Morgan Stanley China A Share Fund, Inc.
Portfolio of Investments
First Quarter Report
March 31, 2019 (unaudited)
|
|
Shares |
|
Value |
| |
Common Stocks (97.6%) |
|
|
|
|
| |
Aerospace & Defense (1.2%) |
|
|
|
|
| |
AECC Aviation Power Co., Ltd., Class A |
|
1,764,972 |
|
$ |
6,941 |
|
|
|
|
|
|
| |
Air Freight & Logistics (2.8%) |
|
|
|
|
| |
Deppon Logistics Co Ltd, Class A |
|
2,355,088 |
|
6,599 |
| |
SF Holding Co. Ltd., Class A |
|
1,689,646 |
|
9,237 |
| |
|
|
|
|
15,836 |
| |
|
|
|
|
|
| |
Automobiles (2.0%) |
|
|
|
|
| |
SAIC Motor Corp., Ltd., Class A |
|
2,974,300 |
|
11,583 |
| |
|
|
|
|
|
| |
Banks (13.8%) |
|
|
|
|
| |
Bank of Communications Co., Ltd., Class A |
|
33,109,469 |
|
30,833 |
| |
China CITIC Bank Corp., Ltd. H Shares (a) |
|
28,791,000 |
|
18,337 |
| |
China Everbright Bank Co. Ltd. H Shares (a) |
|
20,902,000 |
|
9,878 |
| |
Industrial & Commercial Bank of China Ltd., Class A |
|
24,226,700 |
|
20,077 |
| |
|
|
|
|
79,125 |
| |
Beverages (2.1%) |
|
|
|
|
| |
Kweichow Moutai Co., Ltd., Class A |
|
67,668 |
|
8,636 |
| |
Tsingtao Brewery Co., Ltd., Class A |
|
472,000 |
|
3,035 |
| |
|
|
|
|
11,671 |
| |
|
|
|
|
|
| |
Capital Markets (1.8%) |
|
|
|
|
| |
Huatai Securities Co., Ltd. H Shares (a) |
|
5,113,400 |
|
10,225 |
| |
|
|
|
|
|
| |
Chemicals (1.7%) |
|
|
|
|
| |
Tangshan Sanyou Chemical Industries Co.,Ltd., Class A |
|
9,203,833 |
|
9,611 |
| |
|
|
|
|
|
| |
Commercial Services & Supplies (3.5%) |
|
|
|
|
| |
Focused Photonics Hangzhou, Inc., Class A |
|
4,901,000 |
|
20,078 |
| |
|
|
|
|
|
| |
Electronic Equipment, Instruments & Components (0.7%) |
|
|
|
|
| |
O-film Tech Co., Ltd., Class A |
|
1,982,111 |
|
4,211 |
| |
|
|
|
|
|
| |
Food Products (3.6%) |
|
|
|
|
| |
Inner Mongolia Yili Industrial Group Co., Ltd., Class A |
|
4,674,115 |
|
20,278 |
| |
|
|
|
|
|
| |
Health Care Providers & Services (7.3%) |
|
|
|
|
| |
China National Accord Medicines Corp. Ltd., Class A |
|
1,118,316 |
|
8,573 |
| |
Huadong Medicine Co. Ltd., Class A |
|
2,565,025 |
|
12,500 |
| |
Shanghai Pharmaceuticals Holding Co., Ltd., Class A |
|
1,730,338 |
|
5,328 |
| |
Shanghai Pharmaceuticals Holding Co., Ltd. H Shares (a) |
|
7,127,700 |
|
15,545 |
| |
|
|
|
|
41,946 |
| |
Hotels, Restaurants & Leisure (5.5%) |
|
|
|
|
| |
China CYTS Tours Holding Co., Ltd., Class A |
|
11,193,021 |
|
28,043 |
| |
Tsui Wah Holdings Ltd. |
|
31,511,000 |
|
3,251 |
| |
|
|
|
|
31,294 |
| |
|
|
|
|
|
| |
Household Durables (5.3%) |
|
|
|
|
| |
Qingdao Haier Co., Ltd., Class A |
|
11,940,696 |
|
30,504 |
| |
|
|
|
|
|
| |
Insurance (6.7%) |
|
|
|
|
| |
China Pacific Insurance Group Co., Ltd., Class A |
|
2,227,540 |
|
11,344 |
| |
China Pacific Insurance Group Co., Ltd. H Shares (a) |
|
6,791,600 |
|
26,644 |
| |
|
|
|
|
37,988 |
| |
Machinery (1.3%) |
|
|
|
|
| |
CRRC Corp., Ltd. H Shares (a) |
|
7,599,000 |
|
7,163 |
| |
|
|
|
|
|
| |
Media (2.6%) |
|
|
|
|
| |
Qingdao Citymedia Co., Ltd., Class A |
|
7,136,143 |
|
8,931 |
| |
Southern Publishing & Media Co., Ltd., Class A |
|
4,240,368 |
|
5,998 |
| |
|
|
|
|
14,929 |
| |
|
|
|
|
|
| |
Oil, Gas & Consumable Fuels (1.4%) |
|
|
|
|
| |
China Petroleum & Chemical Corp., Class A |
|
9,531,351 |
|
8,151 |
| |
|
|
|
|
|
| |
Personal Products (3.1%) |
|
|
|
|
| |
Shanghai Jahwa United Co., Ltd., Class A |
|
3,783,577 |
|
17,804 |
| |
|
|
|
|
|
| |
Pharmaceuticals (13.0%) |
|
|
|
|
| |
China Resources Sanjiu Medical & Pharmaceutical Co., Ltd., Class A |
