2001 ANNUAL REPORT
December 31, 2001
[MORGAN STANLEY LOGO]
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
MORGAN STANLEY
INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
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 A. GALLO
DIRECTOR TREASURER
GERARD E. JONES MARY E. MULLIN
DIRECTOR SECRETARY
NILESH JOSHI BELINDA A. BRADY
DIRECTOR ASSISTANT TREASURER
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
SHAREHOLDER SERVICING AGENT
AMERICAN STOCK TRANSFER & Trust Company
40 WALL STREET
NEW YORK, NEW YORK 10005
(800) 278-4353
LEGAL COUNSEL
CLIFFORD CHANCE ROGERS & Wells 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 INDIA INVESTMENT FUND, INC.
OVERVIEW
LETTER TO SHAREHOLDERS
For the year ended December 31, 2001, the Morgan Stanley India Investment Fund,
Inc. (the "Fund") had a total return, based on net asset value per share, of
-14.52% compared to -25.82% for the U.S. dollar adjusted Bombay Stock Exchange
(BSE) National Index (the "Index"). On December 31, 2001, the closing price of
the Fund's shares on the New York Stock Exchange was $8.65, representing a
17.9% discount to the Fund's net asset value per share.
MARKET REVIEW
2001 was one of the most difficult years for equity investors in recent history
with global markets going through their worst phase since 1973-74. Our strategy
was to stick with companies high on corporate governance and management quality
that in turn would fit in with our global sector calls. The importance of the
latter in the overall investment process cannot be exaggerated as the past few
years have dramatically changed the characteristics of the Indian market.
The Indian market now looks and behaves like other major global markets. The
tight relationship between India and the rest of the world's equity markets (led
by the U.S.) is also no longer restricted to sectors like technology. It's
almost as tight for telecommunication, financial and industrial sectors. Even
the largely domestic oriented consumer sector in the Indian market moves more in
line with global trends. A major reason for the strong overall correlation is
that the Indian market's composition (on a sector-wide basis) is quite similar
to the major global indices. The relative weights of technology,
pharmaceuticals, energy and even the overall consumer sector in the Indian
market are near identical to the world Index.
There are glaring exceptions like financials, where the sector weight in India
is half that of the world and emerging market indices. But if the past is any
guide, then the odds are the weights will get more aligned in the coming years
with the financials in the Indian market appreciating more on a relative basis.
Therefore, we continue to have a structural overweight in the financial sector.
There are other reasons as well for the overweight in the sector including
compelling valuations, a structural decline in the interest rate regime and
unrecognized gains in the large bond portfolios.
Another sector in which we have moved to an overweight position is basic
materials. Commodities have seen the maximum capital discipline over the past
decade and have the greatest operating leverage and so a revival in growth could
mean disproportionate benefits for commodities.
OTHER DEVELOPMENTS
On December 13, 2001, 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
Funds 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. The tender offer materials will be
mailed to shareholders of the Fund.
Sincerely,
/s/ Ronald E. Robison
Ronald E. Robison
President and Director
January 2002
2
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
December 31, 2001
INVESTMENT SUMMARY
Historical Information (Unaudited)
TOTAL RETURN (%)
--------------------------------------------------------------------------------
MARKET VALUE(1) NET ASSET VALUE(2) INDEX(3)
--------------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
-------------------------------------------------------------------------------------------------------------
One Year -11.68% -11.68% -14.52% -14.52% -25.82% -25.82%
Five Year 17.50 3.28 54.41 9.08 -15.08 -3.22
Since Inception* -19.64 -2.75 -2.17 -0.28 -49.91 -8.43
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
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share $ 13.99 $ 8.91 $ 8.81 $ 8.83 $ 9.19 $ 22.59 $ 13.92 $ 10.53
Market Value Per
Share $ 11.25 $ 9.13 $ 9.50 $ 8.38 $ 6.75 $ 16.50 $ 11.06 $ 8.65
Premium/(Discount) -19.6% 2.5% 7.8% -5.1% -26.6% -27.0% -20.5% -17.9%
Income Dividends -- -- -- -- -- -- -- $ 0.23
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%
Index Total
Return(3) -7.88% -31.53% -6.49% 6.43% -20.98% 88.41% -27.73% -25.82%
(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. These percentages are not an indication of the performance of
a shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value
per share of the Fund. Total returns for periods of less than one year are
not annualized.
