Morgan Stanley Investment Management Inc.
Adviser
Adviser
Morgan Stanley China A Share Fund, Inc. NYSE: CAF
Semi-Annual Report
June 30, 2026
|
Not FDIC Insured | May Lose Value | No Bank Guarantee
|
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Table of Contents
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3
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4
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7
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8
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9
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10
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11
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21
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24
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25
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35
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36
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37
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Back Cover
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2
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Performance Summary
Average Annual Total Returns as of June 30, 2026
|
|
6 Month*
|
One Year
|
Five Years
|
Ten Years
|
|
Net Asset Value ("NAV")
|
28.59
%
|
57.32
%
|
2.09
%
|
6.26
%
|
|
Market price
|
21.20
%
|
54.99
%
|
0.61
%
|
6.12
%
|
|
MSCI China A Onshore Index(1)
|
15.60
%
|
45.16
%
|
1.36
%
|
5.66
%
|
|
China Blended Index(2)
|
8.95
%
|
33.79
%
|
-0.06
%
|
5.58
%
|
* Cumulative return
Performance data quoted in the table represents past performance, which is no guarantee
of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends
and distributions, if any, were reinvested at prices obtained under the Fund’s dividend reinvestment plan. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment returns and principal value
will fluctuate so that Fund shares, when sold, may be worth more or less than their original cost. The table do not reflect the deduction
of taxes that a shareholder would pay on fund distributions or the sale of fund shares. Total return, market price, NAV, market
price distribution rate, and NAV distribution rate will fluctuate with changes in market conditions. The Fund’s total returns are based upon the market value and net asset value on the last business day of the period.
|
Distributions
|
|
|
Total Distributions per share for the period
|
N/A
|
|
Distribution Rate at NAV(3)
|
N/A
|
|
Distribution Rate at Market Price(3)
|
N/A
|
|
% Premium/(Discount) to NAV(4)
|
(16.61
)%
|
|
(1)
|
The MSCI China A Onshore Index is a free float-adjusted market capitalization index
that is designed to capture large and mid cap
representation across China securities listed on Shanghai and Shenzhen exchanges.
The performance of the Index is listed in U.S.
dollars and assumes reinvestment of net dividends. It is not possible to invest directly
in an index. Effective March 1, 2018, the MSCI
China A Index was renamed the MSCI China A Onshore Index.
|
|
(2)
|
The China Blended Index is custom blend of 80% of the MSCI China A Onshore Index and
20% of the MSCI China Index (a benchmark
that captures large and mid cap representation across China A shares, H shares, B
shares, Red chips, P chips and foreign listings (e.g.
ADRs). The performance of the Index is listed in U.S. dollars and assumes reinvestment
of net dividends. Such costs would lower
performance. It is not possible to invest directly in an index.
|
|
(3)
|
The Distribution Rate is based on the Fund’s last regular distribution per share in the period (annualized) divided by the Fund’s NAV or
market price at the end of the period. The Fund’s distributions may be comprised of amounts characterized for federal income tax
purposes as qualified and non-qualified ordinary dividends, capital gains and non-dividend
distributions, also known as return of capital.
The Fund will determine the federal income tax character of distributions paid to
a shareholder after the end of the calendar year. The
Fund’s distributions are determined by the investment adviser based on its current assessment of the Fund’s long-term return potential.
Fund distributions may be affected by numerous factors including changes in Fund performance,
the cost of financing for leverage,
portfolio holdings, realized and projected returns, and other factors. As portfolio
and market conditions change, the rate of
distributions paid by the Fund could change.
|
|
(4)
|
The shares of the Fund often trade at a discount or premium to their net asset value.
The discount or premium may vary over time and
may be higher or lower than what is quoted in this report.
|
3
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Portfolio of Investments
|
|
|
Shares
|
Value
(000)
|
|
COMMON STOCKS (97.7%)
|
|||
|
Air Freight & Logistics (0.2%)
|
|||
|
SF Holding Co. Ltd., Class A
|
|
164,900
|
$761
|
|
Automobile Components (2.3%)
|
|||
|
Fuyao Glass Industry Group Co. Ltd.,
Class A
|
|
612,800
|
4,568
|
|
Ningbo Tuopu Group Co. Ltd., Class A
|
|
390,200
|
3,276
|
|
|
|
|
7,844
|
|
Automobiles (0.4%)
|
|||
|
BYD Co. Ltd., Class A
|
|
123,500
|
1,454
|
|
Banks (6.9%)
|
|||
|
Bank of Jiangsu Co. Ltd., Class A
|
|
4,038,900
|
6,417
|
|
Bank of Ningbo Co. Ltd., Class A
|
|
699,037
|
3,060
|
|
China Construction Bank Corp., Class A
|
|
3,527,611
|
5,005
|
|
China Merchants Bank Co. Ltd., Class A
|
|
1,671,508
|
8,752
|
|
|
|
|
23,234
|
|
Beverages (1.5%)
|
|||
|
Kweichow Moutai Co. Ltd., Class A
|
|
28,049
|
4,905
|
|
Biotechnology (0.7%)
|
|||
|
BeOne Medicines Ltd., Class A (a)
|
|
64,267
|
2,418
|
|
Capital Markets (5.7%)
|
|||
|
China International Capital Corp. Ltd.,
Class A
|
|
1,001,974
|
5,351
|
|
CITIC Securities Co. Ltd., Class A
|
|
2,008,515
|
8,528
|
|
Huatai Securities Co. Ltd., Class A
|
|
1,799,700
|
5,487
|
|
|
|
|
19,366
|
|
Chemicals (3.2%)
|
|||
|
Ganfeng Lithium Group Co. Ltd.,
Class A
|
|
277,300
|
2,686
|
|
Hubei Dinglong Co. Ltd., Class A
|
|
59,600
|
936
|
|
Ningxia Baofeng Energy Group Co. Ltd.,
Class A
|
|
428,500
|
1,283
|
|
Satellite Chemical Co. Ltd., Class A
|
|
443,200
|
1,535
|
|
Tongkun Group Co. Ltd., Class A
|
|
531,100
|
1,702
|
|
Wanhua Chemical Group Co. Ltd.,
Class A
|
|
262,900
|
2,658
|
|
|
|
|
10,800
|
|
Communications Equipment (6.7%)
|
|||
|
Suzhou TFC Optical Communication Co.
Ltd., Class A
|
|
50,880
|
2,317
|
|
Zhongji Innolight Co. Ltd., Class A
|
|
105,940
|
20,172
|
|
|
|
|
22,489
|
|
|
|
Shares
|
Value
(000)
|
|
Construction Materials (0.5%)
|
|||
|
Anhui Conch Cement Co. Ltd., Class A
|
|
721,200
|
$1,805
|
|
Electrical Equipment (8.1%)
|
|||
|
Contemporary Amperex Technology Co.
Ltd., Class A
|
|
256,340
|
14,901
|
|
Dongfang Electric Corp. Ltd., Class A
|
|
428,900
|
1,830
|
|
Huaming Power Equipment Co. Ltd.,
Class A
|
|
603,900
|
1,685
|
|
NARI Technology Co. Ltd., Class A
|
|
604,833
|
2,042
|
|
Shenzhen Megmeet Electrical Co. Ltd.,
Class A
|
|
61,400
|
1,527
|
|
Sieyuan Electric Co. Ltd., Class A
|
|
74,100
|
1,897
|
|
Sungrow Power Supply Co. Ltd.,
Class A
|
|
143,431
|
3,365
|
|
|
|
|
27,247
|
|
Electronic Equipment, Instruments & Components (9.0%)
|
|||
|
Eoptolink Technology, Inc. Ltd., Class A
|
|
149,660
|
13,577
|
|
Foxconn Industrial Internet Co. Ltd.,
Class A
|
|
494,400
|
5,325
|
|
Luxshare Precision Industry Co. Ltd.,
Class A
|
|
427,200
|
4,461
|
|
Shengyi Technology Co. Ltd., Class A
|
|
32,500
|
839
|
|
Victory Giant Technology Huizhou Co.
Ltd., Class A
|
|
101,300
|
5,226
|
|
WUS Printed Circuit Kunshan Co. Ltd.,
Class A
|
|
39,700
|
902
|
|
|
|
|
30,330
|
|
Gas Utilities (0.6%)
|
|||
|
ENN Natural Gas Co. Ltd., Class A
|
|
806,500
|
1,875
|
|
Household Durables (1.8%)
|
|||
|
Midea Group Co. Ltd., Class A
|
|
539,346
|
6,013
|
|
Independent Power & Renewable Electricity Producers
(2.3%)
|
|||
|
China Yangtze Power Co. Ltd., Class A
|
|
1,722,314
|
6,723
|
|
SDIC Power Holdings Co. Ltd., Class A
|
|
525,800
|
1,032
|
|
|
|
|
7,755
|
|
Insurance (2.5%)
|
|||
|
China Life Insurance Co. Ltd., Class A
|
|
225,700
|
1,179
|
4
The accompanying notes are an integral part of the financial statements.
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Portfolio of Investments (cont'd)
|
|
|
Shares
|
Value
(000)
|
|
People's Insurance Co. Group of China
Ltd., Class A
|
|
1,278,600
|
$1,277
|
|
Ping An Insurance Group Co. of China
Ltd., Class A
|
|
823,319
|
5,809
|
|
|
|
|
8,265
|
|
Life Sciences Tools & Services (2.0%)
|
|||
|
WuXi AppTec Co. Ltd., Class A
|
|
366,800
|
6,750
|
|
Machinery (8.1%)
|
|||
|
Anhui Yingliu Electromechanical Co. Ltd.,
Class A (a)
|
|
262,000
|
2,346
|
|
Hangcha Group Co. Ltd., Class A
|
|
457,519
|
1,614
|
|
Han's Laser Technology Industry
Group Co. Ltd., Class A
|
|
337,700
|
7,515
|
|
Jiangsu Hengli Hydraulic Co. Ltd.,
Class A
|
|
176,900
|
2,814
|
|
Sany Heavy Industry Co. Ltd., Class A
|
|
1,019,053
|
2,604
|
|
Shenzhen Inovance Technology Co. Ltd.,
Class A
|
|
411,300
|
4,033
|
|
Weichai Power Co. Ltd., Class A
|
|
764,100
|
3,098
|
|
Zhejiang Sanhua Intelligent Controls Co.