|
13,130,973 |
|
56,429 |
| |
Yunnan Baiyao Group Co., Ltd., Class A |
|
1,425,470 |
|
18,155 |
| |
|
|
|
|
74,584 |
| |
Real Estate Management & Development (7.3%) |
|
|
|
|
| |
China Fortune Land Development Co. Ltd., Class A |
|
1,957,735 |
|
9,071 |
| |
China Merchants Shekou Industrial Zone Holdings Co., Ltd., Class A |
|
6,543,461 |
|
22,483 |
| |
Huafa Industrial Co., Ltd. Zhuhai, Class A |
|
7,523,986 |
|
10,401 |
| |
|
|
|
|
41,955 |
| |
|
|
|
|
|
| |
Software (5.0%) |
|
|
|
|
| |
Beijing Thunisoft Corp., Ltd., Class A |
|
8,957,863 |
|
28,504 |
| |
|
|
|
|
|
| |
Transportation Infrastructure (5.9%) |
|
|
|
|
| |
Jiangsu Expressway Co., Ltd., Class A |
|
3,696,100 |
|
5,446 |
| |
Shenzhen Airport Co., Ltd., Class A |
|
19,054,595 |
|
28,455 |
| |
|
|
|
|
33,901 |
| |
Total Common Stocks (Cost $496,858) |
|
|
|
558,282 |
| |
Short-Term Investment (0.1%) |
|
|
|
|
| |
Investment Company (0.1%) |
|
|
|
|
| |
Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Class (b) (Cost $788) |
|
787,722 |
|
788 |
| |
Total Investments (97.7%) (Cost $497,646) (c)(d)(e) |
|
|
|
559,070 |
| |
Other Assets in Excess of Liabilities (2.3%) |
|
|
|
13,030 |
| |
Net Assets (100.0%) |
|
|
|
$ |
572,100 |
|
(a) |
Security trades on the Hong Kong exchange. |
(b) |
The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds - Government 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 its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the three months ended March 31, 2019, advisory fees paid were reduced by approximately $1,000 relating to the Funds investment in the Liquidity Funds. |
(c) |
The Fund is permitted to purchase and sell securities (cross-trade) from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the Rule). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the three months ended March 31, 2019, the Fund did not engage in any cross-trade transactions. |
(d) |
The approximate fair value and percentage of net assets, $558,282,000 and 97.6%, 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. |
(e) |
At March 31, 2019, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $70,602,000 and the aggregate gross unrealized depreciation is approximately $9,178,000, resulting in net unrealized appreciation of approximately $61,424,000. |
|
|
Portfolio Composition
Classification |
|
Percentage of |
|
Other* |
|
28.5 |
% |
Banks |
|
14.1 |
|
Pharmaceuticals |
|
13.3 |
|
Real Estate Management & Development |
|
7.5 |
|
Health Care Providers & Services |
|
7.5 |
|
Insurance |
|
6.8 |
|
Transportation Infrastructure |
|
6.1 |
|
Hotels, Restaurants & Leisure |
|
5.6 |
|
Household Durables |
|
5.5 |
|
Software |
|
5.1 |
|
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, 2019 (unaudited)
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-13, Fair Value Measurement (Topic 820) - Disclosures Framework - Changes to Disclosure Requirements of Fair Value Measurement (ASU 2018-13) which introduces new fair value disclosure requirements as well as eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 would be effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years; however, management has elected to early adopt ASU 2018-13 as permitted by the standard. The impact of the Funds adoption was limited to changes in the Funds financial statement disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements, when applicable.