(3) The Bombay Stock Exchange (BSE) National index is a market capitalization
weighted index including the equity shares of 100 companies from the
"Specified" and the "Non-specified" list of the 5 major stock exchanges,
namely, Bombay, Calcutta, Delhi, Ahmedabad and Madras, 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
3
PORTFOLIO SUMMARY
[CHART OF ALLOCATION OF TOTAL INVESTMENTS]
Equity Securities 94.8%
Short-Term Investments 5.2
[CHART OF INDUSTRIES]
IT Consulting & Services 14.3%
Pharmaceuticals 10.4
Automobiles 10.0
Banks 9.7
Household Products 5.4
Diversified Financials 5.0
Oil & Gas 4.7
Food Products 4.2
Road & Rail 4.2
Metals & Mining 4.1
Other 28.0
Ten Largest Holdings
PERCENT OF
NET ASSETS
-------------------------------------------------------
1. Hero Honda Motors Ltd. 8.5%
2. Infosys Technologies Ltd. 6.9
3. Wipro Ltd. 5.9
4. State Bank of India Ltd. 5.5
5. Housing Development Finance Corp., Ltd. 5.0
6. HDFC Bank Ltd. 4.2%
7. Container Corporation of India Ltd. 4.2
8. Mahanagar Telephone Nigam Ltd. 3.1
9. Dr. Reddy's Laboratories Ltd. 3.1
10. ITC Ltd. 3.1
----
49.5%
====
4
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
FINANCIAL STATEMENTS
December 31, 2001
STATEMENT OF NET ASSETS
VALUE
SHARES (000)
----------------------------------------------------------------------------
COMMON STOCKS (96.2%)
(UNLESS OTHERWISE NOTED)
----------------------------------------------------------------------------
AUTO COMPONENTS (0.5%)
Apollo Tyres Ltd. 1,875(a) $ 3
Apollo Tyres Ltd. 200 --@
Rane (Madras) Ltd. 95,700(a) 40
Sundaram Fasteners Ltd. 232,525 926
----------------------------------------------------------------------------
969
============================================================================
AUTOMOBILES (10.0%)
Hero Honda Motors Ltd. 3,368,910 17,515
Patheja Brothers Forgings &
Stampings Ltd. 450,000(a,b) --@
Tata Engineering & Locomotive Co.,
Ltd. 1,414,725(a) 2,928
----------------------------------------------------------------------------
20,443
============================================================================
BANKS (9.7%)
HDFC Bank Ltd. 1,326,124 6,180
HDFC Bank Ltd. ADR 168,700(a) 2,455
State Bank of India Ltd. 2,955,054 11,187
----------------------------------------------------------------------------
19,822
============================================================================
BIOTECHNOLOGY (0.8%)
Shantha Biotechnics Pvt. Ltd. 500,000(a,b) 1,555
============================================================================
CHEMICALS (3.6%)
Asian Paints (India) Ltd. 373,584 2,103
Aventis Cropscience India Ltd. 291,867 763
ICI (India) Ltd. 25,000(a) 35
Indo Gulf Corp., Ltd. 1,829,545 1,377
Reliance Industries Ltd. 490,000 3,101
----------------------------------------------------------------------------
7,379
============================================================================
COMMERCIAL SERVICES & SUPPLIES (0.4%)
Xerox Modicorp Ltd. 718,225(a,b) 745
============================================================================
CONSTRUCTION MATERIALS (3.0%)
Gujarat Ambuja Cements Ltd. 1,204,597 4,745
Gujarat Ambuja Cements Ltd. GDR 355,000 1,429
----------------------------------------------------------------------------
6,174
============================================================================
DIVERSIFIED FINANCIALS (5.0%)
Housing Development
Finance Corp., Ltd. 751,876 10,339
UTI Mastergain 1,600(a) --@
----------------------------------------------------------------------------
10,339
============================================================================
DIVERSIFIED TELECOMMUNICATION SERVICES (3.1%)
Mahanagar Telephone Nigam Ltd. 2,212,831 $ 5,812
Mahanagar Telephone Nigam Ltd. ADR 105,000(a) 631
----------------------------------------------------------------------------
6,443
============================================================================
ELECTRIC UTILITIES (2.8%)
BSES Ltd. 556,203 2,288
Tata Power Co., Ltd. 1,408,040 3,491
----------------------------------------------------------------------------
5,779
============================================================================
ELECTRICAL EQUIPMENT (2.6%)
Asea Brown Boveri, Ltd. 197,735 837
Bharat Heavy Electricals Ltd. 1,550,184 4,520
----------------------------------------------------------------------------
5,357
============================================================================
FOOD PRODUCTS (4.2%)
Britannia Industries Ltd. 207,236 2,648
Nestle India Ltd. 141,824 1,518
SmithKline Beecham Consumer
Healthcare Ltd. 495,927 4,062
Tata Tea Ltd. 135,377 474
----------------------------------------------------------------------------
8,702
============================================================================
HOUSEHOLD DURABLES (0.1%)
Samtel Colour Ltd. 559,300 299
============================================================================
HOUSEHOLD PRODUCTS (5.3%)
Colgate-Palmolive (India) Ltd. 1,016,386 3,516
Hindustan Lever Ltd. 1,324,594 6,144
Reckitt Benckiser (India) Ltd. 446,971 1,313
----------------------------------------------------------------------------
10,973
============================================================================
INTERNET SOFTWARE & SERVICES (0.1%)
India Info.com PCL 532,875(a,b,c) 124
============================================================================
IT CONSULTING & SERVICES (14.3%)
HCL Technologies Ltd. 531,494 3,023
Infosys Technologies Ltd. 168,645 14,247
Wipro Ltd. 209,697 6,969
Wipro Ltd. ADR 137,310 5,026
----------------------------------------------------------------------------
29,265
============================================================================
MACHINERY (2.4%)
Cummins India Ltd. 2,766,523 3,018
Lakshmi Synthetic Machinery
Manufacturers Ltd. 137,700(a,b) 17
Punjab Tractors Ltd. 264,862 958
Revathi Equipment Ltd. 262,850 948
----------------------------------------------------------------------------
4,941
============================================================================
The accompanying notes are an integral part of the financial statements.
