N-Q 1 destramulti_nq.htm N-Q

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 811-22572

Destra Multi-Alternative Fund

(Exact name of registrant as specified in charter)

444 West Lake Street, Suite 1700, Chicago, IL 60606

(Address of principal executive offices) (Zip code)

The Corporation Trust Company – Corporation Trust Center

1209 Orange Street, Wilmington, Deleware 19801

(Name and address of agent for service)

Registrant's telephone number, including area code: 1-312-843-6161

Date of fiscal year end: 2/28

Date of reporting period: 11/30/18

Item 1. Schedule of Investments.

Destra Multi-Alternative Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
November 30, 2018
Shares		Security					Value
		COMMON STOCKS - 5.42%
		ENTERTAINMENT - 0.37%
10,988		Cedar Fair LP					$601,263
		LISTED BUSINESS DEVELOPMENT COMPANIES - 2.18%
25,194		Ares Capital Corp.					429,306
51,792		BlackRock Capital Investment Corp.					303,501
30,782		FS Investment Corp.					183,768
33,990		Garrison Capital, Inc.					256,625
24,505		Golub Capital BDC, Inc.					453,588
17,971		New Mountain Finance Corp.					244,585
27,634		PennantPark Floating Rate Capital Ltd.					355,926
27,852		TPG Specialty Lending, Inc.					565,117
27,527		TriplePoint Venture Growth BDC Corp.					326,195
32,516		WhiteHorse Finance, Inc.					427,585
							3,546,196
		PIPELINES - 0.24%
4,585		Buckeye Partners LP					135,533
19,618		Enable Midstream Partners LP					261,704
							397,237
		PRIVATE EQUITY - 1.18%
30,249		Hercules Capital, Inc.					367,828
14,289		Icahn Enterprises LP					955,505
32,700		The Carlyle Group LP					598,737
							1,922,070
		SEMICONDUCTORS - 0.99%
19,400		NXP Semiconductors NV *					1,617,378
		TECHNOLOGY - 0.46%
7,000		Dell Technologies, Inc. Class V					738,360
		TOTAL COMMON STOCKS					8,822,504
		(Cost - $9,989,065)
		EXCHANGE TRADED NOTES - 0.50%
100,000		Credit Suisse X-Links Gold Shares Covered Call ETN					821,000
		TOTAL EXCHANGE TRADED NOTES
		(Cost - $929,130)
		REAL ESTATE INVESTMENT TRUSTS - 40.12%
		LISTED REAL ESTATE INVESTMENT TRUSTS - 5.92%
40,800		American Campus Communities, Inc.					1,788,264
210,460		American Finance Trust					2,912,765
125,685		Colony Credit Real Estate, Inc.					2,132,874
20,000		CoreCivic, Inc.					439,000
19,440		CyrusOne, Inc.					1,090,195
45,000		Granite Point Mortgage Trust, Inc.					853,200
17,450		The GEO Group, Inc.					405,538
		TOTAL LISTED REAL ESTATE INVESTMENT TRUSTS					9,621,836