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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter (OTC) market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers; (3) certain portfolio securities may be valued by an outside pricing service/vendor approved by the Funds Board of Directors (the Directors). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available in the relevant exchanges; (4) 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), a wholly-owned subsidiary of Morgan Stanley, 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 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; (5) 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; and (6) 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.
The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Funds Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the
Directors. 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.
Fair Value Measurement: 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, 2019:
Investment Type |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
Assets: |
|
|
|
|
|
|
|
|
| ||||
Common Stocks |
|
|
|
|
|
|
|
|
| ||||
Aerospace & Defense |
|
$ |
|
|
$ |
6,941 |
|
$ |
|
|
$ |
6,941 |
|
Air Freight & Logistics |
|
|
|
15,836 |
|
|
|
15,836 |
| ||||
Automobiles |
|
|
|
11,583 |
|
|
|
11,583 |
| ||||
Banks |
|
|
|
79,125 |
|
|
|
79,125 |
| ||||
Beverages |
|
|
|
11,671 |
|
|
|
11,671 |
| ||||
Capital Markets |
|
|
|
10,225 |
|
|
|
10,225 |
| ||||
Chemicals |
|
|
|
9,611 |
|
|
|
9,611 |
| ||||
Commercial Services & Supplies |
|
|
|
20,078 |
|
|
|
20,078 |
| ||||
Electronic Equipment, Instruments & Components |
|
|
|
4,211 |
|
|
|
4,211 |
| ||||
Food Products |
|
|
|
20,278 |
|
|
|
20,278 |
| ||||
Health Care Providers & Services |
|
|
|
41,946 |
|
|
|
41,946 |
| ||||
Hotels, Restaurants & Leisure |
|
|
|
31,294 |
|
|
|
31,294 |
| ||||
Household Durables |
|
|
|
30,504 |
|
|
|
30,504 |
| ||||
Insurance |
|
|
|
37,988 |
|
|
|
37,988 |
| ||||
Machinery |
|
|
|
7,163 |
|
|
|
7,163 |
| ||||
Media |
|
|
|
14,929 |
|
|
|
14,929 |
| ||||
Oil, Gas & Consumable Fuels |
|
|
|
8,151 |
|
|
|
8,151 |
| ||||
Personal Products |
|
|
|
17,804 |
|
|
|
17,804 |
| ||||
Pharmaceuticals |
|
|
|
74,584 |
|
|
|
74,584 |
| ||||
Real Estate Management & Development |
|
|
|
41,955 |
|
|
|
41,955 |
| ||||
Software |
|
|
|
28,504 |
|
|
|
28,504 |
| ||||
Transportation Infrastructure |
|
|
|
33,901 |
|
|
|
33,901 |
| ||||
Total Common Stocks |
|
|
|
558,282 |
|
|
|
558,282 |
| ||||
Short-Term Investment |
|
|
|
|
|
|
|
|
| ||||
Investment Company |
|
788 |
|
|
|
|
|
788 |
| ||||
Total Assets |
|
$ |
788 |
|
$ |
558,282 |
|
$ |
|
|
$ |
559,070 |
|
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investments valuation changes.