ANNUAL REPORT
Morgan Stanley India Investment Fund, Inc. December 31, 2002
DIRECTORS AND OFFICERS
Barton M. Biggs Marie Joseph Raymond
CHAIRMAN OF THE Lamusse
BOARD OF DIRECTORS DIRECTOR
Ronald E. Robison Fergus Reid
PRESIDENT AND DIRECTOR DIRECTOR
Gaetan Bouic II Stefanie V. Chang
DIRECTOR VICE PRESIDENT
John S.Y. Chu Lorraine Truten
DIRECTOR VICE PRESIDENT
Clifford D'Souza James W. Garrett [MORGAN STANLEY LOGO]
DIRECTOR TREASURER
Gerard E. Jones Mary E. Mullin
DIRECTOR SECRETARY
Nilesh Joshi Belinda A. Brady
DIRECTOR ASSISTANT TREASURER Morgan Stanley
India Investment Fund, Inc.
INVESTMENT ADVISER
Morgan Stanley Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
ADMINISTRATOR
JPMorgan Chase Bank
73 Tremont Street
Boston, Massachusetts 02108
CUSTODIAN
JPMorgan Chase Bank
3 Chase Metrotech Center
Brooklyn, New York 11245
STOCKHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10030
(800) 278-4353
LEGAL COUNSEL
Clifford Chance US LLP
200 Park Avenue
New York, New York 10166
INDEPENDENT AUDITORS
Ernst & Young LLP
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 1-800-221-6726 or visit our
website at www.morganstanley.com/im.
Morgan Stanley
Investment Management Inc.
(C) 2003 Morgan Stanley Investment Adviser
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Overview
Letter to Stockholders
For the year ended December 31, 2002, the Morgan Stanley India Investment Fund,
Inc. (the "Fund") had a total return, based on net asset value per share of
13.94% compared to 7.50% for the U.S. dollar adjusted Bombay Stock Exchange
(BSE) National Index (the "Index"). On December 31, 2002, the closing price of
the Fund's shares on the New York Stock Exchange was $9.94, representing a 17.0%
discount to the Fund's net asset value per share.
MARKET REVIEW
It's now a well publicized fact that 2002 was one of the worst years for global
equities in the post World War II period and further extended the misery streak
that's been in place for equities since early 2000. Global equities ended the
2002 year down 20.5% in U.S. dollar terms, as measured by the Morgan Stanley
Capital International Index (MSCI). Not a single major developed market came
close to generating positive returns for the year. Only 15 out of the 50 markets
tracked worldwide by the MSCI ended 2002 in positive territory and 14 of them
were emerging markets.
Indeed, India was one of the very few equity markets (albeit ever so slightly)
to generate positive returns. Emerging markets investing showed signs of
returning to the days when country-specific factors played the most important
role in differentiating performance. However, markets globally remained tightly
correlated and it required a strong domestic policy impulse for the country
effect to outweigh the overarching negative global effect. Accordingly, markets
of the Czech Republic, Indonesia, Thailand and Hungary were among the best
performing markets in the world, all powered by a meaningful domestic economic
reform story.
India's better than usual effort in carrying through with its privatization
drive was probably the main reason for the market's outperformance over the past
year. Privatization plays both rallied significantly and kept interest in the
broader market alive. Investors were also impressed by the solidity of the
Indian outsourcing model. The relatively strong business performance of the
Indian technology sector in an otherwise challenging global environment was
widely appreciated.
We were able to position the Fund well to capture such themes. We are also happy
to note that the Fund's outperformance for the year was not driven by just one
or two powerful trends as this creates problems for the future when the
particular trends inevitably exhaust.
One of the biggest contributors to the Fund's performance was the long-term
overweight in financials, led by one of the major banks in India. A number of
proximate causes given to the run in banking stocks were ranging from new
legislation on bad loans recovery to declining interest rates. Our view for
quite sometime has been that the banking sector in India is underrepresented in
the Indian market, especially when compared to the structure of other emerging
markets and despite the presence of increasingly profitable institutions. It was
always just a matter of time before such an anomaly would be corrected and that
time has come.
MARKET OUTLOOK
With the focus returning to country-specific factors, such as reform impulses,
the focus with regard to India will be based more than ever on policy
statements, principally the "Budget" speech. The other story worth tracking is
the recovery one. With the country's drought well behind us and record low real
interest rates in place, there is ample scope for at least a cyclical recovery.
OTHER DEVELOPMENTS
In our ongoing efforts to reduce Fund expenses, the Fund will discontinue the
distribution of first and third quarter stockholder reports. The Fund will
continue to produce and distribute semi-annual and annual stockholder reports.
Additionally, the Fund's portfolio holdings information that was contained in
the first and third quarter reports will be available on our web site, which is
www.morganstanley.com/im, beginning in May of 2003. If you have difficulty
accessing or navigating the site, or if you would like us to send you a copy of
the portfolio holdings, please call us at 1-800-221-6726 and we will be happy to
assist you.
On February 12, 2003, Barton M. Biggs resigned as Director and Chairman of the
Board of Directors of the Fund. On that same day, Mitch Merin, President and
Chief Operating Officer of the Adviser, was elected by the Fund's Board of
Directors to serve as a Director and Chairman of the Board of Directors of the
Fund.
Sincerely,
/s/ Ronald E. Robison
Ronald E. Robison
President and Director
January 2003
2
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
December 31, 2002
Investment Summary (Unaudited)
Historical Information
TOTAL RETURN (%)
---------------------------------------------------------------------------
MARKET VALUE(1) NET ASSET VALUE(2) INDEX(3)
---------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------------------------------------------------------------------------
One Year 15.07% 15.07% 13.94% 13.94% 7.50% 7.50%
Five Year 53.20 8.91 75.34 11.89 (14.21) (3.02)
Since Inception* (7.63) (0.89) 11.34 1.22 (46.22) (6.77)
Past performance is not predictive of future performance.