Destra Multi-Alternative Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
November 30, 2018
Shares		Security					Value
		NON-LISTED REAL ESTATE INVESTMENT TRUSTS - 17.86%
228,122		Carey Watermark Investors, Inc. #					$2,342,815
290,378		Healthcare Trust, Inc. #					6,095,863
90,031		Hines Global REIT, Inc. #					776,711
456,540		Hospitality Investor Trust, Inc. # *					6,247,057
1,081,081		NorthStar Health Care Income, Inc. #					9,064,832
764,346		N1 Liquidating Trust #					557,973
388,931		Steadfast Income REIT, Inc. #					3,954,054
		TOTAL NON-LISTED REAL ESTATE INVESTMENT TRUSTS					29,039,305
		PRIVATE REAL ESTATE INVESTMENT TRUSTS - 16.34%
7,354		Clarion Lion Industrial Trust #					13,607,757
661,928		Cottonwood Residential, Inc. #					12,953,931
		TOTAL PRIVATE REAL ESTATE INVESTMENT TRUSTS					26,561,688
		TOTAL REAL ESTATE INVESTMENT TRUSTS					65,222,829
		(Cost - $64,124,921)
		NON-LISTED BUSINESS DEVELOPMENT COMPANIES - 7.02%
362,805		Business Development Corporation of America #					2,975,004
745,598		Cion Investment Corp. #					6,943,197
211,949		Sierra Income Corp. #					1,494,243
		TOTAL NON-LISTED BUSINESS DEVELOPMENT COMPANIES					11,412,444
		(Cost - $12,757,299)
		PRIVATE BUSINESS DEVELOPMENT COMPANIES - 3.85%
409,727		Owl Rock Capital Corp. # (Cost - $6,266,428)					6,256,533
		PRIVATE INVESTMENT FUNDS - 26.54%
14		AIM Infrastructure MLP Fund II LP #					4,228,794
250		Arboretum Core Asset Fund, L.P. #					2,500,000
9,910		Clarion Lion Properties Fund #					14,737,960
1		Levine Leichtman Capital Partners VI, LP #					1,915,903
9,076		Mosaic Real Estate Credit, LLC #					10,000,000
3		Ovation Alternative Income Fund #					7,713,449
1		Stepstone Capital Partners IV, L.P. #					2,053,666
		TOTAL PRIVATE INVESTMENT FUNDS					43,149,772
		(Cost - $41,945,371)
		CLOSED-END FUNDS - 8.50%
12,000		Altaba, Inc.					787,080
92,641		Apollo Tactical Income Fund, Inc.					1,354,411
125,086		BlackRock Debt Strategies Fund, Inc.					1,298,393
58,623		Blackstone/GSO Long-Short Credit Income Fund					872,896
114,153		BlackRock Multi-Sector Income Trust					1,832,156
53,000		Brookfield Real Assets Income Fund, Inc.					1,070,070
98,042		DoubleLine Income Solutions Fund					1,798,090
40,000		First Trust Energy Income and Growth Fund					798,800
65,009		Flaherty & Crumrine Dynamic Preferred and Income					1,387,942
71,536		John Hancock Premium Dividend Fund					1,121,684
26,800		Morgan Stanley China A Share Fund, Inc.					526,620
78,964		Western Asset Emerging Markets Debt Fund, Inc.					970,468
		TOTAL CLOSED-END FUNDS					13,818,610
		(Cost - $15,285,278)
		HEDGE FUND - 16.96%
25,420		Collins Master Access Fund Ltd. # *					27,572,793
		TOTAL HEDGE FUNDS
		(Cost - $25,677,450)

Destra Multi-Alternative Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
November 30, 2018
Shares		Security					Value
		SHORT-TERM INVESTMENT - 1.20%
		MONEY MARKET FUND - 1.20%
1,956,835		Fidelity Investments Money Market Funds - Treasury Portfolio, Class I, 2.07% +					$1,956,835
		TOTAL SHORT-TERM INVESTMENT
		(Cost - $1,956,835)
		TOTAL INVESTMENTS - 110.11%
		(Cost - $178,931,777)					$179,033,320
		LIABILITIES IN EXCESS OF OTHER ASSETS  - (10.11)%					(16,439,809)
		NET ASSETS - 100.00 %					$162,593,511
LLC - Limited Liability Company
LP - Limited Partnership
NV - Naamloze Vennootschap
REIT - Real Estate Investment Trust
* Non-income producing security.
# Fair Value estimated using Fair Valuation Procedures adopted by the Board of Trustees. Total value of such securities is $143,992,535 or 88.56% of net assets.
+ Money market fund; interest rate reflects the seven-day effective yield on November 30, 2018.

Portfolio Composition as of November 30, 2018
				Percent of Net Assets
		Private Investment Funds		26.54%
		Real Estate Investment Trusts
		Non-Listed Real Estate Investment Trusts		17.86%
		Private Real Estate Investment Trusts		16.34%
		Listed Real Estate Investment Trusts		5.92%
		Hedge Fund		16.96%
		Closed End Funds		8.50%
		Non-Listed Business Development Companies		7.02%
		Private Business Development Companies		3.85%
		Listed Business Development Companies		2.18%
		Short-term Investment		1.20%
		Private Equity		1.18%
		Semiconductors		0.99%
		Exchange Traded Notes		0.50%
		Technology		0.46%
		Entertainment		0.37%
		Pipelines		0.24%
		Liabilities In Excess Of Other Assets		-10.11%
		Net Assets		100.00%

Multi-Strategy Growth & Income Fund

PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)

November 30, 2018

Security Valuation – Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ, at the NASDAQ Official Closing Price (“NOCP”).  In the absence of a sale, such securities shall be valued at the mean of the closing bid and asked prices on the day of valuation.  Short-term investments that mature in 60 days or less may be valued at amortized cost, provided such valuations represent fair value. The Fund follows the specialized accounting and reporting requirements under generally accepted accounting principles in the United States  that are applicable to investment companies.

Valuation of Fund of Funds - The Fund may invest in funds of open-end or closed-end investment companies (the “Underlying Funds”).  The Underlying Funds value securities in their portfolios for which market quotations are readily available at their market values (generally the last reported sale price) and all other securities and assets at their fair value using the methods established by the board of directors of the Underlying Funds. Open-end funds are valued at their net asset value per share and closed-end fund that trade on an exchange are valued as described under security valuation.