Ltd., Class A
|
|
479,000
|
3,111
|
|
|
|
|
27,135
|
|
Metals & Mining (3.4%)
|
|||
|
Yunnan Aluminium Co. Ltd., Class A
|
|
956,200
|
3,144
|
|
Zijin Mining Group Co. Ltd., Class A
|
|
2,255,500
|
8,470
|
|
|
|
|
11,614
|
|
Oil, Gas & Consumable Fuels (1.0%)
|
|||
|
China Shenhua Energy Co. Ltd., Class A
|
|
425,385
|
2,445
|
|
PetroChina Co. Ltd., Class A
|
|
809,700
|
1,032
|
|
|
|
|
3,477
|
|
Pharmaceuticals (2.1%)
|
|||
|
Jiangsu Hengrui Pharmaceuticals Co.
Ltd., Class A
|
|
597,500
|
4,596
|
|
Sichuan Kelun Pharmaceutical Co. Ltd.,
Class A
|
|
425,400
|
2,416
|
|
|
|
|
7,012
|
|
Semiconductors & Semiconductor Equipment (27.6%)
|
|||
|
Advanced Micro-Fabrication Equipment,
Inc. China, Class A
|
|
263,232
|
18,319
|
|
Anji Microelectronics Technology
Shanghai Co. Ltd., Class A
|
|
22,290
|
1,124
|
|
|
|
Shares
|
Value
(000)
|
|
Beijing Huafeng Test & Control
Technology Co. Ltd., Class A
|
|
18,075
|
$1,411
|
|
Cambricon Technologies Corp. Ltd.,
Class A
|
|
33,620
|
7,960
|
|
Hangzhou Chang Chuan Technology Co.
Ltd., Class A
|
|
25,500
|
1,294
|
|
Hua Hong Grace Semiconductor Ltd.,
Class A (a)
|
|
333,674
|
16,722
|
|
Hwatsing Technology Co. Ltd., Class A
|
|
23,592
|
1,127
|
|
Hygon Information Technology Co. Ltd.,
Class A
|
|
95,581
|
5,252
|
|
JCET Group Co. Ltd., Class A
|
|
559,800
|
8,633
|
|
Montage Technology Co. Ltd., Class A
|
|
307,571
|
14,207
|
|
NAURA Technology Group Co. Ltd.,
Class A
|
|
106,225
|
13,932
|
|
SG Micro Corp., Class A
|
|
39,858
|
849
|
|
TongFu Microelectronics Co. Ltd.,
Class A
|
|
196,200
|
2,214
|
|
|
|
|
93,044
|
|
Software (0.3%)
|
|||
|
Beijing Kingsoft Office Software, Inc.,
Class A
|
|
29,120
|
921
|
|
Tech Hardware, Storage & Peripherals (0.2%)
|
|||
|
Huaqin Co. Ltd., Class A
|
|
63,280
|
698
|
|
Transportation Infrastructure (0.6%)
|
|||
|
Guangdong Provincial Expressway
Development Co. Ltd., Class A
|
|
949,900
|
1,912
|
|
TOTAL COMMON STOCKS (Cost $199,165)
|
329,124
|
||
The accompanying notes are an integral part of the financial statements.
5
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Portfolio of Investments (cont'd)
|
|
|
Shares
|
Value
(000)
|
|
SHORT-TERM INVESTMENT (0.2%)
|
|||
|
Investment Company (0.2%)
|
|||
|
Morgan Stanley Institutional Liquidity
Funds — Government Portfolio —
Institutional Class, 3.56%
(See Note E) (Cost $790)
|
|
790,307
|
$790
|
|
TOTAL INVESTMENTS (97.9%) (Cost $199,955) (b)(c)
|
329,914
|
||
|
OTHER ASSETS IN EXCESS OF LIABILITIES (2.1%)
|
7,013
|
||
|
NET ASSETS (100.0%)
|
$336,927
|
||
|
(a)
|
Non-income producing security.
|
|
(b)
|
The approximate fair value and percentage of net assets,
$329,124,000 and 97.7%, respectively, represent the
securities that have been fair valued under the fair
valuation policy for international investments as described
in Note A-1 within the Notes to Financial Statements.
|
|
(c)
|
At June 30, 2026, the aggregate cost for federal income
tax purposes approximates the aggregate cost for book
purposes. The aggregate gross unrealized appreciation is
approximately $135,822,000 and the aggregate gross
unrealized depreciation is approximately $5,863,000,
resulting in net unrealized appreciation of approximately
$129,959,000.
|
|
Portfolio Composition
|
|
|
Classification
|
Percentage of
Total Investments
|
|
Semiconductors & Semiconductor Equipment
|
28.2%
|
|
Other*
|
26.4
|
|
Electronic Equipment, Instruments & Components
|
9.2
|
|
Electrical Equipment
|
8.3
|
|
Machinery
|
8.2
|
|
Banks
|
7.0
|
|
Communications Equipment
|
6.8
|
|
Capital Markets
|
5.9
|
|
Total Investments
|
100.0%
|
|
*
|
Industries and/or investment types representing less than 5% of total
investments.
|
|
6
The accompanying notes are an integral part of the financial statements.
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Financial Statements
|
Statement of Assets and Liabilities
|
June 30, 2026
(000)
|
|
Assets:
|
|
|
Investments in Securities of Unaffiliated Issuers, at Value (Cost $199,165)
|
$329,124
|
|
Investment in Security of Affiliated Issuer, at Value (Cost $790)
|
790
|
|
Total Investments in Securities, at Value (Cost $199,955)
|
329,914
|
|
Foreign Currency, at Value (Cost $7,460)
|
7,471
|
|
Cash
|
—
@
|
|
Receivable from Affiliate
|
2
|
|
Other Assets
|
40
|
|
Total Assets
|
337,427
|
|
Liabilities:
|
|
|
Payable for Advisory Fees
|
298
|
|
Payable for Professional Fees
|
76
|
|
Payable for Custodian Fees
|
66
|
|
Payable for Administration Fees
|
21
|
|
Payable for Stockholder Servicing Agent Fees
|
4
|
|
Payable for Tender Offer Fees
|
3
|
|
Other Liabilities
|
32
|
|
Total Liabilities
|
500
|
|
Net Assets
|
|
|
Applicable to 13,353,946 Issued and Outstanding $0.01 Par Value Shares (100,000,000
Shares Authorized)
|
$336,927
|
|
Net Asset Value Per Share
|
$25.23
|
|
Net Assets Consist of:
|
|
|
Common Stock
|
$134
|
|
Paid-in-Capital
|
366,118
|
|
Total Accumulated Loss
|
(29,325
)
|
|
Net Assets
|
$336,927
|
|
@
|
Amount is less than $500.
|
The accompanying notes are an integral part of the financial statements.
7
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Financial Statements (cont'd)
|
Statement of Operations
|
Six Months Ended
June 30, 2026
(000)
|
|
Investment Income:
|
|
|
Dividends from Securities of Unaffiliated Issuers (Net of $257 of Foreign Taxes Withheld)
|
$2,326
|
|
Dividends from Security of Affiliated Issuer (Note E)
|
20
|
|
Total Investment Income
|
2,346
|
|
Expenses:
|
|
|
Advisory Fees (Note B)
|
1,828
|
|
Custodian Fees (Note D)
|
191
|
|
Tender Offer Fees
|
180
|
|
Administration Fees (Note C)
|
127
|
|
Professional Fees
|
120
|
|
Stockholder Reporting Expenses
|
20
|
|
Stockholder Servicing Agent Fees
|
8
|
|
Directors' Fees and Expenses
|
3
|
|
Other Expenses
|
11
|
|
Total Expenses
|
2,488
|
|
Rebate from Morgan Stanley Affiliate (Note E)
|
(1
)
|
|
Net Expenses
|
2,487
|
|
Net Investment Loss
|
(141
)
|
|
Realized Gain:
|
|
|
Investments Sold
|
18,080
|
|
Foreign Currency Transaction
|
166
|
|
Net Realized Gain
|
18,246
|
|
Change in Unrealized Appreciation (Depreciation):
|
|
|
Investments
|
55,081
|
|
Foreign Currency Translation
|
(30
)
|
|
Net Change in Unrealized Appreciation (Depreciation)
|
55,051
|
|
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)
|
73,297
|
|
Net Increase in Net Assets Resulting from Operations
|
$73,156
|
8
The accompanying notes are an integral part of the financial statements.
Morgan Stanley China A Share Fund, Inc.
June 30, 2026
Financial Statements (cont'd)
|
|
|
|
|
Statements of Changes in Net Assets
|
Six Months Ended
June 30, 2026
(unaudited)
(000)
|
Year Ended
December 31, 2025
(000)
|
|
Increase (Decrease) in Net Assets:
|
|
|
|
Operations:
|
|
|
|
Net Investment Income (Loss)
|
$(141
)
|
$3,830
|
|
Net Realized Gain
|
18,246
|
5,479
|
|
Net Change in Unrealized Appreciation (Depreciation)
|
55,051
|
60,958
|
|
Net Increase in Net Assets Resulting from Operations
|
73,156
|
70,267
|
|
Dividends and Distributions to Stockholders
|
—
|
(4,428
)
|
|
Capital Share Transactions:
|
|
|
|
Repurchase of Shares (121,269 and 192,335 shares)
|
(2,357
)
|
(4,805
)
|
|
Common Stock Redeemed Through Tender Offer (3,363,566 and 0 shares)
|
(64,307
)
|
—
|
|
Net Decrease in Net Assets Resulting from Capital Share Transactions
|
(66,664
)
|
(4,805
)
|
|
Total Increase
|
6,492
|
61,034
|
|
Net Assets:
|
|
|
|
Beginning of Period
|
330,435
|
269,401
|
|
End of Period
|
$336,927
|
$330,435
|
The accompanying notes are an integral part of the financial statements.
9
Morgan Stanley China A Share Fund, Inc.