5
VALUE
SHARES (000)
----------------------------------------------------------------------------
MEDIA (1.4%)
New Delhi Television Ltd. 333,300(a,b) $ 700
Zee Telefilms Ltd. 938,419 2,173
----------------------------------------------------------------------------
2,873
============================================================================
METALS & MINING (4.1%)
Hindalco Industries Ltd. 252,210 3,346
National Aluminum Co., Ltd. 1,368,875 1,405
Steel Authority of India Ltd. 15,253,097(a) 1,534
Tata Iron & Steel Co., Ltd. 1,206,400 2,182
----------------------------------------------------------------------------
8,467
============================================================================
OIL & GAS (4.7%)
Bharat Petroleum Corp., Ltd. 581,286 2,278
Hindustan Petroleum Corp., Ltd. 1,159,211 3,356
Reliance Petroleum Ltd. 6,506,654 3,954
----------------------------------------------------------------------------
9,588
============================================================================
PHARMACEUTICALS (10.4%)
Aventis Pharma Ltd. 107,425 926
Cipla Ltd. 237,058 5,596
Dabur India Ltd. 2,735,708 3,852
Dr. Reddy's Laboratories Ltd. 271,000 5,190
Dr. Reddy's Laboratories Ltd. ADR 62,800 1,190
E. Merck (India) Ltd. 182,599 1,045
Lupin Ltd. 119,308 235
Ranbaxy Laboratories Ltd. 174,500 2,498
Strides Arcolab Ltd. 585,000 777
----------------------------------------------------------------------------
21,309
============================================================================
ROAD & RAIL (4.2%)
Container Corporation of India 2,830,978 8,630
Ltd.
============================================================================
SPECIALTY RETAIL (0.5%)
Titan Industries Ltd. 1,218,376 932
============================================================================
TOBACCO (3.0%)
ITC Ltd. 415,741 5,835
ITC Ltd. GDR 27,500 426
----------------------------------------------------------------------------
6,261
============================================================================
TOTAL COMMON STOCKS
(Cost $223,744) 197,369
============================================================================
FACE
AMOUNT VALUE
(000) (000)
----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (5.2%)
============================================================================
REPURCHASE AGREEMENT (5.2%)
J.p. Morgan Securities Inc.,
1.63%, dated 12/31/01, due 1/2/02
(Cost $10,599) $ 10,599(d) $ 10,599
============================================================================
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.1%)
============================================================================
Indian Rupee
(Cost $153) INR 7,378 153
============================================================================
The accompanying notes are an integral part of the financial statements.
6
VALUE
(000)
============================================================================
TOTAL INVESTMENTS (101.5%)
(Cost $234,496) $208,121
============================================================================
AMOUNT
(000)
----------------------------------------------------------------------------
OTHER ASSETS (0.8%)
Receivable for Investments Sold $ 1,045
Tax Reclaim Receivable 340
Dividends Receivable 200
Other 27 1,612
============================================================================
LIABILITIES (-2.3%)
Payable For:
Distributions Declared (3,749)
Custodian Fees (393)
Investment Advisory Fees (196)
Investments Purchased (76)
Directors' Fees and Expenses (74)
Professional Fees (59)
Administrative Fees (44)
Shareholder Reporting Expenses (43)
Other Liabilities (80) (4,714)
============================================================================
NET ASSETS (100.0%)
Applicable to 19,465,004 issued and
outstanding $ 0.01 par value shares
(100,000,000 shares authorized) $205,019
============================================================================
NET ASSET VALUE PER SHARE $ 10.53
============================================================================
AT DECEMBER 31, 2001, NET ASSETS CONSISTED OF:
Common Stock $ 195
Paid-in Capital 313,046
Distributions in Excess of Net Investment
Income (3,066)
Distribution in Excess of Net Realized Gain (78,362)
Unrealized Depreciation on Investments and
Foreign Currency Translations (26,794)
============================================================================
TOTAL NET ASSETS $205,019
============================================================================
(a) -- Non-income producing.
