required by Section 906 has been
provided to Morgan Stanley Flexible Income Trust and will be retained by Morgan
Stanley Flexible Income Trust and furnished to the Securities and Exchange
Commission or its staff upon request.