[CHART]
Returns and Per Share Information
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1994* 1995 1996 1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 13.99 $ 8.91 $ 8.81 $ 8.83 $ 9.19 $ 22.59 $ 13.92 $ 10.53 $ 11.98
----------------------------------------------------------------------------------------------------------------------------------
Market Value Per Share $ 11.25 $ 9.13 $ 9.50 $ 8.38 $ 6.75 $ 16.50 $ 11.06 $ 8.65 $ 9.94
----------------------------------------------------------------------------------------------------------------------------------
Premium/(Discount) (19.6)% 2.5% 7.8% (5.1)% (26.6)% (27.0)% (20.5)% (17.9)% (17.0)%
----------------------------------------------------------------------------------------------------------------------------------
Income Dividends -- -- -- -- -- -- -- $ 0.23 $ 0.01
----------------------------------------------------------------------------------------------------------------------------------
Capital Gains Distributions $ 0.17 -- -- -- -- -- $ 1.60 $ 0.84 --
----------------------------------------------------------------------------------------------------------------------------------
Fund Total Return(2) 0.72% (36.31)% (1.12)% 0.23% 4.08% 145.81% (29.68)% (14.52)% 13.94%
----------------------------------------------------------------------------------------------------------------------------------
Index Total Return(3) (7.88)% (31.53)% (6.49)% 6.43% (20.98)% 88.41% (27.73)% (25.82)% 7.50%
----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes dividends and distributions, if any, were reinvested.
(2) 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.Total returns do not reflect the deduction of taxes that a
stockholder would pay on Fund distributions or the redemption of fund
shares. These percentages are 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.
(3) The Bombay Stock Exchange (BSE) National Index is a market capitalization
weighted index of 100 companies expressed in U.S. dollar terms.
* The Fund commenced operations on February 25, 1994.
FOREIGN INVESTING INVOLVES CERTAIN RISKS, INCLUDING CURRENCY FLUCTUATIONS
AND CONTROLS, RESTRICTIONS ON FOREIGN INVESTMENTS, LESS GOVERNMENTAL
SUPERVISION AND REGULATION, LESS LIQUIDITY AND THE POTENTIAL FOR MARKET
VOLATILITY AND POLITICAL INSTABILITY. IN ADDITION, INVESTING IN EMERGING
MARKETS MAY INVOLVE A RELATIVELY HIGHER DEGREE OF VOLATILITY.
3
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
December 31, 2002
Portfolio Summary (Unaudited)
[CHART]
Allocation of Total Investments
Equity Securities 93.3%
Short-Term Investment 6.7%
[CHART]
Industries
IT Consulting & Services 17.1%
Banks 11.2%
Automobiles 8.8%
Metals & Mining 6.6%
Pharmaceuticals 6.5%
Other 49.8%
Ten Largest Holdings*
PERCENT OF
NET ASSETS
---------------------------------------------------------------
1. Infosys Technologies Ltd. 9.1%
2. State Bank of India Ltd. 8.6
3. Hero Honda Motors Ltd. 6.6
4. Wipro Ltd. 6.1
5. Housing Development Finance Corp., Ltd. 3.9
6. Container Corp. of India Ltd. 3.6%
7. Bharat Heavy Electricals Ltd. 3.5
8. Reliance Industries Ltd. 3.3
9. Ranbaxy Laboratories Ltd. 3.3
10. Hindustan Lever Ltd. 3.0
----
51.0%
----
* Excludes Short-Term Investments
4
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
STATEMENT OF NET ASSETS
December 31, 2002
Statement of Net Assets
VALUE
SHARES (000)
--------------------------------------------------------------------------------
COMMON STOCKS (92.9%)
(UNLESS OTHERWISE NOTED)
================================================================================
AUTO COMPONENTS (0.0%)
Apollo Tyres Ltd. 2,075 $ 6
================================================================================
AUTOMOBILES (8.8%)
Hero Honda Motors Ltd. 2,239,822 12,678
Patheja Forgings & Auto Ltd. 450,000(a)(b) --@
Tata Engineering & Locomotive Co., Ltd. 1,274,725(a) 4,289
--------------------------------------------------------------------------------
16,967
================================================================================
BANKS (11.2%)
HDFC Bank Ltd. 257,279 1,175
HDFC Bank Ltd. ADR 135,300(a) 1,821
ICICI Bank Ltd. 709,000 2,078
State Bank of India Ltd. 2,734,016(b) 16,546
--------------------------------------------------------------------------------
21,620
================================================================================
BIOTECHNOLOGY (0.3%)
Shantha Biotechnics PCL 500,000(a)(b) 574
================================================================================
CHEMICALS (5.9%)
Asian Paints (India) Ltd. 484,584 3,281
ICI (India) Ltd. 25,000 62
Indo Gulf Corp., Ltd. 1,577,190 1,689
Reliance Industries Ltd. 1,031,514 6,405
--------------------------------------------------------------------------------
11,437
================================================================================
COMMERCIAL SERVICES & SUPPLIES (0.4%)
Xerox Modicorp Ltd. 718,225(a)(b) 749
================================================================================
CONSTRUCTION MATERIALS (2.3%)
Gujarat Ambuja Cements Ltd. 995,699 3,392
Gujarat Ambuja Cements Ltd. GDR 305,000 1,022
--------------------------------------------------------------------------------
4,414
================================================================================
DIVERSIFIED FINANCIALS (3.9%)
Housing Development Finance Corp., Ltd. 1,001,752 7,483
================================================================================
DIVERSIFIED TELECOMMUNICATION SERVICES (2.5%)
Bharti Tele-Ventures Ltd. 1,330,000(a) 635
Mahanagar Telephone Nigam Ltd. 1,912,831 3,784
Mahanagar Telephone Nigam Ltd. ADR 90,000(a) 355
--------------------------------------------------------------------------------
4,774
================================================================================
ELECTRIC UTILITIES (1.2%)
Tata Power Co., Ltd. 947,229 2,207
================================================================================
ELECTRICAL EQUIPMENT (4.5%)
Asea Brown Boveri Ltd. 398,026 2,064
Bharat Heavy Electricals Ltd. 1,849,848 6,659