June 30, 2026
Financial Highlights
Selected Per Share Data and Ratios
|
|
Six Months Ended
June 30,2026
(unaudited) |
Year Ended December 31,
|
||||
|
|
2025
|
2024
|
2023
|
2022
|
2021
|
|
|
Net Asset Value, Beginning of Period
|
$19.62
|
$15.68
|
$14.87
|
$17.07
|
$23.13
|
$25.09
|
|
Net Investment Income (Loss)(1)
|
(0.01
)
|
0.23
|
0.23
|
0.16
|
0.14
|
0.10
|
|
Net Realized and Unrealized Gain (Loss)
|
5.59
|
3.92
|
0.88
|
(2.26
)
|
(6.20
)
|
(0.72
)
|
|
Total from Investment Operations
|
5.58
|
4.15
|
1.11
|
(2.10
)
|
(6.06
)
|
(0.62
)
|
|
Distributions from and/or in Excess of:
|
|
|
|
|
|
|
|
Net Investment Income
|
—
|
(0.26
)
|
(0.33
)
|
(0.12
)
|
(0.00
)(2)
|
(0.21
)
|
|
Net Realized Gain
|
—
|
—
|
—
|
—
|
—
|
(1.13
)
|
|
Total Distributions
|
—
|
(0.26
)
|
(0.33
)
|
(0.12
)
|
(0.00
)(2)
|
(1.34
)
|
|
Anti-Dilutive Effect of Share Repurchase
Program
|
0.03
|
0.05
|
0.03
|
0.02
|
—
|
—
|
|
Net Asset Value, End of Period
|
$25.23
|
$19.62
|
$15.68
|
$14.87
|
$17.07
|
$23.13
|
|
Per Share Market Value, End of Period
|
$21.04
|
$17.36
|
$12.46
|
$12.74
|
$14.20
|
$20.41
|
|
TOTAL INVESTMENT RETURN:(3)
|
|
|
|
|
|
|
|
Market Value
|
21.20
%(4)
|
41.43
%
|
0.36
%
|
(9.41
)%
|
(30.41
)%
|
(1.84
)%
|
|
Net Asset Value
|
28.59
%(4)
|
27.02
%
|
8.21
%
|
(12.04
)%
|
(26.19
)%
|
(1.76
)%
|
|
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
|
|
|
|
|
|
|
|
Net Assets, End of Period (Thousands)
|
$336,927
|
$330,435
|
$269,401
|
$322,941
|
$373,435
|
$506,037
|
|
Ratio of Expenses
|
1.57
%(5)(6)
|
1.52
%(6)
|
1.63
%(6)
|
1.67
%(6)
|
1.79
%(6)
|
1.74
%(6)
|
|
Ratio of Net Investment Income (Loss)
|
(0.09
)%(5)(6)
|
1.33
%(6)
|
1.54
%(6)
|
0.98
%(6)
|
0.76
%(6)
|
0.42
%(6)
|
|
Ratio of Rebate from Morgan Stanley
Affiliates
|
0.00
%(5)(7)
|
0.00
%(7)
|
0.00
%(7)
|
0.00
%(7)
|
0.00
%(7)
|
0.00
%(7)
|
|
Portfolio Turnover Rate
|
13
%(4)
|
64
%
|
54
%
|
16
%
|
31
%
|
121
%
|
|
(1)
|
Per share amount is based on average shares outstanding.
|
|
(2)
|
Amount is less than $0.005 per share.
|
|
(3)
|
Total investment return based on net asset value per share reflects the effects of
changes in net asset value on the performance of the
Fund during each period, and assumes dividends and distributions, if any, were reinvested.
This percentage is not an indication of the
performance of a stockholder’s investment in the Fund based on market value due to differences between the market price of the stock
and the net asset value per share of the Fund. Total returns are based upon the market
value and net asset value on the last business
day of each period.
|
|
(4)
|
Not annualized.
|
|
(5)
|
Annualized.
|
|
(6)
|
The Ratio of Expenses and Ratio of Net Investment Income (Loss) reflect the rebate
of certain Fund expenses in connection with the
investments in Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio
of Rebate from Morgan Stanley Affiliates.”
|
|
(7)
|
Amount is less than 0.005%.
|
10
The accompanying notes are an integral part of the financial statements.
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements
The Morgan Stanley China A Share Fund, Inc. (the “Fund”) was incorporated in Maryland on July 6, 2006 and is registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “Act”). The Fund’s investment objective is to seek capital growth by investing, under normal circumstances, at least 80% of its assets in A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges. The prices of A-shares are quoted in Renminbi (“RMB”), and only Chinese domestic investors and certain Qualified Foreign Institutional Investors (“QFII”) are allowed to trade A-shares outside of the Stock Connect programs. To the extent that the Fund invests in derivative or other instruments that are structured to be positively correlated and linked to China A shares, such investments will be counted for purposes of the Fund’s policy as stated above. To the extent the Fund makes such investments, the Fund will be subject to the risks of such derivative or other instruments as described herein.
The Fund applies investment company accounting and reporting guidance Accounting Standards Codification (“ASC”) Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
The Fund’s adviser, Morgan Stanley Investment Management Inc. (the “Adviser”), had obtained a QFII license pursuant to which it was authorized to invest in China A-shares and other permitted China securities on behalf of the Fund up to its specified investment quota of $200,000,000, as updated, modified or renewed from time to time (the “A-share Quota”). The Adviser had received an increase of $250,000,000 to its A-share Quota, of which approximately $138,000,000 was utilized through a rights offering in August 2010. On May 7, 2020, the People’s Bank of China and the State Administration of Foreign Exchange jointly issued the Regulations on Funds of Securities and Futures Investment by Foreign Institutional
Investors (PBOC & SAFE Announcement [2020] No. 2), which came into effect on June 6, 2020. The new regulations unify and supersede the rules applicable to QFII and RQFII regimes. One of the key changes of the new regulations is the removal of quota restrictions on investment by QFII and RQFII. There is no guarantee that the new regulations will not be modified in the future.
Securities purchased by the Adviser and/or Morgan Stanley Investment Management Company (the “Sub-Adviser”) in its capacity as a QFII, on behalf of the Fund, are credited to a securities trading account with the Fund’s QFII Custodian in China. All capital gains and income that the Fund earns on investments in China A-shares are held in that account, and may be repatriated subject to an undertaking for tax clearance by the QFII to the Fund’s QFII custodian, except where the Fund is wound up, in which case the repatriation of capital gains and income shall be subject to tax filing clearance by the Shanghai Tax Bureau. Failure to provide the tax payment confirmation on a timely basis could adversely affect the Fund’s ability to distribute taxable income and capital gains and cause the Fund to become liable for the payment of U.S. federal income tax. See Note F. Federal Income Taxes.
A.Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles (“GAAP”). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.
1.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
11
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements (cont'd)
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. If only bid prices are available then the latest bid price may be used. 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/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) an unlisted equity security that trades over-the-counter (“OTC”) for which 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/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Fund's 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. If the Adviser and Sub-Adviser, each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security’s fair value or the pricing service/vendor or exchange is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked
prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or 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 security’s market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions (“spot contracts”) and foreign exchange forward contracts (“forward contracts”) are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of 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 (“NAV”) as of the close of each business day.
In connection with Rule 2a-5 of the Act, the Directors have designated the Fund's Adviser as its valuation designee. The valuation designee has responsibility for 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 Fund's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides
12
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements (cont'd)
administration and oversight of the Fund's 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.
2.Fair Value Measurement: Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurement” (“ASC 820”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 entity’s 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 Fund’s 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 Fund’s 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 issuer's 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 Fund’s investments as of June 30, 2026:
|
|
||||
|
Investment
Type
|
Level 1
Unadjusted
quoted
prices
(000)
|
Level 2
Other
significant
observable
inputs
(000)
|
Level 3
Significant
unobservable
inputs
(000)
|
Total
(000)
|
|
Assets:
|
||||
|
Common
Stocks
|
$—
|
$329,124
(1)
|
$—
|
$329,124
|
|
Short-Term
|
||||
|
Investment
|
|
|
|
|
|
Investment
|
|
|
|
|
|
Company
|
790
|
—
|
—
|
790
|
|
Total Assets
|
$790
|
$329,124
|
$—
|
$329,914
|
|
(1) The level classification by major category of investments is the same
as the category presentation in the Portfolio of Investments.
|
||||
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment’s valuation changes.
3.Foreign Currency Translation and Foreign
Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are
13
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements (cont'd)
translated into U.S. dollars as follows:
—
investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;
—
investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, 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 fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.
Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from sales and maturities of foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized
currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.
A significant portion of the Fund’s net assets consist of securities of issuers located in China which are denominated in foreign currencies. Changes in currency exchange rates will affect the value of securities and investment income from such securities. In general, Chinese securities are subject to greater price volatility, limited capitalization and liquidity, and higher rates of inflation than securities of companies based in the United States.
In addition, Chinese securities may be subject to substantial governmental involvement in the economy and greater social, economic and political uncertainty. Such securities may be concentrated in a single or a limited number of countries and regions and may vary throughout the year.
4.Indemnifications: The Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
5.Dividends and Distributions to Stockholders: Dividends and distributions to stockholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.
6.Other: Security transactions are accounted for on the date the securities are purchased or sold. Realized gains (losses) on the sale of investment securities are determined on the specific identified cost basis. Interest income is recognized on the accrual basis except where collection is in doubt and is recorded net of foreign withholding tax. Discounts are accreted and premiums are amortized over the life of the respective securities. Dividends and distributions are
14
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements (cont'd)
recorded on the ex-dividend date (except certain dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes.
7.Segment Reporting: The Fund operates as a single reportable segment, an investment company whose investment objective is included at the beginning of the Notes to the Financial Statements. The Fund’s President act as the Fund's Chief Operating Decision Maker ("CODM"), who is responsible for assessing the performance of the Fund’s single segment and deciding how to allocate the segment’s resources. To perform this function, the CODM reviews the information in the Fund’s Financial Statements.
B.Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, calculated weekly and payable monthly, at an annual rate of 1.15% of the Fund’s average weekly net assets.
The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund’s Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.
C.Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued weekly and paid monthly, of 0.08% of the Fund's average weekly net assets.
Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company (“State Street”), State Street provides certain administrative services to
the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.
D.Custodian Fees: State Street (the “Custodian”) also serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.
E.Security Transactions and Transactions with
Affiliates: For the six months ended June 30, 2026, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $39,594,000 and $109,963,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2026.
The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the “Liquidity Fund”), 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 Fund. For the six months ended June 30, 2026, advisory fees paid were reduced by approximately $1,000 relating to the Fund’s investment in the Liquidity Fund.
A summary of the Fund’s transactions in shares of affiliated investments during the six months ended June 30, 2026 is as follows:
|
Affiliated
Investment
Company
|
Value
December 31,
2025
(000)
|
Purchases
At Cost
(000)
|
Proceeds
From Sales
(000)
|
Dividend
Income
(000)
|
|
Liquidity Fund
|
$909
|
$4,607
|
$4,726
|
$20
|
15
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements (cont'd)
|
Affiliated
Investment
Company (cont'd)
|
Realized
Gain (Loss)
(000)
|
Change in
Unrealized
Appreciation
(Depreciation)
(000)
|
Value
June 30,
2026
(000)
|
|
Liquidity Fund
|
$—
|
$—
|
$790
|
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”). As a result of a change in the Rule 2a-5 under the Act, which impacts transactions under Rule 17a-7, a security is an eligible security for purposes of Rule 17a-7 only when there is a “readily available market quotation” for the security. The Fund's Rule 17a-7 policy was amended effective September 8, 2022, to reflect the new requirements of Rule 2a-5.