(b) -- Securities valued at fair value -see note A-1 to financial statements.
At December 31, 2001, the Portfolio held $3,141,000 of fair-valued
securities, representing 1.5% of net assets.
(c) -- 144A Security - Certain conditions for public sale may exist.
(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 Receipt.
GDR -- Global Depositary Receipt.
INR -- Indian Rupee
The accompanying notes are an integral part of the financial statements.
7
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Financial Statements
STATEMENT OF OPERATIONS
YEAR ENDED
DECEMBER 31, 2001
(000)
============================================================================
INVESTMENT INCOME
Dividends $ 5,174
Interest 781
============================================================================
TOTAL INCOME 5,955
============================================================================
EXPENSES
Investment Advisory Fees 2,745
Custodian Fees 776
Administrative Fees 344
Professional Fees 227
Shareholder Reporting Expenses 156
Transfer Agent Fees 27
Directors' Fees and Expenses 74
Other Expenses 93
============================================================================
TOTAL EXPENSES 4,442
============================================================================
NET INVESTMENT INCOME 1,513
============================================================================
NET REALIZED LOSS ON:
Investments (76,562)
Foreign Currency Transactions (208)
============================================================================
NET REALIZED LOSS (76,770)
============================================================================
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON:
Investments 7,227
Foreign Currency Transactions 20
============================================================================
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION 7,247
============================================================================
TOTAL NET REALIZED LOSS AND CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION (69,523)
============================================================================
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (68,010)
============================================================================
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2001 (000) 2000 (000)
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income $ 1,513 $ 685
Net Realized Gain (Loss) (76,770) 159,432
Change in Unrealized Appreciation/Depreciation 7,247 (409,116)
=======================================================================================
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS (68,010) (248,999)
=======================================================================================
Distributions:
Net Investment Income (1,333) --
In Excess of Net Investment Income (3,066) --
Net Realized Gain -- (44,923)
In Excess of Net Realized Gain (16,427) --
=======================================================================================
TOTAL DISTRIBUTIONS (20,826) (44,923)
=======================================================================================
Capital Share Transactions:
Repurchase of Shares (8,559,288 shares and 4,576,200
shares, respectively) (96,335) (52,231)
=======================================================================================
TOTAL DECREASE (185,171) (346,153)
=======================================================================================
Net Assets:
Beginning of Period 390,190 736,343
---------------------------------------------------------------------------------------
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS
OF NET INVESTMENT INCOME/ACCUMULATED NET INVESTMENT
LOSS OF $3,066 AND $752, RESPECTIVELY) $205,019 $ 390,190
=======================================================================================
The accompanying notes are an integral part of the financial statements.
8
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Financial Highlights
SELECTED PER SHARE DATA AND RATIOS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
2001 2000 1999 1998 1997
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD $ 13.92 $ 22.59 $ 9.19 $ 8.83 $ 8.81
Net Investment Income (Loss) 0.10 0.02 (0.08) (0.04) (0.07)
Net Realized and Unrealized Gain
(Loss) on Investments (2.43) (7.93) 13.33 0.31 0.09
----------------------------------------------------------------------------------------------------------
Total from Investment Operations (2.33) (7.91) 13.25 0.27 0.02
----------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income (0.07) -- -- -- --
In Excess of Net Investment Income (0.16) -- -- -- --
Net Realized Gain -- (1.60) -- -- --
In Excess of Net Realized Gain (0.84) -- -- -- --
----------------------------------------------------------------------------------------------------------
Total Distributions (1.07) (1.60) -- -- --
----------------------------------------------------------------------------------------------------------
Anti-Dilutive Effect of Shares
Repurchased 0.01 0.84 0.15 0.09
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.53 $ 13.92 $ 22.59 $ 9.19 $ 8.83
==========================================================================================================
PER SHARE MARKET VALUE, END OF
PERIOD $ 8.65 $ 11.06 $ 16.50 $ 6.75 $ 8.38
==========================================================================================================
TOTAL INVESTMENT RETURN:
Market Value (11.68)% (23.49)% 144.44% (19.40)% (11.84)%
Net Asset Value (1) (14.52)% (29.68)% 145.81% 4.08% 0.23%
==========================================================================================================
RATIOS, SUPPLEMENTAL DATA:
----------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(THOUSANDS) $ 205,019 $ 390,190 $ 736,343 $ 314,701 $ 315,446
----------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets 1.77% 1.48% 1.59% 1.97% 2.06%
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.60% 0.12% (0.55)% (0.44)% (0.70)%
Portfolio Turnover Rate 56% 44% 34% 24% 25%
----------------------------------------------------------------------------------------------------------
(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
shareholder'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.
The accompanying notes are an integral part of the financial statements.