--------------------------------------------------------------------------------
8,723
================================================================================
ENERGY EQUIPMENT & SERVICES (2.1%)
Oil & Natural Gas Corp., Ltd. 548,231 3,999
================================================================================
FOOD PRODUCTS (3.9%)
Britannia Industries Ltd. 185,838 1,996
Glaxo SmithKline Consumer Healthcare Ltd. 428,496 2,334
Nestle India Ltd. 286,254(a) 3,124
--------------------------------------------------------------------------------
7,454
================================================================================
HOUSEHOLD DURABLES (0.2%)
Samtel Colour Ltd. 636,707 475
================================================================================
HOUSEHOLD PRODUCTS (4.5%)
Colgate-Palmolive (India) Ltd. 975,743 2,744
Hindustan Lever Ltd. 1,536,445 5,824
--------------------------------------------------------------------------------
8,568
================================================================================
INTERNET SOFTWARE & SERVICES (0.0%)
IndiaInfo.com PCL 532,875(b)(c) --@
================================================================================
IT CONSULTING & SERVICES (17.1%)
HCL Technologies Ltd. 975,494 3,796
Infosys Technologies Ltd. 174,680 17,381
Wipro Ltd. 220,197 7,489
Wipro Ltd. ADR 152,710 4,211
--------------------------------------------------------------------------------
32,877
================================================================================
MACHINERY (1.2%)
Cummins India Ltd. 1,478,725 1,497
Lakshmi Synthetic Machinery
Manufacturers Ltd. 137,700(a)(b) 10
Punjab Tractors Ltd. 225,619 699
--------------------------------------------------------------------------------
2,206
================================================================================
MEDIA (0.4%)
New Delhi Television Ltd. 333,300(b) 704
================================================================================
METALS & MINING (6.6%)
Hindalco Industries Ltd. 321,506 3,932
Steel Authority of India Ltd. 17,853,286(a) 3,816
Tata Iron & Steel Co., Ltd. 1,580,400 4,993
--------------------------------------------------------------------------------
12,741
================================================================================
OIL & GAS (2.2%)
Hindustan Petroleum Corp., Ltd. 712,211 4,277
================================================================================
The accompanying notes are an integral part of the financial statements.
5
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
STATEMENT OF NET ASSETS
December 31, 2002
Statement of Net Assets (cont'd)
VALUE
SHARES (000)
--------------------------------------------------------------------------------
PHARMACEUTICALS (6.5%)
Cipla Ltd. 212,912 $ 3,993
Dabur India Ltd. 2,397,946 2,193
Ranbaxy Laboratories Ltd. 517,600 6,404
--------------------------------------------------------------------------------
12,590
================================================================================
ROAD & RAIL (3.6%)
Container Corp. of India Ltd. 1,451,251 6,946
================================================================================
SPECIALTY RETAIL (0.8%)
Titan Industries Ltd. 954,074 1,548
================================================================================
TOBACCO (2.8%)
ITC Ltd. 391,356 5,390
================================================================================
TOTAL COMMON STOCKS
(Cost $182,421) 178,729
================================================================================
FACE
AMOUNT
(000)
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (6.4%)
================================================================================
REPURCHASE AGREEMENT (6.4%)
J.P. Morgan Securities, Inc.,
1.05%, dated 12/31/02, due
1/02/03 (Cost $12,274) $ 12,274(d) 12,274
================================================================================
FOREIGN CURRENCY ON DEPOSIT WITH
CUSTODIAN (0.3%)
================================================================================
Indian Rupee (Cost $494) INR 23,701 494
================================================================================
VALUE
(000)
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.6%)
(Cost $195,189) $ 191,497
================================================================================
AMOUNT
(000)
--------------------------------------------------------------------------------
OTHER ASSETS (0.8%)
Cash $ 1
Receivable for Investments Sold 951
Tax Reclaim Receivable 342
Dividends Receivable 132
Other 29 1,455
================================================================================
LIABILITIES (-0.4%)
Payable For:
Investment Advisory Fees (179)
Investments Purchased (130)
Custodian Fees (74)
Directors' Fees and Expenses (68)
Professional Fees (54)
Stockholder Reporting Expenses (39)
Administrative Fees (14)
Other Liabilities (85) (643)
================================================================================
NET ASSETS (100%)
Applicable to 16,051,172, issued and
outstanding $ 0.01 par value shares
(100,000,000 shares authorized) $ 192,309
================================================================================
NET ASSET VALUE PER SHARE $ 11.98
================================================================================
AT DECEMBER 31, 2002, NET ASSETS CONSISTED OF:
Common Stock $ 161
Paid-in Capital 276,412
Undistributed (Distributions in Excess of) Net
Investment Income (2,210)
Accumulated Net Realized Gain (Loss) (77,954)
Unrealized Appreciation (Depreciation) on
Investments and Foreign Currency Translations (4,100)
================================================================================
TOTAL NET ASSETS $ 192,309
================================================================================
(a) -- Non-income producing.
(b) -- Securities valued at fair value - see note A-1 to financial
statements. At December 31, 2002, the Fund held $18,583,000 of
fair-valued securities, representing 9.7% of net assets.