For the six months ended June 30, 2026, the Fund did not engage in any cross-trade transactions.
Each Director receives an annual retainer fee for serving as a Director of the Morgan Stanley Funds. The aggregate compensation paid to each Director is paid by the Morgan Stanley Funds, and is allocated on a pro rata basis among each of the operational funds of the Morgan Stanley Funds based on the relative net assets of each of the funds. The Fund also reimburses such Directors for travel and other out-of-pocket expenses incurred by them in connection with attending such meetings.
The Fund has an unfunded Deferred Compensation Plan (the “Compensation Plan”), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting
increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.
F.Federal Income Taxes: It is the Fund’s intention to continue to qualify as a regulated investment company and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in the financial statements.
The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.
The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary. As of December 31, 2025, the Fund had no uncertain tax positions that would require financial statement recognition, derecognition, or disclosure.
During this reporting period, the Fund adopted FASB Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires annual disclosure of the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes, and further disaggregated by individual jurisdiction in which income taxes paid is equal to or greater than 5% of total income taxes paid. The adoption of ASU 2023-09 did not result in any changes to the Fund’s financial statement presentation or disclosure.
FASB ASC 740-10, “Income Taxes — Overall”, sets forth a minimum threshold for financial statement recognition of the
16
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements (cont'd)
benefit of a tax position taken or expected to be taken in a tax return. Management has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. 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. Tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns are evaluated to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken, or to be taken, on U.S. federal income tax returns for all open tax years, and has concluded that no provision for income tax is required in the Fund’s financial statements. The Fund’s U.S. federal income tax returns are subject to examination by the Internal Revenue Service (“IRS”) for a period of three years after they are filed. The Fund’s tax positions for the tax years for which the applicable statutes of limitations have not expired are subject to examination by the state departments of revenue and by foreign tax authorities.
The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2025 and 2024 was as follows:
|
2025 Distributions
Paid From:
|
2024 Distributions
Paid From:
|
||
|
Ordinary
Income
(000)
|
Long-Term
Capital Gain
(000)
|
Ordinary
Income
(000)
|
Long-Term
Capital Gain
(000)
|
|
$4,428
|
$—
|
$5,619
|
$—
|
|
|
|
|
|
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which
may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.
Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.
The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2025.
At December 31, 2025, the components of distributable earnings for the Fund on a tax basis were as follows:
|
Undistributed Ordinary
Income
(000)
|
Undistributed
Long-Term Capital Gain
(000)
|
|
$321
|
$—
|
At December 31, 2025, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $47,450,000 and $129,800,000, respectively, that do not have an expiration date.
To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the stockholders. During the year ended December 31, 2025, the Fund utilized capital loss carryforwards for U.S. federal income tax purposes of approximately $3,688,000.
Due to recent changes mentioned above, failure to provide the tax payment confirmation on a timely basis could adversely affect the Fund’s ability to distribute taxable income and capital gains. Therefore, the Fund reserves the right not to pay any dividends, or to delay the payment thereof, in the event that the Adviser is not satisfied that the Fund can or will be able to fund such
17
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements (cont'd)
dividends through the repatriation of funds from China. This may cause the Fund to become liable for the payment of U.S. federal income tax.
G.Other: Under the Corporate Income Tax (“CIT”) Law, People’s Republic of China (“PRC”) tax resident enterprises are taxed at the CIT rate of 25%. Pursuant to the CIT Law and its detailed implementation rules, a non-PRC tax resident who does not establish a permanent establishment in China (or which has a permanent establishment in China but income derived is not effectively connected with such permanent establishment) is generally subject to PRC Withholding Income Tax (“WIT”) on PRC sourced income (including but not limited to passive income such as dividends, interest, gains from transfer of assets) unless the statutory WIT of 10% is subject to reduction or exemption in accordance with the applicable tax treaty signed with the PRC or under PRC law or regulations.
The current U.S. and PRC tax treaty exempts gains realized on the sale of Chinese securities from the capital gain tax, with the exception of securities in land-rich companies which are companies that have greater than 50% of their assets in land or immovable properties in China.
In November 2014, China’s Ministry of Finance (“MOF”) and State Administration of Taxation (“SAT”) published Caishui [2014] No. 79 (“Circular 79”), which provided that QFIIs are temporarily exempt from WIT with respect to gains derived from the trading of PRC equity investments such as A-Shares on or after November 17, 2014. Circular 79 provided no indication on how long the temporary exemption would be extended. Circular 79 also confirmed that pre-November 17, 2014 gains derived by QFIIs were taxable according to prevailing laws.
The MOF and SAT published Caishui [2014] No.81 and Caishui [2016] No.127, which provided that foreign investors are temporarily exempt from WIT in respect of gains derived from trading in China A-shares through Stock Connect. The
circulars provided no indication on how long the temporary exemption would be extended.
The tax law and regulations of China are subject to change, and may be changed with retrospective effect. The interpretation and applicability of tax law and regulations by PRC tax authorities are not as consistent and transparent as those of more developed nations, and may vary from region to region. Accordingly, China taxes and duties payable by the QFII may change at any time.
As permitted by the Fund’s offering prospectus, on June 19, 2007, the Directors approved a share repurchase program for purposes of enhancing stockholder value and reducing the discount at which the Fund’s shares trade from their NAV. During the six months ended June 30, 2026, the Fund repurchased 121,269 of its shares at an average discount of 14.08% from NAV. Since the inception of the program, the Fund has repurchased 821,777 of its shares at an average discount of 16.71% from NAV. The Directors regularly monitor the Fund’s share repurchase program as part of their review and consideration of the Fund’s premium/discount history. The Fund may only repurchase its outstanding shares at such time and in such amounts as it believes will further the accomplishment of the foregoing objectives and subject to review by the Directors and the Fund’s ability to repatriate capital gains and income out of China.
On December 5, 2025, the Fund announced that the Board had approved a tender offer to acquire in exchange for cash up to 20% of the Fund’s outstanding shares at a price equal to 98.5% of the Fund’s NAV (minus the costs and expenses related to the tender offer) as of the close of regular trading on the New York Stock Exchange ("NYSE") on the day the offer expires (the “2026 Tender Offer”). On March 31, 2026, the Fund accepted 3,363,566 shares for payment on April 1, 2026 at $19.1287 per share, which is equal to 98.5% of the Fund's NAV per share as of the close of regular trading on the NYSE on
18
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements (cont'd)
March 31, 2026. The 3,363,566 shares represent 20% of the Fund's outstanding shares.
On December 5, 2025, the Fund also announced that the Board approved a change to the designated measurement period of its performance-related conditional tender offer policy to change the measurement period from five years to three years. The Fund will conduct a tender for up to 25% of the Fund’s then-issued and outstanding shares at a price equal to 98.5% of the Fund’s NAV (minus the costs and expenses related to the tender offer) (a “Conditional Tender Offer”) only if both (1) the Fund’s total return investment performance measured on a NAV basis is less than the total return investment performance of the Fund’s benchmark index, the MSCI China A Onshore Index, during the three-year period commencing on July 1, 2025 and ending on June 30, 2028 (and for successive three-year periods thereafter commencing on July 1, 2028), and (2) the Fund’s shares are trading at or below NAV at the conclusion of the applicable measurement period, with such Conditional Tender Offer occurring on or before September 30, 2028 (and thereafter on each three-year anniversary of September 30, 2028). If the Fund’s performance described above equals or exceeds that of the MSCI China A Onshore Index during any such period or if the Fund’s shares are trading at a premium to NAV at the conclusion of the applicable measurement period, no Conditional Tender Offer will be conducted for that period. If a Conditional Tender Offer is triggered, the Fund will issue a press release announcing the Conditional Tender Offer and providing additional information about such Conditional Tender Offer. Additional terms and conditions of a Conditional Tender Offer would also be set forth in the relevant offering materials, which would be distributed to the Fund’s stockholders. The size of any such Conditional Tender Offer (up to 25% of the Fund’s then-issued and outstanding shares), the price at which shares are to be tendered and other terms and conditions of such Conditional Tender Offer would be determined by the Board in its discretion based on its review and consideration of the then-current size of
the Fund, market conditions, the ability to repatriate the necessary cash and subject to local Chinese regulatory requirements and other factors it deems relevant.
At June 30, 2026, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 37.2%.
H.Results of Annual Meeting of Stockholders: On June 25, 2026, an annual meeting of the Fund’s stockholders was held for the purpose of voting on the following matter, the results of which were as follows:
Election of Directors by all stockholders:
|
|
For
|
Against
|
|
Frances L. Cashman
|
10,189,590
|
942,066
|
|
Jakki L. Haussler
|
9,845,898
|
1,285,758
|
|
Patricia A. Maleski
|
10,190,348
|
941,308
|
I.Market and Geopolitical Risk: The value of an investment in the Fund is based on the values of the Fund’s investments, which change due to economic, geopolitical and other events that affect the U.S. and global markets generally, as well as those that affect or are perceived or expected to affect particular regions, countries, industries, companies, issuers, sectors, asset classes or governments. These types of events may be sudden and unexpected, and could adversely affect the value (or income generated by) and liquidity of the Fund’s investments, which may in turn impact the Fund’s ability to sell securities and/or its ability to meet redemptions. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events (such as war, natural disasters or events, epidemics and pandemics, terrorism, conflicts, social unrest, recessions, inflation, interest rate changes, supply chain disruptions and the threat or actual imposition of tariffs, trade barriers and other protectionist or retaliatory measures) adversely interrupt or otherwise affect the global economy and financial markets. It is difficult to predict
19
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Notes to Financial Statements (cont'd)
when similar events affecting the U.S. or global financial markets or economies may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These types of events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance or value of the Fund’s investments, adversely affect and increase the volatility of the Fund’s share price and exacerbate preexisting risks to the Fund. The frequency and magnitude of resulting changes in the value of the Fund’s investments cannot be predicted.