9
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
December 31, 2001
NOTES TO FINANCIAL STATEMENTS
The Morgan Stanley India Investment Fund In .(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 generally accepted accounting principles. Such policies are
consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles 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. All other securities and assets for which
market values are not readily available (including investments which are
subject to limitations as to their sale, if any) are valued at fair value as
determined in good faith under procedures approved by the Board of
Directors. 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. TAXES: It is the Fund's intention to continue to qualify as a regulated
investment company and distribute all of its taxable income. Accordingly, no
provision for U.S. Federal income taxes is required in the financial
statements.
The rate of capital gains tax in India is 10% for long-term investments and
30% for short-term investments. The Fund invests in India through a
registered branch office established in Mauritius and expects to obtain
benefits under the double taxation treaty between Mauritius and India. 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
a 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 interest earned on Indian securities at the rate of 20%.
In Mauritius, the Fund is liable for income tax under the current Mauritian
legislation at the rate of 0%. However, the Fund may, in any year, elect to
pay tax on its net investment income at any rate between 0% and 35%. The
Fund has elected to pay tax at the rate of 1% on its net investment income.
For the year ended December 31, 2001, no provision for Mauritius taxes is
considered necessary as a result of cumulative net investment losses
incurred by the Fund.
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.
3. REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements under
which the Fund lends excess ash 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.
4. 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
10
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 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.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of U.S. dollar
denominated transactions as a result of, among other factors, the
possibility of lower levels of governmental supervision and regulation of
foreign securities markets and the possibility of political or economic
instability.
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 may utilize
and their associated risks:
5. 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 market-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 counter parties 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.
6. FORWARD COMMITMENTS AND WHEN-ISSUED/DELAYED DELIVERY SECURITIES: The Fund
may make forward commitments to purchase or sell securities. Payment and
delivery for securities which have been purchased or sold on a forward
commitment basis can take place a month or more (not to exceed 120 days)
after the date of the transaction. Additionally, the Fund may purchase
securities on a when-issued or delayed delivery basis. Securities purchased
on a when-issued or delayed delivery basis are purchased for delivery beyond
the normal settlement date at a stated price and yield, and no income
accrues to the Fund on such securities prior to delivery. When the Fund
enters into a purchase transaction on a when-issued or delayed delivery
basis, it either establishes a segregated account in which it maintains
liquid assets in an amount at least equal in value to the Fund's commitments
to purchase such securities or denotes such securities assets as segregated
on the Fund's records. Purchasing securities on a forward commitment or
when-issued or delayed-delivery basis may involve a risk that the market
price at the time of delivery may be lower than the agreed upon purchase
price, in which case there could be an unrealized loss at the time of
delivery.
7. SWAP AGREEMENTS: The Fund may enter into swap agreements to exchange the
return generated by one security, instrument or basket of instruments for
the return generated by another security, instrument or basket of
instruments. The following summarizes swaps which may be entered into by
the Fund:
INTEREST RATE SWAPS: Interest rate swaps involve the exchange of commitments
to pay and receive interest based on a notional principal amount. Net
periodic interest payments to be received or paid are accrued daily and are
recorded in the Statement of Operations as an adjustment to interest income.
Interest rate swaps are marked-to-market daily based upon
11
quotations from market makers and the change, if any, is recorded as
unrealized appreciation or depreciation in the Statement of Operations.
TOTAL RETURN SWAPS: Total return swaps involve commitments to pay interest
in exchange for a market-linked return based on a notional amount. To the
extent the total return of the security, instrument or basket of instruments
underlying the transaction exceeds or falls short of the offsetting interest
obligation, the Fund will receive a payment from or make a payment to the
counterparty, respectively. Total return swaps are marked-to-market daily
based upon quotations from market makers and the change, if any, is recorded
as unrealized gains or losses in the Statement of Operations. Periodic
payments received or made at the end of each measurement period, but prior
to termination, are recorded as realized gains or losses in the Statement of
Operations.
Realized gains or losses on maturity or termination of interest rate and
total return swaps are presented in the Statement of Operations. Because
there is no organized market for these swap agreements, the value reported
in the Statement of Net Assets may differ from that which would be realized
in the event the Fund terminated its position in the agreement. Risks may
arise upon entering into these agreements from the potential inability of
the counterparties to meet the terms of the agreements and are generally
limited to the amount of net interest payments to be received and/or
favorable movements in the value of the underlying security, instrument or
basket of instruments, if any, at the date of default.
Risks also arise from potential losses from adverse market movements, and
such losses could exceed the related amounts shown in the Statement of Net
Assets.
8. STRUCTURED SECURITIES: The Fund may invest in interests in entities
organized and operated solely for the purpose of restructuring the
investment characteristics of sovereign debt obligations. This type of
restructuring involves the deposit with or purchase by an entity of
specified instruments and the issuance by that entity of one or more classes
of securities ("Structured Securities") backed by, or representing interests
in, the underlying instruments. Structured Securities generally will expose
the Fund to credit risks of the underlying instruments as well as of the
issuer of the Structured Security. Structured Securities are typically
sold in private placement transactions with no active trading market.