(c) -- Restricted security not registered under the Securies Act of 1933.
Aquired 3/00 at a cost of $2,347,000. At December 31, 2002, this security
had a market value of $0, representing 0.0% of net assets.
(d) -- The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of this
statement of net assets. The investment in the repurchase agreement is
through participation in a joint account with affiliated funds.
@ -- Value is less than $500.
ADR -- American Depositary Receipts.
GDR -- Global Depositary Receipts.
PCL -- Public Company Limited.
The accompanying notes are an integral part of the financial statements.
6
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Financial Statements
YEAR ENDED
DECEMBER 31, 2002
STATEMENT OF OPERATIONS (000)
-------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of $337 of foreign taxes withheld) $ 3,488
Interest 174
===================================================================================================================
TOTAL INCOME 3,662
===================================================================================================================
EXPENSES
Investment Advisory Fees 2,184
Custodian Fees 365
Administrative Fees 237
Professional Fees 177
Stockholder Reporting Expenses 83
Directors' Fees and Expenses 27
Interest Expense 12
Other Expenses 21
===================================================================================================================
TOTAL EXPENSES 3,106
===================================================================================================================
NET INVESTMENT INCOME (LOSS) 556
===================================================================================================================
NET REALIZED GAIN (LOSS) ON:
Investments 978
Foreign Currency Transactions (56)
===================================================================================================================
NET REALIZED GAIN (LOSS) 922
===================================================================================================================
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:
Investments 22,683
Foreign Currency Translations 11
===================================================================================================================
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 22,694
===================================================================================================================
NET REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 23,616
===================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 24,172
===================================================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, 2002 DECEMBER 31, 2001
STATEMENT OF CHANGES IN NET ASSETS (000) (000)
-------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income (Loss) $ 556 $ 1,513
Net Realized Gain (Loss) 922 (76,770)
Change in Unrealized Appreciation (Depreciation) 22,694 7,247
===================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 24,172 (68,010)
===================================================================================================================
Distributions from and/or in excess of:
Net Investment Income (214) (4,399)
Net Realized Gain -- (16,427)
===================================================================================================================
TOTAL DISTRIBUTIONS (214) (20,826)
===================================================================================================================
Capital Share Transactions:
Repurchase of Shares (3,413,832 and 8,559,288 shares, respectively) (36,668) (96,335)
===================================================================================================================
TOTAL INCREASE (DECREASE) (12,710) (185,171)
===================================================================================================================
Net Assets:
Beginning of Period 205,019 390,190
===================================================================================================================
END OF PERIOD (INCLUDING UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET
INVESTMENT INCOME OF $(2,210) AND $(3,066), RESPECTIVELY) $ 192,309 $ 205,019
===================================================================================================================
The accompanying notes are an integral part of the financial statements.
7
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Financial Highlights
Selected Per Share Data and Ratios
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
2002+ 2001 2000 1999 1998
--------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.53 $ 13.92 $ 22.59 $ 9.19 $ 8 .83
--------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 0.03 0.10 0.02 (0.08) (0.04)
Net Realized and Unrealized Gain (Loss) on
Investments 1.39 (2.43) (7.93) 13.33 0.31
--------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.42 (2.33) (7.91) 13.25 0.27
--------------------------------------------------------------------------------------------------------------------------------
Distributions from and/or in excess of:
Net Investment Income (0.01) (0.23) -- -- --
Net Realized Gain -- (0.84) (1.60) -- --
--------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.01) (1.07) (1.60) -- --
--------------------------------------------------------------------------------------------------------------------------------
Anti-Dilutive Effect of Share Repurchase Program 0.04 0.01 0.84 0.15 0.09
--------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.98 $ 1 0.53 $ 13.92 $ 22.59 $ 9.19
================================================================================================================================
PER SHARE MARKET VALUE, END OF PERIOD $ 9 .94 $ 8.65 $ 11.06 $ 16.50 $ 6.75
================================================================================================================================
TOTAL INVESTMENT RETURN:
Market Value 15.07% (11.68)% (23.49)% 144.44% (19.40)%
Net Asset Value (1) 13.94% (14.52)% (29.68)% 145.81% 4.08%
================================================================================================================================
RATIOS, SUPPLEMENTAL DATA:
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS) $ 192,309 $ 205,019 $ 390,190 $ 736,343 $ 314,701
--------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.56% 1.77% 1.48% 1.59% 1.97%
Ratio of Net Investment Income (Loss) to Average Net
Assets 0.28% 0.60% 0.12% (0.55)% (0.44)%
Portfolio Turnover Rate 23% 56% 44% 34% 24%
--------------------------------------------------------------------------------------------------------------------------------
(1) 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.
+ Per share amounts for the year ended December 31, 2002 are based on average
shares outstanding.
The accompanying notes are an integral part of the financial statements.
8
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
December 31, 2002
Notes to Financial Statements
The Morgan Stanley India Investment Fund, Inc. (the "Fund") was
incorporated in Maryland on December 22, 1993, and is registered as a
non-diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is long-term
capital appreciation through investments primarily in equity securities.
A. ACCOUNTING POLICIES: The following significant accounting policies are in
conformity with accounting principles generally accepted in the United States of
America. Such policies are consistently followed by the Fund in the preparation
of its financial statements. Accounting principles generally accepted in the
United States of America 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: In valuing the Fund's assets, all listed securities for
which market quotations are readily available are valued at the last sales
price on the valuation date, or if there was no sale on such date, at the
mean between the current bid and asked prices. Securities which are traded
over-the-counter are valued at the mean of current bid and asked prices
obtained from brokers. Short-term securities which mature in 60 days or
less are valued at amortized cost. For all other securities and investments
for which market values are not readily available, including restricted
securities, and where prices determined in accordance with the
aforementioned procedures are not reflective of fair market value, values
are determined in good faith, under fair valuation procedures adopted by
the Board of Directors, although actual calculations may be done by others.