20
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Advisory Agreement Approval
Nature, Extent and Quality of Services
The Board reviewed and considered the nature and extent of the investment advisory
services provided by the Adviser under the advisory agreement, including portfolio management, investment research and equity
and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Adviser, to the extent
applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the
Administrator under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management
and planning, legal services and the provision of supplies, office space and utilities at the Adviser’s expense. The Board also considered the Adviser’s investment in personnel and infrastructure that benefits the Fund. (The Adviser, Sub-Adviser and
Administrator together are referred to as the “Adviser” and the advisory, sub-advisory and administration agreements together are referred to as the “Management Agreement.”) The Board also considered that the Adviser serves a variety of other investment advisory
clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser
with similar services provided by non-affiliated advisers as prepared by Broadridge Financial Solutions, Inc. (“Broadridge”).
The Board reviewed and considered the qualifications of the portfolio managers, the
senior administrative managers and other key personnel of the Adviser who provide the advisory and administrative services to the Fund. The Board determined that the Adviser’s portfolio managers and key personnel are well qualified by education and/or training
and experience to perform the services in an efficient and professional manner. The Board concluded that the nature and extent
of the advisory and administrative services provided were necessary and appropriate for the conduct of the business and investment
activities of the Fund and supported its decision to approve the Management Agreement.
Performance, Fees and Expenses of the Fund
The Board reviewed the performance, fees and expenses of the Fund compared to its
peers, as prepared by Broadridge, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the
performance goals and the actual results achieved in managing the Fund. When considering a fund’s performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December
31, 2025, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and
the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment
strategy or investment personnel. The Board noted that the Fund’s performance was below its peer group averages for the one-, three- and five-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the “management fee”) for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its
peers as prepared by Broadridge. In addition to the management fee, the Board also reviewed the Fund’s total expense ratio. When a fund’s management fee and/or its total expense ratio are higher than its peers, the Board and the Adviser discuss the reasons for
this and, where appropriate, they discuss possible waivers and/or caps. The Board noted that the Fund’s management fee and total expense ratio were higher than its peer group averages. After discussion, the Board concluded that the Fund’s performance, management fee and total expense ratio were acceptable.
21
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Advisory Agreement Approval (cont'd)
Economies of Scale
The Board considered the size and growth prospects of the Fund and how that relates to the Fund’s total expense ratio and particularly the Fund’s management fee rate, which does not include breakpoints. In conjunction with its review of the Adviser’s profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency
or effectiveness of managing the Fund and whether the management fee level is appropriate relative to current and projected asset levels
and/or whether the management fee structure reflects economies of scale as asset levels change. The Board considered that, with
respect to closed-end funds, the assets are not likely to grow with new sales or grow significantly as a result of capital appreciation.
The Board concluded that economies of scale for the Fund were not a factor that needed to be considered at the present time.
Profitability of the Adviser and Affiliates
The Board considered information concerning the costs incurred and profits realized
by the Adviser and its affiliates during the last year from their relationship with the Fund and during the last two years from their
relationship with the Morgan Stanley Fund Complex and reviewed with the Adviser the cost allocation methodology used to determine
the profitability of the Adviser and affiliates. The Board has determined that its review of the analysis of the Adviser’s expenses and profitability supports its decision to approve the Management Agreement.
Other Benefits of the Relationship
The Board considered other direct and indirect benefits to the Adviser and/or its
affiliates derived from their relationship with the Fund and other funds advised by the Adviser. These benefits may include, among other
things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used
by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds’ portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser’s costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision
to approve the Management Agreement.
Resources of the Adviser and Historical Relationship Between the Fund and the Adviser
The Board considered whether the Adviser is financially sound and has the resources
necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship
between the Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures
formulated and adopted by the Adviser for managing the Fund’s operations and the Board’s confidence in the competence and integrity of the senior managers and key personnel of the Adviser. The Board concluded that the Adviser has the financial resources necessary
to fulfill its obligations under the Management Agreement and that it is beneficial for the Fund to continue its relationship with
the Adviser.
Other Factors and Current Trends
The Board considered the controls and procedures adopted and implemented by the Adviser and monitored by the Fund’s Chief Compliance Officer and concluded that the conduct of business by the Adviser indicates
a good faith effort on its part to adhere to high ethical standards in the conduct of the Fund’s business.
22
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Advisory Agreement Approval (cont'd)
General Conclusion
After considering and weighing all of the above factors, with various written materials
and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Fund and
its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not
give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information
over the course of the year and in numerous meetings, some of which were in executive session with only the independent
Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the
information presented, differently in reaching their individual decisions to approve the Management Agreement.
23
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Portfolio Management
The Fund is managed within the Emerging Markets Equity team. The team consists of
portfolio managers and analysts. The member of the team primarily responsible for the day-to-day management of the Fund’s portfolio is Amay Hattangadi, a Managing Director of Morgan Stanley Investment Management Company (“MSIM Co.”).
Mr. Hattangadi has been associated with MSIM Co. in an investment management capacity
since 2017 and, prior to that, with the Adviser in an investment management capacity since 1997.
24
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy
Derivatives
The Fund may, but is not required to, use derivatives and other similar instruments
for a variety of purposes, including hedging, risk management, portfolio management or to seek to earn income. Derivative instruments
used by the Fund will be counted towards the Fund’s exposure in the types of securities listed herein to the extent they have economic characteristics similar to such securities. A derivative is a financial instrument whose value is based, in part, on the value of
an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also
affect the value of derivative instruments. Derivatives and other similar instruments that create synthetic exposure often are
subject to risks similar to those of the underlying asset or instrument and may be subject to additional risks, including imperfect correlation
between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification
of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the
derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements,
risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks
that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use
of highly specialized instruments that require investment techniques and risk analyses different from those associated with other
portfolio investments.
Certain derivative transactions may give rise to a form of leverage. Leverage magnifies
the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio
positions when it may not be advantageous to do so, or may cause the Fund to be more volatile than if the Fund had not been
leveraged. Although the Adviser seeks to use derivatives to further the Fund’s investment objective, there is no assurance that the use of derivatives will achieve this result.
The derivative instruments and techniques that the Fund may use include:
Contracts for Difference (“CFD”). A CFD is a privately negotiated contract between two parties, buyer and seller, stipulating
that the seller will pay to or receive from the buyer the difference between the nominal value
of the underlying instrument at the opening of the contract and that instrument’s value at the end of the contract. The underlying instrument may be a single security, stock basket or index. A CFD can be set up to take either a short or long position on the underlying
instrument. The buyer and seller are typically both required to post margin, which is adjusted daily. The buyer will also pay to
the seller a financing rate on the notional amount of the capital employed by the seller less the margin deposit. A CFD is usually terminated at the buyer’s initiative. The seller of the CFD will simply match the exposure of the underlying instrument in the open market and
the parties will exchange whatever payment is due. As is the case with owning any financial instrument, there is the risk of loss
associated with buying a CFD. For example, if the Fund buys a long CFD and the underlying security is worth less at the end of the contract,
the Fund would be required to make a payment to the seller and would suffer a loss. Also, there may be liquidity risk if
the underlying instrument is illiquid because the liquidity of a CFD is based on the liquidity of the underlying instrument. A further
risk is that adverse movements in the underlying security will require the buyer to post additional margin. CFDs also carry counterparty
risk, i.e., the risk that the counterparty to the CFD transaction may be unable or unwilling to make payments or to otherwise honor
its financial obligations under the terms of the contract. If the counterparty were to do so, the value of the contract, and of the Fund’s shares, may be reduced. The Fund will not enter into a CFD transaction that is inconsistent with its investment objective, policies
and strategies.
25
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy (cont'd)
Futures. A futures contract is a standardized, exchange-traded agreement to buy or sell a specific
quantity of an underlying asset, reference rate or index at a specific price at a specific future time. While the value
of a futures contract tends to increase or decrease in tandem with the value of the underlying instrument, differences between the futures
market and the market for the underlying asset may result in an imperfect correlation. Depending on the terms of the particular contract,
futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment
of a cash settlement amount on the settlement date. A decision as to whether, when and how to use futures contracts involves the
exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected
events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures
contracts can lower total return and the potential loss from futures contracts can exceed the Fund’s initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also
the risk of loss by the Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures
contract.
Options. If the Fund buys an option, it buys a legal contract giving it the right to buy or
sell a specific amount of the underlying instrument, foreign currency or contract, such as a swap agreement or futures contract
on the underlying instrument or foreign currency at an agreed-upon price during a period of time or on a specified date typically
in exchange for a premium paid by the Fund. If the Fund sells an option, it sells to another person the right to buy from or sell
to the Fund a specific amount of the underlying instrument, swap, foreign currency, or futures contract on the underlying instrument
or foreign currency at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium
received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable
or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty
closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a
well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options
can be highly volatile and the use of options can lower total returns.
Investments in foreign currency options may substantially change the Fund’s exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. There is a
risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite
to the position taken. The value of a foreign currency option is dependent upon the value of the underlying foreign currency relative
to the U.S. dollar or other applicable foreign currency. The price of the option may vary with changes in the value of either or
both currencies and has no relationship to the investment merits of a foreign security. Options on foreign currencies are affected
by all of those factors that influence foreign exchange rates and foreign investment generally. Unanticipated changes in currency
prices may result in losses to the Fund and poorer overall performance for the Fund than if it had not entered into such contracts. Options
on foreign currencies are traded primarily in the OTC market, but may also be traded on U.S. and foreign exchanges.
Foreign currency options contracts may be used for hedging purposes or non-hedging purposes in pursuing the Fund’s investment objective, such as when the Adviser anticipates that particular non-U.S. currencies
will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Fund’s investment portfolio. Investing in foreign currencies for
26
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy (cont'd)
purposes of gaining from projected changes in exchange rates, as opposed to only hedging currency risks applicable to the Fund’s holdings, further increases the Fund’s exposure to foreign securities losses. There is no assurance that the Adviser’s use of currency derivatives will benefit the Fund or that they will be, or can be, used at appropriate
times.
Structured Investments. The Fund also may invest a portion of its assets in structured investments. A structured
investment is a derivative security designed to offer a return linked to a particular underlying security,
currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes),
warrants and options to purchase securities. The Fund will typically use structured investments to gain exposure to a permitted
underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost
standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying
security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty
risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty
risk because the Fund is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to
the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Fund’s illiquidity to the extent that the Fund, at a particular point in time, may be unable to find qualified
buyers for these securities.