Investments in Structured Securities may be more volatile than their
underlying instruments, however, any loss is limited to the amount of the
original investment.
9. OVER-THE-COUNTER TRADING: Securities and other derivative instruments that
may be purchased or sold by the Fund may consist of instruments not traded
on an exchange. The risk of nonperformance by the obligor on such an
instrument may be greater, and the ease with which the Fund can dispose of
or enter into losing transactions with respect to such an instrument may
be less, than in the case of an exchange-traded instrument. In addition,
significant disparities may exist between bid and asked prices for
derivative instruments that are not traded on an exchange. Derivative
instruments not traded on exchanges are also not subject to the same type of
government regulation as exchange traded instruments, and many of the
protections afforded to participants in a regulated environment may not be
available in connection with such transactions.
During the year ended December 31, 2001, the Fund's investments in derivative
instruments described above included foreign currency exchange contracts only.
10. OTHER: Security transactions are a counted 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 dividend) net of applicable withholding taxes,
if any. Distributions to shareholders are recorded on the ex-dividend date.
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 generally accepted accounting principles.
The book/tax differences are either considered temporary or permanent in
nature.
Temporary differences are attributable to differing book and tax treatments
for the timing of the recognition of gains and losses on certain investment
transactions and the timing of the deductibility of certain expenses.
Permanent book and tax basis differences may result in reclassifications
among undistributed net investment income (loss), accumulated net realized
gain (loss) and paid in capital.
12
Adjustments for permanent book-tax differences, if any, are not reflected in
ending undistributed net investment income (loss) for the purposes of
calculating net investment income (loss) per share in the financial
highlights.
B. ADVISER: Morgan Stanley Investment Management Inc. (formerly Morgan Stanley
Dean Witter 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 Company (the "Administrator"), provides
administrative services to the Fund under an Administration Agreement. Under the
Administration Agreement, the Administrator is 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. In addition, the Fund is charged certain
out-of-pocket expenses by the Administrator.
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.
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. OTHER: During the year ended December 31, 2001, the Fund made purchases and
sales totaling $133,950,000 and $213,867,000, 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. At December 31, 2001, the U.S. Federal income tax cost basis of
investments (excluding foreign currency) was $241,687,000 and, accordingly, net
unrealized depreciation for U.S. Federal income tax purposes was $33,719,000 of
which $27,509,000 related to appreciated securities and $61,228,000 related to
depreciated securities. At December 31, 2001, the Fund had a capital loss
carryforward for U.S. Federal income tax purposes of approximately $56,001,000
available to offset future capital gains which will expire on December 31, 2009.
To the extent that capital gains are offset, such gains will not be distributed
to the shareholders. 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 the year ended December 31, 2001, the Fund
deferred to January 1, 2002, for U.S. Federal income tax purposes, post-October
passive foreign investment company losses of $586,000, post-October currency
losses of $15,000 and post-October capital losses of $17,629,000.
For the year ended December 31, 2001, the Fund incurred $11,000 of brokerage
commissions with Morgan Stanley & Co. Incorporated, an affiliate of the Adviser.
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. At December 31, 2001,
approximately $1, 431,000 of Fund securities were either out for transfer in the
name of the Fund, were under objection for transfer in the name of the Fund,
were out for dematerialization, or were due from companies and/or brokers for
various capital changes. Such securities are valued in accordance with the
Fund's security valuation policy as described in Note A-1, but may not be
saleable at the value shown in the Statement of Net Assets. The Fund has no
intention of selling such securities until they are transferred in the name of
the Fund.
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, 2001, the deferred fees payable under the Plan totaled
$67,000 and are included in Payable for Directors' Fees and Expenses on the
Statement of Net Assets.
On August 10, 1998, the Fund commenced a share repurchase program for purposes
of enhancing shareholder value and reducing the discount at which the Fund's
shares traded from their net asset value. During the year ended December 31,
2001, the Fund repurchased 152,000 of its shares at an average discount of
19.59% from
13
net asset value per share. From the inception of the program through December
31, 2001, the Fund has repurchased 7,834,800 of its shares at an average
discount of 30.85% 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 14, 2000, with the aim of enhancing stockholder value and reducing
the discount at which the Fund's shares have been trading, the Board of
Directors authorized the Fund to conduct a tender offer during the first
quarter of 2001 for up to 30% of the Fund's outstanding shares of common stock
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 March 29, 2001, the Fund completed the tender offer. The Fund accepted
8,407,288 shares for payment which represented 30% of the Fund's then
outstanding shares. Final payment was made on April 12, 2001 at $11.29 per
share, representing 95% of the NAV per share on March 29, 2001.
On December 13, 2001, 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
Funds 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. The tender offer materials will be
mailed to shareholders of the Fund.
