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 |
811-21926 | |||||||
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Morgan Stanley China A Share Fund, Inc. | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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522 Fifth Avenue, New York, New York |
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10036 | ||||||
(Address of principal executive offices) |
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(Zip code) | ||||||
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John H. Gernon 522 Fifth Avenue, New York, New York 10036 | ||||||||
(Name and address of agent for service) | ||||||||
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Registrants telephone number, including area code: |
212-296-0289 |
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Date of fiscal year end: |
December 31, |
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Date of reporting period: |
March 31, 2015 |
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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 China A Share Fund, Inc.
Portfolio of Investments
First Quarter Report
March 31, 2015 (unaudited)
|
|
Shares |
|
Value |
| |
Common Stocks (98.7%) |
|
|
|
|
| |
Automobiles (2.9%) |
|
|
|
|
| |
SAIC Motor Corp., Ltd., Class A |
|
6,018,400 |
|
$ |
24,234 |
|
|
|
|
|
|
| |
Banks (14.5%) |
|
|
|
|
| |
China Merchants Bank Co., Ltd., Class A |
|
19,634,013 |
|
49,602 |
| |
Industrial & Commercial Bank of China Ltd., Class A |
|
92,316,335 |
|
72,921 |
| |
|
|
|
|
122,523 |
| |
Beverages (12.6%) |
|
|
|
|
| |
Kweichow Moutai Co., Ltd., Class A |
|
1,152,461 |
|
36,423 |
| |
Tsingtao Brewery Co., Ltd., Class A |
|
8,612,270 |
|
59,108 |
| |
Wuliangye Yibin Co., Ltd., Class A |
|
2,914,229 |
|
10,897 |
| |
|
|
|
|
106,428 |
| |
Capital Markets (1.9%) |
|
|
|
|
| |
CITIC Securities Co., Ltd., Class A |
|
3,061,400 |
|
16,308 |
| |
|
|
|
|
|
| |
Construction & Engineering (2.0%) |
|
|
|
|
| |
China State Construction Engineering Corp., Ltd., Class A |
|
13,976,759 |
|
17,295 |
| |
|
|
|
|
|
| |
Construction Materials (1.4%) |
|
|
|
|
| |
Anhui Conch Cement Co., Ltd., Class A |
|
3,127,848 |
|
11,578 |
| |
|
|
|
|
|
| |
Electrical Equipment (4.7%) |
|
|
|
|
| |
NARI Technology Development Co., Ltd., Class A |
|
11,788,079 |
|
39,493 |
| |
|
|
|
|
|
| |
Electronic Equipment, Instruments & Components (9.6%) |
|
|
|
|
| |
GoerTek, Inc., Class A |
|
7,287,043 |
|
39,097 |
| |
Shenzhen O-film Tech Co., Ltd., Class A |
|
6,203,458 |
|
26,804 |
| |
Universal Scientific Industrial Shanghai Co., Ltd., Class A |
|
2,488,527 |
|
15,028 |
| |
|
|
|
|
80,929 |
| |
Food & Staples Retailing (2.8%) |
|
|
|
|
| |
Zhongbai Holdings Group Co., Ltd., Class A |
|
14,252,814 |
|
23,299 |
| |
|
|
|
|
|
| |
Food Products (1.4%) |
|
|
|
|
| |
Inner Mongolia Yili Industrial Group Co., Ltd., Class A |
|
2,310,007 |
|
11,524 |
| |
|
|
|
|
|
| |
Health Care Providers & Services (2.4%) |
|
|
|
|
| |
Shanghai Pharmaceuticals Holding Co., Ltd., Class A |
|
5,525,600 |
|
20,258 |
| |
|
|
|
|
|
| |
Hotels, Restaurants & Leisure (1.3%) |
|
|
|
|
| |
Tsui Wah Holdings Ltd. (a) |
|
33,912,000 |
|
10,978 |
| |
|
|
|
|
|
| |
Household Durables (9.4%) |
|
|
|
|
| |
Qingdao Haier Co., Ltd., Class A |
|
19,024,800 |
|
79,292 |
| |
|
|
|
|
|
| |
Insurance (7.8%) |
|
|
|
|
| |
China Pacific Insurance Group Co., Ltd., Class A |
|
11,913,355 |
|
65,882 |
| |
|
|
|
|
|
| |
Media (0.7%) |
|
|
|
|
| |
Bona Film Group Ltd. ADR (b) |
|
786,902 |
|
5,855 |
| |
|
|
|
|
|
| |
Metals & Mining (1.5%) |
|
|
|
|
| |
Baoshan Iron & Steel Co., Ltd., Class A |
|
11,366,928 |
|
13,106 |
| |
Oil, Gas & Consumable Fuels (3.3%) |
|
|
|
|
| |
China Petroleum & Chemical Corp., Class A |
|
14,284,900 |
|
14,885 |