Swaps. The Fund may enter into OTC swap contracts or cleared swap transactions. An OTC swap
contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates
on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference
rates, currencies or other instruments. Typically swap agreements provide that when the period payment dates for both parties are the
same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Fund’s obligations or rights under a swap contract entered into on a net basis will generally be equal only to
the net amount to be paid or received under the agreement, based on the relative values of the positions held by each party. Cleared
swap transactions may help reduce counterparty credit risk. In a cleared swap, the Fund’s ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial institution. OTC swap agreements are not entered into or traded on exchanges and often
there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to credit risk or the risk of
default or non- performance by the counterparty. Certain swaps have begun trading on exchanges or swap execution facilities. Exchange
trading is expected to increase liquidity of swaps trading. Both OTC and cleared swaps could result in losses if interest rates, foreign
currency exchange rates or other factors are not correctly anticipated by the Fund or if the reference index, security or investments
do not perform as expected. The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments
require the clearing of certain standardized swap transactions. Swaps subject to mandatory central clearing must be traded on an
exchange or swap execution facility unless no exchange or swap execution facility “makes the swap available to trade.” The Fund may pay fees or incur costs each time it enters into, amends or terminates a swap agreement. The Fund’s use of swaps may include those based on the credit of an underlying security, commonly referred to as “credit default swaps.” Where the Fund is the buyer of a credit default swap contract, it would typically be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation
from the counterparty to the contract only in the event of a default or similar event by a third-party on the debt obligation. If
no default occurs, the Fund would have paid to the counterparty a periodic stream of payments over the term of the contract. When the
Fund is the seller of a credit default swap
27
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy (cont'd)
contract, it typically receives the stream of payments but is obligated to pay an
amount equal to the par (or other agreed-upon) value of a referenced debt obligation upon the default or similar event of the issuer of
the referenced debt obligation.
Foreign Currency Forward Exchange Contracts
In connection with their investments in foreign securities, the Fund also may enter
into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency
forward exchange contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency
at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the
subject of the contract. Foreign currency forward exchange contracts may be used to seek to protect against uncertainty in the level
of future foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, the Fund may use cross currency
hedging or proxy hedging with respect to currencies in which the Fund has or expects to have portfolio or currency exposure.
Cross currency and proxy hedges involve the sale of one currency against the positive exposure to a different currency and may be used
for hedging purposes or to establish an active exposure to the exchange rate between any two currencies.
Investments in foreign currency forward exchange contracts may substantially change the Fund’s exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as the Adviser expects. The Adviser’s success in these transactions will depend principally on its ability to predict accurately the future exchange rates
between foreign currencies and the U.S. dollar. Foreign currency forward exchange contracts may be used for non-hedging purposes in seeking to meet the Fund’s investment objectives, such as when the Adviser anticipates that particular non-U.S. currencies
will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Fund’s investment portfolios. Investing in foreign currency forward exchange contracts for purposes of gaining from projected changes in exchange rates,
as opposed to hedging currency risks applicable to the Fund's holdings, further increases the Fund’s exposure to foreign securities losses. There is no assurance that the Adviser’s use of currency derivatives will benefit the Fund or that they will be, or can be, used at
appropriate times.
Cybersecurity Risk
With the increased use of technologies such as the internet to conduct business, the
Fund, the Adviser and Sub-Adviser, authorized participants, service providers and the relevant listing exchange, as applicable,
are susceptible to operational, information security and related “cyber” risks both directly and through the service providers. Similar types of cybersecurity risks are also present for issuers of securities in which the Fund invests, which could result in material adverse consequences for such issuers and may cause the Fund’s investment in such issuers to lose value. In general, cyber incidents can result from
deliberate attacks or unintentional events. Cyber incidents include, but are not limited to, gaining unauthorized access to digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting
data, or causing operational disruption. Cyberattacks may also be carried out in a manner that does not require gaining unauthorized
access, such as causing denial-of-service attacks on websites (i.e., efforts to make network services unavailable to intended
users). Recently, geopolitical tensions may have increased the scale and sophistication of deliberate attacks, particularly those from
nation-states or from entities with nation-state backing.
28
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy (cont'd)
Cybersecurity failures by, or breaches of, the systems of the Adviser, Distributor
and other service providers (including, but not limited to, index and benchmark providers, fund accountants, custodians, transfer agents and
administrators), exchanges, market participants, market makers, authorized participants or the issuers of securities in which the Fund
invests, as applicable, have the ability to cause disruptions and impact business operations, potentially resulting in: financial losses, interference with the Fund’s ability to calculate its NAV, disclosure of confidential trading information, impediments to trading, submission
of erroneous trades or erroneous creation or redemption orders, the inability of the Fund or its service providers to transact
business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation
costs, or additional compliance costs. In addition, cyberattacks may render records of Fund assets and transactions, shareholder
ownership of Fund shares, and other data integral to the functioning of the Fund inaccessible, inaccurate or incomplete. Substantial
costs may be incurred by the Fund in order to resolve or prevent cyber incidents in the future. While the Fund has established
business continuity plans in the event of, and risk management systems to prevent, such cyber incidents, there are inherent limitations
in such plans and systems, including the possibility that certain risks have not been identified, that prevention and remediation
efforts will not be successful or that cyberattacks will go undetected. Furthermore, the Fund cannot control the cybersecurity plans and
systems put in place by service providers to the Fund, issuers in which the Fund invests, market makers or authorized participants,
as applicable. The Fund and its shareholders could be negatively impacted as a result.
Market and Geopolitical Risk
The value of your investment in the Fund is based on the values of the Fund’s investments, which change due to economic, geopolitical and other events that affect the U.S. and global markets generally, as
well as those that affect or are perceived or expected to affect particular regions, countries, industries, companies, issuers, sectors,
asset classes or governments. Price movements, sometimes called volatility, may be greater or less depending on the types of securities the
Fund owns and the markets in which the securities trade. Volatility and disruption in financial markets and economies may be sudden
and unexpected, expose the Fund to greater risk, including risks associated with reduced market liquidity and fair valuation, and adversely affect the Fund’s operations. For example, the Adviser potentially will be prevented from executing investment decisions at an
advantageous time or price as a result of any domestic or global market disruptions and reduced market liquidity may impact the Fund’s ability to sell securities to meet redemptions (i.e., increase the risk that the Fund will not be able to pay redemption
proceeds within the allowable time period). In addition, no active trading market may exist for certain investments held by the Fund,
which may impair the ability of the Fund to sell or to realize the current valuation of such investments in the event of the need to
liquidate such assets.
The increasing interconnectivity between global economies and markets increases the
likelihood that events or conditions in one region or market, or with respect to one company, may adversely impact other companies
and other issuers, including those in a different country, region, sector, industry, or market. For example, adverse developments
in the banking or financial services sector could impact companies operating in various sectors or industries and adversely impact the Fund’s investments. Securities in the Fund’s portfolio may underperform or otherwise be adversely affected due to inflation (or expectations for inflation), deflation (or expectations for deflation), interest rates (or changes in interest rates), global
demand for particular products or resources, market or financial system instability or uncertainty, embargoes, the threat of and/or actual
imposition of tariffs, sanctions and other trade barriers, natural disasters and extreme weather events, health emergencies (such as
epidemics and pandemics), terrorism, regulatory
29
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy (cont'd)
events and governmental or quasi-governmental actions. The occurrence of global events,
such as terrorist attacks, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions
or debt crises and downgrades, among others, may result in increased market volatility and may have long term effects on both the
U.S. and global financial markets. Inflation rates may change frequently and significantly because of various factors, including unexpected
shifts in the domestic or global economy and changes in monetary or economic policies (or expectations that these policies may
change). Changes in inflation rates or expected inflation rates may adversely affect market and economic conditions, an issuer’s financial condition, the Fund’s investments and an investment in the Fund. The market price of debt securities generally falls as inflation
increases because the purchasing power of the future income and repaid principal is expected to be worth less when received by the
Fund. The risk of inflation is greater for debt instruments with longer maturities and especially those that pay a fixed rather than
variable interest rate. Other financial, economic and other global market and social developments or disruptions may result in similar
adverse circumstances, and it is difficult to predict when similar events affecting the U.S. or global financial markets or economies
may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). In general,
the securities or other instruments that the Adviser believes represent an attractive investment opportunity or in which the Fund
seeks to invest may be unavailable entirely or in the specific quantities sought by the Fund. As a result, the Fund may need to obtain
the desired exposure through a less advantageous investment, forgo the investment at the time or seek to replicate the desired exposure
through a derivative transaction or investment in another investment vehicle. Any such event(s) could have a significant adverse impact on the value and risk profile of the Fund’s portfolio. There is a risk that you may lose money by investing in the Fund.
Social, political, economic and other conditions and events, such as war, natural
disasters, health emergencies (e.g., epidemics and pandemics), terrorism, conflicts, social unrest, recessions, inflation, interest rate
changes, the imposition of tariffs, trade restrictions or similar actions by the U.S. or foreign governments (or retaliatory measures taken
in response to such actions) and supply chain disruptions could reduce consumer demand or economic output, result in market closures,
travel restrictions or quarantines, and generally have a significant impact on economies, financial markets, issuers and the Adviser’s investment advisory activities and services of other service providers, which in turn could adversely affect the Fund’s investments and other operations.
Government and other public debt, including municipal obligations, can be adversely
affected by changes in local and global economic conditions, including those that result in increased debt levels. Although
high levels of government and other public debt do not necessarily indicate or cause economic problems, high levels of debt may create
certain systemic risks if sound debt management practices are not implemented. A high debt level may increase market pressures to meet an issuer’s funding needs, which may increase borrowing costs and cause a government or public or municipal entity to issue additional
debt, thereby increasing the risk of refinancing. A high debt level also raises concerns that the issuer may be unable
or unwilling to repay the principal or interest on its debt, which may adversely impact instruments held by the Fund that rely on such payments.
Governmental and quasi-governmental responses to certain economic or other conditions
may lead to increasing government and other public debt, particularly when such responses are unprecedented, which heighten
these risks. Unsustainable debt levels can lead to declines in the value of currency, and can prevent a government from implementing
effective counter-cyclical fiscal policy during economic downturns, can generate or contribute to an economic downturn or cause other
adverse economic or market developments,
30
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy (cont'd)
such as increases in inflation or volatility. Increasing government and other public
debt may adversely affect issuers, obligors, guarantors or instruments across a variety of asset classes.