When price quotations for certain securities are not readily available, or if the available quotations are not believed to be reflective of market value by the Adviser, those securities will be valued at “fair value” as determined in good faith by the Fair Valuation Committee using procedures adopted by and under the supervision of the Fund’s Board of Trustees (the “Board”). There can be no assurance that the Fund could purchase or sell a portfolio security at the price used to calculate the Fund’s net asset value (“NAV”).

Fair valuation procedures may be used to value a substantial portion of the assets of the Fund. The Fund may use the fair value of a security to calculate its NAV when, for example, (1) a portfolio security is not traded in a public market or the principal market in which the security trades is closed, (2) trading in a portfolio security is suspended and not resumed prior to the normal market close, (3) a portfolio security is not traded in significant volume for a substantial period, or (4) the adviser determines that the quotation or price for a portfolio security provided by a broker-dealer or independent pricing service is inaccurate.

The “fair value” of securities may be difficult to determine and thus judgment plays a greater role in the valuation process. The fair valuation methodology may include or consider the following guidelines, as appropriate: (1) evaluation of all relevant factors, including but not limited to, pricing history, current market level, supply and demand of the respective security; (2) comparison to the values and current pricing of securities that have comparable characteristics; (3) knowledge of historical market information with respect to the security; (4) other factors relevant to the security which would include, but not be limited to, duration, yield, fundamental analytical data, the Treasury yield curve, and credit quality.

The values assigned to fair valued investments are based on available information and do not necessarily represent amounts that might ultimately be realized, since such amounts depend on future developments inherent in long-term investments. Changes in the fair valuation of portfolio securities may be less frequent and of greater magnitude than changes in the price of portfolio securities valued at their last sale price, by an independent pricing service, or based on market quotations. Imprecision in estimating fair value can also impact the amount of unrealized appreciation or depreciation recorded for a particular portfolio security and differences in the assumptions used could result in a different determination of fair value, and those differences could be material.

The Fund invests in some securities which are not traded and the Board’s Valuation Committee has established a methodology for fair value of each type of security. Non-traded public Real Estate Investment Trusts (“REITs”) that are in the public offering period (or start-up phase) are valued at cost according to management’s fair valuation methodology unless the REIT issues an updated valuation. The Fund generally purchases REITs at NAV or without a commission.  However, start-up REITs amortize a significant portion of their start-up costs and therefore potentially carry additional risks that may impact valuation should the REIT be unable to raise sufficient capital and execute their business plan.  As such, start-up REITs pose a greater risk than seasoned REITs because if they encounter going-concern issues, they may see significant deviation in value from the fair value, cost basis approach as represented.  Management is not aware of any information which would cause a change in cost basis valuation methodology currently being utilized for non-traded REITs in their offering period. Non-traded REITs that are in their offering period are generally categorized as Level 3 in the fair value hierarchy. Once a REIT closes to new investors, the Fund values the security based on the movement of an appropriate market index or a similar security that is publicly traded until the REIT issues an updated market valuation. Non-traded REITs that have closed to new investors are generally categorized in Level 2 of the fair value hierarchy, due to the significance of the effect of the application of the movement of the market index on the overall fair valuation of the REIT. Other non-traded private investments are monitored for any independent audits of the investment or impairments reported on the potential value of the investment. For non-traded private investments that are themselves treated as investment companies under GAAP, the Fund follows the guidance in GAAP that allows, as a practical expedient, the Fund to value such investments at their reported NAV per share (or if not unitized, at an equivalent percentage of the capital of the investee entity). Such investments typically provide an updated NAV or its equivalent on a quarterly basis. The Valuation Committee meets frequently to discuss the valuation methodology and will adjust the value of a security if there is a public update to such valuation.

Multi-Strategy Growth & Income Fund

PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)

November 30, 2018

Non-traded public Business Development Companies (“BDCs”) that are in the public offering period (or start-up phase) are valued at cost according to management’s fair valuation methodology unless the BDC issues an updated valuation. Non-traded Business Development Companies are categorized as Level 2 in the fair value hierarchy during their public offering period and transition to Level 3 upon the closing of this public offering period. Private BDCs and the non-traded public BDCs outside of their public offering period provide quarterly fair value pricing which is used as an indicator of the valuation for the fund. If the value fluctuates, the adviser will provide an updated price. If a significant event occurs that causes a large change in price, the Fair Valuation Committee will call a meeting to evaluate the fair value.

The Fund utilizes various methods to measure the fair value of its investments on a recurring basis.  GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Fund has the ability to access.

Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.  These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.  Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

The inputs used to measure fair value of a security may fall into different levels (Level 1, Level 2 or Level 3) of the fair value hierarchy.  In such cases, for disclosure purposes, the level within which the fair value measurement falls, in its entirety, is determined based on the lowest level input that is significant in its entirety to the fair value measurement.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.  The following tables summarize the inputs used as of November 30, 2018 for the Fund’s assets and liabilities measured at fair value:

Investments:	Practical Expedient (1)	Level 1	Level 2	Level 3	Total
Common Stocks	$-	$8,822,504	$-	$-	$8,822,504
Exchange Traded Notes	-	821,000	-	-	821,000
Real Estate Investment Trusts	13,607,757	9,621,836	41,993,236	-	65,222,829
Non-Listed Business Development Companies	4,469,247	-	6,943,197	-	11,412,444
Private Business Development Companies	6,256,533	-	-	-	6,256,533
Private Investment Funds	43,149,772	-	-	-	43,149,772
Closed-End Funds	-	13,818,610	-	-	13,818,610
Hedge Fund	27,572,793	-	-	-	27,572,793
Short-Term Investment	-	1,956,835	-	-	1,956,835
Total Investments	$95,056,102	$35,040,785	$48,936,433	$-	$179,033,320
(1)   Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the portfolio of investments.

*Refer to the Portfolio of Investments for industry classifications.
Transfers that were made out of Level 2 represent securities that are now valued using quoted prices in active markets.
It is the Fund’s policy to record transfers into or out of any Level at the end of the reporting period.
	Real Estate Investment Trusts
Transfers into Level 2 from Level 1	$-
Transfers from Level 2 into Level 1	(2,912,765)
Net Transfer Into/(Out) of Level 2	$(2,912,765)

The following is the fair value measurement of investments that are measured at Net Asset Value per Share
(or its equivalent) as a practical expedient:

Security Description		Industry		Acquisition Date		Cost		Value		% of Net Assets		Unfunded Commitments		Redemption Frequency		Redemption Notice Period
AIM Infrastructure MLP Fund II		Private Investment Company		3/12/2014		5,883,750		4,228,794		2.6%		1,616,250		Quarterly		30-60 Days
Arboretum Core Asset Fund, L.P.		Private Investment Company		8/2/2018		2,500,000		2,500,000		1.5%		7,500,000		Annually		30 Days
Business Development Corp. of America		Non-Listed BDC		3/30/2012		3,565,517		2,975,004		1.8%		-		Quarterly		Notice prior to announcement of Repurchase Offer
Clarion Lion Industrial Trust		REIT		6/29/2015		10,000,000		13,607,757		8.4%		-		Quarterly		90 Days
Clarion Lion Properties Fund		Private Investment Company		4/1/2014		11,000,000		14,737,960		9.1%		-		Quarterly		90 Days
Collins Masters Access Fund, Ltd.		Hedge Fund		6/2/2015		25,677,450		27,572,793		17.0%		-		Subject to advisor approval		30-60 Days
Levine Leichtman Capital Partners VI, LP		Private Investment Company		11/22/2017		3,007,958		1,915,903		1.2%		6,917,248		Subject to advisor approval		n/a
Mosaic Real Estate Credit, LLC		Private Investment Company		7/6/2017		9,999,997		10,000,000		6.2%		-		Subject to advisor approval		2 year lock up, then annual with 90 Days notice
Owl Rock Capital Corp.		Private BDC		9/6/2017		6,266,427		6,256,533		3.8%		5,881,222		Quarterly		90 Days
Ovation Alternative Income Fund, LP		Private Investment Company		7/25/2014		7,500,000		7,713,449		4.7%		-		Quarterly		180 Days
Sierra Income Corp.		Non-Listed BDC		3/25/2013		1,999,742		1,494,243		0.9%		-		Quarterly		30 Days
Stepstone Capital Partners IV, L.P.		Private Investment Company		7/30/2018		2,053,666		2,053,666		1.3%		7,946,334		Subject to advisor approval		n/a
						89,454,507		$95,056,102				$29,861,054

  Aggregate Unrealized Appreciation and Depreciation - Tax Basis

Tax Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Net Unrealized Appreciation
$177,624,015		$17,493,912		$(16,084,607)		$1,409,305

Item 2. Controls and Procedures.

(a)       The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)       There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

Certifications required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) (and Item 3 of Form N-Q) are filed herewith.

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.

(Registrant) Destra Multi-Alternative Fund

By (Signature and Title)

/s/ Robert Watson

Robert Watson, President

Date 01/28/19

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)

/s/ Robert Watson

Robert Watson, President

Date 01/28/19

By (Signature and Title)

/s/ Derek Mullins____________________________

Derek Mullins, Treasurer

Date 01/28/19