N-Q 1 y92889bnvq.htm FORM N-Q nvq
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-07377
Morgan Stanley Multi Cap Growth Trust
(Exact name of registrant as specified in charter)
     
522 Fifth Avenue, New York, New York
(Address of principal executive offices) 		  10036
(Zip code)
Arthur Lev
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant’s telephone number, including area code: 212-296-6963
Date of fiscal year end: November 30, 2011
Date of reporting period: August 31, 2011
Item 1. Schedule of Investments.
The Fund’s schedule of investments as of the close of the reporting period prepared pursuant to Rule 12-12 of Regulation S-X is as follows:
 
 

 

 

Morgan Stanley Multi Cap Growth Trust
Portfolio of Investments < August 31, 2011 (unaudited)
             
NUMBER OF          
SHARES       VALUE  
 
 
   Common Stocks (95.7%)        
 
   Air Transport (1.9%)        
159,807
   Expeditors International of Washington, Inc.   $ 7,271,219  
 
          
 
   Alternative Energy (4.4%)        
133,150
   Range Resources Corp.     8,622,794  
238,541
   Ultra Petroleum Corp. (a)     7,991,123  
 
          
 
         16,613,917  
 
          
 
   Asset Management & Custodian (1.4%)        
149,579
   Greenhill & Co., Inc.     5,314,542  
 
          
 
   Biotechnology (2.7%)        
190,727
   Illumina, Inc. (a)     9,936,877  
 
          
 
   Chemicals: Diversified (3.0%)        
162,971
   Monsanto Co.     11,233,591  
 
          
 
   Commercial Finance & Mortgage Companies (1.9%)        
1,233,859
   BM&F Bovespa SA (Brazil)     7,231,550  
 
          
 
   Commercial Services (7.4%)        
186,315
   CoStar Group, Inc. (a)     9,535,602  
314,935
   eBay, Inc. (a)     9,722,043  
283,460
   Leucadia National Corp.     8,398,920  
 
          
 
         27,656,565  
 
          
 
   Communications Technology (3.6%)        
320,823
   Motorola Solutions, Inc. (a)     13,503,440  
 
          
 
   Computer Services, Software & Systems (15.8%)        
75,463
   Baidu, Inc. ADR (China) (a)     11,000,996  
445,944
   Facebook, Inc. Class B (a)(b)(c)     11,148,600  
34,778
   Google, Inc. Class A (a)     18,813,507  
56,825
   LinkedIn Corp. Class A (a)     4,780,119  
78,348
   Salesforce.com, Inc. (a)     10,087,305  
132,900
   Tencent Holdings Ltd. (China) (d)     3,157,844  
 
          
 
         58,988,371  
 
          
 
   Computer Technology (11.0%)        
84,380
   Apple, Inc. (a)     32,471,955  
287,071
   Yandex N.V. Class A (Russia) (a)     8,890,589  
 
          
 
         41,362,544  
 
          
 
   Diversified Media (1.8%)        
130,958
   Naspers Ltd. Class N (South Africa)     6,853,784  
 
          
 
   Diversified Retail (12.4%)        
156,561
   Amazon.com, Inc. (a)     33,706,018  
54,151
   NetFlix, Inc. (a)     12,726,026  
 
          
 
         46,432,044  
 
          
 
   Financial Data & Systems (5.1%)        
281,362
   MSCI, Inc. Class A (a)     9,726,685  
266,261
   Verisk Analytics, Inc. Class A (a)     9,276,533  
 
          
 
         19,003,218  
 
          
 
   Health Care Services (3.3%)        
214,449
   athenahealth, Inc. (a)     12,438,042  
 
          
 
   Medical Equipment (3.0%)        
29,888
   Intuitive Surgical, Inc. (a)     11,397,789  
 
          
 
   Metals & Minerals: Diversified (4.7%)        
4,309,044
   Lynas Corp. Ltd. (Australia) (a)     8,337,140  
162,977
   Molycorp, Inc. (a)     9,211,460  
 
          
 
         17,548,600  
 
          
 
   Pharmaceuticals (3.0%)        
155,276
   Mead Johnson Nutrition Co.     11,063,415  
 
          

 

 

Morgan Stanley Multi Cap Growth Trust
Portfolio of Investments < August 31, 2011 (unaudited) continued
             
NUMBER OF          
SHARES       VALUE  
 
   Real Estate Investment Trusts (REIT) (3.8%)        
478,864
   Brookfield Asset Management, Inc. Class A (Canada)   $ 14,183,952  
 
          
 
   Recreational Vehicles & Boats (3.6%)        
485,479
   Edenred (France)     13,334,116  
 
          
 
   Wholesale & International Trade (1.9%)        
3,988,930
   Li & Fung Ltd. (d)     7,193,123  
 
          
 
   Total Common Stocks (Cost $271,731,168)     358,560,699  
 
          
 
 
   Convertible Preferred Stock (0.5%)        
 
   Alternative Energy        
580,266
   Better Place, Inc. (Cost $1,740,798) (a)(b)(c)     1,740,798  
 
          
                         
NUMBER OF                      
SHARES (000)                      
       
Short-Term Investment (4.1%)
                
       
Investment Company
                
  15,255    
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (Cost $15,255,129)(e)
             15,255,129  
       
 
              
 
       
Total Investments (Cost $288,727,095) (f)
     100.3 %     375,556,626  
       
Liabilities in Excess of Other Assets
     (0.3 )     (987,496 )
       
 
            
       
Net Assets
     100.0 %   $ 374,569,130  
       
 
            
 
ADR   American Depositary Receipt.
 
(a)   Non-income producing security.
 
(b)   At August 31, 2011, the Fund held fair valued securities valued at $12,889,398, representing 3.4% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund’s Trustees.
 