Due to the Indian securities market's smaller size, degree of liquidity and
volatility, the prices which the Fund may realize upon sale of securities
may not be equal to the value presented in the financial statements.
2. REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements under
which the Fund lends excess cash and takes possession of securities with an
agreement that the counterparty will repurchase such securities. In
connection with transactions in repurchase agreements, a bank as custodian
for the Fund takes possession of the underlying securities (collateral),
with a market value at least equal to the amount of the repurchase
transaction, including principal and accrued interest. To the extent that
any repurchase transaction exceeds one business day, the value of the
collateral is marked-to-market on a daily basis to determine the adequacy
of the collateral. In the event of default on the obligation to repurchase,
the Fund has the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation. In the event of default or bankruptcy by
the counterparty to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
The Fund, along with other affiliated investment companies, may utilize a
joint trading account for the purpose of entering into one or more
repurchase agreements.
3. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in Indian rupees are
translated into U.S. dollars at the mean of the bid and asked prices of
such currency against U.S. dollars last quoted by a major bank 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 rate of
exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rate 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 rate from the fluctuations arising from
changes in the market prices of the securities held at period end.
Similarly, the Fund does not isolate the effect of changes in the foreign
exchange rate from the fluctuations arising from changes in the market
prices of securities sold during the period. Accordingly, realized and
unrealized foreign currency gains (losses) due to securities transactions
are included in the reported net realized and unrealized gains (losses) on
investment transactions and balances.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from sales and maturities of foreign
currency exchange contracts, disposition of foreign currency, currency
gains or 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. Net
unrealized currency gains (losses) from valuing foreign currency
denominated assets and liabilities at period end
9
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
December 31, 2002
Notes to Financial Statements (cont'd)
exchange rates are reflected as a component of unrealized appreciation
(depreciation) on investments and foreign currency translations in the
Statement of Net Assets. 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 Indian securities
which involve certain considerations and risks not typically associated
with investments in the United States. In addition to its smaller size,
less liquidity and greater volatility, the Indian securities market is less
developed than the U.S. securities market and there is often substantially
less publicly available information about Indian issuers than there is
about U.S. issuers. Settlement mechanisms are also less developed and are
accomplished, in certain cases, only through physical delivery, which may
cause the Fund to experience delays or other difficulties in effecting
transactions.
The Fund may use derivatives to achieve its investment objectives. The Fund may
engage in transactions in futures contracts on foreign currencies, stock
indices, as well as in options, swaps and structured notes. Consistent with the
Fund's investment objectives and policies, the Fund may use derivatives for
non-hedging as well as hedging purposes.
Following is a description of derivative instruments that the Fund has utilized
and their associated risks:
4. FOREIGN CURRENCY EXCHANGE CONTRACTS: The Fund may enter into foreign
currency exchange contracts generally to attempt to protect securities and
related receivables and payables against changes in future foreign exchange
rates and, in certain situations, to gain exposure to a foreign currency. A
foreign currency exchange contract is an agreement between two parties to
buy or sell currency at a set price on a future date. The market value of
the contract will fluctuate with changes in currency exchange rates. The
contract is marked-to-market daily and the change in market value is
recorded by the Fund as unrealized gain or loss. The Fund records realized
gains or losses when the contract is closed equal to the difference between
the value of the contract at the time it was opened and the value at the
time it was closed. Risk may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of their
contracts and is generally limited to the amount of unrealized gain on the
contracts, if any, at the date of default. Risks may also arise from
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
5. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. Investments in new Indian securities are made by
making applications in the public offerings. The issue price, or a portion
thereof, is paid at the time of application and reflected as share
application money on the Statement of Net Assets. Upon allotment of the
securities, this amount plus any remaining amount of issue price is
recorded as cost of investments. Realized gains and losses on the sale of
investment securities are determined on the specific identified cost basis.
Interest income is recognized on an accrual basis. Dividend income is
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, if any. Distributions to stockholders are
recorded on the ex-dividend date.
B. ADVISER: Morgan Stanley Investment Management Inc. (the "Adviser") provides
investment advisory services to the Fund under the terms of an Investment
Advisory and Management Agreement (the "Agreement"). Under the Agreement, the
Adviser is paid a fee computed weekly and payable monthly at an annual rate of
1.10% of the Fund's average weekly net assets.
C. ADMINISTRATOR: JPMorgan Chase Bank, through its corporate affiliate J.P.
Morgan Investor Services Co. (the "Administrator"), provides administrative
services to the Fund under an Administration Agreement. Under the old
Administration Agreement, effective through September 30, 2002, the
Administrator was paid a fee computed weekly and payable monthly at an annual
rate of 0.09% of the Fund's average weekly net assets, plus $65,000 per annum.
Effective October 1, 2002, under the new Administration Agreement, the
Administrator is paid a fee computed weekly and payable monthly at an annual
rate of 0.02435% of the Fund's average weekly net assets, plus $24,000 per
annum. In addition, the Fund is charged for certain out-of-pocket expenses
incurred by the Administrator on its behalf.
Multiconsult, Ltd., whose registered office is in Mauritius, provides
sub-administrative services to the Fund, including maintaining certain Fund
records and preparing certain periodic filings, under an agreement whereby
Multiconsult is paid a fee of $22,000 per annum.
10
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
December 31, 2002
Notes to Financial Statements (cont'd)
D. CUSTODIAN: JPMorgan Chase Bank serves as custodian for the Fund. Custody fees
are payable monthly based on assets held in custody, investment purchase and
sales activity and account maintenance fees, plus reimbursement for certain
out-of-pocket expenses.