| |
China Shenhua Energy Co., Ltd., Class A |
|
3,968,000 |
|
12,862 |
| |
|
|
|
|
27,747 |
| |
Pharmaceuticals (8.6%) |
|
|
|
|
| |
China Resources Sanjiu Medical & Pharmaceutical Co., Ltd., Class A |
|
16,771,655 |
|
72,284 |
| |
|
|
|
|
|
| |
Real Estate Management & Development (6.0%) |
|
|
|
|
| |
China Overseas Grand Oceans Group Ltd. (a) |
|
41,898,000 |
|
19,565 |
| |
China Vanke Co., Ltd., Class A |
|
13,968,471 |
|
31,133 |
| |
|
|
|
|
50,698 |
| |
Semiconductors & Semiconductor Equipment (0.9%) |
|
|
|
|
| |
Sanan Optoelectronics Co., Ltd., Class A |
|
2,117,653 |
|
7,263 |
| |
|
|
|
|
|
| |
Specialty Retail (0.8%) |
|
|
|
|
| |
Suning Commerce Group Co., Ltd., Class A (b) |
|
3,393,496 |
|
7,151 |
| |
|
|
|
|
|
| |
Textiles, Apparel & Luxury Goods (0.4%) |
|
|
|
|
| |
XTEP International Holdings Ltd. (a) |
|
11,734,000 |
|
3,647 |
| |
|
|
|
|
|
| |
Transportation Infrastructure (1.8%) |
|
|
|
|
| |
Shanghai International Airport Co., Ltd., Class A |
|
3,988,500 |
|
15,561 |
| |
Total Common Stocks (Cost $645,492) |
|
|
|
833,333 |
| |
|
|
|
|
|
| |
Short-Term Investment (0.0%) |
|
|
|
|
| |
Investment Company (0.0%) |
|
|
|
|
| |
Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (c) (Cost $31) |
|
31,412 |
|
31 |
| |
Total Investments (98.7%) (Cost $645,523) (d)+ |
|
|
|
833,364 |
| |
Other Assets in Excess of Liabilities (1.3%) |
|
|
|
11,077 |
| |
Net Assets (100.0%) |
|
|
|
$ |
844,441 |
|
(a) Security trades on the Hong Kong exchange.
(b) Non-income producing security.
(c) The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - (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 Fund due to its investment in the Liquidity Funds. For the three months ended March 31, 2015, advisory fees paid were reduced by approximately $1,000 relating to the Funds investment in the Liquidity Funds.
(d) The approximate fair value and percentage of net assets, $827,478,000 and 98.0%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in the Notes to the Portfolio of Investments.
+ At March 31, 2015, the U.S. Federal income tax cost basis of investments was approximately $645,523,000 and, accordingly, net unrealized appreciation for U.S. Federal income tax purposes was approximately $187,841,000 of which approximately $196,173,000 related to appreciated securities and approximately $8,332,000 related to depreciated securities.
ADR American Depositary Receipt.
Portfolio Composition
Classification |
|
Percentage of |
|
Other* |
|
30.6 |
% |
Banks |
|
14.7 |
|
Beverages |
|
12.8 |
|
Electronic Equipment, Instruments & Components |
|
9.7 |
|
Household Durables |
|
9.5 |
|
Pharmaceuticals |
|
8.7 |
|
Insurance |
|
7.9 |
|
Real Estate Management & Development |
|
6.1 |
|
|
|
|
|
Total Investments |
|
100.0 |
% |
* Industries and/or investment types representing less than 5% of total investments.
Morgan Stanley China A Share Fund, Inc.
Notes to the Portfolio of Investments · March 31, 2015 (unaudited)
Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter (OTC) market quotations are readily available are valued at its latest reported sales price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (3) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the Adviser) or Morgan Stanley Investment Management Company (MSIM Company) (the Sub-Adviser) determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a securitys market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Funds Board of Directors (the Directors). Occasionally, developments affecting 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 of the New York Stock Exchange (NYSE). If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities market value, in which case these securities will be valued at their fair market value determined by the Adviser.