On December 14, 2001, the Board of Directors declared a distribution of $0.19
per share, derived from net investment income, payable on January 11, 2002, to
shareholders of record on December 24, 2001.
--------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For the year ended December 31, 2001, the Fund designates $16,428,000 as
long-term capital gains.
14
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS 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, 2001, and the related
statements of operations for the year then ended, and the statement of changes
in net assets and the financial highlights for each of the two 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 three 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. 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 and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 2001 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, 2001, the results of its
operations for the year then ended, and the changes in its net assets and the
financial highlights for each of the two years then ended, in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 11, 2002
15
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
Overview
DIRECTOR AND OFFICER INFORMATION (UNAUDITED)
Independent Directors:
TERM OF NUMBER OF
OFFICE PORTFOLIOS
AND IN FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS OF HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS
DIRECTOR REGISTRANT SERVED* DURING PAST 5 YEARS DIRECTOR** HELD BY DIRECTOR
------------------------ ---------- ------- ---------------------- ---------- -------------------
Gaetan Bouic (66) Director Director Finance Manager of United 78 Director of UBP
De Chazal de Mee Building since 2001 Basalt Products Ltd; Group, Ste. Marie
10 Frere Felix de Valois Street Chairman of Mauritius Crushing Plant Ltd.,
Port Louis, Mauritius Venture Capital Fund Ltd; Produits Basaltiques
previously, President of du Nord Ltee.,
the Joint Economic Welcome Industries
Council and Chairman of Ltd., UPB
the Stock Exchange of International Ltd.,
Mauritius. United Granite
Products (Private)
Ltd. (Sri Lanka), CDC
Holding Sdh. Bhd.,
CDC Haina (Mauritius)
Ltd., CDC (West
Malaysia) Sdh. Bhd.,
Mozambique Investment
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 (64) Director Director Finance Director of the 1 Director of The India
De Chazal de Mee Building since 1996 ABC Group of companies Magnum Fund Ltd.
10 Frere Felix de Valois Street (conglomerate);
Port Louis, Mauritius previously, Managing
Director of Crown Eagle
Investments Ltd.
Gerard E. Jones (65) Director Director Of Counsel, Shipman & 78 Director of Tractor
Shipman & Goodwin, LLP since 1995 Goodwin, LLP (law firm); Supply Company,
43 Arch Street Director of various U.S. Tiffany Foundation,
Greenwich, CT 06830 registered investment and Fairfield County
companies managed by Foundation
Morgan Stanley Investment
Management Inc.
Marie Joseph Raymond Director Director Director of The India, 1
Lamusse (69) since 2001 Media, Internet and
De Chazal de Mee Building Communications Fund Ltd.,
10 Frere Felix de Valois Street Southern Cross Hotel
Port Louis, Mauritius Ltd., Jean Vaulbert de
Chantily Ltd. (consumer
goods) and Grandville
Ltee. (property holding
company); formerly,
Partner of Lamusse Sek
Sum (accounting)
Fergus Reid (69) Director Director Chairman and Chief 1 Trustee and Director
85 Charles Colman Blvd. since 1995 Executive Officer of of approximately 30
Pawling, NY 12564 Lumelite Plastics investment companies
Corporation; Director of in the JPMorgan Funds
various U.S. registered complex managed by
investment companies JPMorgan Investment
managed by Morgan Stanley Management Inc.
Investment Management Inc.
----------
* Each Director serves an indefinite term, until his or her successor is
elected.
** The Fund Complex currently includes Morgan Stanley Institutional Fund, Inc.;
The Universal Institutional Funds, Inc.; Morgan Stanley Strategic Adviser
Fund, Inc.; Morgan Stanley Africa Investment Fund, Inc.; Morgan Stanley
Asia-Pacific Fund, Inc.; Morgan Stanley Eastern Europe Fund, Inc.; Morgan
Stanley Emerging Markets Fund, Inc.; Morgan Stanley Emerging Markets Debt
Fund, Inc.; Morgan Stanley Global Opportunity Bond Fund, Inc.; Morgan Stanley
High Yield Fund, Inc.; Morgan Stanley India Investment Fund, Inc.; The Latin
American Discovery Fund, Inc.; The Malaysia Fund, Inc.; The Thai Fund, Inc.,
and The Turkish Investment Fund, Inc.
16
Interested Directors:
TERM OF NUMBER OF
OFFICE PORTFOLIOS
AND IN FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS OF HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS
DIRECTOR REGISTRANT SERVED* DURING PAST 5 YEARS DIRECTOR** HELD BY DIRECTOR
------------------------ ---------- ------- ---------------------- ---------- -------------------
Barton M. Biggs (69) Chairman Chairman Chairman, Director and 78 Member of the Yale
1221 Avenue of the Americas and and Managing Director of Development Board
New York, NY 10020 Director Director Morgan Stanley
1994 Investment Management
Inc. and Chairman and
Director of 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 (39) Director Director Executive Director of 1
Morgan Stanley since 2001 Morgan Stanley
Forbes Building - Fifth Floor Investment Management
Charanjit Rai Marg, Fort Inc.