E. FEDERAL INCOME TAXES: It is the Fund's intention to continue to qualify as a
regulated investment company and distribute all its taxable income. Accordingly,
no provision for Federal income taxes is required in the financial statements.
Dividend income and distributions to stockholders are recorded on the
ex-dividend date.
The rate of capital gains tax in India is 10.5% for long-term investments and
31.5% for short-term investments (the capital gains rates were 10% and 30%,
respectively, prior to April 1, 2002). The Fund invests in India through a
registered branch office established in Mauritius and, as a result, obtains the
benefits under the double taxation treaty between Mauritius and India
("Treaty"). To obtain benefits under the double taxation treaty the Fund must
meet certain tests and conditions, including the establishment of Mauritius tax
residence and related requirements. The Fund has obtained a tax residence
certification from the Mauritian authorities and believes such certification is
determinative of its resident status for treaty purposes. A fund which is tax
resident in Mauritius under the treaty but has no branch or permanent
establishment in India will not be subject to capital gains tax in India on the
sale of securities. The Fund is subject to and accrues Indian withholding tax on
dividend and interest earned on Indian securities at the rate of 15% and 21%,
respectively.
The Treaty benefit accorded to foreign investors has been challenged by a
non-governmental organization and the matter is currently being litigated before
India's Supreme Court (the highest court in India) after an unfavorable ruling
by the Delhi High Court in May 2002. While the outcome of this litigation is
uncertain, an unfavorable ruling by India's Supreme Court denying the benefits
of the Treaty to foreign investors would materially impact the operations of the
Fund. If the Treaty benefits were denied retroactively, the Fund could
potentially be subject to substantial Indian income tax as well as interest and
penalties. The Fund believes it is not probable that the outcome of this matter
will be unfavorable. While such amounts cannot currently be determined, the Fund
estimates such taxes and interest could range from approximately $23 million to
$38 million as of December 31, 2002 excluding penalties. Denial of Treaty
benefits could also materially impact the future operations of the Fund as well.
The foregoing is based on current interpretation and practice and is subject to
any future changes in Indian or Mauritian tax laws and in the tax treaty between
India and Mauritius.
The tax character of distributions paid may differ from the character of
distributions shown on the Statements of Changes in Net Assets due to short-term
capital gains being treated as ordinary income for tax purposes. The tax
character of distributions paid during 2002 and 2001 was as follows:
2002 DISTRIBUTIONS 2001 DISTRIBUTIONS
PAID FROM: PAID FROM:
(000) (000)
----------------------- ------------------------
LONG-TERM LONG-TERM
ORDINARY CAPITAL ORDINARY CAPITAL
INCOME GAIN INCOME GAIN
---------------------------------------------------------
$ 214 $ -- $ 4,398 $ 16,428
The amount and character of income and capital gain distributions to be paid by
the Fund are determined in accordance with Federal income tax regulations, which
may differ from accounting principles generally accepted in the United States of
America. The book/tax differences are considered either temporary or permanent
in nature.
Temporary differences are attributable to differing book and treatments for the
timing of the recognition of gains and losses on certain investment transactions
and the timing of the deductibility of certain expenses.
Permanent differences may result in reclassifications among undistributed net
investment income (loss), accumulated net realized gain (loss) and paid-in
capital. Adjustments for permanent book-tax differences, if any, are not
reflected in ending undistributed net investment income (loss) for the purpose
of calculating net investment income (loss) per share the financial highlights.
At December 31, 2002, the components of distributable earnings on a tax basis
were are follows:
UNDISTRIBUTED UNDISTRIBUTED
ORDINARY INCOME LONG-TERM CAPITAL GAIN
(000) (000)
---------------------------------------------------------
$ 299 $ --
---------------------------------------------------------
At December 31, 2002, the U.S. Federal income tax cost basis of investments
(excluding foreign currency) was $201,196,000 and, accordingly, net unrealized
depreciation for U.S. Federal income tax purposes was $10,193,000 of which
$29,350,000 related to appreciated securities and $39,543,000 related to
depreciated securities.
11
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
December 31, 2002
Notes to Financial Statements (cont'd)
At December 31, 2002, the Fund had a capital loss carryforward for U.S. Federal
income tax purposes of approximately $73,799,000 available to offset future
capital gains, of which $56,001,000 will expire on December 31, 2009 and
$17,798,000 will expire on December 31, 2010. To the extent that capital gains
are offset, such gains will not be distributed to the stockholders.
Net capital and currency losses incurred after October 31, and within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. For year ended December 31, 2002, the Fund deferred to January 1,
2003, for U.S. Federal income tax purposes, post-October capital losses of
$95,000.
F. OTHER: During the year ended December 31, 2002, the Fund made purchases
and sales totaling $42,342,000 and $84,643,000 respectively, of investment
securities other than long-term U.S. Government securities and short-term
investments. There were no purchases or sales of long-term U.S. Government
securities.
For the year ended December 31, 2002, the Fund incurred $38,000 of brokerage
commissions with Morgan Stanley & Co., an affiliate of the Adviser.
Future economic and political developments in India could adversely affect the
liquidity or value, or both, of securities in which the Fund is invested. In
addition, the Fund's ability to hedge its currency risk is limited and
accordingly, the Fund may be exposed to currency devaluation and other exchange
rate fluctuations.
Each Director of the Fund who is not an officer of the Fund or an affiliated
person as defined under the Investment Company Act of 1940, as amended, may
elect to participate in the Directors' Deferred Compensation Plan (the "Plan").