(c)   Illiquid security. Resale is restricted to qualified institutional investors.
 
(d)   Security trades on the Hong Kong exchange.
 
(e)   The Fund invests in the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio - Institutional Class (the “Liquidity Fund”), an open-end management investment company managed by the Adviser. Investment advisory fees paid by the Fund are reduced by an amount equal to the advisory and administrative service fees paid by the Liquidity Fund with respect to assets invested by the Fund in the Liquidity Fund.
 
(f)   The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes.

 

 

Morgan Stanley Multi Cap Growth Trust
Notes to Portfolio of Investments < August 31, 2011 (unaudited)
Valuation of Investments — (1) An equity portfolio security listed or traded on the New York Stock Exchange (“NYSE”) or American Stock Exchange or other domestic exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and ask price; (2) an equity portfolio security listed or traded on the Nasdaq is valued at the Nasdaq Official Closing Price; if there were no sales that day, the security is valued at the mean between the last reported bid and ask price; (3) all other domestic securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and ask price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (4) for equity securities traded on foreign exchanges, the last reported sale price or the latest bid price may be used if there were no sales on a particular day; (5) when market quotations are not readily available including, circumstances under which Morgan Stanley Investment Management Inc. (the “Adviser”), a wholly owned subsidiary of Morgan Stanley, determines that the latest sale price, the bid price or the mean between the last reported bid and ask price do not reflect a security’s market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund’s Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund’s Trustees or by the Investment Adviser using a pricing service and/or procedures approved by the Trustees of the Fund; (6) certain portfolio securities may be valued by an outside pricing service approved by the Fund’s Trustees; (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (8) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost, which approximates fair value.
Fair Valuation Measurements
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value as the value that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting 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 as of August 31, 2011 in valuing the Fund’s investments carried at fair value:
                                 
    FAIR VALUE MEASUREMENTS AT AUGUST 31, 2011 USING  
            UNADJUSTED              
            QUOTED PRICES IN     OTHER        
            ACTIVE MARKETS FOR     SIGNIFICANT     SIGNIFICANT  
            IDENTICAL     OBSERVABLE     UNOBSERVABLE  
            INVESTMENTS     INPUTS     INPUTS  
INVESTMENT TYPE   TOTAL     (LEVEL 1)     (LEVEL 2)     (LEVEL 3)  
Assets:
                                
Common Stocks
                                
Air Transport
   $ 7,271,219     $ 7,271,219       —       —  
Alternative Energy
     16,613,917       16,613,917       —       —  
Asset Management & Custodian
     5,314,542       5,314,542       —       —  
Biotechnology
     9,936,877       9,936,877       —       —  
Chemicals: Diversified
     11,233,591       11,233,591       —       —  
Commercial Finance & Mortgage Companies
     7,231,550       7,231,550       —       —  
Commercial Services
     27,656,565       27,656,565       —       —  
Communications Technology
     13,503,440       13,503,440       —       —  
Computer Services, Software & Systems
     58,988,371       47,839,771       —     $ 11,148,600  
Computer Technology
     41,362,544       41,362,544       —       —  
Diversified Media
     6,853,784       6,853,784       —       —  
Diversified Retail
     46,432,044       46,432,044       —       —  
Financial Data & Systems
     19,003,218       19,003,218       —       —  
Health Care Services
     12,438,042       12,438,042       —       —  
Medical Equipment
     11,397,789       11,397,789       —       —  
Metals & Minerals: Diversified
     17,548,600       17,548,600       —       —  
Pharmaceuticals
     11,063,415       11,063,415       —       —  
Real Estate Investment Trusts (REIT)
     14,183,952       14,183,952       —       —  
Recreational Vehicles & Boats
     13,334,116       13,334,116       —       —  
Wholesale & International Trade
     7,193,123       7,193,123       —       —  
 
                        
Total Common Stocks
     358,560,699       347,412,099       —       11,148,600  
 
                        
Convertible Preferred Stock
     1,740,798       —       —       1,740,798  
Short-Term Investment - Investment Company
     15,255,129       15,255,129       —       —  
 
                        
Total Assets
   $ 375,556,626     $ 362,667,228       —     $ 12,889,398  
 
                        
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment’s valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of August 31, 2011, securities with a total value of $31,682,884 transferred from Level 2 to Level 1. At November 30, 2010, the fair market value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.
Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
                 
            Convertible  
    Common Stock     Preferred Stock  
Beginning Balance
   $ 1,910,363     $ 1,740,798  
Purchases
     6,208,461       —  
Sales
     —       —  
Amortization of discount
     —       —  
Transfers in
     —       —  
Transfers out
     —       —  
Change in unrealized appreciation/depreciation
     3,029,776       —  
Realized gains (losses)
     —       —  
 
            
Ending Balance
   $ 11,148,600     $ 1,740,798  
 
            
Net change in unrealized appreciation/depreciation from investments still held as of August 31, 2011
   $ 3,029,776       —  
 
            

 

 

Item 2. Controls and Procedures.
(a) The Fund’s principal executive officer and principal financial officer have concluded that the Fund’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-Q was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.
(b) There were no changes in the Fund’s internal control over financial reporting that occurred during the registrant’s fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.
Item 3. Exhibits.
(a) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto.

 

 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Morgan Stanley Multi Cap Growth Trust
         
     
  /s/ Arthur Lev    
  Arthur Lev   
  Principal Executive Officer 
October 20, 2011		  
 
     Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
         
     
  /s/ Arthur Lev    
  Arthur Lev   
  Principal Executive Officer 
October 20, 2011		  
 
     
  /s/ Francis Smith    
  Francis Smith   
  Principal Financial Officer 
October 20, 2011