Mumbai, India
Nilesh Joshi (37) Director Director Vice President of Morgan 1
Morgan Stanley since 2000 Stanley Investment
Forbes Building - Fifth Floor Management Private Ltd.;
Charanjit Rai Marg, Fort
Mumbai, India
Ronald E. Robison (63) President President Chief Global Operations 78
1221 Avenue of the Americas and since Officer and Managing
New York, NY 10020 Director 2001 and Director of Morgan
Director Stanley Investment
since 2001 Management, Inc.;
Director and President
of various U.S.
registered investment
companies managed by
Morgan Stanley
Investment Management
Inc.; Previously,
Managing Director and
Chief Operating Officer
of TCW Investment
Management Company.
----------
* Each Director serves an indefinite term, until his or her successor is
elected.
** The Fund Complex currently includes Morgan Stanley Institutional Fund, Inc.;
The Universal Institutional Funds, Inc.; Morgan Stanley Strategic Adviser
Fund, Inc.; Morgan Stanley Africa Investment Fund, Inc.; Morgan Stanley
Asia-Pacific Fund, Inc.; Morgan Stanley Eastern Europe Fund, Inc.; Morgan
Stanley Emerging Markets Fund, Inc.; Morgan Stanley Emerging Markets Debt
Fund, Inc.; Morgan Stanley Global Opportunity Bond Fund, Inc.; Morgan Stanley
High Yield Fund, Inc.; Morgan Stanley India Investment Fund, Inc.; The Latin
American Discovery Fund, Inc.; The Malaysia Fund, Inc.; The Thai Fund, Inc.,
and The Turkish Investment Fund, Inc.
17
Officers:
TERM OF
POSITION(S) OFFICE AND
HELD WITH 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 President, Morgan Stanley Institutional Fund,
Morgan Stanley Investment Management Inc. and since 2001 Inc. and Morgan Stanley Strategic Adviser Fund,
1221 Avenue of the Americas Director Inc.; Chief Operating Officer and Managing
New York, NY 10020 Director of Morgan Stanley & Co. Incorporated;
Director and President of various U.S.
registered investment companies managed by
Morgan Stanley Investment Management Inc.;
Previously, Managing Director and Chief
Operating Officer of TCW Investment Management
Company.
Stefanie V. Chang (35) Vice Vice Executive Director of Morgan Stanley & Co.
Morgan Stanley Investment Management Inc. President President Incorporated and Morgan Stanley Investment
1221 Avenue of the Americas since 1997 Management Inc.; formerly, practiced law with
New York, NY 10020 New York law firm of Rogers & Wells (now
Clifford Chance Rogers & Wells LLP); Vice President
of certain funds in the Fund Complex.
Mary E. Mullin (34) Secretary Secretary Vice President of Morgan Stanley & Co., Inc. and
Morgan Stanley Investment Management Inc. since 1999 Morgan Stanley Investment Management, Inc.;
1221 Avenue of the Americas formerly, practiced law with New York firms of
New York, NY 10020 McDermott, Will & Emery and Skadden, Arps,
Slate, Meagher & Flom LLP; Secretary of
certain funds in the Fund Complex.
James A. Gallo (37) Treasurer Treasurer Executive Director of Morgan Stanley Investment
Morgan Stanley Investment Management Inc. since 2001 Management Inc.; Treasurer of certain funds in
1221 Avenue of the Americas the Fund Complex; formerly, Director of Fund
New York, NY 10020 Accounting at PFPC, Inc.
Belinda A. Brady (34) Assistant Assistant Fund Administration Senior Manager, J.P. Morgan
J.P. Morgan Investor Services Co. Treasurer Treasurer Investor Services Co. (formerly Chase Global
73 Tremont Street since 2001 Funds Services Company); and Assistant Treasurer
Boston, MA 02108-3913 of all Portfolios of the Fund. Formerly Senior
Auditor at PriceWaterhouse LLP (now
PricewaterhouseCoopers LLP).
----------
* Each Officer serves an indefinite term, until his or her successor is elected.
18
MORGAN STANLEY INDIA INVESTMENT FUND, INC.
DIVIDEND REINVESTMENT
AND CASH PURCHASE PLAN
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"), each
shareholder will be deemed to have elected, unless American Stock Transfer
& Trust Company (the "Plan Agent") is otherwise instructed by the shareholder 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. 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 ash payments. Although
shareholders 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 shareholders, such as banks, brokers or nominees, which 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
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are participating in the
Plan.
Shareholders 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 shareholders 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
40 Wall Street
New York, NY 10005
1-800-278-4353
19