Under the Plan, such Directors may elect to defer payment of a percentage of
their total fees earned as a Director of the Fund. These deferred portions are
treated, based on an election by the Director, as if they were either invested
in the Fund's shares or invested in U.S. Treasury Bills, as defined under the
Plan. At December 31, 2002, the deferred fees payable under the Plan totaled
$68,000 and are included in Payable for Directors' Fees and Expenses on the
Statement of Net Assets. The deferred portion of Directors' Fees and Expenses
shown on the Statement of Operations is impacted by fluctuations in the market
value of the investments selected by each Director. For the fiscal year ended
December 31, 2002, Director's Fees and Expenses were increased by $11,070, due
to these fluctuations.
On August 10, 1998, the Fund commenced a share repurchase program for purposes
of enhancing stockholder value and reducing the discount at which the Fund's
shares trade from their net asset value. During the year ended December 31,
2002, the Fund repurchased 558,011 of its shares at an average discount of 7.51%
from net asset value per share. Since the inception of the program , the Fund
has repurchased 8,392,811 of its shares at an average discount of 30.14% from
net asset value per share. The Fund expects to continue to repurchase its
outstanding shares at such time and in such amounts as it believes will further
the accomplishment of the foregoing objectives, subject to review by the Board
of Directors.
On December 13, 2001, with the aim of enhancing stockholder value and reducing
the discount at which the Fund's shares have been trading, the Board of
Directors of the Fund authorized the Fund to conduct a tender offer during the
second quarter of 2002 for up to 15% of the Fund's outstanding shares, at a
price equal to 95% of the Fund's net asset value per share ("NAV") on the last
day of the tender period, or such later date if the offer was extended.
On May 17, 2002, the Fund completed the tender offer. The Fund accepted
2,855,821 shares for payment which represented 15% of the Fund's then
outstanding shares. Final payment was made on May 28, 2002 at $11.02 per share,
representing 95% of the NAV per share on May 17, 2002.
FEDERAL TAX INFORMATION (UNAUDITED)
For the year ended December 31, 2002, the Fund expects to pass through to
stockholders foreign tax credits totaling approximately $781,000. In addition,
for the year ended December 31, 2002, gross income derived from sources within a
foreign country totaled $3,825,000.
12
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
December 31, 2002
Independent Auditors' Report
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF MORGAN STANLEY INDIA INVESTMENT
FUND, INC.
We have audited the accompanying statement of net assets of Morgan Stanley India
Investment Fund, Inc. (the "Fund") as of December 31, 2002, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for each of the two years in the period ended December 31, 1999 were
audited by other auditors whose report, dated February 18, 2000, expressed an
unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2002 by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley India Investment Fund, Inc. at December 31, 2002, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 7, 2003
13
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Overview
Director and Officer Information (Unaudited)
Independent Directors:
NUMBER OF
TERM OF PORTFOLIOS
OFFICE AND IN FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS OF HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS HELD BY
DIRECTOR REGISTRANT SERVED* DURING PAST 5 YEARS DIRECTOR** DIRECTOR
------------------------- ---------- ---------- -------------------------- ----------- --------------------------------
Gaetan Bouic (67) Director Director Finance Manager of United 72 Director of UBP Group, Ste.
De Chazal de Mee Building since Basalt Products Ltd; Chairman Marie Crushing Plant Ltd.,
10 Frere Felix de Valois 2001 of Mauritius Venture Capital Produits Basaltiques du Nord
Street Fund Ltd; previously, Ltee., Welcome Industries Ltd.,
Port Louis, Mauritius President of the Joint UPB International Ltd., United
Economic Council and Chairman Granite Products (Private) Ltd.
of the Stock Exchange of (Sri Lanka), CDC Holding Sdh.
Mauritius. Bhd., CDC Haina (Mauritius)
Ltd., CDC (West Malaysia) Sdh.
Bhd., Mozambique Invesment Co.
Ltd., Kulai Oil Palm Estates
Ltd., Pan African Holdings
Ltd., Pan African Cement Ltd.,
Swiss Technology Venture
Capital Fund Ltd.
John S.Y. Chu (65) Director Director Finance Director of the ABC 2 Director of The India Magnum
De Chazal de Mee Building since 1996 Group of companies Fund Ltd.
10 Frere Felix de Valois (conglomerate); previously,
Street Managing Director of Crown
Port Louis, Mauritius Eagle Investments Ltd.
Gerard E. Jones (66) Director Director Of Counsel, Shipman & 72 Director of Tractor Supply
Shipman & Goodwin, LLP since 2000 Goodwin, LLP (law firm). Company, Tiffany Foundation,
43 Arch Street and Fairfield County
Greenwich, CT 06830 Foundation. Director of The
India Magnum Fund Ltd.
Marie Joseph Raymond Director Director Director of The India, Media, 1
Lamusse (70) since Internet and Communications
De Chazal de Mee Building 2001 Fund Ltd., Southern Cross
10 Frere Felix de Valois Hotel Ltd., Jean Vaulbert de
Street Chantily Ltd. (consumer
Port Louis, Mauritius goods) and Grandville Ltee.
(property holding company);
formerly, Partner of Lamusse
Sek Sum (accounting)
Fergus Reid (70) Director Director Chairman and Chief Executive 72 Trustee and Director of
85 Charles Colman Blvd. since Officer of Lumelite Plastics approximately 30 investment
Pawling, NY 12564 2000 Corporation. companies in the JPMorgan Funds
complex managed by JPMorgan
Investment Management Inc.
Director of The India Magnum
Fund Ltd.
14
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Overview
Director and Officer Information (cont'd)
Interested Directors:
NUMBER OF
TERM OF PORTFOLIOS
OFFICE AND IN FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS OF HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS HELD BY
DIRECTOR REGISTRANT SERVED* DURING PAST 5 YEARS DIRECTOR** DIRECTOR
------------------------- ---------- ---------- -------------------------- ----------- --------------------------------
Barton M. Biggs (70) Chairman Chairman Chairman, Director and 72 Member of the Yale Development
1221 Avenue of the and and Director Managing of Morgan Stanley Board
Americas Director Director Investment Management Inc.