Global events may negatively impact broad segments of businesses and populations,
cause a significant negative impact on the price and performance of the Fund’s investments, reduce market liquidity, adversely affect and increase the volatility of markets and the Fund’s share price and exacerbate pre-existing political, social, financial and economic risks to the Fund and cause overall declines in the U.S. and global markets. The Fund’s operations may be interrupted as a result, which may contribute to the negative impact on investment performance. In addition, governments, their regulatory agencies, or self-regulatory
organizations may take actions (including monetary and/or fiscal actions intended to stimulate or stabilize the global
economy) that affect the instruments in which the Fund invests, or the issuers of such instruments, in ways that could have a significant negative impact on the Fund’s investment performance. Monetary and/or fiscal actions taken by U.S. or foreign governments may
not be effective and could lead to increased market volatility. In addition, government actions (such as changes to interest rates)
could have unintended economic and market consequences that adversely affect the Fund’s investments. The frequency and magnitude of resulting changes in the value of the Fund’s investments cannot be predicted.
Foreign and Emerging Market Securities
Investments in foreign markets entail special risks, such as currency, political (including
geopolitical), economic and market risks and heightened risks, that may result in losses to the Fund. There also may be greater
market volatility, less reliable financial information, less stringent investor protections and disclosure standards, higher transaction and
custody costs and risks, decreased market liquidity and less government and exchange regulation associated with investments in foreign
markets. In addition, investments in certain foreign markets that have historically been considered stable may become more volatile
and subject to increased risk due to developments and changing conditions in such markets. Moreover, the growing interconnectivity
of global economies and financial markets has increased the probability that adverse developments and conditions in
one country or region will affect the stability of economies and financial markets in other countries or regions. Certain foreign markets
may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments (including regional
and global, military or other conflicts), the imposition of economic sanctions against a particular country or countries, organizations,
companies, entities and/or individuals, changes in international trading patterns, trade barriers (including tariffs) and
other protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected by governmental interventions or
other actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the
imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign investing
in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility
or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated
in that currency. Certain foreign investments may become less liquid and decline in value in response to market developments or adverse
investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market, economic, political and
social turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The risks of investing in emerging
market countries are greater than the risks associated with investments in foreign developed countries. Emerging market countries
may be subject to increased potential for market manipulation and to less stringent requirements regarding accounting, auditing,
financial reporting and record keeping and
31
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy (cont'd)
therefore, material information related to an investment may not be available or reliable.
Certain emerging market or developing countries are among the largest debtors to commercial banks and foreign governments.
The issuer or governmental authority that controls the repayment of sovereign debt may not be willing or able to repay the principal
and/or pay interest when due in accordance with the terms of such obligations. Economic sanctions or other similar measures may
be, and have been, imposed against certain countries, organizations, companies, entities and/or individuals. In addition, foreign
governments may default on their debt securities, which may require holders of such securities to participate in debt rescheduling or
additional lending to defaulting governments. Moreover, there is no bankruptcy proceeding by which defaulted sovereign debt may
be collected in whole or in part. In addition, the Fund is limited in its ability to exercise its legal rights or enforce a counterparty’s legal obligations in certain jurisdictions outside of the United States, in particular, in emerging market countries. In addition, the Fund’s investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged, the value of those investments
will fluctuate with U.S. dollar exchange rates. Economic sanctions or other similar measures may be, and have been, imposed
against certain countries, organizations, companies, entities and/or individuals. Economic sanctions and other similar measures
could, among other things, effectively restrict or eliminate the Fund’s ability to purchase or sell securities (in the sanctioned country and other markets), negatively impact the value or liquidity of the Fund’s investments, significantly delay or prevent the settlement of the Fund’s securities transactions, force the Fund to sell or otherwise dispose of investments at inopportune times or prices, or impair the Fund’s ability to meet its investment objective or invest in accordance with its investment strategies.
Exchange-Listed Equities via Stock Connect Program
The Shanghai-Hong Kong Stock Connect program and the Shenzhen-Hong Kong Stock Connect programs (“Stock Connect”) allow non-Chinese investors (such as the Fund) to purchase certain listed equities via brokers
in Hong Kong. Although Stock Connect allows non-Chinese investors to trade Chinese equities without a license, purchases
of securities through Stock Connect are subject to daily market-wide quota limitations, which may prevent the Fund from purchasing Stock
Connect securities when it is otherwise advantageous to do so. An investor cannot purchase and sell the same security on the same trading day, which may restrict the Fund’s ability to invest in China A-shares through Stock Connect and to enter into or exit
trades where it is advantageous to do so on the same trading day. Because Stock Connect trades are routed through Hong Kong brokers
and the Hong Kong Stock Exchange, Stock Connect is affected by trading holidays in either China or Hong Kong, and there are
trading days in China when Stock Connect investors will not be able to trade. As a result, prices of securities purchased through
Stock Connect may fluctuate at times when the Fund is unable to add to or exit its position. Only certain China A-shares are eligible
to be accessed through Stock Connect. Such securities may lose their eligibility at any time, in which case they could be sold
but could no longer be purchased through Stock Connect. Because Stock Connect is relatively new, its effects on the market for trading
China A-shares are uncertain. In addition, the trading, settlement and IT systems required to operate Stock Connect are relatively
new and continuing to evolve. In the event that the relevant systems do not function properly, trading through Stock Connect could
be disrupted.
Stock Connect is subject to regulation by both Hong Kong and China. There can be no
assurance that further regulations will not affect the availability of securities in the program, the frequency of redemptions
or other limitations. For defaults by Hong Kong brokers occurring on or after January 1, 2020, the Hong Kong Investor Compensation
Fund will cover losses incurred by investors with a cap of HK$500,000 per investor for securities traded on a stock market operated
by the Shanghai Stock Exchange and/or
32
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy (cont'd)
Shenzhen Stock Exchange and in respect of which an order for sale or purchase is permitted
to be routed through the northbound link of the Stock Connect. In China, Stock Connect securities are held on behalf of ultimate
investors (such as the Fund) by the Hong Kong Securities Clearing Company Limited (“HKSCC”) as nominee. The Fund may therefore depend on HKSCC’s ability or willingness as record-holder of Stock Connect securities to enforce the Fund’s shareholder rights. While Chinese regulators have affirmed that the ultimate investors hold a beneficial interest in Stock Connect securities,
the law surrounding such rights is in its early stages and the mechanisms that beneficial owners may use to enforce their rights are
untested and therefore pose uncertain risks. Further, courts in China have limited experience in applying the concept of beneficial
ownership and the law surrounding beneficial ownership will continue to evolve as they do so. Accordingly, there is a risk that as the law is tested and developed, the Fund’s ability to enforce its ownership rights may be negatively impacted. The Fund may not be able
to participate in corporate actions affecting Stock Connect securities due to time constraints or for other operational reasons. The Fund will not be able to attend shareholders’ meetings. Stock Connect trades are settled in RMB, the Chinese currency, and investors
must have timely access to a reliable supply of RMB in Hong Kong, which cannot be guaranteed.
Stock Connect trades are either subject to certain pre-trade requirements or must
be placed in special segregated accounts that allow brokers to comply with these pre-trade requirements by confirming that the selling
shareholder has sufficient Stock Connect securities to complete the sale. If the Fund does not utilize a special segregated account, the
Fund will not be able to sell the shares on any trading day where it fails to comply with the pre-trade checks. In addition, these
pre-trade requirements may, as a practical matter, limit the number of brokers that the Fund may use to execute trades. While the Fund
may use special segregated accounts in lieu of the pre-trade check, some market participants have yet to fully implement IT systems
necessary to complete trades involving securities in such accounts in a timely manner. Market practice with respect to special segregated
accounts is continuing to evolve. Investments via Stock Connect are subject to regulation by Chinese authorities. Chinese law may require aggregation of the Fund’s holdings of Stock Connect securities with securities of other clients of the Adviser for purposes
of disclosing positions held in the market, acquiescing to trading halts that may be imposed until regulatory filings are completed or complying with China’s short-term trading rules.
Since the inception of Stock Connect, foreign investors investing in China A-shares
through Stock Connect have been temporarily exempt from Chinese corporate income tax and value-added tax on the gains on disposal
of such China A-shares. Dividends are subject to Chinese corporate income tax on a withholding basis at 10% unless reduced
under a double tax treaty with China upon application to and obtaining approval from the competent tax authority. Additionally,
uncertainties in permanent Chinese tax rules governing taxation of income and gains from investments in Stock Connect China A-shares
could result in unexpected tax liabilities for the Fund.
The risks related to investments in China A shares through Stock Connect are heightened
to the extent that the Fund invests in China A shares listed on the Science and Technology Innovation Board on the Shanghai stock exchange (“STAR market”) and/or the ChiNext market of the Shenzhen stock exchange (“ChiNext market”). Listed companies on the STAR market and ChiNext market are usually of an emerging nature with smaller operating scale. They are subject to
higher fluctuation in stock prices and liquidity. China A shares listed on ChiNext market and STAR market may be overvalued and such
exceptionally high valuation may not be
33
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Investment Policy (cont'd)
sustainable. Further, stock prices may be more susceptible to manipulation due to
fewer circulating shares. It may be more common and faster for companies listed on the STAR market and ChiNext market to delist. In
particular, ChiNext market and STAR market have stricter criteria for delisting compared to other boards. Investments in the
ChiNext market and/or STAR market may result in significant losses for the Fund.
Determination of NAV
The Fund determines the NAV per share as of the close of the NYSE (normally 4:00 p.m.
Eastern time) on each day that the NYSE is open for business. Shares generally will not be priced on days that the NYSE is closed.
If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business,
or the NYSE has an unscheduled early closing on a day it has opened for business, the Fund reserves the right to treat
such day as a business day and calculate its NAV as of the normally scheduled close of regular trading on the NYSE for that day, so long
as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. The Fund may elect
to price its shares on days when the NYSE is closed but the primary securities markets on which the Fund’s securities trade remain open.
34
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Dividend Reinvestment Plan
Pursuant to the Dividend Reinvestment Plan (the Plan), each stockholder will be deemed
to have elected, unless Computershare Trust Company, N.A. (the Plan Agent) is otherwise instructed by the stockholder in writing,
to have all distributions automatically reinvested in Fund shares.
Dividend and capital gain distributions (Distribution) will be reinvested on the reinvestment
date in full and fractional shares. If the market price per share equals or exceeds net asset value per share on the reinvestment
date, the Fund will issue shares to participants at net asset value or, if net asset value is less than 95% of the market price on the
reinvestment date, shares will be issued at 95% of the market price. If net asset value exceeds the market price on the reinvestment date,
participants will receive shares valued at market price. The Fund may purchase shares of its Common Stock in the open market in connection
with dividend reinvestment requirements at the discretion of the Board of Directors. Should the Fund declare
a Distribution payable only in cash, the Plan Agent will purchase Fund shares for participants in the open market as agent for the participants.