The Directors have the ultimate responsibility of determining the fair value of the investments. Under procedures approved by the Directors, the Funds Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Funds valuation policies and procedures, which are reviewed at least annually by the Directors. 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 ad hoc 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.
Fair Value Measurement: Financial Accounting Standards Board (FASB) Accounting Standards CodificationTM (ASC) 820, Fair Value Measurement (ASC 820), defines fair value as the value 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. 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 March 31, 2015.
Investment Type |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
Assets: |
|
|
|
|
|
|
|
|
| ||||
Common Stocks |
|
|
|
|
|
|
|
|
| ||||
Automobiles |
|
$ |
|
|
$ |
24,234 |
|
$ |
|
|
$ |
24,234 |
|
Banks |
|
|
|
122,523 |
|
|
|
122,523 |
| ||||
Beverages |
|
|
|
106,428 |
|
|
|
106,428 |
| ||||
Capital Markets |
|
|
|
16,308 |
|
|
|
16,308 |
| ||||
Construction & Engineering |
|
|
|
17,295 |
|
|
|
17,295 |
| ||||
Construction Materials |
|
|
|
11,578 |
|
|
|
11,578 |
| ||||
Electrical Equipment |
|
|
|
39,493 |
|
|
|
39,493 |
| ||||
Electronic Equipment, Instruments & Components |
|
|
|
80,929 |
|
|
|
80,929 |
| ||||
Food & Staples Retailing |
|
|
|
23,299 |
|
|
|
23,299 |
| ||||
Food Products |
|
|
|
11,524 |
|
|
|
11,524 |
| ||||
Health Care Providers & Services |
|
|
|
20,258 |
|
|
|
20,258 |
| ||||
Hotels, Restaurants & Leisure |
|
|
|
10,978 |
|
|
|
10,978 |
| ||||
Household Durables |
|
|
|
79,292 |
|
|
|
79,292 |
| ||||
Insurance |
|
|
|
65,882 |
|
|
|
65,882 |
| ||||
Media |
|
5,855 |
|
|
|
|
|
5,855 |
| ||||
Metals & Mining |
|
|
|
13,106 |
|
|
|
13,106 |
| ||||
Oil, Gas & Consumable Fuels |
|
|
|
27,747 |
|
|
|
27,747 |
| ||||
Pharmaceuticals |
|
|
|
72,284 |
|
|
|
72,284 |
| ||||
Real Estate Management & Development |
|
|
|
50,698 |
|
|
|
50,698 |
| ||||
Semiconductors & Semiconductor Equipment |
|
|
|
7,263 |
|
|
|
7,263 |
| ||||
Specialty Retail |
|
|
|
7,151 |
|
|
|
7,151 |
| ||||
Textiles, Apparel & Luxury Goods |
|
|
|
3,647 |
|
|
|
3,647 |
| ||||
Transportation Infrastructure |
|
|
|
15,561 |
|
|
|
15,561 |
| ||||
Total Common Stocks |
|
5,855 |
|
827,478 |
|
|
|
833,333 |
| ||||
Short-Term Investment |
|
|
|
|
|
|
|
|
| ||||
Investment Company |
|
31 |
|
|
|
|
|
31 |
| ||||
Total Assets |
|
$ |
5,886 |
|
$ |
827,478 |
|
$ |
|
|
$ |
833,364 |
|
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 March 31, 2015, the Fund did not have any investments transfer between investment levels.
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 China A Share Fund, Inc.
/s/ John H. Gernon |
|
John H. Gernon |
|
Principal Executive Officer |
|
May 20, 2015 |
|
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/ John H. Gernon |
|
John H. Gernon |
|
Principal Executive Officer |
|
May 20, 2015 |
|
|
|
/s/ Francis Smith |
|
Francis Smith |
|
Principal Financial Officer |
|
May 20, 2015 |
|
Exhibit 99.CERT
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, John H. Gernon, certify that:
1. I have reviewed this report on Form N-Q of Morgan Stanley China A Share Fund, Inc.;
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 schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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) Omitted;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 20, 2015 |
/s/ John H. Gernon |
|
John H. Gernon |
|
Principal Executive Officer |
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Francis Smith, certify that:
1. I have reviewed this report on Form N-Q of Morgan Stanley China A Share Fund, Inc.;
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 schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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) Omitted;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 20, 2015 |
/s/ Francis Smith |
|
Francis Smith |
|
Principal Financial Officer |