New York, NY 10020 since and Chairman and Director of
1996 Morgan Stanley Investment
Management Limited; Managing
Director of Morgan Stanley &
Co. Incorporated; Director
and Chairman of the Board of
various U.S. registered
companies managed by Morgan
Stanley Investment Management
Inc.
Clifford D'Souza (40) Director Director Executive Director of Morgan 1
Morgan Stanley since 2001 Stanley Investment Management
Forbes Building - Inc.
Fifth Floor
Charanjit Rai Marg, Fort
Mumbai, India
Nilesh Joshi (38) Director Director Vice President of Morgan 1
Morgan Stanley since Stanley Investment Management
Forbes Building - 2001 Private Ltd.
Fifth Floor
Charanjit Rai Marg, Fort
Mumbai, India
Ronald E. Robison (63) President President President and Trustee; Chief 72
1221 Avenue of the and and Global Operations Officer and
Americas Director Director Managing Director of Morgan
New York, NY 10020 since Stanley Investment
2001 Management, Inc.; Managing
Director of Morgan Stanley &
Co. Incorporated; formerly,
Managing Director and Chief
Operating Officer of TCW
Investment Management
Company; Director and
President of various funds in
the Fund Complex.
----------
* Each Director serves an indefinite term, until his or her successor is
elected.
** The Fund Complex includes all funds advised by Morgan Stanley Investment
Management Inc. and any funds that have an investment advisor that is an
affiliated entity of Morgan Stanley Investment Management Inc. (including,
but not limited to, Morgan Stanley Investments LP, Morgan Stanley Investment
Advisors Inc. and Van Kampen Asset Management Inc.).
15
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Overview
Director and Officer Information (cont'd)
Officers:
POSITION(S) TERM OF OFFICE
HELD WITH AND LENGTH OF
NAME, AGE AND ADDRESS OF EXECUTIVE OFFICER REGISTRANT TIME SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
------------------------------------------ ------------ -------------- --------------------------------------------------------
Ronald E. Robison (63) President President and Chief Global Operations Officer and Managing Director of
Morgan Stanley Investment Management Inc. and Director Director since Morgan Stanley Investment Management Inc.; Director and
1221 Avenue of the Americas 2001 President of various U.S. registered investment companies
New York, NY 10020 managed by Morgan Stanley Investment Management Inc.;
previously, Managing Director and Chief Operating Officer
of TCW Investment Management Company.
Stefanie V. Chang (36) Vice Vice President Executive Director of Morgan Stanley & Co. Incorporated
Morgan Stanley Investment Management Inc. President since 1997 and Morgan Stanley Investment Management Inc.; formerly,
1221 Avenue of the Americas practiced law with New York law firm of Rogers & Wells
New York, NY 10020 (now Clifford Chance US LLP); Vice President of certain
funds in the Fund Complex.
Lorraine Truten (41) Vice Vice President Executive Director of Morgan Stanley Investment
Morgan Stanley Investment Management Inc. President since 2001 Management Inc.; Head of Global Client Services, Morgan
1221 Avenue of the Americas Stanley Investment Management Inc.; President, Morgan
New York, NY 10020 Stanley Fund Distribution, Inc. formerly, President of
Morgan Stanley Institutional Fund Trust; Vice President
of certain funds in the Fund Complex.
Mary E. Mullin (35) Secretary Secretary Vice President of Morgan Stanley & Co., Incorporated and
Morgan Stanley Investment Management Inc. since 1999 Morgan Stanley Investment Management, Inc.; formerly,
1221 Avenue of the Americas practiced law with the New York law firms of McDermott,
New York, NY 10020 Will & Emery and Skadden, Arps, Slate, Meagher & Flom
LLP; Secretary of certain funds in the Fund Complex.
James W. Garrett (34) Treasurer Treasurer Executive Director of Morgan Stanley & Co. Incorporated
Morgan Stanley Investment Management Inc. since 2002 and Morgan Stanley Investment Management Inc. and
1221 Avenue of the Americas Treasurer of various U.S. registered investment companies
New York, NY 10020 managed by Morgan Stanley Investment Management Inc.;
formerly, with Price Waterhouse LLP (now
PricewaterhouseCoopers LLP).
Belinda A. Brady (34) Assistant Assistant Fund Administration Senior Manager, J.P. Morgan Investor
J.P. Morgan Investor Services Co. Treasurer Treasurer Services Co. (formerly Chase Global Funds Services
73 Tremont Street since 2001 Company); formerly, Senior Auditor at Price Waterhouse
Boston, MA 02108-3913 LLP (now PricewaterhouseCoopers LLP). Assistant Treasurer
of certain funds in the Fund Complex.
----------
* Each Officer serves an indefinite term, until his or her successor is
elected.
16
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Dividend Reinvestment and Cash Purchase Plan
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
each stockholder will be deemed to have elected, unless American Stock Transfer
& Trust Company (the "Plan Agent") is otherwise instructed by the stockholder in
writing, to have all distributions automatically reinvested in Fund shares.
Participants in the Plan have the option of making additional voluntary cash
payments to the Plan Agent, annually, in any amount from $100 to $3,000, for
investment in Fund shares.
Dividend and capital gain distributions 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. 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 dividend or capital gain 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 dividends and distributions
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. A participant will also pay brokerage
commissions incurred on purchases made by voluntary cash payments. 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 India Investment Fund, Inc.
American Stock Transfer & Trust Company
Dividend Reinvestment and Cash Purchase Plan
59 Maiden Lane
New York, New York 10030
1-800-278-4353
17