The Plan Agent’s fees for the reinvestment of a Distribution will be paid by the Fund. However, each participant’s account will be charged a pro rata share of brokerage commissions incurred on any open market purchases effected on such participant’s behalf. Although stockholders in the Plan may receive no cash distributions, participation
in the Plan will not relieve participants of any income tax which may be payable on such dividends or distributions.
In the case of stockholders, such as banks, brokers or nominees, that hold shares
for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of shares certified from
time to time by the stockholder as representing the total amount registered in the stockholder’s name and held for the account of beneficial owners who are participating in the Plan.
Stockholders who do not wish to have Distributions automatically reinvested should
notify the Plan Agent in writing. There is no penalty for non-participation or withdrawal from the Plan, and stockholders who have
previously withdrawn from the Plan may rejoin at any time. Requests for additional information or any correspondence concerning
the Plan should be directed to the Plan Agent at:
Morgan Stanley China A Share Fund, Inc.
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, Rhode Island 02940-3078
1 (800) 231-2608
Monday–Friday between 8:30 a.m. and 6:00 p.m. (EDT)
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, Rhode Island 02940-3078
1 (800) 231-2608
Monday–Friday between 8:30 a.m. and 6:00 p.m. (EDT)
35
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
Important Notices
Reporting to Shareholders
The Fund provides a complete schedule of portfolio holdings in its semi-annual and
annual reports within 60 days of the end of the Fund’s second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission (“SEC”) on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im/shareholderreports. Each Morgan Stanley non-money
market fund also files a complete schedule of portfolio holdings with the SEC for the Fund’s first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fund on Form N-MFP. Morgan Stanley does not deliver
the reports for the first and third fiscal quarters to stockholders, but makes the complete schedule of portfolio holdings for the Fund’s first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to
the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC’s website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s e-mail address (publicinfo@sec.gov).
In addition to filing a complete schedule of portfolio holdings with the SEC each
fiscal quarter, the Fund provides a complete schedule of portfolio holdings on the public website on a monthly basis at least 15
calendar days after month end and under other conditions as described in the Fund’s policy on portfolio holdings disclosure. You may obtain copies of the Fund’s monthly website postings by calling toll free 1(800) 231-2608.
Proxy Voting Policies and Procedures and Proxy Voting Record
A copy of (1) the Fund’s policies and procedures with respect to the voting of proxies relating to the Fund’s portfolio securities; and (2) how the Fund voted proxies relating to portfolio securities during the most recent
twelve-month period ended June 30, is available without charge, upon request, by calling toll free 1(800) 231-2608 or by visiting
our website at www.morganstanley.com/im/en-us/institutional-investor/about-us/proxy-voting/vote-summary-report.desktop.html. This information is also available on the SEC’s web site at www.sec.gov.
Share Repurchase Program
You can access information about the monthly share repurchase results through Morgan
Stanley Investment Management's website: www.morganstanley.com/im/shareholderreports.
36
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
U.S. Customer Privacy Notice March 2026
|
FACTS
|
WHAT DOES MORGAN STANLEY INVESTMENT MANAGEMENT, INC.
(“MSIM”) DO WITH YOUR PERSONAL INFORMATION?
|
|
Why?
|
Financial companies choose how they share your personal information. Federal law gives
consumers the right to limit some but not all sharing. Federal law also requires us
to tell you how
we collect, share, and protect your personal information. Please read this notice
carefully to
understand what we do.
|
|
What?
|
The types of personal information we collect and share depend on the product or service
you have
with us. This information can include:
■
Social Security number and income
■
investment experience and risk tolerance
■
checking account information and wire transfer instructions
|
|
How?
|
All financial companies need to share customers’ personal information to run their everyday
business. In the section below, we list the reasons financial companies can share their customers’
personal information; the reasons MSIM chooses to share; and whether you can limit
this sharing.
|
|
Reasons we can share your personal information
|
Does MSIM
share?
|
Can you limit this
sharing?
|
|
For our everyday business purposes —
such as to process your transactions, maintain your
account(s), respond to court orders and legal investigations,
or report to credit bureaus
|
Yes
|
No
|
|
For our marketing purposes —
to offer our products and services to you
|
Yes
|
No
|
|
For joint marketing with other financial companies
|
No
|
We don't share
|
|
For our affiliates’ everyday business purposes —
information about your transactions and experiences
|
Yes
|
No*
|
|
For our affiliates’ everyday business purposes —
information about your creditworthiness
|
Yes
|
Yes*
|
|
For our affiliates to market to you
|
Yes
|
Yes*
|
|
For nonaffiliates to market to you
|
No
|
We don't share
|
37
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
U.S. Customer Privacy Notice (cont'd)March 2026
|
To limit our
sharing
|
To limit sharing, call toll-free (844) 312-6327 or email: msimprivacy@morganstanley.com.
Please
include your name, address, and first three digits (and only the first three digits)
of your account
number in the email. If we serve you through an investment professional, please contact
them
directly. Specific Internet addresses, mailing addresses, and telephone numbers are
listed on your
statements and other correspondence.
Please Note: If you are a new customer, we can begin sharing your information 30 days from the date
we sent this notice. When you are no longer our customer, we continue to share your information as
described in this notice. However, you can contact us at any time to limit our sharing.
*MSIM does not share your creditworthiness information or your transactions and experiences
information with the Morgan Stanley Affiliates, nor does MSIM enable the Morgan Stanley
Affiliates
to market to you. Your opt outs will prevent MSIM from sharing your creditworthiness
information
with the Investment Management Affiliates and will prevent the Investment Management
Affiliates
from marketing their products to you.
|
|
Questions?
|
Call toll-free (844) 312-6327 or email: msimprivacy@morganstanley.com
|
|
Who we are
|
|
|
Who is providing this notice?
|
Morgan Stanley Investment Management Inc. and its investment
management affiliates (“MSIM”) (See Affiliates definition below.)
|
|
What we do
|
|
|
How does MSIM protect my personal
information?
|
To protect your personal information from unauthorized access
and use, we use security measures that comply with federal law.
These measures include computer safeguards and secured files and
buildings. We have policies governing the proper handling of
customer information by personnel and requiring third parties
that provide support to adhere to appropriate security standards
with respect to such information.
|
|
How does MSIM collect my personal
information?
|
We collect your personal information, for example, when you
■
open an account or make deposits or withdrawals from
your account
■
buy securities from us or make a wire transfer
■
give us your contact information
We also collect your personal information from others, such as
credit bureaus, affiliates, or other companies.
|
38
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
U.S. Customer Privacy Notice (cont'd)March 2026
|
What we do
|
|
|
Why can’t I limit all sharing?
|
Federal law gives you the right to limit only
■
sharing for affiliates’ everyday business purposes —
information about your creditworthiness
■
affiliates from using your information to market to you
■
sharing for nonaffiliates to market to you
State laws and individual companies may give you additional
rights to limit sharing. See below for more on your rights under
state law.
|
|
What happens when I limit sharing for an
account I hold jointly with someone else?
|
Your choices will apply to everyone on your account. |
|
Definitions
|
|
|
Affiliates
|
Companies related by common ownership or control. They can
be financial and non-financial companies.
■
Our affiliates include registered investment advisers
such as Eaton Vance Management, Eaton Vance
Advisers International Ltd., Boston Management and
Research, Calvert Research and Management,
Atlanta Capital Management Company, LLC,
Parametric Portfolio Associates LLC, Morgan Stanley
Investment Management Co., Morgan Stanley
Investment Management Ltd; registered broker-
dealers such as Morgan Stanley Distribution, Inc. and
Eaton Vance Distributors, Inc. (collectively, the
“Investment Management Affiliates”); and registered
and unregistered funds sponsored by Morgan Stanley
Investment Management such as the registered
funds within Morgan Stanley Institutional Fund, Inc.
(together, the “Investment Management Affiliates”);
and companies with a Morgan Stanley name and
financial companies such as Morgan Stanley Smith
Barney LLC and Morgan Stanley & Co. (the “Morgan
Stanley Affiliates”).
|
|
Non-affiliates
|
Companies not related by common ownership or control. They
can be financial and non-financial companies.
■
MSIM does not share with non-affiliates so they can
market to you.
|
|
Joint marketing
|
A formal agreement between non-affiliated financial companies
that together market financial products or services to you.
■
MSIM doesn’t jointly market
|
39
Morgan Stanley China A Share Fund, Inc.
June 30, 2026 (unaudited)
U.S. Customer Privacy Notice (cont'd)March 2026
|
Other important Information
|
|
Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with non-affiliates unless you provide us with your written consent to share such information.
|
|
California: Except as permitted by law, we will not share personal information we collect about
California residents
with non-affiliates and we will limit sharing such personal information with our Affiliates
to comply with California
privacy laws that apply to us.
|
40
Directors
Frances L. Cashman
Kathleen A. Dennis, Vice Chairperson of the Board
Nancy C. Everett
Richard G. Gould III
Eddie A. Grier
Jakki L. Haussler
Dr. Manuel H. Johnson
Michael F. Klein, Chairperson of the Board
Patricia A. Maleski
W. Allen Reed
Officers
Deidre A. Downes
Chief Compliance Officer
John H. Gernon
President and Principal Executive Officer
Michael J. Key
Vice President
Deidre Walsh
Secretary and Chief Legal Officer
James F. Kirchner
Treasurer and Principal Financial Officer
Adviser and Administrator
Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036
1585 Broadway
New York, New York 10036
Sub-Adviser
Morgan Stanley Investment Management Company
2 Central Boulevard
#22-01 West Tower, IOI Central
Boulevard Towers, Singapore 018916
2 Central Boulevard
#22-01 West Tower, IOI Central
Boulevard Towers, Singapore 018916
Custodian
State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114
One Congress Street
Boston, Massachusetts 02114
Stockholder Servicing Agent
Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, Kentucky 40233
P.O. Box 505000
Louisville, Kentucky 40233
Legal Counsel
Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
1095 Avenue of the Americas
New York, New York 10036
Counsel to the Independent Directors
Morgan, Lewis & Bockius LLP
One State Street
Hartford, Connecticut 06103
One State Street
Hartford, Connecticut 06103
Independent Registered Public Accounting Firm
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
200 Clarendon Street
Boston, Massachusetts 02116
For additional Fund information, including the Fund’s net asset value per share and information regarding the investments comprising the Fund’s portfolio, please call toll free
1 (800) 231-2608 or visit our website at www.morganstanley.com/im/shareholderreports. All investments involve risks, including the possible loss of principal.
1 (800) 231-2608 or visit our website at www.morganstanley.com/im/shareholderreports. All investments involve risks, including the possible loss of principal.
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